What if I receive money during my bankruptcy?

What if I receive money during my bankruptcy?

Apart from your ordinary income, other money and payments you receive may:

• still form part of your income assessment or
• be an asset your trustee can claim and sell.

If you receive a payment and you're unsure if it falls into the above categories, check with your trustee. The below information shows some common payment types and how they are treated in bankruptcy.

For information about changes in income, read my income has changed.

If your trustee is the Official Trustee (AFSA) you can notify us of money received using the online form below.

Can I keep my tax refund?

It depends on your circumstances. You must inform your trustee when you receive your tax refund. It's important not to spend your tax refund before your trustee makes an assessment and informs you if they have a claim in the refund.

For more information, learn about bankruptcy and tax returns.

Can I keep my super?

It depends on whether the super is still held by the fund or if you have received it. In most cases, you can keep super balances held in a regulated fund, approved deposit fund or an exempt public sector superannuation scheme.  

If you receive payments from a regulated superannuation fund:

• After the date of bankruptcy: they are generally exempt.
• Before the date of bankruptcy: they are not protected and may be claimed by the trustee.

For more information, learn about what happens to my money?

I'm getting an inheritance, can I keep it?

Normally no. If you receive an inheritance, you need to inform your trustee.

For more information, learn about what happens to my money?

I'm receiving a redundancy payment, can I keep it?

Redundancy and leave payments you receive:

• prior to entering bankruptcy are an asset the trustee can claim
• after entering bankruptcy form part of your assessable income. If your income goes over a set amount you need to make compulsory payments.

You need to inform your trustee if you receive these types of payments.

How are compensation payments treated?

The type, circumstances, components, and way which compensation is awarded impacts whether the trustee has claim to it. If you receive a compensation payment, you must inform your trustee. Your trustee can request supporting documents to determine whether they will claim it. If they claim it, they can use it to help repay your debts.

What about gifts and prizes?

If you receive money during your bankruptcy, you need to inform your trustee. This includes gifts from friends or family and prizes, such as winning a lottery. Your trustee can claim money you receive as an asset.

Payments from the Coronavirus Economic Response Package

Economic support payments – are not claimable by your bankruptcy trustee as income or as an asset, regardless of whether you received the payments before or after the date of bankruptcy.

COVID-19 supplement payments – are claimable by the trustee if you received them before the date of bankruptcy and it remained in your bank account when you became bankrupt. The payments are included in your after-tax income amount.

More information about these payments is available at Services Australia.

Early access to superannuation – If you received payments from your superannuation under the Coronavirus Economic Response Package, there is no change to the way this payment is treated in bankruptcy.

For details on what happens to your super during bankruptcy, visit what happens to my money? 

The Australian Taxation Office has more information about super payments on their website at Early access to your super.

Notifying your trustee

If your trustee is the Official Trustee (AFSA) update us now.