Do you know about the new Director Identification Number and your obligations?

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Are you a director of a company or maybe the director of the trustee of a trust or your SMSF?

As part of a suite of amendments introduced by the Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 (Cth) in June, all company directors will now be required to be identified by unique “Director Identification Numbers”.

Company directors in Australia now have a deadline for getting a director’s identification number.

This deadline will affect directors in more than 2.9 million registered Australian companies, including the corporate trustees in self-managed super funds (SMSFs)

What is the requirement to hold a director’s identification number?

A DIN is designed to be a single, unique and permanent identifier for all of Australia’s company directors.

It will remain attached to all Australian company directors even if they cease to be a director, change their name or move overseas.

It is designed to ensure that company directors can always be traced and held accountable for their activities.

The introduction of the DIN scheme was driven by the Federal government’s desire to clamp down on illegal ‘phoenixing’ activities.

This is when a new company is set up to continue the operations of a company that has been liquidated to avoid paying debts to creditors.

The term derives from the phoenix character in Greek mythology that rose from the ashes.

Further reasoning behind the scheme is to reduce the likelihood that a director is able to appear as a different person on different company records, by using a middle name, nickname, or false name.

There are significant penalties for directors who attempt to supply fake names to get around the intentions of the DIN scheme.

But it is much more difficult for regulators to track whether directors have repeatedly been involved in failed companies of illegal ‘phoenix’ activity, without clear and consistent identification of a director.

Further, by hiding a director’s identity, that director can potentially avoid being banned or disqualified as a director.

When do I have to do it?

Most current company directors in Australia will have until 30 November 2022 to apply for their DIN.

However, current directors of Australian corporations will have until 30 November 2023.

In addition, there are the different requirements for new directors who are appointed following 1 November 2021:

  • new directors appointed between 1 November 2021 and 4 April 2022 must register for their DIN within 28 days.
  • new directors from 5 April 2022 will have to apply for their DIN before the appointment.

How can I apply for a director’s ID?

You will be able to apply for a DIN online from November 1 this year via the newly created Australian Business Registry Services (ABRS).

This ABRS platform will replace the existing Australian Business Register platform. Tax Budget Finance Money

It is free to apply.

You will need the following when applying:

  1.  your MyGov ID
  2.  two proof of identity documents (such as a tax assessment notice or your bank account details).

You can speed up the registration process by providing your tax file number.

You will also be able to update your contact details via the ABRS website anytime.

What happens if I don’t?

If you don’t apply for your DIN before the relevant deadline, you face a fine of $1.1 million (or $200,000 if you are a director of an Australian corporation).

The Director ID is attached to a director permanently, even if they cease to be a director, change their name, or move interstate or overseas.

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About

Ken is director of Metropole Wealth Advisory and gives strategic expert advice to property investors, professionals and business owners. He is in a unique position to blend his skills of accounting, wealth advisory, property investing, financial planning and small business. View his articles


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