By Phillip La Greca
Executive Manager, SMSF Technical and Strategic Services
New Director Identification Number (Director ID) changes are now in place and the ATO has identified about 690,000 existing SMSF trustees who need to take action. It takes minutes to apply online for the 15-digit unique identifier and is a once off submission – you'll keep this number for life.
In June last year, the government passed legislation containing an initiative which requires all directors, including directors of a corporate trustee for an SMSF, to obtain a Director ID. According to the ATO’s SMSF Annual Statistics from June 2020, nearly 63% of SMSFs have a corporate trustee. This means that the directors of approximately 320,000 SMSFs will have to apply, including individuals appointed as an alternate director or acting under an Enduring power of attorney in that capacity.
in 2020, Treasury released a consultation paper regarding the Modernising Business Registers (MBR) Program which recommended that the Australian Business Register (ABR) and 31 business registers, administered by the Australian Securities and Investments Commission (ASIC), be rolled into a single platform.The objective of this new measure is to promote good corporate conduct and assist regulators to detect and address unlawful conduct by requiring each appointed director of a registered body corporate to be properly identified and have a unique identification number that follows them throughout their life.
The MBR Program consequently sees the introduction of a Director Identification Number – a single, unique identifier for each individual director of a business or, a corporate trustee to be used for all entities of which they are directors.
The new regime will apply to anyone who is a director of a company, corporate trustee (including SMSFs), a foreign company registered with ASIC and carrying out business in Australia, other registered bodies and/or is intending to apply to be a director of a company.
Director IDs are changing the SMSF landscape. This new process will shape internal procedures for practitioners and create additional considerations for clients and trustee structures.
There are transitional rules and dates that apply based on when you are appointed as a director to a new entity during the next six months. After that Director ID obligations will become mandatory.
Penalties of up to $1.1 million and 12 months imprisonment may be issued for non-compliance.
Applications can be now made at abrs.gov.au using your myGovID. Directors must apply for their director ID themselves and will need to use the myGovID app with standard or strong identity strength to log in to ABRS online.
Applicants must prove their identity by answering two questions based on documents listed on the site. Providing an individual tax file number is optional but speeds up the process. Applications can also be made by phone or on paper.
Unfortunately, as the director must personally register for their ID, their accountants, tax agents, financial advisers and SMSF administrators are unable to assist with applications.
Finally it is important to note that if a person is a director of multiple companies such as their corporate SMSF trustee, corporate family trust trustee or business, they only need to apply for a single director ID which is applicable for all the entities.
To learn more about Director ID changes tune into the latest episode of SMSF Adventures with SuperConcepts here.