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28/10/10 16:06
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Resolving Complaints about Trustees and Administrators
03/07/10 12:08
RESOLVING COMPLAINTS ABOUT TRUSTEES AND ADMINISTRATORS
Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia.
January 2004 Edition
About Bankruptcy Regulation
Bankruptcy Regulation is an independent branch of ITSA which reports directly to the Inspector-General in Bankruptcy.
It is responsible under the Bankruptcy Act for monitoring the standards of trustees and debt agreement administrators.
Its role includes, on behalf of the Inspector-General in Bankruptcy, dealing with complaints against trustees and administrators and dealing with requests for review of certain decisions made by trustees.
Who may complain to Bankruptcy Regulation?
Anyone may complain if they are concerned about an action taken by a:
• trustee
• debt agreement administrator
• controlling trustee of a Part X arrangement.
Bankruptcy Regulation does not have specific authority to make enquiries regarding complaints about someone who provides advice in setting up a Debt Agreement, or in respect to voting on Debt Agreement proposals.
ITSA however does have a role in this area and may be able to assist you. Please contact your local ITSA office if you have a query or complaint concerning these aspects of the Debt Agreement process.
See the ITSA website www.itsa.gov.au for contact information
How to complain
Bankruptcy Regulation encourages you to first try and resolve your concerns with the trustee or administrator. If you have been dealing with an employee of the trustee or administrator, you should raise your concerns directly with your trustee or administrator.
If you are dissatisfied with the way they handle your complaint, or you feel unable to raise the issue with them, you are welcome to contact Bankruptcy Regulation.
Please send a full written explanation of your complaint to Bankruptcy Regulation along with copies of any relevant documents or letters.
See rear cover for contact information
Bankruptcy Regulation treats all complaints seriously and needs to understand the precise basis of your complaint and how you have tried to resolve it.
What does it cost?
There is no charge for a review undertaken by Bankruptcy Regulation.
ITSA (Insolvency and Trustee Service Australia) is a Commonwealth government agency. ITSA is the trustee when a registered trustee is not appointed.
See the Prescribed Information booklet for definitions of bankruptcy terms.
How is my complaint handled?
Bankruptcy Regulation will advise you in writing within 7 days of receiving your complaint whether it considers an investigation is warranted.
If your complaint is investigated, and the investigation is not finalized within 28 days, you will be kept informed of its progress.
Bankruptcy Regulation aims to finalise your complaint within 60 days of receiving it.
If your complaint is beyond Bankruptcy Regulation’s powers to investigate, or they cannot resolve it, they will advise you of your options, such as making an application to the Court.
More information is available in the pamphlet: Can I Appeal? Review and appeal of trustee and administrator decisions
How is my complaint investigated?
Bankruptcy Regulation may be able to resolve some complaints through discussions with the trustee or administrator, particularly if they are able to demonstrate to the trustee or administrator that they have incorrectly applied the law.
The basis of your complaint is usually explained to the trustee or administrator. If you wish to remain anonymous, or have any concerns about details being made available to them, please make this clear in your letter of complaint.
If the matter is investigated further, a written response is obtained from the trustee or administrator addressing the issues of your complaint and their file may be inspected.
If you wish, their written response may be made available to you; however, because of Privacy Act restrictions, this can only occur if the trustee or administrator agrees.
Report on the investigation
Bankruptcy Regulation will provide you and the trustee or administrator with a copy of any report it provides on your complaint, whether or not their response is made available to you.
Decisions which can be reviewed by Bankruptcy Regulation
In some instances Bankruptcy Regulation can review a trustee’s decision. Reviewable decisions are:
• filing of a notice of objection to discharge
• issuing an income contribution assessment
• rejecting a hardship application with respect to an income contribution assessment
• rejecting an application for early discharge (applies only to bankruptcies prior to 5 May 2003)
If your complaint relates to a decision of a trustee that is reviewable by Bankruptcy Regulation, you should follow the procedure set out in the pamphlet: Can I Appeal? Review and appeal of trustee and administrator decisions.
Bankruptcy Regulation does not have the authority to review any other decision made by a trustee, such as:
• selling an asset (eg house, property, stock, plant and equipment, motor vehicle etc.)
