What’s the Go with Director IDs?
On March 15 2022, the ATO released guidance reminding taxpayers that directors must now obtain Director IDs. The ATO has advised that the purpose of these IDs is to prevent unlawful activities and can be utilised internationally.
What is a Director ID?
A Director ID is an identification number that remains with an individual indefinitely. It is comprised of 15 digits and ensures that company directors are verified. The good news is that there are no additional costs when applying for a Director ID.
The Australian Business Registry Services have advised that Director IDs will track directors regardless of whether they:
- change companies
- cease their directorship
- change their names
- relocate interstate or overseas.
What’s the purpose of Director IDs?
Director IDs serve several functions.
- to prevent fake director identities
- help regulators assess the companies that red flag directors work in
- help prevent unlawful activity such as illegal phoenixing.
Did you know?
Illegal phoenixing occurs when individuals bankrupt a company, defraud their creditors and start up the company again with its old assets under a new name.
Illegal phoenixing is detrimental as can cause:
- employees to miss out on wages, superannuation and entitlements. It can leave suppliers of subcontractors unpaid.
- unfair disadvantages for businesses that abide by corporate rules and legislation.
According to the Australian Business Registry Services, illegal phoenixing deprives the community of social funding.
Director IDs may seem burdensome but are a step closer to preventing crime, fraud and other harmful activity.
Who Needs to Apply?
All directors need to apply. This includes directors of:
- Aboriginal and Torres Strait Islander corporations.
- Corporate trustees including for self-managed super funds. (for more information relating to corporate trustees, click here.)
- Certain incorporated associations.
· Foreign companies registered with the Australian Securities and Investment Commission and carrying on business in Australia.
Did you know?
You can be called a director in your job title but still not be a director under the Corporations Act 2001 (Cth). This has important implications for your responsibilities and liabilities.
When do I Apply?
- If you have become a director before 1 November 2021, you must apply by 30 November 2022
- If you have become a director between 1 November 2021 and 4 April 2022, you must apply within 28 days of appointment
- If you are to become a director after 4 April 2022, you must apply beforehand
- Crucially, this means that you may be late! Now is the time to act as penalties may apply.
What Penalties Apply?
The Corporations Act 2001 (Cth) now imposes serious penalties for Director ID offences. Criminal Director ID maximums range from $13,200 to $26,640 with one year in prison. Further, the civil Director ID maximum is a penalty of $1,100,000.
Don’t get caught out, even failure to have a Director ID on time is an offence under the Corporations Act 2001 (Cth) s 1272C. It too carries a maximum criminal penalty of $13,200 and a maximum civil penalty of $1,100,000.
Did you know? Some company directors may need Director IDs already. If you are late, you may be liable for up to $13 200 in penalties.
If you need further guidance on Director IDs our team of passionate corporate lawyers and commercial lawyers at ABA Legal Group is here to help.