The Supervised Account Regime
Bankrupt must
st open and maintain supervised account: s139ZIE
1.
A Supervised Account Notice (SAN) must be in the approved form and
require the bankrupt to open an account that contains the following features:
•
•
•
•
•
•
•
The account is kept with an ADI (Authorised Deposit-Taking
Taking Institution)
(An
An ADI generally means a body corporate authorised by the Australian
A
Prudential Regulation
egulation Authority to carry on banking business in Australia)
Australia
The
he account is kept in Australia
The account is denominated
den
in Australian currency
The account is held solely
sole in the name of the bankrupt
Deposits may be made to, and withdrawals
withdrawals may be made from, the account
The account is designed
esigned not to have a debit balance
Such other requirements as are specified
specifi in the notice.
2.
The SAN must require the bankrupt to open the account within 10 working
days after the notice is given,
given although the
he trustee may specify a longer period.
The SAN must require the bankrupt to inform the ADI, when opening the
3.
account, that the account is a supervised account and must require the bankrupt,
after the account is opened, to maintain the account for so long as the SAN is in
force.
4.
The bankrupt is required to comply with a SAN. Further, where
here the
supervised account regime applies, the bankrupt must notify the trustee in writing of
details of the account (i.e. the name of the ADI concerned; the name in which the
account is held; the account
unt number and BSB number)– that notice must be given
within 2 working days after opening the account.
account Failure
ailure to comply with either of
these requirements is an offence punishable by imprisonment
onment for 6 months.
months
5.
A SAN ceases to be in force if the bankrupt ceases to be a bankrupt to whom
the supervised account regime applies.
New supervised account:
account s139ZIEA
6.
The trustee is able to revoke a SAN, issue a fresh SAN and require the
bankrupt to transfer the balance of an existing supervised account to the
th account
opened in accordance with the fresh notice. The earlier notice will remain in force
until the bankrupt complies with the fresh notice by opening a new supervised
account. This power is to allow the trustee to change the account if the trustee
considers
onsiders that account is no longer suitable for the purposes of this regime – for
example, the ADI at which the account is held may change the terms, conditions or
fees relating to the account which impact adversely on the amount available to satisfy
the bankrupt’s
ankrupt’s contributions liability.
7.
A decision to issue a revocation notice and issue a fresh notice may be made
by the trustee on his or her own initiative or on application by the bankrupt. If the
Attachment to s139ZIC Determination
bankrupt applies to the trustee to exercise this power and
and the trustee refuses, the
trustee must give written notice of that refusal to the bankrupt.
8.
Failure to comply with the requirements of a notice issued under this section
is an offence punishable by imprisonment for 6 months.
months
Bankrupt’s monetary income to be deposited to supervised account:
account s139ZIF
9.
A bankrupt to whom the supervised account regime applies is required to
ensure that all monetary income actually received by the bankrupt
bankrupt after the account
is opened is deposited into the account. Income received
received in the form of cash or
cheque must be deposited to the account within 5 working days of its receipt. In any
other case, the income must be deposited upon its receipt. Income received as cash
which is used to make a refund is not required to be deposited
deposited to the account.
A person who fails to comply with these requirements is guilty of an offence
10.
punishable by imprisonment for 12 months.
Trustee to supervise withdrawals from supervised account:
account: s139ZIG
11.
There is a general prohibition on withdrawals (or the authorisation of
withdrawals) from the account by the bankrupt. However, there are exceptions to
this general prohibition.
The first of these exceptions relates to withdrawals made with the consent of
12.
the trustee. The trustee must give written notice
otice of this consent to the bankrupt.
That consent can be given to any of the following withdrawals:
•
•
•
a specified
cified withdrawal
withdrawals included in a specified class of withdrawals
withdrawals up to a daily, weekly, fortnightly or monthly limit ascertained
in accordance with the notice.
13.
This
is would allow, for example, the trustee to come to an arrangement with
the bankrupt allowing for regular withdrawals from the account to meet the bankrupt’s
living expenses while ensuring that the balance of the account remains sufficient to
meet the bankrupt’s liability
iability to pay contributions. In addition to consenting
consent
to
withdrawals to meet living expenses, the trustee may also consent to additional
withdrawals
als to meet unexpected liabilities or where a balance has accumulated in the
account which exceeds the amount required to meet the bankrupt’s contributions
liability.
