Date of article: 27 July 2006
Last updated: N/A

Superannuation recoverable in bankruptcy

The Attorney General, Phillip Ruddock, and the Minister for Revenue and Assistant Treasurer, Peter Dutton, have announced amendments to the Bankruptcy Act 1966 to ensure that superannuation contributions that are 'out of character' and made prior to bankruptcy in order to defeat creditors can be recovered by bankruptcy trustees.

Payments to superannuation plans with the aim of defeating creditors are now intended to be recoverable in the same way as other payments or transfers made for this purpose. However, genuine contributions to superannuation for retirement income purposes will still be protected from recovery.

In determining whether contributions were made to defeat creditors, courts will be able to take into account the person's history of contributions and whether the contributions in question are 'out of character'.

The amendments will prevent unscrupulous debtors from transferring their assets into superannuation when bankruptcy is looming.

The amendments apply to superannuation contributions made after 27 July 2006.