With 30 November 2022 approaching, SMSFs are being reminded to obtain their director identification number by this date. The director ID laws which were passed back in June 2022 require all directors of companies in Australia to obtain an ID number, including SMSF members who are directors of a corporate trustee.
Speaking to SMSF Adviser, SMSF Alliance principal David Busoli warned many SMSFs with corporate trustees are unaware of the fact that the director ID requirements also apply to directors that were a company director on or before 31 October 2021, but have since resigned.
The SMSF Association recently confirmed with the ATO that this obligation to obtain a director ID also applies to any client who was a director on or before 04 April 2021, even if they have since resigned from all directorship roles and have no intention to ever be appointed in the role of director of any Australian or foreign company.
“The timeframe for obtaining a director ID number is rapidly drawing to a close and the problem is that they’re also required for people who are no longer directors and ceased being a director after a certain date or those who have died. This causes its own problems,” said Mr Busoli.
Mr Busoli said the inclusion of deceased directors under the requirements was likely an unintentional outcome.
“I’m sure this is unintended and that when these dead directors fail to register there will be a reasonable approach taken by the regulators,” said Mr Busoli.
“Eventually, there will be notices sent to people who haven’t registered. I’m not sure at what stage the penalties will kick in, but the penalties are not insignificant and there will be no doubt a number of notifications that the parties have passed on.”
Failure to have a director ID when required to do so or failure to apply when directed by the Registrar can carry a maximum criminal penalty of $13,200 or up to $1,100,000 under civil law.
SMSF Association deputy chief executive Peter Burgess warned SMSFs back in May that where alternate directors and enduring powers of attorney (EPOA) take on the role of director of the corporate trustee and they don’t have a director ID at that time, they will be in breach of the 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.”
This is certainly another case of the public servants trying to understand the rules themselves. I also phoned ABRS about the fact that I was a director in 2021 but intended resigning at the end of this month and closing my company. Did I have to get a DIN? After an hour’s wait on the phone, it sounded like I reached an overseas call centre. The person assured me that I would not have to get a DIN because I would no longer be a director by the end of November. He said the rules said only “current” directors need a DIN. I explained that articles seemed to suggest if you were one when the rule came into force, you had to get a DIN even if no longer a director now. After persistently saying I didn’t need one, something I mentioned made him decide to ask someone else “would I mind holding?”. After another 20 mins I gave up as I had to be somewhere. It certainly is yet another example of ministers not thinking of consequences.
What about registered companies? I.e. ceased before November, but existed 31/10/2021?
Just another government balls-up unfolding before our eyes. Time wasting. I guess this is what we have to keep government employees in jobs. Inane obligations designed by illogical idiots!
We called ABRS and were told anyone that was a director from November 2021 will need a DIN even if retired before 30 Nov 2022. They noted deceased may receive letters requesting the DIN in which case the executor would need to call and advise they are deceased.
Please provide more specifics as to the legislative requirement, as a Tax Agent I’ve just spent 1.5 hrs on the phone to the ABRS. Their telephone advice is that directors only need to apply if they are a new director post 31 October 2021 or they are a continuing director on 31 October 2022. There (telephone) advice was that a director who had resigned by 31 October 2022 and was not a director of another company was not required to apply for a Director ID unless they became a director again?? The ABRS website certainly is vague about this.
Sure ATO please send notifications for my dead director clients to Heaven, C/O God.
Only Govt can be this stupid.
I find it odd that this article doesn’t say why resigned or deceased directors need a DIN other than the ATO so for resigned directors. No mention why deceased directors would be included. Perhaps an update could be provided with a more technical explanation.
What about a director that has since been resigned due to dementia – surely they cant expect a Director ID to be applied for in that circumstance where they were removed for that reason but post 31 October.
There was a paper form for directors within Australia but it has been removed.
We are still using the paper form for clients, especially the older ones (one one email and phone number between them).
I’ve had clients submit paper forms. I’ve spent over 3 hours on the phone with one client who was UNABLE to get registered. The system is clearly flawed. The more we try to provide online ID the more at risk of identity theft we are. The ATO might have to start sending tokens so any log in is done with an even more robust log-in process. What I don’t understand is why this is necessary? Surely at the time ASIC receive an application for a new company they should have a “naughty list” on their data base – name, dob, address which automatically flags and the application requires manual intervention.
Currently the ID is done through ABRS (not ASIC) and when you actually apply all you do is “declare” you have a DirectorID. You don’t even have to submit the Director ID to ASIC. Why is this then required, if ASIC don’t require it?
What an omnishambles this rollout has been…
I’d like to see a viable alternative to the online/mobile phone registration as I have a number of older Directors who aren’t familiar with technology! The only company they are directors of is the Corporate Trustee and I think there certainly needs to be another way for them……the paper registration really is for overseas directors unless I’ve been misinformed.
The ABRS told me in a pfone call that deceased directors would not require a Director ID and that “any director on 30/11/22 will require an ID. If the deceased does not appear as a director on that date, there should be no issue”. Is the ABRS correct or is this just an attempt to create anxiety?