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New regulations have come into effect on 1 November 2021 for a Director Identification Number

Director ID, what is it?
Background:

Australian regulators are developing more and more systems to track activities and match data to identify fraud and other illegal activity.

The ATO has been doing this in several ways, including:

  • Single Touch Payroll to capture the amount of PAYG withholding amounts and then be able to enforce collection from Directors personally where a company is unable to make payment
  • Single Touch Payroll and Superannuation Clearing Houses (which has been used to identify the late payment of super)
  • Land tax to match ownership with tax records
  • State Revenue Departments with payroll tax information and data being compared to ATO.

The Australian Securities and Investments Commission (“ASIC”) is now no different. They have been pushing for a new regime to track directors and their involvement in companies.

Overview of New Requirements:

The requirements require that by 30 November 2022, all directors of companies will need a Director ID and then to link that to all companies and activities registered with the ASIC.

Why a Director ID?

The unique identification number will be allocated to a director for life even if the director changes companies, ceases to be a director, changes their name or moves interstate or overseas. Designed to help prevent the use of false identities, trace the director’s relationships across companies and ensure directors are not involved in illegal activities, such as phoenix activities.

(Illegal phoenix activity is when a company is liquidated, wound up or abandoned to avoid paying its debts – this is similar to bankruptcy, but for companies. This is of particular concern for ATO when a new company is then started to continue the same business activities without the debt).

Who will require a Director ID?

While this is extensive, it introduces the notion of an ‘eligible officer’. An eligible officer is a director who:

  • Is appointed to the position of director; or
  • Is designated as an alternate director and is acting in that capacity (regardless of the name of that position); or
  • Any other officer of the registered body who is an officer of a kind prescribed by the government.

This definition seeks to overcome the concept of ‘shadow directors’ who act in the capacity of directors through authority and control but are not directors by title. That is, it’s possible for someone who is not a director but is seen to be making decisions on behalf of the company can be held to account.

An eligible officer is a director of:

  • A company;
  • A registered foreign company;
  • A registered Australian body under the Corporations Act such as an association or a charity; or
  • An Aboriginal and Torres Strait Islander Corporation.
    (Registered under CATSI. — The Corporations of Aboriginal & Torres Strait Islander Act.)

Directors need to apply for an ID through the Australian Business Register system using their myGovID app to begin this process. If they do not have the myGovID set up on their phone, they will be required to set it up first and familiarise themselves with how it works.

Note — myGovID is different from myGov

myGovID is an app. You download the myGovID app to your smart device. It is designed to prove who you are and log in to a range of government online services, including myGov.

myGov is an account. Your myGov account lets you link to and access online services provided by the Australian Taxation Office (ATO), Centrelink, Medicare and more.

How to apply for your Director’s ID:

You can apply for your director ID from November 2021.

Method 1: Apply via ABRS online – you’ll need to use the myGovID app

Method 2: Apply by Phone

Method 3: Apply with a paper form.
(A downloadable application form is available here from the ABRS website)

You will need to have the following information when applying for your director ID:

  • your tax file number (TFN)
  • your residential address as held by the ATO
  • information from two documents to verify your identity.
    Examples of the documents you can use to verify your identity include:

    • bank account details
    • an ATO Notice of Assessment
    • super account details
    • a dividend statement
    • a Centrelink payment summary
    • PAYG payment summary.

As always you can contact us for help. We have a fixed price fee of $150+GST to guide you through the process if you need our assistance.

Transitional Dates:
Appointment date  Date by which a Director ID must

be held (Corporations Act)

Existing directors appointed on or before 31 October 2021

By 30 November 2022

New directors appointed between 1 November 2021 and 4 April 2022

Within 28 days of the appointment

Directors appointed from 5 April 2022

Director ID is required before appointment

The Registrar has the discretion to extend the period within which newly
appointed directors
have 28 days to apply under section 1272E.

CATSI directors appointed on or before 31 October 2022

By 30 November 2023
CATSI directors appointed from 1 November 2022

Director ID is required before appointment

Government Announcement:

The Director ID initiative is a part of The Modernising Business Registers (MBR) program announced as part of the broader Digital Business Plan in the 2020 Federal Budget.

The MBR program seeks to bring together the Australian Business Register and 31 ASIC business registers, including the register of companies.

The Australian Business Registry Services (ABRS) is a single-entry point to simplify how businesses register, view and maintain information with the Australian government. Through the establishment of the ABRS, directors must register for a unique identification number known as Director Identification Number (Director ID).

If you have any questions or need assistance applying for your Director ID, reach out to our ClientCare Team.
We are always ready to help.

AAG AustAsia

AAG AustAsia

AAG is a family-owned group providing Tax planning, management accounting, wealth management, and more. Established in 1979, AAG acts entirely in their clients' best interest by providing financial expertise and upholds a reputation of nurturing long-lasting relationships with clients to assist them with all their personal and business financial issues.