Abstract
Research suggests that Australian bankrupts are increasingly older, have professional backgrounds and generally enjoy higher levels of income than has previously been the case. Significantly, available data also indicates that the numbers of persons entering into bankruptcy hold greater levels of real property, and associated mortgage debt, than in previous decades. Given these trends, the importance of protecting superannuation funds becomes paramount to a bankrupt. However, this paper argues that there is a need to balance the protected asset status of superannuation funds with other objectives, such as achieving a fair distribution of the bankrupt’s assets among creditors. This paper examines the extent to which this balance is achieved, particularly in the context of self-managed superannuation funds.
Highlights
When the Superannuation Guarantee scheme was introduced in 1992, superannuation funds were not considered to form part of the divisible property in bankruptcy, as members of the superannuation fund, like beneficiaries in a discretionary trust, do not hold a proprietary interest in the fund
This paper considers whether superannuation funds are strictly exempt property under the Bankruptcy Act, and the extent to which the balance is achieved between the objectives of a fresh start and a fair distribution of assets to creditors in personal insolvency law
The protected asset status given to a regulated superannuation fund under the Bankruptcy Act plays a significant role in providing a discharged bankrupt with a ‘fresh start’
Summary
When the Superannuation Guarantee scheme was introduced in 1992, superannuation funds were not considered to form part of the divisible property in bankruptcy, as members of the superannuation fund, like beneficiaries in a discretionary trust, do not hold a proprietary interest in the fund. The interest of the bankrupt in a regulated superannuation or approved deposit fund as defined by the Superannuation Industry (Supervision) Act 1993 (Cth) (‘SIS Act’);[4] and. A payment to the bankrupt from such a fund received on or after the date of the bankruptcy, provided the payment is not a pension within the meaning of SIS Act.[5]
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