Why is Director IDs being introduced?
Director IDs are the first step in the goal of cleaning up and streamlining Business Registers.
For many years, Officer registers have been plagued by inconsistencies due to variations in Director Names. Director names can be reported differently across multiple companies. One company may have an individual recorded with their first, middle, and surname, whilst another has only the individual's first and surname. One Company may have an individual's name recorded correctly whilst another may have misspelled it. The introduction of a unique identifier number (Director ID) for each director, will make name variation issues a thing of the past as each director can now be identified by a unique number.
Director IDs will also make it easier to trace Director's relationships with companies and further, it will help to identify and eliminate involvement in illegal activities such as illegal phoenix activity.
This illegal practice usually happens when company directors abandon the company or transfer the business of an existing company to a new company without paying true or market value, leaving debts with the old company. Once the assets have been transferred, the old company is placed in liquidation or abandoned. If the liquidator is appointed, there are no assets to recover, which means creditors cannot be paid.
This is a huge problem as it is the creditors and employees that are left unpaid and out of pocket. It also indirectly impacts the broader community because the company avoids having to pay tax, while at the same time Government often has to subsidise outstanding employee entitlements of liquidated companies.
In Australia, it is estimated that illegal phoenix activity costs employees up to $298 million in unpaid entitlements, up to $3.171 billion in the cost of business for unpaid trade creditors, and costs the Government around $1.66 billion in unpaid taxes and compliance costs. (see: The economic impact of potential illegal phoenix activity)
Who needs a Director ID?
You need a director ID if you’re a Director (or alternate Director) of:
- a company, a registered Australian body, or a registered foreign company under the Corporations Act 2001 (Corporations Act)
- an Aboriginal and Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act).
Individuals who intend to become a Director within 12 months may also apply for a Director ID.
When do individuals need to apply for a Director ID?
Deadlines for obtaining a Director ID vary based on when a director was appointed.
* Existing directors appointed before 31 October 2021 will have until 5 April 2022 if they are appointed to other/new companies. If existing directors are not being appointed to new companies then they will have until 30 November 2022 to apply for a Director ID.
The ABRS have stated that they do intend to apply the director ID requirement (that an ID is needed before a director is appointed) for all directors regardless of if they are already an existing director or not after 5 April 2022.
How do individuals apply for a Director ID?
There are a number of different methods directors can utilise to apply for a director ID.
- Apply online using the myGovID app.
- Apply by phone
- Apply with a paper form
Apply online using the myGovID app
You will need a myGovID to apply for your director ID online. If you live outside Australia and can’t get a myGovID, you will need to apply with a paper form.
For more information, see Apply for your director ID.
Apply by Phone
You can apply by phone if you have:
- an Australian tax file number (TFN)
- the information you need to verify your identity.
When you have the information you need to apply, contact the ABRS using the relevant ABRS Contact numbers.
Apply with a paper form
If you can’t apply online or over the phone, you can apply using a downloadable form:
Note: This is a slower process and you will also need to provide certified copies of your documents to verify your identity.
To certify your documents:
- photocopy them
- ensure the copy and any photograph is clear and identifiable
- take the copies and originals to an authorised certifier.
The following people can certify copies of your original identity documents as true and correct:
- Medical practitioner
- Justice of the Peace (JP)
- Minister of religion (who is authorised to celebrate marriage)
- Police officer
- Bank, building society or credit union officer with at least five years of service
- Sheriff's officer
- Commissioner of Declarations (in Queensland only).
How do we manage Director ID's in CAS 360?
Director ID Alert
CAS 360's Director ID Alert is designed to help you track and manage your company director's IDs. You will instantly be able to identify if a director still needs to apply for an ID and better yet, the alert even allows you to send messages to the company directors reminding them of their ID obligations and how to go about acquiring one.
See Director ID alert for more.
Official ABRS letters
To help, we now include official ABRS Director ID letters that can be generated from CAS 360. These letters will be included as part of the document set when you prepare annual reviews, Director appointments and Company Incorporations.
How will the Director ID's affect the ASIC forms and lodging through CAS 360?
At this stage, there is no change to the way you will prepare and lodge your ASIC forms. Also, the Director ID is not required to be input into any current ASIC forms, where director details are required.
The main focus, for now, is about educating directors and the corporate compliance profession on the importance of Director IDs and to allow time to help ensure that directors apply and obtain their ID.
Keep in mind that in late 2022-23, ASIC will be providing further guidance in relation to the changes to their forms. As for any of these future changes, like always, CAS 360 and the team at BGL will be sure to let you know what they are.