Directors are now required to verify their identity and apply for a Director Identification Number (director ID or DIN).
The Australian Government introduced the Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 (Cth). Part of the measures in this legislation introduced a new regime to Part 9.1A of the Corporations Act 2001 (Cth), which requires all company directors, or anyone who intends to become a company director, to obtain a Director Identification Number.
What is the purpose?
The DIN is the first service to be delivered by the Australian Business Registry Services (ABRS). Shareholders, employees, creditors, consumers, external administrators, and regulators are entitled to know the names and certain details of the directors of a company.
All directors are required to verify their identity with the ABRS before receiving a director ID. The aim of the DIN is to:
- prevent the use of false or fraudulent director identities
- make it easier for external administrators and regulators to trace directors’ relationships with companies over time
- identify and eliminate director involvement in unlawful activity, such as illegal phoenix activity.
Preventing fraud or dishonest conduct is not the only reason for DINs. The program is also meant to protect the privacy of directors by allowing them to be identified on public registers without disclosing personal information that is currently accessible, such as dates of birth and residential addresses.
Who is required to hold a director ID?
A director ID is required if an individual is an eligible officer of:
- A company, a registered Australian body, or a registered foreign company under the Corporations Act 2001
- An Aboriginal and Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act).
An eligible officer is a person who is appointed as:
- A director
- An alternate director who is acting in that capacity.
A person who expects to become an eligible officer within 12 months may apply for an ID (if they are not already registered). Once registered, they have 12 months to be appointed as an eligible officer or their ID will be made inactive.
How do directors apply for an ID?
Applicants are required to verify their identity using a combination of identification documents and existing ATO held information.
Note that accountants cannot apply for an ID on behalf of a director. Those without a myGovID will still be able to apply by phone or written application.
There are three (3) options to apply:
- MyGovID – Directors will need a myGovID with a Standard or Strong identity strength to apply for a director ID online. Details on how to set up a myGovID are available via the link – How to set up myGovID
- Phone – Apply via phone if you have an Australia Tax file number (TFN) and have the information you need to verify your identify.
- Paper form – Apply using a downloadable form. This process may take longer to complete and you will also need to provide certified copies of your documents to verify your identity.
Foreign Directors that do not hold an Australian TFN will most likely need to apply via the paper form.
DINs must be applied for personally. There is no cost to apply.
When to apply?
Applications for a director ID are now open. The table below summarises the proposed dates by which new and existing directors will need to apply for a director ID.
Corporations Act Directors
|Date you become a director
|Date you must apply
|On or before 31 October 2021 (existing & new directors)
|By 30 November 2022
|Between 1 November 2021 and 4 April 2022
|Within 28 days of appointment
|From 5 April 2022
CATSI Act Directors
|Date you become a director
|Date you must apply
|On or before 31 October 2022
|By 30 November 2023
|From 1 November 2022
When do directors need to use the ID?
The director ID needs to be provided to the corporation’s record-holder, which can be the company secretary, another director, or an authorised agent of the company.
If appointed as a director of any other companies in the future, directors will also need to give their ID number to the people responsible for maintaining the records of those companies.
Directors must also inform the Registrar of any changes to the information attached to their ID.
What happens if directors fail to comply?
Failing to hold a director ID may result in an infringement notice or possible civil and/or criminal prosecution. Certain offences may also be applied against those involved in a contravention, which could include the eligible officer’s advisers.
Additional breaches include if a director:
- Fails to comply with a direction from the Registrar
- Applies for multiple director ID’s
- Provides a false ID
- Misrepresents their ID
- Provides false or misleading information.
Further application details are available at the Australian Business Registry Services website.
To find out more about director ID’s, please get in touch with Blackwattle Tax.