SMSF changes and reminders for 2023

People who are thinking of starting a self managed superannuation fund (an SMSF) in 2023 need to be aware of the recent changes made by the ATO on fund registration and the application of the Director ID regime to those funds with corporate trustees. Due to an increase in fraud and in order to protect the retirement savings of Australians, the ATO has now removed the ability to add SMSF bank details to the online and paper applications for an SMSF registration. Any SMSFs with corporate trustees will also need to ensure that the directors of the corporate trustee obtain Director IDs before any appointment.

Previously, after the SMSF was established and trustees had been appointed, the trustees had 60 days to register the SMSF with the ATO by applying for an ABN through the Australian Business Register. That application process included a section where bank account details of the SMSF could be added, along with other information such as the TFN for the fund.

However, due to the recent explosion in fraudulent schemes targeting SMSFs, this feature has now been removed in a bid to protect the retirement savings of Australians. New SMSFs will now need to provide the ATO with their bank account details after the SMSF registration process. This can be done through the online portal for businesses, via phone, or through a registered tax agent.

New SMSFs with members who are likely to request a rollover should be extra careful, as both the SMSF bank account details and the electronic service address must be provided to the ATO before any rollover is requested. Otherwise, it will not be possible for the rollover to be processed, or delays will be experienced.

If you’re contemplating starting an SMSF with a corporate trustee, you’ll need to ensure that the directors of that corporate trustee apply for Director IDs before the appointment is made through Australian Business Registry Services (ABRS). The Director ID is a unique 15-digit identifier that will follow each individual through their business life and was introduced as a part of a suite of measures to combat phoenixing and other illegal activities. The process is free, simple, online and only requires individuals to confirm their identity. Every individual must apply for their own Director ID, and no one else can apply on their behalf.

The Director ID regime also applies to existing directors of corporate trustees of SMSFs. For individuals who first became a director on or before 31 October 2021, the deadline to apply was 30 November 2022. Individuals who first became a director of a corporate trustee between 1 November 2021 and 4 April 2022 were required to apply for a Director ID within 28 days of their appointment. However, the ATO has noted that those who missed the deadline can still apply for a Director ID because it is “taking a reasonable approach to those directors who try to do the right thing”.

Individuals who have been unable to apply by the various deadlines can apply for an extension of time to apply. It was estimated by the ATO at the end of 2022 that around one million directors had not applied when required to do so. It is important to note that it is a criminal offence if Director IDs are not applied for on time, and maximum penalties of $16,500 (criminal) and $1,375,000 (civil) may apply.

If you would like to know more please contact one of our accountants on 07 4639 1099 or come in and see us at 4 Bowen Street Toowoomba.