Bankruptcy and Superannuation
Bankruptcy Does Not Mean You Will Lose Your Superannuation.
Your Super is “usually” protected. Bankruptcy does not mean you will lose your Superannuation. If you have been a worker and have only received superannuation contributions from your employer, which fall under the standard contribution levels, your superannuation is yours to keep.
Who Could Lose Their Superannuation?
Fortunately none of our clients have ever fallen into this category thus far. However, to provide you with an example – let’s assume John X is a builder. He has just completed a block of 40 units and owes all of his sub contractors a lot of money. You see, John may have won the contract to build the units, because he under quoted. John deliberately underquoted and he thought he was very clever in doing so. He got his final payment of $500k and has outstanding accounts and wages of $750K. You can see John has a problem. Well, John doesn’t think so. John expected this shortfall all along. John decides to deposit the $500k final payment into his Superannuation and happily walk in to declare himself bankrupt, thinking the $500k will be a nice nest egg for when he retires.
John has lodged his bankruptcy and is planning to set up the next business under a relative’s name, using their Builders Licence. Hold it there Johnny – not so fast. You see, John used the bankruptcy and superannuation theory, thinking his Super is protected under bankruptcy. Not so in such a case – this is not a normal super contribution and it was done with fraudulent intent. John now not only loses his superannuation, he has also lost his builders licence. Not that he needs that where he is going – John is facing a lengthy jail sentence.
So as you can see in general, if you are an upright citizen, facing Bankruptcy you will not lose your Superannuation