The Federal Government has introduced a requirement for Australian company directors to have an identification number in a bid to stop phoenixing and increase directors’ accountability.
What is it?
The purpose of the Director ID is to reduce the use of false director identities, provide traceability of a director’s profile and association with companies over their career and to enable authorities to hold to account directors who engage in phoenixing activity. This initiative will be delivered by Australian Business Registry Services (ABRS) as part of the Australian Tax Office’s functions.
All eligible directors will need to apply for, and be issued with, a unique, 15-digit director ID. An individual will only need to apply once and that number will apply for all future appointments.
What do I need to do?
From 1 November 2021 to 4 April 2022: if you are appointed as a director of a company during this period, you have 28 days from the date of appointment in which to apply for a Director ID.
From 5 April 2022: you must apply for a Director ID before you are appointed as a director of a company.
By 30 November 2022: all individuals who were appointed as a director of a company as at 31 October 2021 (regardless of the date of their appointment) must have registered for a Director ID.
You can apply for your Director ID by phone, by paper lodgment, or via the ABRS website.
What happens if I don’t register for a Director ID in time?
Individuals who fail to register for a Director ID in time, or when directed by the registrar, may be issued with an infringement notice of 60 penalty units, which on the current scale, equates to $13,320.
Individuals who apply for multiple Director IDs or misrepresent their Director ID to a government entity or another company may face up to 1 year imprisonment.
Committing these offences is also a breach of the Corporations Act 2001 (Cth), for which the Australian Securities and Investment Commission (ASIC) can bring proceedings asking a Court to declare that there has been contravention and seek further pecuniary penalty orders of up to 5000 penalty units, or $1,110,000 (at the current scale). ASIC can also seek that the individual be disqualified from acting as a director in the future.
What about foreign-based directors?
All directors of Australian companies must apply for the Director ID, regardless of their place of residence.
If you have MyGovID, or are eligible to obtain a MyGovID you can apply online.
If you do not have, or cannot get a MyGovID, but you do have an Australian Tax File Number (TFN), you can apply by phone.
If you do not have a TFN, you will need to apply using the ABRS’ paper form and using certified, translated (if necessary) proof of identity documents. A copy of the paper form is available on the ABRS website here.
Foreign directors that have never lived in Australia (and thus do not have a TFN) will have to file a paper application. Filing a paper application is a longer process as identity documents may need to be translated into English and must also be certified. Directors located outside of Australia that need to have their identity documents certified may do so through a notary public, or staff at an Australian embassy, high commission or consulate. Copies of the identity document in its original language must also be certified.
If you are applying using the paper form, the process is slower and you should act now to apply for your Director ID to ensure your application is submitted before the relevant deadline.
You must apply for the Director ID yourself. A tax or BAS agent or similar cannot lodge the application on your behalf, because of the proof of identity documents which must be lodged with the application.
For more information, please contact Brit Ibanez or Nicholas Edwards.