• admitting/rejecting a proof of debt.
What else can Bankruptcy Regulation help with?
If your complaint cannot be resolved by discussion with the trustee or administrator, and would involve direct intervention in the conduct of an administration, you will be advised of other options available to you under the Act. In such circumstances, your remedy may be to apply to the Court.
The Bankruptcy Act provides specific review mechanisms for complaints about trustee’s fees. A creditor or bankrupt dissatisfied with a registered trustee’s claim for fees and costs may request the Official Receiver to tax the trustee’s claim. The request must be made within 28 days of you becoming aware of the amount of the claim. You will be charged for this taxing service at a specified hourly rate. Under certain circumstances ITSA’s fees as a trustee can also be reduced.
More information is available in the pamphlet: Can I Appeal? Review and appeal of trustee and administrator decisions
If a complaint reveals a possible offence against the Bankruptcy Act, it will be referred to Bankruptcy Fraud Investigation for further examination.
Your complaint is permanently recorded even if Bankruptcy Regulation cannot resolve it. The record is kept as valuable feedback to assist in:
• determining the scope of Bankruptcy Regulation’s monitoring of trustees and administrators
• advising Government on bankruptcy policy issues
Further information about what you can expect from Bankruptcy Regulation and ITSA generally is available in the Client Service Charter
Where to contact us
ITSA website wwwitsa.gov.au
For more information please contact a Bankruptcy Regulation Office
Queensland and NT
Bankruptcy Regulation
PO Box 10443, Adelaide St
Brisbane QLD 4000
Ph: 07 3360 5425
Fax: 07 3360 5402
email: br.qld@itsa.gov.au
New South Wales and ACT
Bankruptcy Regulation
Level 8, 135 King St
SYDNEY NSW 2000
Ph: 02 8233 7857
Fax: 02 8233 7805
email: br.nsw@itsa.gov.au
Western Australia
Bankruptcy Regulation
GPO Box H536
Perth WA 6001
Ph: 08 9268 1204
Fax: 08 9268 1287
email: br.wa@itsa.gov.au
Victoria and Tasmania
Bankruptcy Regulation
Level 10, 360 Elizabeth St
MELBOURNE VIC 3000
Ph: 03 9272 4800
Fax: 03 9272 4940
email: br.vic@itsa.gov.au
South Australia
Bankruptcy Regulation
GPO Box 2604
ADELAIDE SA 5001
Ph: 08 8112 4315
Fax: 08 8112 4304
email: br.sa@itsa.gov.au
Overseas Travel: Can I leave Australia if I become bankrupt?
03/07/10 12:08
Overseas Travel: Can I leave Australia if I become bankrupt?
The provider of this information is Insolvency & Trustee Services Ausralia.
Need further information? Visit our legal forum where you can ask questions and search for similar topics.
OVERSEAS TRAVEL
CAN I LEAVE AUSTRALIA IF I BECOME BANKRUPT?
Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia.
January 2004 Edition
Can I leave Australia if I become bankrupt?
You can leave Australia while you are bankrupt but you must obtain your trustee’s written consent before you leave.
Your trustee will need to be satisfied that you have legitimate reasons for the proposed travel e.g.:
• as a condition of your employment
• for compassionate reasons.
Your trustee may impose written conditions when giving permission such as:
• the period or duration of travel
• the date you are required to return to Australia
• that you pay any contributions you have been assessed to pay.
Contributions are sums of money that a bankrupt person is required to regularly pay to the trustee from their income.
More information is available in the pamphlet: Income Contributions
You are allowed to have a passport however you must hand it over to your trustee on request.
Bankruptcy is a process where people who cannot pay their debts become bankrupt to receive the protection of the Bankruptcy Act and their estate is administered by a trustee. It allows for the fair distribution of property among creditors and the prosecution of dishonest debtors.
Your trustee can be either a registered trustee or ITSA.
Your trustee may refuse permission if:
• you have not carried out all of your obligations under the Bankruptcy Act e.g. filing a Statement of Affairs
or
• you are required to assist your trustee in the administration of your bankruptcy e.g. to attend an interview, examination or a meeting of creditors.
