The basic thrust of the Commonwealth’s legislation regarding superannuation is to encourage as many people as possible, to build up a superannuation fund which will be sufficient to fund their retirement and thereby not require the Government to pay them a pension and associated benefits. The Bankruptcy Act adopts this policy by prescribing that the funds held by a bankrupt at the date of their bankruptcy in a regulated superannuation fund are “protected” and cannot be seized by the trustee for the benefit of the bankrupt’s creditors. Likewise, any payments made to the bankrupt during their bankruptcy from any such a fund, not necessarily the bankrupt’s fund, are protected. Furthermore, in a convoluted manner, the protection afforded to such payments flows over to any assets such as a house, where the whole or substantially all, of the purchase price/acquisition cost of the asset comprises moneys received from the superannuation fund payment to the bankrupt.
The Insolvency Law Reform Act 2016 has finally arrived and according to the Government propaganda “it represents the most significant suite of reforms to Australia’s bankruptcy and corporate insolvency laws in twenty years and is an integral component of the Federal Government’s agenda of improving economic incentives for innovation and entrepreneurialism.”