The article is regarding the consequences of declaring bankruptcy when a self-managed superannuation fund (SMSF) holds real estate.

According to the Superannuation Industry Supervision Act (SIS) and the CIS Act, SMSFs are generally considered protected during bankruptcy and can be kept following the bankruptcy. However, the property purchased in the SMSF may be at risk. The bankruptcy trustee may investigate the purchase of the property, including how and when it was acquired, and how it was funded. If the purchase was made without a mortgage or financing and shortly before the bankruptcy was declared, it may be subject to being lost to the bankrupt estate.

It can be said that in the opposite extreme example, the property might have been purchased by a self- managed superannuation fund from regular contributions from the bankrupt or other members of the fund throughout their employment period. At the time of the purchase and contributions made by the bankrupt, there were no signs of imminent financial trouble. In this case, the property would be considered part of the assets of the self-managed superannuation fund and there is no link between the bankrupt and the fund or the property. It is important for Australian business owners to be aware of the risks involved when it comes to bankruptcy and their SMSFs.