Do you need a Director ID for a Self Managed Super Fund?
Yes, you need a director identification number (DIN) if you are appointed as a director of a corporate trustee for a self-managed super fund (SMSF). Each individual director requires only one director ID in their lifetime and must apply for it if they are becoming a director for the first time. Individual trustees do not need a DIN.
Why have a corporate trustee?
There may be some short-term savings in establishing an SMSF with individual trustees but in the long-term establishing an SMSF with a sole purpose trustee company has a lot of advantages. An SMSF sole purpose company qualifies for a substantially reduced ASIC annual review fee which is currently only $65. An SMSF can now have up to six members but the Trustee Acts in NSW, Qld, Vic, WA and ACT only allow a maximum of four individual trustees and a fund with more than four members must have a corporate trustee anyhow.
There are several advantages for a SMSF to have a corporate trustee which is why when we complete an SMSF Setup we always use a corporate trustee:
- Administrative Efficiency
The superannuation laws and regulations (SISA) requires trustees to keep fund assets separate from their own. Events such as adding children, death, incapacity, or divorce require changing the title of all fund assets to reflect all individual trustees. A corporate trustee, being an indefinitely continuing entity, does not need title changes for fund assets in these events. Directors can be replaced more efficiently and cost-effectively than notifying all relevant banks, registries and offices changing the title of the fund’s assets and engaging a solicitor to transfer the title of fund property.
- Limited Recourse Borrowing Arrangement (LRBA)
Lending institutions providing a mortgage to an SMSF via a Bare Trust for the purchase of property generally require the SMSF trustee to be a company.
- ATO Administration Penalties
Monetary penalties apply to SMSF trustees who breach SISA. Individual trustees face penalties separately, while corporate trustees have a single penalty applied to the entity, not each director.
What is a director identification number?
It is a unique 15-digit identifier that a director of a company is required to apply for. This is a one- off event. The director retains the DIN for their lifetime even if they cease being a director for a short or extended period of time. This new system is a federal government initiative to improve the integrity of the records they hold and to crackdown on illegal activity and make it easier to track directors moving from one company to the next.
How do you apply for a DIN?
It is not an automatic process when a person becomes a director for the first time. An application must be made through the Australian Business Registry Service (ABRS).
Commonly Asked Questions
- Do I need a director ID as I am my mother’s enduring power of attorney (EPOA) and I will be appointed as a director of her SMSF’s corporate trustee if she loses capacity?
When you are appointed as a director you must have a director ID. Your director ID is valid for life, even if you no longer serve as a director it can be used in future directorships.
- I was a director of the company trustee of my family’s discretionary trust in 2010. The company was deregistered in 2016. Do I need to apply for a director ID as I am being appointed as the sole director of my SMSF corporate trustee?
If you were not a director of any company after 30 November 2022, you must apply for a director ID as a first-time director.
- When do I need to apply for my first-time DIN?
You must apply for a director ID before you are appointed as a director. You can apply up to 12 months in advance of an appointment.
- Can I get my accountant or SMSF administrator or lawyer to apply for my director ID on my behalf?
No. You can get assistance in gathering the documents together and checking on your eligibility, but you must apply for your own director ID using the link below.
- What happens if I lose my Director Identification Number, or I have changed my name or my address?
You can obtain your director ID or update your personal details using myID or if you don’t have myID setup you can contact the ABRS as per the link below.
- Where will the identification number be shown?
The ABRS will eventually show the registered entities you are linked to but will only disclose your DIN to yourself and to certain Commonwealth, state and territory government bodies and courts and tribunals. At the moment a director ID cannot be publicly searched.