One million Aussies need to sign up for director ID by November 30 deadline


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Australian company directors are being pushed to get their skates on and register for a compulsory director identification number (director ID) before the deadline on Wednesday, November 30.

Even with an uptick in registrations, the Australian Tax Office (ATO) and the Australian Business Registry Services (ABRS) revealed last week that roughly one million of the estimated 2.5 million directors in Australia had yet to sign up for a director ID.

ABRS deputy registrar Karen Foat says that part of the problem is that there are people out there who simply don't realise that they are directors in the first place.

director id deadline small business

"You don't have to wear a suit or work in an office to be considered a director. If you run a small business, self-managed super fund, a not-for-profit or even a large sporting club, you may be a director, which means you'll need a director ID."

The ATO and ABRS have received criticism from some directors over the lack of promotion surrounding both the deadline and who is actually required to get an ID - especially given that those who don't apply in time could face fines of up to $13,200, amongst other penalties.

Foat has confirmed that a "reasonable approach" will be taken by the ABRS in relation to penalties though, especially for those who have been affected by recent natural disasters.

Why the push for director IDs?

At the heart of the move to introduce director IDs is a desire to limit illegal phoenix activity - a practice which, explains Elinor Kasapidis, a senior manager of tax policy at CPA Australia, swindles other businesses, employees and the ATO out of billions of dollars each year.

"Phoenix activity is the intentional liquidation or winding up of a company to avoid paying debts, then continuing the business using other companies.

"Phoenixing costs Australians an estimated $1.6 billion a year in unpaid taxes and other government debts. That's not counting the cost to businesses and employees. A 2018 PwC report estimates that phoenix activities cost businesses more than $1 billion in unpaid debts while employees lose up to $300 million of their entitlements."

Kasapidis says that the new ID system will increase transparency and enable regulators to crack down more easily on directors and businesses doing the wrong thing.

"Without strong identity checks, directors can be appointed with false identities. In some cases, creditors are unable to identify the real directors," she says.

"Regulators will be able to digitally monitor the behaviour of corporate entities and respond faster to potential illegal phoenixing."

How can directors apply?

The ABRS is encouraging directors to sign up for their ID online rather than over the phone. To get started they will need a myGovID with at least a standard level of identity strength - i.e. it's been set up with at least two forms of identification such as a passport, driver's licence or birth certificate.

Applicants will also need some extra details to apply for the director ID itself including their tax file number and residential address, and information like their bank account details, a notice of assessment and their APRA super fund account details (including the fund's ABN).

Foat has also reminded directors that they will need to go through the application process themselves.

"There's a common myth floating around that if you've got a registered tax agent, they can just apply for a director ID on your behalf, but that's not true. All company directors must apply for it themselves, as they are required to verify their identity themselves. This robust identification process will help prevent the use of false and fraudulent director identities."

To get the process started head over to the ABRS' director identification number application hub, or if you're unsure whether or not you need to apply, you can also check out the full list of people who need a director ID on the ABRS' website.

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Tom Watson is a senior journalist at Money magazine, and one of the hosts of the Friends With Money podcast. He's previously worked as a journalist covering everything from property and consumer banking to financial technology. Tom has a Bachelor of Communication (Journalism) from the University of Technology, Sydney.