A technical manager has warned non-compliance with the requirement for directors of a corporate SMSF trustee to obtain an identification number can attract severe penalties.
“If you do not apply for [a director ID number] within the required time frame, or you do not hold one when you are required to, or you have more than one director identification number, that could result in an infringement notice issued and/or civil penalties being brought against you or criminal prosecution,” SuperConcepts SMSF technical support executive manager Nicholas Ali told attendees of a recent technical webinar.
Specifically, four areas of non-compliance have been identified and assigned accompanying penalties. For failing to have a director ID, the criminal penalty is a $13,200 fine and the civil penalty is a fine of $1.1 million.
Failing to apply for a director ID when directed by the registrar attracts a criminal fine of $13,200 and a civil fine of $1.1 million.
Applying for multiple director IDs and misrepresenting a director ID both attract more serious punitive measures, with the relevant criminal penalty being a $26,640 fine or one-year imprisonment or both, and the civil penalty being a $1.1 million fine for both offences.
“[So these are] really, really severe penalties,” Ali said.
However, he predicted they will be applied in a measured way and will not be aimed at directors who make genuine errors while trying to adhere to the new regime.
“This is a whole new thing and people are going to get confused. They’re not necessarily going to know what the norms are [and] they’re not necessarily going to get it done within the time frames [provided],” he noted.
“So I think these penalties will be for reckless and wanton behaviour, not innocent mistakes.
“So [trustees shouldn’t] read this and think ‘oh my word, we’re going to be up for a $1.1 million fine’. That would be [for] somebody who really is rorting the system.”