With the implementation of Director Identification Numbers (DIN’s or Directors ID’s) approaching, it is important to understand the new obligations for those in the position of director. The Director ID is a unique 15-digit identifier that is issued to a director that has verified their identity with Australian Business Registry Services.
Why is it important?
It is being implemented to help cut down on the use of false and fraudulent Director Identities. It will enable regulators to better track directors of failed companies who use fabricated identities and help identify businesses who are doing the wrong thing.
The new system will help overcome issues with data integrity, which has been an ongoing issue in regulating phoenixing and the illegal activities around this problem.
Phoenixing is when companies deliberately avoid paying liabilities by shutting down an indebted company and transferring assets to another company. Why is this an issue? It hurts trade creditors, employees, and the public through lost taxes.
If you would like more information on Phoenixing activity and how to protect your business, you can check out the ATO’s information on it here.
How Do You Apply?
Directors need to apply for their own ID and you only need to apply once. You do not need to apply each time you are appointed to the position.
You keep this number for life even if you:
- Change companies
- Stop being a director
- Move overseas or interstate
- Change name
Who Needs a DIN?
Directors have obligations under the law, so it is important that people such as shareholders, employees, creditors and regulators know who the directors of a company are. Eligible officers will need to apply.
.An eligible officer is a person who is appointed as (or will be appointed come November 2021):
- a director; or
- an alternate director who is acting in that capacity.
A person must apply for a DIN if they are an eligible officer of:
- a company, a registered Australian body or a registered foreign company under the Corporations Act 2001; and/or
- an Aboriginal and Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act)
You may apply if you expect or intend to become a director in the next 12 months.
When Do You Need to Apply?
The date you will need to apply for a DIN will vary depending on when you became a director.
If you became a director on or before 31 October 2021, your application must be submitted by 30 November 2022.
If it was between 1 November 2021 and 4 April 2022 your application must be submitted within 28 days of appointment.
If you become appointed on or after 5 April, you will need to apply before you become appointed.
What Identification Do I Need?
To verify your identity, you will need two standard Australian Identification documents such as:
- Drivers Licence
- Medicare Card
- Birth Certificate
- Citizenship Certificate
You will then need to provide proof of ATO record ownership using:
- Bank account details
- Notice of assessment
- PAYG payment summary
- Superannuation account details
Once you complete the application process using this information you will then instantly receive your DIN. Once you receive your DIN you will then need to provide it to your company record holder.
What Happens if You Fail to Comply?
Failing to hold a Director ID may result in an infringement notice or possible civil and/or criminal prosecution. Additional compliance 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.
If you want to know more about Directors Identification Numbers or discuss if you need to apply for one, Sense in Numbers is happy to answer your questions.