Q1: Are Digital Signatures legal in Australia?
The Electronic Transactions Act 1999 – Section 10 (‘ETA1999’) allows electronic signatures to be used for financial statements and other documents.
The Electronic Transactions Act 1999 (ETA 1999) established the basic rule that a transaction is not invalid because it took place by means of electronic communication. The ETA 1999 contains specific provisions which state that a requirement or permission under a law of the Commonwealth for a person to provide information, in writing, to sign a document or to retain information or a document can be satisfied by electronic communication, subject to certain minimum criteria being satisfied.
The requirement for an electronic signature under this law
- a method is used to identify the person
- The method used was reliable to indicate the person’s intention regarding the information communicated.
- The method is reliable and appropriate.
- The method used can be proven.
Q2: Does the ATO accept digitally signed financial statements?
A: Yes. Section 35 of the SIS Act sets out rules about the accounts, statements and audits of superannuation entities, and rules around require certain reports and returns relating to superannuation entities to be given to the Regulator.
On 29 July 2020, the Commonwealth Government passed the Electronic Transactions Regulations 2020, so the ETA now applies permanently to section 35B of the SIS Act to make it clear electronic signatures are permitted on SMSF financial statements going forward.
However, the SMSF's trust deed will also set out the procedures for signing, which the trustees need to comply with. Remember to check this.
The ATO has also previously addressed this through the Frequently Asked Questions on the ATO Website.
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?
ATO 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 are 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.
Q3: What about ATO Lodgement Declarations?
The ATO has stated for declarations that certain requirements must be met when providing a declaration electronically. Sections 9 and 10 of the Electronic Transactions Act 1999 (ETA) require:
If information is required to be given in writing it can be given electronically if the person receiving the information consents to receiving it electronically.
Consent does not have to be explicit and can be inferred from a person's conduct.
A method that is reasonable is used to identify the person's signature (for example, their email address). If your client chooses to send their declaration by email, they do not need to include their scanned signature. The action of sending the email and the agent accepting the information and then using that as a basis for lodging the approved form would be sufficient to satisfy the electronic signature provisions set out in section 10 of the ETA
Q3: What about documents under the Corporations Act?
Section 127 of the Corporations Act outlines how a company may execute a document.
The Corporations (Coronavirus Economic Response) Determination 2020 was made as a response to the COVID-19 pandemic and applies on a temporary basis until 21 March 2021. It allows documents to be signed via a secure platform, and signatures can be identified. It also allows online shareholder meetings to be held.
In 2022, permanent legislation was passed to establish a permanent mechanism, allowing companies to:
- Hold hybrid (in-person and remote) meetings and
- Use technology to execute, sign and share company and meeting-related documents, including deeds.
More specifically, the Act clarifies that electronic signatures will satisfy sections 126 and 127 of the Corporations Act. That is, agents of companies and the company itself may execute documents, including deeds, and make, vary, ratify or discharge contracts electronically. Further, electronic signing will allow parties to rely on the assumptions under the Corporations Act in relation to dealings with a company.
Section 110C(3) provides that the electronic signing provisions do not apply to a document that is required to be sent to ASIC.
In September 2023, Treasury Laws Amendment (Modernising Business Communications and Other Measures) Bill 2023 was passed and Amends the Corporations Act 2001 to enable all documents under the Act to be signed electronically and for certain documents to be sent in either hard copy or electronic form.
Q4: Do you know if each signatory needs a separate email address?
When directors/trustees have the same email address, the digital signing will still be supported by CAS 360 and Simple Fund 360. The email address will receive separate emails to be addressed to each director for signing.
It is recommended in this case to ensure MFA is enabled where there is a shared email address but different mobile phone numbers.
However, for legal reasons, it is highly recommended to have separate email addresses. To meet the legal requirements of electronic signatures under the Electronic Transactions Act 1999, each signatory must be identified, and the electronic signing process must confirm their intent to sign.
If trustees or directors share an email account/address, it is difficult to confirm these requirements.
Q5: What Permanent SMSF documents can and can’t be signed electronically?
Trust deed establishments
|Trust deed upgrades
|Member Applications and Trustee Minutes
|Consent to act as a trustee
|ATO trustee declaration