As part of the Federal Government’s digitalisation strategy, all Directors will be required to acquire a Director Identification Number (DIN) by 30/11/2022.
To obtain a Director ID you will need to verify your identity by supplying a number of official identity documents. Your Director ID will stay with you for your lifetime, similar to a TFN.
The intent of the new rules is to:
- Help prevent the use of fictitious director identities
- Improve Director accountability and traceability, allowing the Tax Office and regulators to trace directors’ relationships with companies over time
- Tackle illegal phoenixing activities
Phoenixing is when a company deliberately avoids paying it’s liabilities (Tax office, suppliers, employees) by shutting down that company and transferring it’s assets to another company, sometimes at less than fair market value. Whilst significant penalties are in place to penalise those involved in illegal phoenixing activities, the Government are growing increasingly frustrated that this has not stopped a number of people from conducting these types of activities.
Also of concern to Government is instances where companies with fictitious directors were created to illegally obtain Government stimulus money, a practice that increased during JobKeeper. An ABC Radio National investigation alleged that vulnerable people (homeless people or those battling addiction) were recruited in Victoria to act as “dummy Directors” for companies created solely to access Government funding. In other instances, people have been appointed or removed as Directors without their knowledge.
The Director ID regime is intended to curb these activities and make it easier for regulators and insolvency practitioners to identify and track Directors involved in illegal activities.
What does this mean?
- There will be a new register that Directors will need to keep up to date whenever there’s changes to personal details such as your address.
- Any new Directors who do not already have an ID will be required to apply prior to being appointed as a company Director. This is expected to slow up the process for setting up new companies in the future
- All current Directors will be required to obtain a Director ID by 30/11/2022
- The legislation has passed Parliament however the ATO are still testing the application process. No date has yet been announced for the program to go live.
- We are expecting applications will open by late 2021. Watch this space.