Over the next 13 months, every director needs to apply for what is called a Director Identification Number (aka Director ID & DIN).
The purpose is so ASIC can identify every director in Australia. This is primarily being done to prevent what is called phoenixing. Phoenixing is where one insolvent company is abandoned only for that business to suddenly be run by another company; that new company might have the same directors or relatives thereof. If your business has been dudded by such activity then you will be all in favour of this.
DIN’s are also being introduced to prevent fake identities being used.
To facilitate this, the ATO will be entrusted with the system. And what was known as the ABN registry will become the Australian Business Registry Services.
There will be a transition period with the expectation that by November 2022, all Australian directors will have been issued with their director ID.
- From November, any new director will need to apply for DIN and do so within 28 days.
- Current directors need to have applied for their DIN by November 2022.
- By November 2022, a first time director will need to apply for a DIN before becoming a director.
So you will be issued with a unique number. You will be issued with just one number irrespective of how many companies you are a director of and it will stay with you until the grave (and never be re-assigned to anyone else).
How do you apply
Somewhat oddly, directors must apply for their own DIN; accountants and lawyers cannot do so for their clients. This seems a remarkably impractical requirement given the age and computer abilities of many directors. Furthermore, many of our clients don’t have (nor want) a MyGov account but will be forced to open one. Some clients don’t even have a computer (which is not crime). Moreover, many will feel uncomfortable providing proof of identity documents such as passports, birth certificate and drivers licence. Only those with a disability, injury or illiteracy can ask someone to ask on their behalf.
The fines for non-compliance are breath taking – 5,000 penalty units ($1,050,000 – yes more than $1mAUD) or three times any benefit derived.
This process will also clean up ASIC’s data base which is full of permutations of a director’s name and/or address. It is not uncommon to on board a new client and find there are 3 versions of their name across multiple entities due to a missing middle name or mis-spelt names. Fortunately, this is a process we have already been tidying up as part of our new corporate affairs program you have seen by virtue of the new ASIC Annual Reviews.
Whilst we are denied from being able to apply on your behalf (as we can do for Tax file Numbers, and ABN applications) we will happily answer any question you may have so we can point you in the right direction.
At MRS, we will spend today planning for your success.