Director Identification Numbers

On 12 September 2017, the then Minister for Revenue and Financial Services, the Hon. Kelly O’Dwyer MP, announced that a comprehensive package of reforms to address illegal phoenixing would include the introduction of a Director Identification Number (DIN) to deter and penalise phoenix activity. The reforms were made by Schedule 2 to the Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020, which was enacted on 22 June 2020.

Currently, although directors are required to provide their details to the Australian Securities and Investments Commission (ASIC), ASIC has not been required to verify the identity of directors. This has made it difficult to trace a director’s relationships across companies, track directors of failed companies and prevent the use of fictitious identities. These reforms will assist regulators and external administrators to investigate a director’s involvement in what may be repeated unlawful activity including illegal phoenix activity.

Requiring all directors of companies and body corporates to apply for a DIN will compel them to confirm their identity. The DIN will be a unique permanent identifier for each person who consents to being a director.

Transitional arrangements

Directors don’t need to do anything now, as the commencement date is yet to be proclaimed (must be no later than 23 June 2022) and the ATO is currently testing the director ID application process in a private beta.

A series of draft legislative instruments have been issued which set out:

• the proposed transitional application periods;
• what information may be requested and collected in an application for a director ID and how this information will be used.

Under the proposed transitional arrangements:

• Existing directors will have until 30 November 2022 to apply for a DIN;
• If a person is appointed as a director within the first 12 months of the new regime, they must apply for a DIN within 28 days of becoming a director;
• Otherwise, the person will need to have a DIN before they are appointed as a director.

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Source: Accountants Daily