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If you are a director of a company (including a director of a corporate trustee), please read the following important information.
With the implementation of the Director Identification Numbers (DIN’s or Director ID’s) pending, it will be important to understand the new obligations for those operating in the capacity of a Director, as failure to apply for a DIN within the required time frame will leave you open to both criminal and civil penalties. It is one of the first initiatives under the Modernising of Business Registers Program and will be a legal requirement. A person only needs to apply once for a Director ID, there is no need to apply each time you are appointed a Director.
A person keeps their director ID forever, even if they:
- change companies
- stop being a director
- change their name
- move interstate
- move overseas
When does the Application Process Start?
- New Directors / New Entities
- Doesn’t apply yet, unless you are invited.
- From 1st November 2021: Must apply within 28 days.
- From 5th April 2022: must apply before being appointed.
- Existing Directors / Existing Entities
- Doesn’t apply yet, unless you are invited.
- Must obtain prior to 30th November 2022. (transition period)
- Future Directors
- A person who intends to be appointed, may apply up to 12 months before.
- Corporations (Aboriginal and Torres Strait Islander Act 2006 CASTSI Act) have an extra 12 months. Must apply by 30th November 2023.
- NFP Sector – working through this at the moment. Information to follow.
The proposed deadlines anticipated by the Treasury, has now been confirmed by the Minister for Superannuation, Financial Services and the Digital Economy, senator Jane Hume.
While existing directors will have a year to apply for their director ID it is recommend to applying as soon as possible.
Under the law, directors who fail to apply for a director ID within the stipulated time frame can face criminal or civil penalties of 5,000 penalty units, which currently stands at $1.11 million. 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.
Who needs a director ID?
Only directors need to obtain DIN (director ID number).
It is not applicable to company office holders, secretary and external admin (e.g. receiver, administrator or liqiodator).
What is Phoenixing
Phoenixing is when companies deliberately avoid paying liabilities by shutting down an indebted company and transferring assets to another company. This hurts trade creditors, employees, and the public through lost taxes.
The main aim of the Modernising of Business Registers Program is to protect legitimate businesses. To stop directors who are leaving unpaid creditors behind. By identifying those questionable directors from deliberately avoiding their obligations, government departments can be there to support credible businesses. Putting identification on the front end of business means we know who we are dealing with when it comes to trading with a business. There is a legislative provision to deactivate the Director ID if needed.
Why do you need to apply for DIN?
The Director ID will be a unique identifier that a Director will keep forever, enabling regulators to better track of Directors of failed companies who use fabricated identities. It will help identify business who are doing the wrong thing. The new system will help overcome issues with data integrity, which have always been a constant battle in regulating phoenixing and the illegal activities around this dilemma. This compliance regulator will further support small businesses by keeping out the operators that are breaking the law.
- Directors have obligations under the law. Shareholders, employees, creditors, consumers, external administrations and regulators need to know who the directors of a company are.
- Director ID will help to prevent the use of false or fraudulent director identities on the new registry service.
- It will be easier to trace director' relationships with companies and identify and eliminate director involvement in illigal activity such as illegal pheonix activity.
- Three digit country code for Australia (under International Standard ISO 3166)
- 11 digit unique number
- One check digit for error detection
How to apply for director ID?
A persona needs to prove their identity when they apply and no one can apply for them.
Therefore bookkeepers and accountants cannot provide this service on your behalf; however I will provide further information when available to assist with the process.
Applications are free and will open November 2021 on the newly established Australian Business Registry Services (ABRS), a single platform administered by the Commissioner of Taxation that brings together Australian Securities and Investment Commission (ASIC) 31 business registers and the Australian Business Register.
Step 1. Make sure you have your myGovID.
Make sure that you have your myGovID handy. Please, don’t mix it up with myGov login.
Register myGovID if you still don't have one.
Step 2. Australian Business Registry Services
Visit ABRS online. Click Apply now:
Scroll down and use your myGovID to sign in by clicking Apply now with myGovID:
Enter your email and copy 4 digit code into your myGovID app to login:
Read and agree to terms and conditions of use and click Next:
Enter your TFN and address registered with ATO. Read and tick if you are an eligible officer and tick to acknowledge the requirements, click Next:
Enter your residential, postal address and contact details and click Next:
Congratulations, you now have your Director ID, now it is time to pass on this information to your accountant and/or company secretary.
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