14.
The trustee is able to vary or revoke a consent as the circumstances require.
The power to issue a consent notice or to vary or revoke that consent may be
exercised by the trustee on his or her own initiative or upon application of the
bankrupt. If the bankrupt applies to the trustee to exercise this power and the trustee
refuses, the trustee
ee must give written notice of that refusal to the bankrupt.
In addition to withdrawals made with the consent of the trustee, there is also a
15.
range of other exceptions to the general prohibition on withdrawals by the bankrupt.
Attachment to s139ZIC Determination
These include withdrawals to pay a contribution or instalment; to meet the bankrupt’s
tax obligations; and to make payments of fees and charges imposed by the ADI in
connection with the operation of the account.
16.
A bankrupt who makes unauthorised
unauthori
withdrawals from the supervised
account is guilty of an offence punishable by imprisonment for 12 months
17.
This provision will not affect the operation of statutory garnishee powers (such
as those available to trustees under section 139ZL of the Bankruptcy Act and to the
Commissioner of Taxation under the Taxation Administration Act 1953).
1953
Constructive income receipt arrangements:
arrangements s139ZIH
18.
A bankrupt to whom the supervised account regime applies is prohibited from
entering
ing into, or continuing to participate in, constructive receipt arrangements. A
constructive
nstructive receipt arrangement for these purposes is an arrangement the effect of
which is that income derived by a bankrupt is not actually received by the bankrupt
because it is:
(a)
(b)
reinvested, accumulated or capitalized; or
dealt with on behalf of the bankrupt or as the bankrupt directs.
19.
If the bankrupt was participating in such an arrangement immediately before
becoming subject to the supervised account regime, the bankrupt is required to
cease participating
ting in that arrangement as soon as practicable after becoming
subject to the regime. However, the
t bankrupt is able to enter into such
arrangements, or continue to participate in such arrangements, with the consent of
the trustee. The trustee must give written
ritten notice of any such consent to the bankrupt
and may, by further written notice, vary or revoke that consent.
The power to issue a consent notice or to vary or revoke that consent may be
20.
exercised by the trustee on his or her own initiative or upon application
application of the
bankrupt. If the bankrupt applies to the trustee to exercise this power and the trustee
refuses, the trustee must give written notice of that refusal to the bankrupt.
21.
A bankrupt who fails to comply with the requirements of this provision will be
guilty of an offence punishable by imprisonment for12 months.
Non-monetary
monetary income receipt arrangements:
arrangements s139ZIHA
22.
A bankrupt subject to the supervised account regime is prohibited from
entering
ing into, or continuing to participate in, non-monetary
monetary income receipt
arrangements. A non-mone
monetary income receipt arrangement for these purposes is
an arrangement the effect of which is that income derived by a bankrupt is not
received by the bankrupt in monetary form.
23.
If the bankrupt was participating
participating in such an arrangement immediately before
becoming subject to the supervised account regime, the bankrupt is required to
cease participating in that arrangement as soon as practicable after becoming
subject to the regime. However, the
t bankrupt is able to enter into such
Attachment to s139ZIC Determination
arrangements, or continue to participate in such arrangements, with the consent of
the trustee. The trustee is required to give written notice of any such consent to the
bankrupt and may, by further written notice, vary or revoke
revoke that consent.
24.
The power to issue a consent notice or to vary or revoke that consent may be
exercised by the trustee on his or her own initiative or upon application of the
bankrupt. If the bankrupt applies to the trustee to exercise this power and the
th trustee
refuses, the trustee must give written notice of that refusal to the bankrupt.
A bankrupt who fails to comply with the requirements of this provision will be
25.
guilty of an offence punishable by imprisonment for 12 months.
months
Cash income: s130ZII
26.
A bankrupt subject to the supervised account regime is prohibited from
receiving income in the form of cash.
he bankrupt is able to receive income in the form of cash with the
27.
However, the
consent of the trustee. The trustee is required to give written notice of any such
consent to the bankrupt and may, by further written notice, vary or revoke that
consent.
