What you need to know about Director Identification Numbers

If you’re an Australian company director, the countdown is on for you to set yourself up with a new form of identification.

The director ID is to be administered by the Commonwealth Registrar and operate within the Australian Taxation Office (ATO) under a separate statutory function. It is expected to cover over 2.5 million company directors – roughly 10% of Australia’s population.

Most company directors have until 30 November, 2022 to apply for a director identification number (director ID), but for newly appointed directors, the window is significantly shorter. From 1 November 2021, newly appointed directors must apply for a DIN within 28 days or can risk civil and criminal penalties.

From 5 April 2022, all persons must have a DIN prior to being appointed a director.

Read on for more detailed information.

What is a Director ID?

The director ID is a 15-digit unique identifier company directors will keep forever (similar to a tax file number, in this sense), allowing regulators to better track directors across companies. This new requirement may also help to prevent fraudulent behaviours, such as directors of a company being appointed to other companies without their knowledge or consent.

Company director numbers are also being implemented by the federal government in an effort to improve data integrity and better protect director identities from unlawful activity, such as illegal phoenix activity.

“Phoenixing” typically refers to a debt-avoidance loophole when company directors have abandoned a company, or transferred an existing company into a new one to seize its assets without paying its market value. They then allow the existing company to be placed in liquidation or insolvency, and abandoned, meaning when a liquidator is appointed, no assets can be recovered and creditors will not be paid.

While current practices see directors already providing the above information to the Australian Securities and Investments Commission (ASIC), the regulatory body currently is not required to verify the identity of directors.

This gap in the system has unfortunately allowed false details to infiltrate its data system, but the implementation of director ID should be a significant deterrent for fraudulent behaviour.

What documentation do you need to apply for a Director ID?

Company directors will be required to apply for their director ID themselves, and may need to provide identity documents (particularly if applying online), such as their:

• Personal identification documents, such as driver’s licence, passport or visa,
• Tax file number (TFN),
• Residential address held by the ATO,
• ATO notice of assessment,
• Bank account and Super account details,
• Dividend statement,
• Centrelink payment summary, and
• PAYG payment summary.

How to apply for your Director ID

There are three ways you may apply for your director ID:

Using the MyGovID app 

To set up your MyGovID and apply for your director ID, simply:

1. Set up your MyGovID with a ‘Standard’ or ‘Strong’ identity strength by downloading the app with your smart device (Note: this is a separate app to the MyGov app).
2. Gather the documents listed above and provide these details through the app.
3. Now you have set up your MyGovID with Standard or Strong identity strength, you may login to apply for your director ID. This process should take around 5 minutes.

By phone application 

To apply by phone, you will need to provide documentation such as your TFN, residential address held by the ATO, and two identity documents.

You may also be asked to answer two security questions based on details the Australian Business Registry Services (ABRS) knows about you.

By paper application 

If you are unable to apply online, you may be able to set up your director ID via a paper application.

Simply fill in the paper director ID application form located on the ARBS website, ensuring to answer all relevant questions to prevent delay.

Applicants outside of Australia may be asked to provide separate identification documents, such as a foreign birth certificate or passport, national photo identification card, foreign government identification and/or a marriage certificate to verify a change of name.

What is the deadline for setting up your Director ID?

As of November 1 2021, if you are currently a director or will be acting as a director in the future, and you operate under the Corporations Act 2001, you must apply for a Director ID based on the following:

What to do once you have your Director ID

Once your application has been successfully submitted and your director ID has been created, please provide it to your corporation record-holder, such as the company secretary, administrative team, another director or an authorised agent of the company.

Myssy + Co. is urging any individuals who have been appointed as company director since 1 November 2021 to consider preparing for the 28-day deadline as soon as possible. As we establish legal entities, such as companies and trusts, this process may be significantly delayed if clients have not yet registered for their director ID. Further, you may face penalties for not having done so – explained below.

What if you don’t apply for a director ID within the timeframe?

Civil and criminal penalties fall under the legislation for those who do not comply within the application period and miss the registration deadline, those that deliberately provide false identity information to the registrar, providing a false director ID to a government body or applying for multiple director IDs.

Companies registered under the Corporations Act may see directors face penalties of up to $1.1 million. The maximum civil penalties will be set at $200,000 for Indigenous companies overseen by the Corporations (Aboriginal and Torres Strait Islander) Act 2006.

Not only may missing a deadline have severe financial implications on the director and/or registered company, but it will significantly hinder standard processes.

As mentioned above, Myssy + Co. is urging all directors to be aware of these changes and act accordingly, as establishing legal entities on their behalf will be delayed if a director does not apply for their director ID within their specific time frame.