If you don’t return to Australia when you said you would, or if your trustee has asked you to return and you do not, your trustee may lodge an objection to your discharge. If an objection is lodged your bankruptcy will be extended by 8 years from the date you return to Australia.
Warning:
If you leave, or try to leave Australia without the written consent of your trustee, you are committing an offence under the Bankruptcy Act, punishable by law. You may be prevented form leaving Australia at the airport or ship terminal.
Contravening a condition imposed by your trustee is also an offence under the Bankruptcy Act punishable by law.
How do I apply for permission?
Write to your trustee as soon as you become aware that you may need to leave Australia explaining:
• the reasons for the proposed trip
• the name of the countries you propose to visit
• the date you intend to leave Australia
• the date you intend to return to Australia
• the name of the person paying for the trip, and a confirming letter from that party (unless you propose paying for the trip yourself)
• an overseas address where your trustee could readily contact you
• your level of income in the current Contribution Assessment Period (CAP)
Your CAP will generally be the 12 month period beginning on the date of, or anniversary of, your bankruptcy. Ask you trustee if you do not know.
• proposed arrangements for paying any contribution liability whilst overseas.
Your trustee must have adequate time and information to consider your request. Your request must be in writing so that your trustee understands exactly what you are requesting.
You will be advised promptly of the trustee’s decision and any conditions placed on your travel.
If you are not satisfied with your trustee’s decision you may apply to the Federal Court or the Federal Magistrates Service for a review. You should seek legal advice before making an application.
Where to contact us
ITSA website wwwitsa.gov.au
ITSA Offices
ACT
Level 2, NFF House, 14-16 Brisbane Avenue BARTON ACT 2600
Tel: 1300 364 785
Fax: (02) 6270 3608
email: itsa.canberra@itsa.gov.au
New South Wales
GPO Box 548 SYDNEY NSW 2001 Level 8, 135 King Street SYDNEY NSW 2000
Tel: 1300 364 785
Fax: (02) 8233 7891
email: itsa.sydney@itsa.gov.au
Queensland
Brisbane
PO Box 10443 Adelaide Street BRISBANE QLD 4001
Level 16, 340 Adelaide Street BRISBANE OLD 4000
Tel: 1300 364 785
Fax: (07) 3360 5466
email: itsa.brisbane@itsa.gov.au
Townsville
PO Box 1527 TOWNSVILLE QLD 4810 Level 1,
National Australia Bank Building 315 Ross River Road AITKENVALE OLD 4814
Tel: 1300 364 785
Fax: (07) 4727 0500
email: itsa.townsviIIe-0itsa.gov.au
South Australia/Northern Territory
GPO Box 2604 ADELAIDE SA 5001
Level 18, Grenfell Centre 25 Grenfell Street ADELAIDE SA 5000
Tel: 1300 364 785
Fax: (08) 8112 4305
email: itsa.adelaide@itsa.gov.au
Tasmania
GPO Box 850 HOBART TAS 7001
Level 4, ANZ Centre 22-26 Elizabeth Street HOBART TAS 7000
Tel: 1300 364 785
Fax: (03) 6221 7700
email: itsa.hobart@itsa.gov.au
Victoria
Level 10, Melbourne Central 360 Elizabeth Street MELBOURNE VIC 3000
Tel: 1300 364 785
Fax: (03) 9272 4900
email: itsa.melbourne@itsa.gov.au
Western Australia
GPO Box H536 PERTH WA 6841
Level 12, Durack Centre 263 Adelaide Terrace PERTH WA 6000
Tel: 1300 364 785
Fax: (08) 9268 1298
email: itsa.perth@itsa.gov.au
More information pamphlets are available.
See the website or contact ITSA for a complete list.
Information for Creditors about Bankruptcy
03/07/10 12:06
Information for Creditors about Bankruptcy
The provider of this information is Insolvency & Trustee Services Ausralia.
Need further information? Visit our legal forum where you can ask questions and search for similar topics.
INFORMATION FOR CREDITORS ABOUT BANKRUPTCY
Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia.
June 2004 Edition
What is Bankruptcy
Bankruptcy is a legal process where people, who cannot pay their debts or reach a compromise or arrangement with their creditors, have their affairs administered under the Bankruptcy Act.
