Oct 26, 2022

What you need to know about Australia’s director ID rules

There’s a very important deadline coming up on 30th November. The ATO is urging those who haven’t yet applied for their director identification number (Director ID) to do so ASAP. The consequences for neglecting this task are severe.

What is a director ID?

The director ID is a mandatory 15-digit identification number given to a director who has verified their identity with the ATO. Once you have it, that is tied to you for life, even if you switch organisations. The change to a mandatory and permanent ID number came into effect in November of last year. It’s intended to prevent the use of false or fraudulent director identities.

With the number in place, it will be much more difficult for directors of failed companies to use fake identities. It will also make it easier for regulators to identify director involvement in illegal activity.

Who counts as a director?

Any director of a company, charity, not-for-profit organisation, registered Australian body, or registered foreign company under the Corporations Act 2001 must have a director ID. This includes anyone serving as a temporary director or an alternate director.

Even those closely involved in your business, such as a spouse, sibling, or parent, may count as a director.

Directors of Aboriginal and Torres Strait Islander corporations also need to have a director ID. Although, the deadline dates are a little different.

If your small business is operating under a proprietary limited (“Pty Ltd”) structure, then you are likely a company director and need a director ID.

When do I have to apply?

We are currently in a transition period to allow time for an estimated 2.7 million directors to apply for their director ID. When you need to apply depends on when you became a director.

If you became a director on or before 31st October 2021
Apply by 30th November 2022.

If you became a director between 1st November 2021 and 4th April, 2022
Apply within 28 days of becoming a director.

If you became a director on or after 5th April 2022
You must have your director ID before appointment.

We recommend that you apply for your director ID as soon as possible to avoid any fines. Those who intend to become a director may apply up to 12 months before their anticipated appointment.

Why do I have to apply?

All company directors now need a director ID. It’s designed to increase transparency and fairness. The Australian Business Registry Services states that “shareholders, employees, creditors, consumers, external administrators and regulators are entitled to know the names and certain details of the directors of a company”.

What happens if I don’t apply?

The consequences of acting as a director of a company without a registered director ID are serious. They include penalties over $1 million, jail time, or both. Similar penalties exist for obtaining more than one director ID. Once you have your unique number, it stays with you for life.

How do I apply?

Submit your application through the ABRS website, or by using the myGovID app. Registration is easy and straightforward for those who already have a myGovID. If you don’t yet have a myGovID, you must get one before applying for your Director ID.

Your application for a director ID must be completed personally and not by an agent.

Final thoughts

While administrative tasks such as this can be a hassle, they are necessary to keep up transparency and fairness. You only have to apply for your director ID once, and you keep it for life. Visit the ABRS application website to get your director ID as soon as possible to easily avoid fines or other consequences.

The post What you need to know about Australia’s director ID rules appeared first on ausmasternew.staging.bizinkonline.com.

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