On November 4, 2021

Mandatory Director Identification

Director ID Implementation

With the implementation of the Director Identification Numbers (DIN’s or Director ID’s) pending, it will be important to understand the new obligations for those operating in the capacity of a Director, as failure to apply for a DIN within the required time frame will leave you open to both criminal and civil penalties. It is one of the first initiatives under the Modernising of Business Registers Program and will be a legal requirement. A person only needs to apply once for a Director ID, there is no need to apply each time you are appointed a Director.

What Does it Mean to have a Director ID?

The Director ID will be a unique identifier that a Director will keep forever, enabling regulators to better track of Directors of failed companies who use fabricated identities. It will help identify business who are doing the wrong thing. The new system will help overcome issues with data integrity, which have always been a constant battle in regulating phoenixing and the illegal activities around this dilemma. This compliance regulator will further support small businesses by keeping out the operators that are breaking the law.

What is Phoenixing

Phoenixing is when companies deliberately avoid paying liabilities by shutting down an indebted company and transferring assets to another company. This hurts trade creditors, employees, and the public through lost taxes.

The main aim of the Modernising of Business Registers Program is to protect legitimate businesses. To stop directors who are leaving unpaid creditors behind. By identifying those questionable directors from deliberately avoiding their obligations, government departments can be there to support credible businesses. Putting identification on the front end of business means we know who we are dealing with when it comes to trading with a business. There is a legislative provision to deactivate the Director ID if needed.

When does the Application Process Start?

New Directors / New Entities

  • Doesn’t apply yet, unless you are invited.
  • From 1st November 2021: Must apply within 28 days.
  • From 5th April 2022: must apply before being appointed.

Existing Directors / Existing Entities

  • Doesn’t apply yet, unless you are invited.
  • Must obtain prior to 30th November 2022. (transition period)

Future Directors

  • A person who intends to be appointed, may apply up to 12 months before.
  • Corporations (Aboriginal and Torres Strait Islander Act 2006 CASTSI Act) have an extra 12 months. Must apply by 30th November 2023.
  • NFP Sector – working through this at the moment. Information to follow.

Who

Who needs a director ID?

Why

About director ID

When

*Not yet – after 1st November 2021

When people need to apply

How

How to apply online

Institute of Certified Bookkeepers article October 2021 used with permission.

  • By Jennifer Lawrence  0 Comments   

    0 Comments