The effects of bankruptcy are:
• The bankrupt obtains relief from his or her creditors
• The creditors receive an equitable distribution of the bankrupt’s property (dividends).
Bankruptcies are administered by a trustee, either a registered trustee or ITSA.
If a person makes themselves bankrupt they may choose the trustee. If they do not choose, then ITSA is their trustee.
During bankruptcy the creditors may decide to change trustees, and trustees may also obtain the consent of another trustee to replace them.
A registered trustee is a person registered with ITSA to be a trustee of bankruptcies and Part X agreements
See the Prescribed Information booklet for definitions of other bankruptcy terms
How does bankruptcy affect creditors?
Unsecured creditors:
• cannot take any remedy against the person or property of the bankrupt
• cannot commence or take a fresh step in any legal action, such as a summons or garnishee, and must stop any recovery action by a sheriff or bailiff
• should not generally be paid by bankrupts
• may lodge a proof of debt with the trustee, and participate in any dividends.
Secured creditors:
A secured creditor is a creditor who holds a security over an asset (eg by a mortgage or a bill of sale).
Secured creditors:
• Are entitled to take possession of the secured asset and sell it if the bankrupt is in default
• May lodge a proof of debt in the bankruptcy as an unsecured creditor for any loss resulting from dealing with their security.
A bankrupt may agree to pay a secured creditor in order to keep an asset; however, if it is a divisible asset the trustee may seize and sell the asset when there is sufficient equity.
Divisible assets are assets/property which can be legally sold in bankruptcy by the trustee
A garnishee is an automatic deduction from a bankrupt’s income or bank account arranged without his or her consent
A proof of debt is a formal claim for a debt lodged by a creditor with the trustee
Which debts does a bankrupt have to pay during bankruptcy?
1. Some debts are not provable in bankruptcy. Some creditors cannot receive any money from the bankrupt estate for certain types of debts but they can continue debt recovery action against the bankrupt even during bankruptcy, for example:
• penalties and fines imposed by a court
• damages from accidents (eg car accidents), unless, before bankruptcy, the sum of damages has been fixed by a court judgment or the bankrupt has a written agreement with the other party
• student assistance/supplement loans.
2. Any new debts created on or after the date of bankruptcy.
Which debts continue after a bankrupt’s discharge?
Creditors with certain types of provable debts can both receive money from the bankrupt estate and can also continue debt recovery action after a bankrupt is discharged from bankruptcy, for example:
• Child support debts
• Maintenance
• Debts incurred by fraud
• Accumulated HECS (Higher Education Contribution Scheme) debts raised before bankruptcy.
More information is available in the pamphlet: Debts and Creditors: What happens to them if I go bankrupt?
A provable debt is an amount for which a creditor is entitled to claim a dividend in bankruptcy
What happens to a bankrupt’s assets?
Assets or property are anything that a bankrupt owns, buys or receives. A bankrupt’s interest in assets passes to the trustee.
Exempt assets
Some assets are exempt in bankruptcy, which means that bankrupts may keep them, or keep up to a limited value. Exempt assets include:
• most ordinary household and personal items (eg furniture, bedding and linen, electrical appliances, educational equipment)
• property used to earn an income (such as tools of trade) up to a limit of $2,900 (indexed)
• vehicles (cars or motorbikes) used as a bankrupt’s primary means of transport, up to a limit of $5,800 (indexed)
• life assurance and superannuation policies, up to the pension Reasonable Benefit Limit
• compensation and damages for personal injury, and assets bought with compensation proceeds
• some grants, including grants under the Rural Adjustment Act or Farm Household Support Act
• property protected under the Defence Service Homes Act
• assets held in trust for another person.
Indexed – the amount regularly changes in line with the Consumer Price Index or the base pension rate
Awards of a sporting, cultural, military or academic nature made to the bankrupt, such as medals or trophies but not cash or jewellery, and claimed as having sentimental value may be exempted by the vote of creditors.
Creditors who hold security over an exempt asset are entitled to take possession of it if the bankrupt is in default.
Divisible assets
Assets that are not exempt are called divisible assets. A trustee may deal with dividible assets. These assets may be in Australia or overseas, and in the possession of the bankrupt or someone else.
