Coming Soon: Director Identification Number requirements

Directors will soon be required to verify their identity and apply for a Director Identification Number (director ID) in an effort to deal with illegal phoenix activities and improve the traceability of company directors over time.

Included as part of the Treasury Laws Amendment Act 2020 by the Australian Government, the measure is also intended to cut down on the use of false or fraudulent director identities by assigning a unique ID to directors that lasts forever.

With applications for existing directors opening in November, we’ve prepared responses to some FAQs about the director ID and the processes surrounding it.

What is a director ID?

A director ID is a 15-digit identifier given to a director, or someone who intends to become a director, who has verified their identity with the Australian Business Registry Services. This will be used to trace relationships to companies over time.

Directors need to apply for their own ID and they will only ever have one, which they will keep forever.

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 (Corporations Act)
• 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 do not already hold one). Once registered, that person has 12 months to be appointed as an eligible officer or their ID will be made inactive.

How do directors apply for an ID?

Application is via the Australian Business Registry Services website. Applicants will need a myGovID to apply for the director ID online, which can be obtained by following the instructions available at www.mygovid.gov.au/set-up. (Please note - a myGovID is different to a myGov account.)

Applicants will need to provide details such as:

• Individual Tax File Number (optional)
• Residential address (as recorded with the ATO)
• Answers to 2 questions, where details are known by the ATO, such as:
  • Bank account details
  • An ATO notice of assessment
  • Super account details
  • A dividend statement
  • A Centrelink payment summary
  • PAYG payment summary.

If you can’t get a myGovID, you can apply via the following two methods:

1. By phone if you have an Australian Tax File Number
2. By completing a paper form and providing certified (translated) copies of your documents to verify your identification.

When do directors need to apply?

Applications for a director ID can commence from November 2021. Both existing and new directors will need to apply in accordance with the following dates:

Corporations Act Directors

Date of Directorship	Application date
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	Before appointment

CATSI Act Directors

Date of Directorship	Application date
On or before 31 October 2022	By 30 November 2023
From 1 November 2022	Before appointment

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. The maximum penalties are 60 penalty units ($13,320 at the current penalty unit rate of $222) and 1 year imprisonment. 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.

This article was originally published by BDO. To view the original article, please click here.