In January 2021, the government introduced changes to the insolvency framework in an effort to better support Australian small business facing financial difficulties. The changes included the option to appoint a restructuring practitioner to undertake a debt restructuring process or a simplified liquidation.
The changes have slowly been integrated into the relevant legislation. On 8 December 2021, changes were made to the Superannuation Industry (Supervision) Act 1993 (SIS Act) that could affect self-managed superannuation funds (SMSF) with a corporate trustee.
Section 120 of the SIS Act has been amended to extend the “disqualified persons” provision to a body corporate that has appointed a restructuring practitioner. This means that if a restructuring practitioner is appointed to a SMSF, the corporate trustee will be disqualified from managing the SMSF.
What does this mean for your SMSF?
If a restructuring practitioner is appointed to your existing SMSF, the corporate trustee will no longer be able to act. You will have six months (from the date of the restructuring practitioner’s appointment) to either:
- restructure the fund to meet the definition of a SMSF;
- appoint a RSE (registerable superannuation entity) licensee and become a small Australian Prudential Regulation Authority (APRA) fund; or
- voluntarily wind up the SMSF and roll the benefit into an APRA-regulated fund.
The Australian Taxation Office also needs to be notified of the disqualification as soon as is practicable.
For a new SMSF, you will need to consider if the corporate trustee is eligible to act as trustee of the SMSF before it is appointed.
If you are considering appointing a restructuring practitioner to your SMSF, get in contact with one of our team members for assistance.