More information is available in the pamphlet: Assets: What happens to my assets if I go bankrupt?
What are contributions?
Contributions are regular compulsory payments from a bankrupt’s income to their trustee to repay creditors.
At the start of a bankruptcy, and at each 12 month interval during bankruptcy, the trustee makes an assessment of a bankrupt’s contribution liability.
Every bankrupt is assessed, and if their income exceeds a certain threshold (level) they must pay contributions. Low income earners are not required to pay contributions.
More information is available in the pamphlet: Income Contributions: Will I have to make payments from my income?
What are the duties of a trustee?
A trustee must:
• notify creditors of the bankruptcy and report on important matters
• determine whether assets are available to pay creditors
• sell and recover assets for the benefit of creditors
• pay dividends to creditors when there is enough money to do so
• ensure bankrupts fulfill their duties
• refer bankrupts who may have committed an offence to relevant law enforcement authorities
What are the obligations of a bankrupt?
Bankrupts must assist their trustee to administer their bankruptcy. If they do not they may be required to attend an examination to give information and evidence under oath.
The Bankruptcy Act does not prevent a bankrupt from obtaining credit. However a bankrupt must inform the credit provider of their bankruptcy if the credit exceeds $4,029 (indexed).
The Bankruptcy Act does not prevent a bankrupt operating a business. However bankrupts trading under assumed or business names must disclose that they are bankrupt to every person they deal with.
Do I have to attend meetings of creditors?
The trustee may convene a meeting of the bankrupt’s creditors at any time.
Creditors may request in writing that the trustee convene a meeting. However, if the creditors making the request are less than one-fourth in $ value of the creditors, they must lodge with the trustee sufficient security for the costs of holding the meeting.
The trustee will notify creditors of the time, place and agenda of the meeting. Creditors may participate in a meeting in person or by telephone.
The trustee may require the bankrupt to attend the meeting to answer creditors’ questions and give such information about his or her conduct and affairs as the meeting requires.
How are trustee fees and expenses determined?
The trustee is entitled to fees and expenses for handling the bankruptcy.
ITSA as a trustee charges fees set by the Bankruptcy Act. ITSA’s fees are normally at least $4,500.
More information is available in the pamphlet: ITSA Statutory Fees and Charges
Registered trustees usually charge an hourly rate which is either fixed:
• by creditors, or
• in accordance with the Bankruptcy Regulations.
Fees are usually paid from the sale of assets or a bankrupt’s income contributions. If trustees do not receive enough money to pay their fees, they are allowed to recover from the bankrupt a minimum fee of $1,331 (indexed).
A creditor may also request the Official Receiver to review a registered trustee’s fees and costs if he or she is dissatisfied with their claim. This is referred to as a ‘taxing of costs’. The request must be made within 28 days of you becoming aware of the amount of the claim. The applicant may be required to pay for the taxing and will be charged an hourly rate.
Trustees may also ask creditors to advance money to fund investigations where creditors are likely to benefit directly from a successful investigation (eg to recover assets). If any money is received by the trustee, creditors’ advances are repaid before fees and dividends.
Will I receive a dividend?
A dividend will be paid to unsecured creditors if funds are received in excess of amounts required to pay:
• the government realisations charge
• the trustee’s fees and expenses
• claims of priority creditors (eg employee wages).
If a trustee expects to pay a dividend they will notify the creditors and give them time to lodge a proof of debt. It is important that creditors retain sufficient evidence of their debt.
Can a bankruptcy be annulled?
A bankruptcy can be annulled (cancelled) when:
• the government realisations charge, trustee’s fees and expenses and the creditors have been paid in full or
• An offer of composition or arrangement during bankruptcy is accepted by creditors to satisfy their debts.
In rare cases, bankrupts may also apply to the Court for an annulment if they think that they should not have been made bankrupt or they should not have lodged a Debtor’s Petition.
More information is available in the pamphlet: Annulment: Can my bankruptcy be cancelled?
Realisations charge is a Commonwealth Government levy on all bankruptcies, compositions or arrangements. It is taken out before expenses, fees and dividends.
When is a bankrupt discharged?
