Did you know that ASIC looks after 31 different business registers that a business or company may need to on? Some of these registers are being brought together in what will be known as the Australian Business Registry Services (ABRS). With all these changes going on you may have heard about a Director Identification Number.
In April 2021, The Commissioner of Taxation became the Commonwealth Registrar of the ABRS. Shortly, registering a company will be done through the ABRS instead of ASIC. This is a part of the government’s move towards a more efficient digital economy.
ASIC previously looked after the registration of a company or business. In the registration process, you would need a Tax File Number and an Australian Business Number. The registration numbers obtained through the Australian Taxation Office (ATO) are critical for setting up a business or company.
What Are The Changes?
When registering a company from November 2021, the directors will require a Director Identification Number (DIN).
This director identification number is a unique identifier that a director will apply for once and keep forever.
Every company director will need to have a DIN before 30 November 2022. An exception is where Indigenous directors have an additional year (till 30 November 2023) to adhere to the new requirement.
These requirements apply to directors if their organisation is a company, registered foreign company, registered Australian body or Aboriginal and Torres Strait Islander corporation.
Directors will need to apply for their director ID themselves because they will need to verify their identity. Eligible persons that have sufficiently established their identity will be provided with a DIN that they will keep for their lifetime – even if they cease to be a Director.
No one else will be able to apply on their behalf.
Who Needs One?
The new DIN Requirements apply to appointed Directors and acting Directors of Australian corporations and registered foreign companies, including companies responsible for managed investment schemes and registered charities. Pt 9.1A of the Corporations Act 2001 (Cth) details this further.
As of writing, the DIN requirements do not extend to unincorporated bodies, de facto or shadow Directors.
The ATO will administer the new database to record DIN’s and make it available to the public.
The ATO will also have the power to provide, record, cancel and re-issue a person’s DIN. Individuals will have their DIN cancelled if they do not become a Director within 12 months of receiving the DIN.
Following the DIN, the ARBS will take over the Australian Company Register, the Business Names Register, and the Australian Business Numbers (currently on the Australian Business Register).
The ABRS is responsible for the implementation and administration of director IDs. ASIC will then be responsible for the enforcement of associated offences.
The expectation is that around 10% of all Australians will require a DIN.
Despite the small number, it is a crucial part of the plan to prevent and halt phoenix directors from being appointed to companies, who then rack up significant debts that no one is held accountable for.
The change will make the process cheaper, faster, and easier, as companies will no longer need to be first set up through ASIC before dealing with the ATO for an ABN and TFN.
If you currently have a company and do not already possess a MyGov account, now is the time to rectify it in the move towards DINs. For more information please feel free to contact us.
