The government has officially locked in requirements for Director Identification Numbers. Luckily, the team at Beyond Advisors have done the research on what you need to know. Below we unpack what directors are required to do under the new initiative, the application process, and its statutory implications.
What are Director IDs?
The rollout of director IDs came into effect on November 1, with all Australian directors required to register themselves with a unique identifier that will remain the same as they move from companies, roles, and even countries throughout their lifetime.
The director ID initiative has been in the pipeline for years to track the activities of individual directors and level the playing field for honest business practice. Established by the federal government’s ‘Modernising Business Registers Program’ (MBR Program), A director ID is a unique 15-digit identification number that all directors will need to have by November 30, 2022.
Why are Director IDs being implemented?
Director IDs are designed to register, verify and track the corporate history of individual directors to reduce the temptation for illegal activities, such as phoenixing – transferring assets to a new company, while leaving any bad debt with the previous company and placing it in liquidation.
While it may sound a bit ‘Big Brother’, the unique identifier will essentially make it harder to get away with false director identities, introducing greater transparency, better governance, and more confidence in our modern-day system.
Do I need to apply for a Director ID?
If you’ve been appointed as a director for an Australian corporation, or are an alternate director acting in that capacity, then this new government scheme applies to you. This includes directors of:
- Companies;
- Registered foreign companies;
- Registered Australian bodies; and
- Aboriginal and Torres Strait Islander corporations.
When do you need to apply?
The application deadline will depend on when you are appointed as a director, as set out below:
Existing Directors – Appointed on or before 31 October 2021
- Have until 30 November 2022 to apply
- New Directors – Appointed between 1 November 2021 and 4 April 2022
- Must apply within 28 days of their appointment
- New Directors – Appointed from 5 April 2022 onwards
- Must have a Director ID before their appointment
If you are unable to apply by the deadline, you can apply for an extension through the ABRS website.
How do I apply?
Applications are now open and directors can kickstart their unique identifier by following the steps outlined on the ABRS website.
Note that a MyGovID is required and can be set up here. MyGovID, not to be confused with the MyGov platform, is an application that can be downloaded on your phone to prove your identity and allow you to log in to various government services online.
The downside of this new scheme is more form filling for company directors. This means, providing a number of documents to establish your identity with the Commonwealth Registrar. To ensure the process runs as smoothly as possible, applicants should have:
- a Tax File Number
- a residential address (as recorded by the ATO)
- a verification of identity documentation, such as:
- bank account documents
- a PAYG payment summary
- an ATO notice of assessment
- a dividend statement; and/or
- your superannuation account details
Once an applicant has received their director ID, they will need to pass it on to the record-holder within their corporation. This may be a company secretary, another director, a contact person or an authorised agent of the company. Keep in mind, there are obligations for managing a director ID, which are outlined here.
How to view or update your details
After you apply for your director ID, you can view, update and manage your details online at any time. Use your myGovID to log onto the ABRS website where you can view your ID number and status, look over your past activities, or edit your profile and update personal details.
What are the penalties for not applying in time?
Those who miss the application due date may be issued with an infringement notice or receive civil or criminal penalties. Since the legislation is currently in its early stages, the penalties have not yet been confirmed, however, previous draft legislations floated by the Treasury suggests they will be capped at 5000 penalty units, or $1.1 million and up to 15 years’ imprisonment.
Legal responsibilities are constantly changing and evolving for businesses. Get in touch with Beyond Advisors for clarity and to avoid complications when applying for your director ID.