Director IDs create time pressure

SMSF directors

The directors of a corporate SMSF may find they have different time frames to apply for a director identification number dependent on when they first registered as a director.

SMSF members who are appointed as directors of a corporate trustee after the end of October will only have four weeks to apply for a director identification number (DIN), unlike those appointed before that date who will have until close to the end of next year to do the same.

Heffron head of SMSF technical and education services Lyn Formica said any directors of a corporate trustee appointed within 12 months after 31 October 2021 will be regarded as a ‘critical first group’ in the rollout of the identification program.

“This requirement will be applicable to all directors in Australia eventually and in SMSF land it applies to corporate trustees and if there is an LRBA (limited recourse borrowing arrangement) and a company is the trustee of the custodian entity,” Formica said during a recent webinar.

“The ATO as the registry of DINs has been in beta testing for the past few months and has issued about 50 DINs and is refining the process as it goes along.

“The ATO is almost past that testing and into the transition period and anyone who is appointed as a director of a company in that period, which we expect to start at the end of October 2021, will have to ensure they have a director ID within 28 days of their appointment.”

She acknowledged SMSF members and trustees who were already directors of companies, including a corporate SMSF, would have an easier approach and would be required to have a DIN for their fund by 30 November 2022. After the transition period, all directors must have a DIN before their appointment to that role.

The task of obtaining a DIN may be confusing for some SMSF trustees and cannot be carried out by SMSF practitioners, she added.

“The understanding is the ATO will start the communication process via the tax agent network, but tax agents will not be able to apply for DINs on behalf of their clients, nor can financial advisers, but you can start to walk them through the identification requirements they will need,” she said.

“This will be a myGov ID or other proof of ownership type of records proving their identity and will not be an easy process for elderly clients or those who don’t wish to have myGov IDs.”

DINS were introduced in mid-2020 as part of changes by the federal government to modernise its business registers program.

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital