News

Compliance, Regulation

Director ID must occur before appointment

director ID SMSF

Directors of a corporate SMSF must obtain their director identification number prior to being appointed, according to new rules introduced on Monday.

Trustees of SMSFs using a corporate trustee structure need to be clear that a director must apply for a director identification (ID) number prior to their appointment, rather than within 28 days of it, following changes that took effect on Monday.

Speaking during the Self-managed Independent Superannuation Funds Association SMSF Annual Forum today, BT head of public policy and technical services Neil Sparks pointed out the new deadline for director IDs.

“[Before] 4 April 2022, you could set up your company and then have 28 days to apply for a director ID, but now directors would be required to apply for a DIN prior to being appointed as a director,” Sparks said.

“The transition period is kind of now in two parts. All new directors do apply for the DIN before being appointed as company directors and that creates some challenges for SMSFs.”

He additionally warned the time frame for directors who were appointed on or before 31 October 2021 to obtain an ID closed on 30 November 2022, and encouraged those impacted to apply soon.

The new obligation will also affect family-run corporate SMSFs that have minors as members and parents as trustees on their behalf, with Sparks noting minors who turn 18 after 4 April must be appointed as a director.

“The first step that advisers need to consider is for [the child] to go and apply for his director ID so they can then be appointed as a director of the company and trustee of the SMSF,” he said.

He added funds needed to ensure that where an SMSF constitution had successor director nominations built into it that any successor director has also applied for a director ID before that appointment and the SMSF has notified the ATO and Australian Securities and Investments Commission of that change within 28 days.

“Even though this is old news from six months ago, because the deadline has changed this week there is an impact on SMSFs that advisers will need to consider when looking at the structure, or potential restructuring, of an existing SMSF,” he said.

Copyright © SMS Magazine 2022

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital