Potential director ID breaches flagged with EPOAs

Funds that were established after 5 April this year are required to obtain a director ID before they are appointed as a director of the company.

“The only exception to that is where they were already a director of another company as of 31 October last year, then they don’t need to get the director ID till 30 November this year,” Mr Burgess explained.

An important point to be aware of with director IDs, said Mr Burgess, is that where alternate directors and enduring powers of attorney (EPOA) take on the role of director of the corporate trustee; if they don’t have a director ID at that time, they will be in breach of those rules.

“You can apply for a director ID even if you’re not a company director. The way the rules work is that if you don’t take on the role of director within 12 months, then your director ID essentially lapses, but it can be reactivated fairly easily,” he said.

“So if you’re appointing someone as an enduring power of attorney, then they should apply for a director ID straight away if they don’t already have one because if they take over that role and they don’t have one, they will be in breach of the rules.”

Mr Burgess also stressed that it is important to get all the documentation in the right date order, given that the clients will need to apply for their director ID before they become appointed as director.

“If there is a corporate trustee, then the clients need to apply for their director ID first, then we need to set up the company, then we establish the fund. You need to make sure that your establishment documents are in that order. It’s very easy for regulators to check those dates because the dates appear on all the documents, so get them in the right order,” he warned.

“Our understanding of the way the rules work is that you cannot apply for a director ID on the same date you become appointed as a director. You need to apply [at least] the day before. So make sure you get all your dates lined up when establishing SMSFs.”