Director Identification Number (Director ID)
A director identification number (Director ID) is a mandatory requirement for all company directors. From 5 April 2022, a first-time director will need to apply for a Director ID before their official appointment (that is, before a company can be registered with that first-time director).
Below we consider this new obligation in further detail.
Why is there a need for a Director ID?
Various stakeholders, including company shareholders, employees and government regulators are entitled to know the names and certain details of the directors of a company. The new Director ID process serves to:
- prevent the use of false or fraudulent identities;
- make it easier for external administrators and government regulators to trace directors’ relationships with companies; and
- identify and eliminate director involvement in unlawful activity, such as illegal phoenix activity.
Illegal phoenix activity occurs when a company is liquidated to avoid paying its debts. A new company is then set up to continue the same business, but without the debt. When this happens, employees, suppliers and contractors are badly affected, whilst other businesses are competitively disadvantaged.
Who must apply for a Director ID?
A Director ID must be applied for by all “eligible officers” of:
- a company, a registered Australian body or a registered foreign company under the Corporations Act 2001(Corporations Act); or
- an Aboriginal and Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006(CATSI Act).
An “eligible officer” is a person who is appointed as a director or, an alternate director who is acting in that capacity.
In essence, those already acting in the capacity of a director, or, who wish to become a director, need a Director ID.
Only one Director ID is applied for and this carries with the individual forever, even if they are no longer a director, or they become a new director of another company or if the individual relocates interstate or overseas.
A Director ID must be applied for by an individual themselves, so as to complete the identity verification process. Accountants and Tax Agents are not able to apply for a Director ID on behalf of their client/s.
You need a Director ID if you’re a director of a:
· company;
· Aboriginal and Torres Strait Islander corporation;
· corporate trustee, for example, of a self-managed super fund;
· charity or not-for-profit organisation that is a company or Aboriginal and Torres Strait Islander corporation;
· registered Australian body, for example, an incorporated association that is registered with the Australian Securities and Investments Commission (ASIC) and trades outside the state or territory in which it is incorporated;
· foreign company registered with ASIC and carrying on business in Australia (regardless of where you live).
The new requirements apply to all companies registered in Australia, whether trading or dormant.
You don’t need a Director ID if you are:
· a company secretary but not a director;
· acting as an external administrator of a company;
· running a business as a sole trader or partnership;
· referred to as a ‘director’ in your job title but have not been appointed as a director under the Corporations Act or the CATSI Act;
· a director of a registered charity with an organisation type that is not registered with ASIC or the Office of the Registrar of Indigenous Corporations (ORIC) to operate throughout Australia;
· an officer of an unincorporated association, cooperative or incorporated association established under state or territory legislation, unless the organisation is also a registered Australian body.
Note: If a company is struck off ASIC’s Companies Register before the deadline that a director needs to apply for a Director ID (see dates below), and the director(s) of that company are not directors of any other company, then there is no requirement for the director(s) to apply for a Director ID.
What are the deadlines?
For Corporations Act directors, the deadline for applying for a Director ID is as follows:
|
Date appointed as Director |
Deadline for applying for a Director ID |
|
On or before 31 October 2021 |
By 30 November 2022 |
|
Between 1 November 2021 and 4 April 2022 |
Within 28 days of appointment |
|
From 5 April 2022 |
Before appointment |
For further information on the responsibilities of a Director under the Corporations Act, see here.
Example – Tom, Existing Director
Tom has been a director of a registered company for several years (well before 31 October 2021). He must apply for a Director ID by 30 November 2022.
Once Tom receives his Director ID, he keeps it safe until he needs to use it.
He can share it with his:
· accountant
· company secretary
· ASIC registered agent
· tax agent.
He is not required to provide his Director ID to ASIC unless he is asked to. He doesn’t need to do anything else at this time.
TIP – Existing Directors
For those appointed to a director role on or before 31 October 2021, these individuals have until 30 November 2022 to apply for a Director ID. This holds even if the individual becomes a director of another company after 31 October 2021.
For CATSI Act directors, the deadline for applying for a Director ID is as follows:
| Date appointed as Director | Deadline for applying for a Director ID |
| On or before 31 October 2022 | By 30 November 2023 |
| From 1 November 2022 | Before appointment |
For further information on the responsibilities of a Director under the CATSI Act, see here.
To request an extension of time to apply for a Director ID, see: here. ASIC is responsible for enforcing Director ID offences set out in the Corporations Act. Failure to apply for a Director ID on time is a criminal offence.
Those intending to become a Director in the next 12 months, can apply for a Director ID now. In the event that the Director ID is not used within 12 months of applying, the Director ID will be cancelled. If an application for a Director ID is again made down the track, the same number will be issued.
How to apply for a Director ID
Application for a Director ID can be made online via the Australian Business Registry Services (ABRS), by using the myGovID app. The relevant steps are briefly outlined below.
Step 1 – Set up myGovID
A myGovID with a Standard or Strong identity strength is needed to apply for a Director ID online.
|
TIP – myGovID is different from myGov · myGovID is an app. The app is downloaded to a smart device. It allows you to prove your identity and log in to a range of government online services. · myGov is an account. This account lets you link to and access government online services, for example, Centrelink, Medicare and more. |
Step 2 – Gather relevant documents
The information needed includes:
- a tax file number;
- a residential address, as held by the Australian Taxation Office (ATO); and
- information from two documents to verify your identity (for example, an ATO notice of assessment and a bank statement).
Step 3 – Complete the application
Apply here on the ABRS website.
With all the above information on hand, the application process itself should take less than 15 minutes.
Alternatively, a Director ID can be applied for by phone or paper. Please note that paper applications can take several weeks or months to process.
Further details on the above steps can be found here.
Finally… apply early!
Applications for a Director ID can be made up to 12-months before any formal appointment. Any difficulties encountered (particularly for those needing to apply in paper form) won’t be known until an individual actually commences the application process. For this reason, we recommend applying for a Director ID early, given that from 5 April 2022, a first-time director of a company will need to apply for a Director ID before their official appointment.
For any assistance meeting your ASIC requirements, please contact us here.