Deadline for Director Identification Number Applications
Directors of companies will have to enrol in the Director Identification Number regime. This requires that current and future directors apply for director identification numbers (DIN) which will be permanently linked to the individual and not be reissued, even if they are no longer directors. It is hoped the regime will make it easier to trace relationships across companies and reduce instances of phoenixing and other illegal activity. Most existing directors will have until 30 November 2022 to apply for the DIN through the ATO.
The Director Identification Number regime came into force late in 2020 as a tool for the government to reduce phoenixing and black economy activities. Broadly, the regime will require all directors to confirm their identity with the ATO, at which time they will be issued a unique identifier. This identifier will then be permanently linked to the individual even if they cease to be a director.
While this regime was introduced in late 2020, the government has recently introduced an instrument that extends the time available for persons who are eligible officers immediately before the commencement of the director identification number obligations to apply for a director identification number (DIN). Individuals that operate under the Corporations Act and became a director on or before 31 October 2021 are required to apply for a DIN before the end of the transitional period, which is between 4 April 2021 to 30 November 2022.
Directors operating under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 and became a director on or before 31 October 2021 will have even more time, these individuals will have until 30 November 2023 to apply for a DIN (the transition period is 4 April 2021 to 30 November 2023). Any individuals that are appointed directors between 1 November 2021 and 4 April 2022 will have within 28 days of appointment to apply for the DIN and from 5 April 2022, individuals seeking to become directors will need to apply for a DIN before their appointment.
It is envisaged that the DIN will provide traceability of a director's relationships across companies, enabling better tracking of directors of failed companies and prevent the use of fictitious entities. It will also assist regulators to investigate a director's involvement in what may be repeated unlawful activity including illegal phoenixing.
ASIC and external administrators will also benefit by saving time and money as the DIN will make it simpler to track the corporate history of various directors and assist liquidators to improve efficiency of the insolvency process. In addition, the DIN is also expected to protect individuals against the fraudulent use of stolen identities to set up companies, and improve overall data integrity and security.
"To prevent abuse of the regime, any conduct that would be considered to undermine the DIN requirement will be subject to civil and criminal penalties. This includes deliberately providing false identity information, intentionally providing a false DIN, or intentionally applying for multiple DINs"
Sign-ins and director identity verification will be conducted using the myGovID app. This app requires a compatible smart device and will require an individual to enter personal details and verify at least two Australian identity documents (ie drivers licence, birth certificate, citizenship certificate, passport etc) to obtain the "standard identity strength". The "strong identity strength" which is currently in testing phase will require the completion of an additional face verification check.
If you are already the director of the company under the Corporations Act, you will have until 30 November 2022 to register for a DIN. If you are thinking of becoming a directors, you will have substantially less time, so it's prudent to do the necessary prep work now.
Contact us today for any assistance with the above.