Bankruptcy Thresholds and Limits



Bankruptcy Thresholds and Limits

The Bankruptcy Act provides for a number of limits and thresholds in relation to entitlements of bankrupts during the bankruptcy period. This includes value of assets that they are allowed to keep, income thresholds for calculating contributions during bankruptcy etc. These limits are updated by ITSA quarterly in line with CPI.

For a full list of thresholds and limits updated quarterly by ITSA please refer to their website here

Income Contributions towards debts during bankruptcy.

The Bankruptcy Act imposes certain income thresholds on a bankrupt in the event that they happen to earn more than the set income threshold they are required to pay 50% of any income in excess of the set threshold to the Bankruptcy Trustee for distribution to creditors towards outstanding debts. The bankruptcy income thresholds are updated quarterly based on a similar calculation to pension adjustment.

The income contribution is calculated on after-tax income. Any non-taxable income received by a bankrupt like child support and family tax benefit (FTB) is not included in the calculation. The bankruptcy income thresholds are a sliding scale based on the number of dependants of the bankrupt. Income contributions are collected by the bankruptcy trustee, who is appointed by ITSA, to ensure that creditors receive all the money they are entitled to under the Bankruptcy Act.

A forward projection of income is requested from the bankrupt and an estimate of bankruptcy income contributions is made by the bankruptcy trustee.

Generally speaking the bankrupt is required to pay these funds into a trust account. If the bankrupt fails to make the set payments their bankruptcy can be extended by up to 5 years. At the end of the year the bankruptcy income contributions are assessed against actual income and a refund or bill may be issued, similar to a tax refund.

Current Bankruptcy Income Thresholds (after tax)


No Dependants  $917.18/week
1 Dependants  $1,082.27/week
2 Dependants $1,164.82/week
3 Dependants $1,210.68/week
4 Dependants $1,229.02/week
5 or more Dependants $1,247.36/week