The requirement for all company directors to have an director identification number under the federal government’s Modernising Business Registers Program could present a challenge for the SMSF sector due to the application process involved, an industry technical expert has warned.
Under the program rules, the individual with a directorship, including a director of an SMSF corporate trustee, is the person who has to apply for the identification number because they will have to authenticate their digital identity unless they cannot use the electronic form provided by the ATO.
“This is going to be a really interesting challenge, [especially for] our older SMSF clients if you think about it, [having to go] through this digital identity process with the ATO and the fact that it can’t be done by you as the practitioner,” Smarter SMSF chief executive Aaron Dunn told attendees of his webinar today.
“You cannot have the agent of a third party apply for a director ID unless the register is happy an exception applies within the legislation, such as disability, injury or illiteracy.
“This will be quite interesting for the SMSF sector where we know there are a lot of older Australians that don’t necessarily have the same technical savvy as some of the younger entrants would.”
By Dunn’s calculations based on 30 June 2020 data, the requirement is likely to affect 62.8 per cent of all SMSFs.
“This equates to about 690,000 out of the 1.1 million individuals within the SMSF sector who are going to need to get a director ID,” he said.
Further, he pointed out the need to go through this process will not necessarily be confined to individuals holding or applying for a directorship.
“As time moves on [this requirement will] not only [be for] new trustees coming in and new entrants that come in, who would need that as part of the establishment process, but there will also be people who need to get their own director IDs where they may come in acting as a legal [personal representative],” he noted.