Update: July 2020 - Technical Update Supporting SMSF Electronic Signing of Financial Statements
The use is electronic signatures is covered by the Electronic Transaction Act 1999 and the Electronic Transactions Regulations 2020. Schedule 1 of the Electronic Transactions Regulations 2020 includes a list of laws and regulations the Electronic Transactions Act does not apply to.
Item 89 of the Schedule excludes the Superannuation Industry (Supervision) Act 1993 (which relates to SMSFs) other than the following provisions:
a) subsection 20B(1A);
(b) paragraph 20B(3A)(b);
(c) subsection 29E(6B);
(d) subparagraph 29SAA(1)(a)(i);
(e) subsection 29SAA(3);
(f) sections 29WA, 29WB and 35B;
(g) subsections 68AAA(2), 68AAB(2) and 68AAC(2);
(h) subparagraph 387(1)(a)(i)
Section 35B(3) The accounts and statements prepared in accordance with subsection (1) must be signed as follows:
(a) if there is a single corporate trustee--by:
(i) if there is only one director of the corporate trustee--that director; or
(ii) otherwise--at least 2 directors of the corporate trustee; or
(b) if there is a group of individual trustees--by at least 2 of those trustees.
Please note that this change is a technical amendment only. The use of electronic signatures for the signing of SMSF financial statements have never been disputed by the ATO as the regulator of SMSFs.
In addition, as per below, the ATO supports the use of electronic signatures of SMSF annual returns.
Does the ATO accept electronic signatures?
Trustees can use a digital signature to sign their SMSF’s financial statements if they are unable to sign their documents in person due to COVID-19 restrictions, the ATO has confirmed.
In an update on its website, the regulator stated the use of a digital signature was an option for SMSF trustees unable to sign their fund’s financial statements in person because of social distancing requirements as a result of the coronavirus pandemic.
“Alternative options available for signing the financial statements consist of returning a signed scanned copy to your tax agent or accountant by email or using an electronic signature such as a digital signature,” the ATO noted.
Signature requirements for SMSF financial statements
Question: I usually attend my accountant’s premises to sign my SMSF’s financial statements. However, I am unable to attend in person to sign them this year due to COVID-19. How can I meet the signature requirements?
Answer: There are options available. Under the super laws, SMSF trustees are required to sign their SMSF’s financial statements before finalising their fund’s audit each income year. COVID-19 impacts such as social distancing or isolation requirements or your tax agent or accountant working from a home office may prevent you from signing your SMSF’s financial statements in person this year.
Alternative options available for signing the financial statements consist of returning a signed scanned copy to your tax agent or accountant by email or using an electronic signature such as a digital signature.
Digital signatures should be provided:
using a secure system, typically through an established third-party provider
in a way that clearly identifies the trustee signing and indicates the approval you are providing.
A secure system would include a system that requires a personal identification number, access code or password to use.
If you can't use these alternative options to sign your financial statements, your agent or accountant should post the financial statements to you and you will need to sign them and arrange to return them to your agent by post.
You will not meet the signature requirement if you only acknowledge the financial statements by email or over the phone.
This question was last updated on 23 April 2020.
“Digital signatures should be provided using a secure system, typically through an established third-party provider, in a way that clearly identifies the trustee signing and indicates the approval you are providing.”
It also reminded trustees they could sign and return their financial statements to their accountant or tax agent via post. The signature requirement for SMSF financial statements would not be met if the trustee only acknowledged the documents by email or over the phone, it added.
Noting the impact of social distancing measures on signing and witnessing SMSF legal documents, Smarter SMSF chief executive Aaron Dunn highlighted the New South Wales government’s recent introduction of a temporary regulation, under the Electronic Transactions Act 2000, intended to assist with the legal documentation process during the pandemic.
“The new law requires a witness to sight a person signing the document in ‘real-time’ to confirm the legitimacy of the signature, which now allows through the use of videoconferencing technology (for example, Skype, Zoom, et cetera),” Dunn said in a blog post on the Smarter SMSF website.
In addition, Cooper Grace Ward lawyers Katelyn Gillert and Hayley Mitchell pointed to the COVID-19 Emergency Bill 2020, recently passed by the Queensland parliament, which allows remote witnessing of documents.
“The Queensland regulations may also apply to the witnessing of superannuation binding nominations. However, the New South Wales regulations do not,” Gillert and Mitchell said in a blog post on the Cooper Grace Ward website.
Content Attribution: Most of the above content has been take from the following article published in Self Managed Super Magazine (Online) 27/04/2020 - ATO open to digital signature use
Intello's comments on the ATOs acceptance of electronic signatures for SMSFs
Although electronic signature options have become a popular solution during the COVID-19 social distancing requirements and work from home increase, they are not new and the ATO has been comfortable with the electronic signing of tax returns (and by extension SMSF financial statements) for some time.
Refer here for further information: Client declarations and lodgment online
Other useful articles on electronic signatures for SMSFs