Director ID deadline announced

Director ID applications are now open and existing directors have one year – that is, until November 30, 2022 – to apply for their own unique Director Identification Number or face harsh penalties. All directors of a company, registered Australian body, registered foreign company or Aboriginal and Torres Strait Islander corporation will require a director ID.

Director Identification Numbers (DINs) are designed to help tackle illegal phoenixing activities and to increase accountability and traceability of directors by being able to trace directors across companies while preventing the use of false identities.

Applications can be made here. All DINs will be recorded in a new database that will be administered by the Australian Tax Office. This database will also be available for the public to view.

Impact of illegal phoenix activity

The Economic Impact of Potential Illegal Phoenix Activity Report found that illegal phoenix activity costs employees between $31 million and $298 million in unpaid entitlements, and costs the federal government around $1.6 billion in unpaid taxes and compliance costs.

Jirsch Sutherland Partner Trent Devine says it’s important for directors to understand these new obligations. “If you don’t apply for a DIN within the required period of time, you could be open to both criminal and civil penalties,” he says. “Penalties will also apply for conduct that undermines the new requirements, including providing false identity information to the registrar or intentionally applying for multiple director IDs.”

The DIN regime will be administered by the Australian Business Registry Services (ABRS), which in turn will be managed by the ATO. The ABRS is a single platform that brings together ASIC’s 31 business registers and the Australian Business Register. The ABRS has the power to provide, record, cancel and reissue a DIN.

The new regime was passed in Parliament in June last year and is expected to cover more than 2.5 million directors. The ID will be attached to a director permanently, even if they cease to be a director, change their name, or move interstate or overseas.

Who needs to apply?

All appointed directors and acting directors of Australian corporations and registered foreign companies under the Corporations Act 2001 (Cth) will need to apply. This includes companies that are responsible for managed investment schemes and registered charities.

Applications are free and applicants need to provide the following:

• name and former names
• address and former addresses
• contact details
• date and place of birth
• tax file number (note, while this is requested, applicants cannot be compelled to disclose it)

Applicants must apply for their DIN themselves and will need to produce their myGovID and prove their identify from a list of Australian identity documents, including their bank and super account details, ATO notice of assessment, dividend statement, Centrelink payment summary, and PAYG payment summary.

Once issued with a DIN, it is the director’s for their lifetime, even if they cease to be a director. The Act also specifies that if an individual does not become a director within 12 months of receiving a DIN, it will be automatically cancelled.

Information on how to apply can be found here.

Fines for non-compliance

Current directors need to apply for their DIN by November 30, 2022, and if they don’t apply within this timeframe, they may be eligible for a fine for up to $1.1 million. Directors of Indigenous corporations that are governed by the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act) are required to apply by November 30, 2023.

While existing directors will have a year to apply for their director ID, new directors appointed between 1 November 2021 and 4 April 2022 will have just 28 days after appointment to apply for their DIN. New directors who are appointed from 5 April 2022 will be required to apply for their DIN before their appointment.

DINs don’t replace existing requirements to keep company records updated. Directors must still notify their company of changes in address and other details, and the company will still need to notify ASIC of any changes for the public record.

Devine says DINs are another weapon for ASIC to use in combatting illegal phoenixing activity. “ASIC has been clamping down on this type of activity for some time and it’s likely to get worse as a result of COVID-19,” he says. “Directors need to be more aware than ever of their obligations as well as of their personal exposure.”