Retirement income entities - Individual trustees of a Self managed superannuation fund (SMSF) declared bankrupt.

Can disqualified persons continue to act as trustees of a SMSF?

No. Subsection 121(1) of the Superannuation Industry (Supervision) Act 1993 (SISA) prohibits a disqualified person from being a trustee of a fund.

All trustees of the SMSF are individuals

All trustees of the SMSF are undischarged bankrupts.

Under paragraph 120(1)(b) of the SISA, an individual is a disqualified person by

reason of being 'insolvent under administration'.

The term 'insolvent under administration' is defined in subsection 10(1) of the SISA to include a person who is an undischarged bankrupt under the Bankruptcy Act 1966 .

Under subsection 121(1) of the SISA , a disqualified person is prohibited from being a trustee of a fund.

As all of the trustee/members are disqualified persons, they must resign as trustees of the fund and consequently the fund would cease to be an SMSF as defined by s17A of the SISA.