A bankrupt is normally automatically discharged 3 years and 1 day after the Statement of Affairs was lodged with and accepted by ITSA.
If a person has been made bankrupt by the Court the Statement of Affairs was probably lodged some time after the date of bankruptcy.
The period of bankruptcy may be extended to 5 or 8 years if the trustee lodges an objection to discharge with ITSA. An objection is usually lodged because the bankrupt has not co-operated with the trustee or there has been some misconduct on their part.
More information is available in the pamphlet: Discharge: How and why does my bankruptcy end?
A composition is an offer made by a bankrupt through a trustee to creditors to finalise his or her debts
Where can I find information about specific bankruptcies?
Information about personal insolvencies in Australia is available from the public record which consists of the National Personal Insolvency Index (NPII) database.
Certain documents lodged with ITSA may also be inspected by debtors, creditors and the public.
Any member of the public can:
• Pay information brokers of ITSA to search the NPII, or
• Search the document files if they pay a fee to ITSA.
Creditors wishing to find out details of a specific bankruptcy should speak to the relevant trustee.
More information is available in the pamphlet: Searching the Public Record
Where to contact us
Telephone 1300 364 785
ITSA website wwwitsa.gov.au
ITSA Offices
ACT
Level 2, NFF House, 14-16 Brisbane Avenue BARTON ACT 2600
Tel: 1300 364 785
Fax: (02) 6270 3608
email: itsa.canberra@itsa.gov.au
New South Wales
GPO Box 548 SYDNEY NSW 2001 Level 8, 135 King Street SYDNEY NSW 2000
Tel: 1300 364 785
Fax: (02) 8233 7891
email: itsa.sydney@itsa.gov.au
Queensland
Brisbane
PO Box 10443 Adelaide Street BRISBANE QLD 4001
Level 16, 340 Adelaide Street BRISBANE OLD 4000
Tel: 1300 364 785
Fax: (07) 3360 5466
email: itsa.brisbane@itsa.gov.au
Townsville
PO Box 1527 TOWNSVILLE QLD 4810 Level 1,
National Australia Bank Building 315 Ross River Road AITKENVALE OLD 4814
Tel: 1300 364 785
Fax: (07) 4727 0500
email: itsa.townsviIIe-0itsa.gov.au
South Australia/Northern Territory
GPO Box 2604 ADELAIDE SA 5001
Level 18, Grenfell Centre 25 Grenfell Street ADELAIDE SA 5000
Tel: 1300 364 785
Fax: (08) 8112 4305
email: itsa.adelaide@itsa.gov.au
Tasmania
GPO Box 850 HOBART TAS 7001
Level 4, ANZ Centre 22-26 Elizabeth Street HOBART TAS 7000
Tel: 1300 364 785
Fax: (03) 6221 7700
email: itsa.hobart@itsa.gov.au
Victoria
Level 10, Melbourne Central 360 Elizabeth Street MELBOURNE VIC 3000
Tel: 1300 364 785
Fax: (03) 9272 4900
email: itsa.melbourne@itsa.gov.au
Western Australia
GPO Box H536 PERTH WA 6841
Level 12, Durack Centre 263 Adelaide Terrace PERTH WA 6000
Tel: 1300 364 785
Fax: (08) 9268 1298
email: itsa.perth@itsa.gov.au
More information pamphlets are available.
See the website or contact ITSA for a complete list.
Income Contributions: Will I have to make payments from my income?
03/07/10 12:04
Income Contributions: Will I have to make payments from my income?
The provider of this information is Insolvency & Trustee Services Ausralia.
Need further information? Visit our legal forum where you can ask questions and search for similar topics.
INCOME CONTRIBUTIONS
WILL I HAVE TO MAKE PAYMENTS FROM MY INCOME?
Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia.
January 2004 Edition
Contributions are regular and compulsory payments from a bankrupt's income to their trustee to repay creditors.
Will I have to pay contributions?
All bankrupts are assessed by their trustees for contribution liability at the start of their bankruptcy, and at each 12 month interval (Contribution Assessment Period (CAPJ) during bankruptcy.
Your CAP will generally be the 12 month period beginning on the date of, or anniversary of, your bankruptcy. Ask your trustee if you do not know.
