On 1 November 2021, we saw the launch of the Australian Business Registry Services (‘ARBS’), which forms part of the Government’s ‘Modernising Business Registers (MBR) Program’ to unify the Australian Business Register (ABR) and 31 business registers administered by the Australian Securities and Investments Commission (ASIC) onto a single platform. This platform is administered by the Commonwealth Registrar (the Registrar) under the legislation and as a separate statutory function of the Australian Taxation Office (ATO).
Of most relevance to the SMSF industry is the introduction of a Director Identification Number (director ID) which acts as a unique identifier that a director will retain forever. The director ID is designed to help promote good corporate conduct and deter illegal phoenixing of companies.
SMSFs with corporate trustees
The most recent SMSF annual statistics by the ATO showed that 62.8% (at 30 June 2020) of all funds have a corporate trustee. This equates to approx. 690,000 individuals within the SMSF sector will be required to register for a director ID, let alone any other individuals that will also require registration due to a member’s legal disability (e.g. incapacity, or overseas absence).
Application for director ID
It should be noted that a director can only ever have one director ID. Application for a director ID will generally be completed electronically and will be available by the ABRS website. As part of the application process, individuals will be required to authenticate their identity digitally using MyGovID (unless the individual cannot use the electronic form).
The application must be completed by the individual themselves and cannot have an agent or third party apply for a director ID unless the Registrar is satisfied that an exception applies – this includes where the applicant may require assistance to prepare as they are unable to do so themselves (e.g. disability, injury or illiteracy). This is going to be particularly challenging for a number of older SMSF individuals acting as directors of a corporate trustee.
Timing of director IDs
Director ID applications are available from 1 November 2021. The following should be noted in respect to timing of obtaining the director ID:
|Date you become a director||Date you must apply|
|On or before 31 October 2021||By 30 November 2022|
|Between 1 November 2021 and 4 April 2022||Within 28 days of appointment|
|From 5 April 2022||Before appointment|
It should be noted that different dates apply to Aboriginal and Torres Strait Islanders who are directors registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act).
If an individual anticipates that they will become an eligible officer within a 12-month period, they may apply for a director ID.
Example – LPR appointed as director of corporate trustee
Harold is a director of ABC Super Pty Ltd, which acts as trustee for the Jones Super Fund. Due to his failing health, it is expected that his son, James, who has an enduring power of attorney (EPA) will be required to replace Harold as a director within the next 12 months.
With the proposed new director ID laws, if James does not already hold a director ID, he is eligible to apply for a director ID on the basis that he will enter into the role as director (as Harold’s LPR) within the allowable time frame (next 12 months).
Other considerations for director IDs
Examples where individuals, other than existing directors of a SMSF corporate trustee may require a director ID:
- Member is incapacitated (e.g. cognitive decline, disability)
- Member is overseas (e.g. central management & control)
- Member is a minor (parent or guardian)
Where information in respect to the director is required to be updated, the individual will be able to request updates of their details electronically to the Registrar.
For more information about the requirements and process for Director IDs, visit the ABRS website.
View our SMSF Investment Strategy page for more details.