As part of the Australian Taxation Office ‘Modernising Business Registers’ program, the Australian Business Registry Services (ABRS) have recently rolled out the requirement for Director Identification Numbers (Director ID). From November 2021, all directors of companies will need to obtain a Director Identification Number. The experienced commercial lawyers at Tonkin Drysdale Partners are here to assist your company, or you as a director, make this important transition.
What is the Director ID?
The Director ID is a unique 15 digit number that a director will maintain forever. The person will use the same number for each company for which they are a director. It won’t change when a director changes companies, stops being a director, changes their name, or moves interstate or overseas.
Why do you need a Director ID?
All consumers, creditors, employees, shareholders and regulators are entitled to have access to some details about the directors of companies with which they engage. The ABRS makes it a legal requirement for all directors to verify their identity in order to receive their Director ID. This requirement helps to prevent the use of false or fraudulent director identities, makes it easier for regulators to monitor directors’ activity over time, and reduces the opportunities for unlawful activity such as illegal phoenix activity that disadvantage those engaging with the company.
Who needs to apply for a Director ID?
All directors of companies, registered foreign companies, registered Australian bodies, and Aboriginal and Torres Strait Islander corporations are required to obtain a Director Identification Number.
You do not require a Director ID if you are:
- A company secretary but not a director;
- An external administrator of a company;
- A sole trader or partnership;
- Referred to as “director” but not appointed as director under the Corporations Act or Corporations (Aboriginal and Torres Strait Islander) Act;
- A director of a registered charity with an organisation type that is not registered with ASIC to operate throughout Australia; or
- An officer of an unincorporated association, cooperative or incorporated association established under state or territory legislation, unless the organisation is also a registered Australian body.
If you are unsure whether you require a Director ID, the commercial law team at Tonkin Drysdale Partners can answer your questions with regard to your specific circumstances.
When do directors need to apply for a Director ID?
The timeframe to obtain a Director ID varies according to when you were appointed a director.
Existing directors – a director appointed on or before 31 October 2021, must obtain a director identification number by 30 November 2022.
New directors – a director appointed:
- between 1 November 2021 and 4 April 2022, must obtain a director identification number within 28 days of being appointed; and
- from 5 April 2022, must obtain a director identification number before being appointed.
How do directors apply for a Director ID?
Directors first need to create a myGovID number. Importantly, myGovID is different to the myGov platform many Australians are already familiar with.
Directors will need to gather documents including:
- tax file number (TFN);
- residential address as held by the ATO; and
- information from two documents to verify their identity (e.g. PAYG payment summary, ATO notice of assessment, bank account details, super account details).
Following these steps applications can then be completed on the ABRS website.
What are directors obligations with regard to their Director ID?
Directors must comply with the Director ID process, including applying within the relevant timeframe or when directed by the Registrar. If directors fail to discharge these obligations, directors may face heavy civil and/or criminal penalties of up to $1.1 million and imprisonment.
Directors are required to provide their Director ID to their company through an authorised agent, such as a company secretary. For directors within the meaning of the Corporations Act 2001 any changes in personal details must be provided to the company within 7 days, and the company must provide ASIC with the new details within 28 days.