If your income exceeds a certain threshold (or level) you must pay contributions.
Low income earners are not required to make income contributions. However, even if you do not have to pay contributions you may make voluntary payments to your trustee for the benefit of your creditors.
Your trustee will calculate your contribution liability using the formula on pages 4-5. The table below is an approximate guide to how much you may have to pay based on certain levels of before tax income and number of dependants.
Number of dependants
0
1
2
3
Gross
(before tax)
annual income
Payments per fortnight
(as at 20 September 2003)
$40,000
$0
$0
$0
$0
$45,000
$5
$0
$0
$0
$50,000
$71
$0
$0
$0
$55,000
$130
$11
$0
$0
$60,000
$184
$65
$6
$0
$65,000
$236
$117
$58
$25
$70,000
$286
$167
$107
$74
$80,000
$385
$266
$206
$173
What is included as income?
Income for bankruptcy purposes is different to your taxable income.
Income includes:
• any wages and salary (including second jobs)
• tax refunds for financial years during bankruptcy
• value of fringe benefits from your employer or others (eg use of a car, subsidised housing/rent, free board)
• salary sacrifice arrangements
• business drawings and profits
• benefits and pensions
• income you earn which is paid to another person or entity.
You must disclose all income to your trustee, who will determine whether any fringe benefits in your job or salary sacrifice are included in your assessment and, if so, to what extent.
There are penalties for not disclosing all the income and benefits you receive.
A dependant is a person who resides with you and
• is wholly or partly dependant on you for economic support, and
• whose income during the assessment period is not more than the amount prescribed by the Bankruptcy Regulations (currently $2,500 and indexed).
How are contributions calculated?
Your trustee will calculate your contribution liability by:
1. Calculating your assessed income
Your trustee will:
• determine your total income from all sources
• then deduct your income tax (which includes your Medicare levy) and assessed child support or maintenance payments.
2. Working out your Actual Income Threshold Amount (AITA)
The AITA is based on an indexed figure called the Base Income Threshold Amount (BITA), adjusted to take into account your dependants.
Dependents
AITA
Net annual income after tax
(as of 20 September 2003)
0
$34,398.00
1
$40,589.64
2
$43,685.46
3
$45,405.36
4
$46,093.32
More than 4
$46, 781.28
Indexed figures regularly change in line with the Consumer Price Index or the base pension rate, All indexed amounts it this pamphlet are correct as at September 2003. To find out the current BITA see the ITSA website vvwkb,.itsa.gov.au or contact ITSA (see rear cover).
3. Calculating your contribution liability
Using your Assessed Income and AITA your trustee will calculate your contribution liability according to the following formula from the Bankruptcy Act
Assessed Income –AITA
2
Notice of Assessment
Your trustee will send you an Assessment of your contribution liability, explaining:
• how it was calculated
• when your payments are to start
• their frequency (eg a lump sum payment or fortnightly payments).
Example
Bob, a bankrupt, advises his trustee that he expects his gross income for the first 12 months of his bankruptcy to be $65,000, and that during this period he will have one person dependant on him.
Step 1: the trustee calculates Bob's Assessed Income.
gross expected income $65,000.00
deduct income tax 17,357.00
deduct Medicare levy 975.00
Assessed Income $46,668.00
Step 2: the trustee works out Bob's AITA.
AITA (with 1 dependant) $40,589.64
Step 3: the trustee uses Bob's Assessed Income and AITA to calculate his annual contribution liability.
$46,668 - $40,589.64 = $6,078.36 /2 = $3,039.18
The trustee issues Bob with a Notice of Assessment, and asks him to pay the sum of $3,039.18 at the rate of $117.00 per fortnight.
Payment arrangements
Your trustee may be willing to alter payment arrangements, particularly if you are paid on a monthly basis or your income is 'seasonal'.
Arrangements may be made to automatically deduct contributions from your salary or bank account.
Penalties for non-payment
If you are asked to pay and you do not, your trustee will take recovery action to collect contributions owing, even if you have been discharged from bankruptcy.
Your trustee may:
• garnishee (automatically deduct without your consent) from your income or bank account or from a third person who holds money on your behalf
• extend your bankruptcy to a maximum of 8 years and you may have to pay contributions for this extended period.