The power to issue a consent notice or to vary or revoke that consent may be
28.
exercised by the trustee on his or her own initiative
initiative or upon application of the
bankrupt. If the bankrupt applies to the trustee to exercise this power and the trustee
refuses, the trustee must give written notice of that refusal to the bankrupt.
29.
A bankrupt who fails to comply with the requirements
requirements of this provision will be
guilty of an offence punishable by imprisonment for 12 months.
months
Keeping of books:: s139ZIIA
30.
Section
ection 139ZIIA modifies the offence contained in section 277A of the
Bankruptcy Act (keeping of books in respect of period of bankruptcy) in relation to a
discharged bankrupt who is subject to the supervised account regime. Under section
277A, a bankrupt is required to keep books until discharged from bankruptcy. The
supervised account regime may continue to apply after discharge
discharge (until the bankrupt
no longer has a liability to pay contributions). Therefore, where a bankrupt is subject
to the supervised account regime, the obligation imposed by section 277A will
continue until that regime ceases to apply to the bankrupt.
Injunctions: s139ZIJ-s139ZIN
s139ZIN
31.
The trustee is able to apply for a range of injunctions to ensure that a
bankrupt who is subject to the supervised account regime complies with his or her
obligations under that regime. The trustee is able to apply for an injunction to
restrain the bankrupt from conduct in contravention of these provisions (a restraining
re
injunction) or to compel the bankrupt to do something required
require under the provisions
(a performance injunction). The trustee is also able to apply for an interim injunction
inj
for these purposes.
Attachment to s139ZIC Determination
32.
The Court may discharge or vary an injunction. The powers of the Court
under these provisions are in addition to, and not instead of, any other powers of the
Court, whether conferred by the Bankruptcy Act or otherwise.
Review of trustees’ decisions:
decisions ss139ZIO-139ZIT
33.
‘Reviewable decision’ is defined in section 139ZIB and includes all decisions
made by trustees under the provisions relating to the supervised account regime,
regime
including:
•
•
•
•
Making a determination that the supervised account
account regime applies to a
bankrupt, or refusing to revoke such a determination (under s139ZIC);
Specifying or refusing to specify a period in a SAN, or specifying
requirements in a SAN (for the purposes of s139ZIE);
Refusing to exercise the powers under s139ZIEA(1) relating to fresh SANs;
Refusing, revoking, varying, or refusing to vary a consent under subsections:
o 139ZIG(3) - withdrawals from the supervised account;
o 139ZIH(5) – constructive income receipt arrangements;
o 139ZIHA(5) – non-monetary income receipt
ceipt arrangements;
o 139ZII(3) – cash income
34.
These decisions are subject to review by the Inspector-General
Inspector General either at the
Inspector-General’s
General’s own initiative; at the request of the bankrupt – for reasons that
appear sufficient to the Inspector-General;
Inspector
or at the request of the Ombudsman.
Ombudsman
35.
A request by the bankrupt to the Inspector-General
Inspector General for a review must be
made not later than 60 days after the trustee’s decision first came to the notice of the
bankrupt, and must be accompanied by any relevant documents given
given by the trustee
and any other documents on which the bankrupt wishes to rely to support the
request. Within 60 days after receiving a request for review from the bankrupt, the
Inspector-General
General must decide whether to review the trustee’s decision and, if so,
make his or her decision on the review.
36.
The Inspector-General
General may seek further information from the bankrupt or the
trustee, either orally or in writing.
37.
The Inspector-General
General may confirm the trustee’s decision; vary it; set it aside;
or set it aside and substitute a new decision.
38.
If the Inspector-General
General reviews a reviewable decision or refuses a bankrupt’s
request for a review, the Inspector-General
Inspector General must advise the bankrupt, trustee and
Official Receiver in writing of the decision on the review
review or the request (as the case
may be) and set out the decision and the reasons for the decision.
39.
The notice of the decision must also advise the bankrupt and/or trustee that if
they are dissatisfied with the decision they may seek a review of the decision by the
Administrative Appeals Tribunal.
Attachment to s139ZIC Determination
40.
If, within 60 days of receiving a request from a bankrupt to review a
reviewable decision of the trustee, the Inspector-General
Inspector
has nott given written notice
of the decision on the request, the Inspector-General
Inspector General is taken to have reviewed the
trustee’s decision and confirmed it.
it
Attachment to s139ZIC Determination