Why do I need a director identification number?
Since last November, new legislation has required all company directors to apply for a director identification number in order to better track the activity of directors and their companies.
The measure has been part of an effort to create greater transparency and regulate potentially illegal company activity that has been difficult to trace in the past.
In particular, director ID’s are designed to address Illegal phoenix activity where business owners transfer existing assets to a new company over from an old company with unpaid debts.
Once registered, a director ID will be used to permanently identify the director, even if they cease to be one in the future.
Who needs a director identification number?
You need a director ID if you’re a director of a:
- Aboriginal or Torres Straight corporation
- Corporate trustee (ie: SMSF)
- Charity or not-for-profit organisation that is a company or Aboriginal and Torres Straight corporation
- Australian body registered with ASIC
- Foreign company registered with ASIC and carrying on business in Australia
You will not require a director ID if you’re one of the following:
- Company secretary but not a director
- Running a business as a sole trader or partnership
- An external administrator of a company
- Director of a registered charity not registered with ASIC
- Referred to as a ‘director’ but have not been appointed as a director under the corporations Act or the CATSI act
- Officers of an unincorporated association, cooperative or incorporated association established under state or territory legislation (unless the organisation is also a registered Australian body)
How do I apply for a director identification number?
When you need to apply depends on when you became a director.
From now until April 4th, all directors must apply for a director ID within 28 days of their appointment. From April 5th onwards, directors will be required to apply before their date of appointment.
In order to apply, you must first set up your myGovID, which is different to your myGov.
It’s important to not that director ID’s cannot be applied for on behalf of someone else as directors need to first verify their identity.
In order to verify your identity, the ATO will need the following information:
- Your tax file number
- You’re residential address
- Information from two documents to verify your identity
Once you’ve verified your identity, you must complete the director ID application through the Australian Business Registry Services (ABRS) website. Here you will need to have documentation that matches the information held by the ATO.
Your director ID will be issued following the successful completion of your application.
Keep in mind, the legislation stipulates that a director ID will be cancelled if the person is not appointed to the role within 12 months of their application.