What if my circumstances change?
You must advise your trustee immediately if your income or number of dependants changes, or you become aware that they will change, even if you have not been assessed to pay contributions. If you do not advise your trustee your assessment will be incorrect and you may have not paid enough or paid too much.
At the end of each 12 month period your trustee will re-assess your contribution liability based on your actual income and dependants for the period.
If your trustee finds out that you have not paid enough leg because your income was greater than you estimated) then you will have to make up the shortfall in contributions. If however you have paid too much the extra payments cannot be refunded. They will be taken into account in the next assessment.
Hardship variations
If you are assessed to pay contributions but you consider that you will suffer hardship in paying, you may apply to your trustee to reduce your contributions.
Hardship grounds are limited to circumstances of an exceptional nature which would impose an excessive financial burden on you. Those grounds may include:
• your or your dependant's illness or disability that requires ongoing medical attention
• cost of child day care to enable your continued employment
• private rental expenses that take up a substantial part of your income
• substantial travelling expenses to and from work
• loss of contribution, usually made by your spouse or someone residing with you, to your costs of maintaining your household.
Your trustee will be able to explain hardship grounds to you.
• explain why you will suffer hardship
• provide satisfactory evidence of your income and expenses, including any supporting documents.
Your trustee must:
• decide your application within 30 days after receipt of your application (if the trustee does not make a decision within 30 days, the trustee is taken to have refused the application)
• refuse the application if she or he is not satisfied that you will suffer hardship if required to pay the assessment
• give written notice to you of the decision on the application, refer to evidence or other material on which it was based and give reasons for the decision.
Review
If you disagree with your trustee's assessment or decision to refuse a hardship variation, you are entitled to request a review from Bankruptcy Regulation.
More information is available in the pamphlet: Can I Appeal?: Review and appeal of trustee and administrator decisions
Where to contact us
Telephone 1300 364 785
ITSA website wwwitsa.gov.au
ITSA Offices
ACT
Level 2, NFF House, 14-16 Brisbane Avenue BARTON ACT 2600
Tel: 1300 364 785
Fax: (02) 6270 3608
email: itsa.canberra@itsa.gov.au
New South Wales
GPO Box 548 SYDNEY NSW 2001 Level 8, 135 King Street SYDNEY NSW 2000
Tel: 1300 364 785
Fax: (02) 8233 7891
email: itsa.sydney@itsa.gov.au
Queensland
Brisbane
PO Box 10443 Adelaide Street BRISBANE QLD 4001
Level 16, 340 Adelaide Street BRISBANE OLD 4000
Tel: 1300 364 785
Fax: (07) 3360 5466
email: itsa.brisbane@itsa.gov.au
Townsville
PO Box 1527 TOWNSVILLE QLD 4810 Level 1,
National Australia Bank Building 315 Ross River Road AITKENVALE OLD 4814
Tel: 1300 364 785
Fax: (07) 4727 0500
email: itsa.townsviIIe-0itsa.gov.au
South Australia/Northern Territory
GPO Box 2604 ADELAIDE SA 5001
Level 18, Grenfell Centre 25 Grenfell Street ADELAIDE SA 5000
Tel: 1300 364 785
Fax: (08) 8112 4305
email: itsa.adelaide@itsa.gov.au
Tasmania
GPO Box 850 HOBART TAS 7001
Level 4, ANZ Centre 22-26 Elizabeth Street HOBART TAS 7000
Tel: 1300 364 785
Fax: (03) 6221 7700
email: itsa.hobart@itsa.gov.au
Victoria
Level 10, Melbourne Central 360 Elizabeth Street MELBOURNE VIC 3000
Tel: 1300 364 785
Fax: (03) 9272 4900
email: itsa.melbourne@itsa.gov.au
Western Australia
GPO Box H536 PERTH WA 6841
Level 12, Durack Centre 263 Adelaide Terrace PERTH WA 6000
Tel: 1300 364 785
Fax: (08) 9268 1298
email: itsa.perth@itsa.gov.au
More information pamphlets are available.
See the website or contact ITSA for a complete list.
