What Is A Director ID – And Do You Need One?
- 360South
Are you a director of a company or about to become one? You might already be a Director – or need to become one – if you’re operating a business through a Pty Ltd company, or if a company is the trustee of your Family Trust or Self-Managed Superannuation Fund.
If so, a new scheme introduced in November 2021 now requires you to obtain a Director Identification Number (ID).
The Government has introduced this new ID requirement as part of a package of reforms to address illegal activity. The initiative is delivered by the Australian Business Registry Services (ABRS), which is a newly established function of the ATO.
What is a Director ID?
A director ID is a unique identifier aimed at preventing the use of false or fraudulent director identities and to help regulators trace directors’ relationships with companies over time and better identify director involvement in unlawful activity.
Once an ID has been issued, it should be passed on to the record holder in the relevant company or corporation. Depending on the organisational structure this could be a company secretary, another director, or an authorised agent of the company (such as your accountant).
At this stage, there isn’t a requirement to provide your director ID to ASIC.
Who needs a Director ID?
You need a director ID if you’re an eligible officer of:
- a company, a registered Australian body or a registered foreign company under the Corporations Act 2001 (Corporations Act)
- 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
- an alternate director who is acting in that capacity.
You can also apply for a director ID if you intend to become a director within the next 12 months. If you fail to become a director within that time frame, you will not retain the ID.
You’ll only ever need one director ID, and don’t need to apply for another one if you become a director of other companies or corporations.
Why are director IDs needed?
Director ID’s will help to:
- reduce the likelihood that a director can appear as a different person on different company records
- make it easier for external administrators and regulators to trace directors’ relationships with companies over time
- identify and eliminate director involvement in unlawful activity, such as illegal phoenix activity. This is when a company is liquidated to avoid paying its debts, and replaced by a new company that operates the same business activities, but now without the debt.
With director IDs now in play, regulators and advisors can obtain a complete picture of a director’s corporate history, bring to light any conflicts of interest and give a clearer view of whether companies have participated in related party transactions.
How does a director ID work?
A director ID is a 15-digit identifier issued to a director, who has verified their identity with the ABRS.
If you are a director, you will only ever have one director ID issued to you. Even if you change companies, stop being a director, change your name or move interstate or overseas, your director ID stays with you forever and doesn’t change.
A director ID won’t be available to the public without the director’s consent, and for now at least, IDs are not searchable by the public. The Registrar is looking to consult the community about what details can be disclosed and searched in the future.
When do you need to apply for a director ID?
If you are an existing director then you can apply now. If you are planning to become a director then you can apply before your appointment.
The scheme is rolling out progressively and there is a transitional application period. The following dates to apply have been determined based on the date that you became a director.
If you became a director on or before 31 October 2021 then you have until 30 November 2022 to apply. However, we recommend it’s best to apply now and get it out of the way.
If you became a director between 1 November 2021 and 4 April 2022 then you have to apply for your ID within 28 days of appointment.
Finally, if you become a director from 5 April 2022 then you must apply for your ID before your appointment.
How do directors apply for the ID?
You can apply for your director ID using the ABRS website.
There are three key steps in the process which are detailed extensively on the website.
Step 1 is to set up myGovID
To do so you will need to download an app to your smart device so you can verify who you are and then log in to access a range of government online services. It’s important to note that your myGovID is not the same as your myGov account which is linked to things such as the ATO, Medicare and Centrelink.
Step 2 is to gather up your documents that are needed to verify who you are. You’ll need to have on hand your tax file number, residential address and two documents to verify your identity.
The final step once you’ve been verified is to login and apply for your director ID.
The process is free and should only take a few minutes.
Can someone else apply on your behalf?
No. The director themselves must apply for their own Director ID so that they can complete the proof of identity requirements. However, authorised tax and ASIC agents can assist their clients to understand the new requirement and provide support around how and when to apply.
BCV Financial Solutions acts as the Registered ASIC Agent for many clients’ registered companies. If that’s the case, we will be in communication with all Directors at the relevant time to ensure they meet their Director ID requirements. If you manage your company yourself, or require further information about Director ID’s, please contact BCV to discuss your needs.
