New ID required by company directors

All directors of Australian businesses are now required to apply for a Director Identification Number (DIN) under a system designed to track and quash fraudulent activity.

The new regime took effect on 1 November and applies to all directors, including directors of a corporate trustee of Self-Managed Superannuation Funds and other trusts. Penalties will be enforced for directors and their businesses if a DIN is not obtained by the stipulated dates.

Previously ASIC, the Australian Securities and Investments Commission, did not verify the identity of directors, meaning directors could have multiple records with ASIC with variations of name, address or personal details.

A unique, permanent DIN is aimed at making business information more reliable and providing better traceability of a director's relationships across companies. It will also make it harder for directors to disassociate themselves with failed companies and to undertake illegal phoenix activity (when the assets of a failing company are transferred to third parties without consideration to avoid paying existing liabilities).

You must register for your own DIN; a director cannot use an authorised agent or have someone apply for a DIN on their behalf.

When the director receives their DIN they should pass it on to the company record-holder, who could be an authorised agent of the company. The DIN should also be provided to your accountant (such as Hood Sweeney Accounting & Business Advisory) so that they can update ASIC and any other government agencies.

Applications should be completed electronically via the Australian Business Registry Services. To complete an online application, a director will need:

• a myGovID

• an individual Australian tax file number (TFN)

• the residential address, as recorded by the Australian Taxation Office ATO

• answers to two questions based on details known about the Director from the following documents

  • bank account details

  • an ATO notice of assessment

  • super account details

  • a dividend statement

  • a Centrelink payment summary

  • PAYG payment summary.

If a director can’t get a myGovID, they can apply by phone if they have:

• an individual Australian TFN

• documents to verify their identity

If a director can’t apply online or over the phone, they can apply using a paper form. This is a slower process and they will also need to provide certified copies of their documents to verify their identity.

Failure to comply with the DIN regime can result in both civil and criminal penalties.

Under the Corporations Act, directors without a DIN can face maximum criminal liability of 60 penalty units and maximum civil liability of $1.05 M. Directors who apply for more than one DIN or who misrepresent their DIN numbers can face up to 12 months imprisonment in addition to pecuniary penalties.

Further information on how to apply for a DIN can be found here.