Director Identification Numbers – they are finally here and this is what you need to know

Prior to the introduction of Director Identification Number regime (also referred to as ‘DIN’) there was no unique identifying numbers to keep track of Australia’s 2.7 million company directors. From 1 November 2021, directors are able to apply for a DIN using the ‘Australian Business Registry Services (‘ABRS’). 

DINs will stay with the director, much like a TFN (tax file number) does – meaning that it will move with the director between different company roles and businesses, creating a streamlined experience for directors, ASIC compliance agents and tax agents who manage company records. It is also intended to provide greater confidence to directors that they will be protected from fraud.

Who needs to register?

The legislation refers to ‘eligible officers’, which includes directors and alternate directors of:

• a company, or a body corporate that is a registered Australian body or registered foreign company under the Corporations Act 2001 (‘Corps Act’);
• an Aboriginal and Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (‘CATSI Act’)

When do you need to register?

There are different timelines for directors/alternate directors governed by the Corps Act and the CATSI Act. 

For those governed by the Corps Act the timeframes are as follows:

• Those individuals that are new directors have 28 days to apply for a DIN between 1 November 2021 and 4 April 2022;
  
• These transitional rules end on 5 April 2022, from which point new directors need to apply for a DIN before being appointed as a director; and
  
• Existing directors (i.e. current directors) need to apply for a DIN by 30 November 2022. 
  

For those governed by the CATSI Act the time frames are as follows:

• Individuals that are current or new directors appointed on or before 31 October 2022, they must apply for a DIN by 30 November 2023; and
  
• If the individual is appointed as a director on or after 1 November 2022, they must apply for a DIN before your appointment. 
  

What information is required to register for/apply for a DIN?

The information required on the application is very similar to the information provided to ASIC when appointed a new director (except for the former details). The following information is provided through the ABRS electronic platform:

• A standard or strong identity strength myGovID;
  
• Names and former names,
  
• Addresses and former addresses,
  
• Contact details, 
  
• Date and place of birth,
  
• Tax File Number (optional)
  

If the system is unable to establish your identity, further requests for information will be made. 

Unfortunately, due to the sensitivities of information provided when applying for a DIN, this process can only be conducted by the individual. An advisor may assist where it is determined that the individual is unable to apply themselves.

What happens if you don’t register in time?

Non-compliance with the DIN regime can result in civil and criminal penalties. Non-compliance includes:

• Failing to apply for a DIN within the specified time frames or when directed to do so;
  
• Intentionally applying for more than one DIN;
  
• Providing a false DIN; or
  
• Being actively involved in the contravention of any of the above offences. 
  

The penalties include:

• An infringement notice; or
  
• Civil (maximum being greater of $1,050,000 (5,000 penalty units) or three times from the benefit derived or detriment avoided because of the contravention) or criminal penalties (maximum of $12,600 (60 penalty units)). 
  

Issues we expect to see 

Much of the commentary around DIN’s is positive – the regime is intended to protect individuals from fraud and help stop phoenix activity. However, a downside that has been mentioned by many professional bodies is the difficulty some individuals may face in trying to apply. 

Generally, ASIC related compliance is left to the ASIC agent (who is usually the tax agent as well), with little engagement required from directors. This is especially the case for directors of trustee companies. Many family trusts that passively invest and self-managed superannuation funds have a corporate trustee – and as a result, and aging population of directors who may already struggle with MyGov.

As practitioners, we often see client struggle to log in and located documents on MyGov, so we expect to see similar issues with those individuals trying to verify their identity on myGovID and then apply for a DIN. 

How can Tax Controversy Partners help you?

At Tax Controversy Partners, our experienced lawyers can represent your best interests in providing advice that is compliant with the current case law and legislation and based on our understanding of likely ATO actions. 

Please contact us using our online contact form, via email at admin@taxcontroverypartners.com.au or by phone at 02 8513 3813.