October 29, 2021
What are Director Identification Numbers and do I need one?
Some of the 31 registers that are currently part of the Australian Securities and Investments Commission will be brought together under a new entity which will be known as the Australian Business Registry Services. As part of these changes, from November 2021 directors will need to apply for a Director Identification Number, designed to improve transparency and accountability. We’ll explore what this means for you and whether you need a Director Identification Number.
What is the Australian Business Registry Services?
In April 2021 the Commissioner of Taxation was appointed as the Commonwealth Registrar of the Australian Business Registry Services (ABRS) which will bring together some of the registers currently held by ASIC. The ARBS will be taking over the Australian Company Register, the Business Names Register, and the Australian Business Numbers (currently on the Australian Business Register). ASIC will then be responsible for the enforcement of associated offences.
Previously, a company or business would register through ASIC, where a Tax File Number (TFN) and an Australian Business Number (ABN) would be required. These are obtained through the Australian Taxation Office (ATO) and are a critical part of setting up a business or company. Registering with ABRS will simplify the registration process for businesses and streamline different services.
From November 2021, there will be an additional step introduced when registering a company through ABRS that will involve applying for a Director Identification Number.
What is a Director Identification Number?
A Director Identification Number (DIN) is a 15-digit unique identifier given to a director (or someone who intends to become a director) who has verified their identity with the ABRS. A DIN is a way for the ABRS to track company directors and their details to hold them accountable to their responsibilities as directors.
A director will apply for a DIN once and keep the same number forever, even if they:
- change companies
- stop being a director
- change their name
- move interstate or overseas.
DINs will be recorded in a new database to be administered and operated by the ATO and will be made available to the public. This is a move towards transparency as shareholders, employees, creditors, consumers, external administrators and regulators are entitled to know the names and certain details of the directors of a company.
The ATO will have the authority to issue, record, cancel, and reissue a DIN. If an individual fails to become a director within 12 months of receiving their DIN, the DIN will be automatically canceled.
Who needs to get a Director Identification Number?
According to projections, around 10% of Australians will require a DIN.
Every company director will need to have a DIN prior to 30 November 2022, with Indigenous directors having an additional year (till 30 November 2023) to adhere to the new requirement.
This applies to directors if their organisation is a company, registered foreign company, registered Australian body or Aboriginal and Torres Strait Islander corporation.
The new DIN Requirements apply to appointed directors and acting directors of Australian corporations and registered foreign companies, which includes those companies who are responsible for managed investment schemes and registered charities. This is set out under the Corporations Act 2001 (Cth).
As of the time of writing, the DIN requirements do not extend to certain legal structures including unincorporated bodies, de facto or shadow Directors.
How do I get a Director Identification Number?
Director ID numbers will not be issued automatically to directors, they must apply for this number themselves and verify their identity. No one else will be able to apply on their behalf.
If you currently have a company and do not already possess a MyGovID account, now is the time to obtain one in the move towards DINs. To apply for a DIN you will need to submit documents to verify your identity into MyGovID. The whole application process should take less than 5 minutes.
Why do we need these changes?
It is believed that this change will make the registering process cheaper, faster, and easier, as companies will no longer need to be first set up through ASIC before dealing with the ATO for an ABN and TFN.
It will also prevent and stop phoenix directors from being appointed to companies, who then rack up significant debts that they are not held accountable for.
Director Identification Numbers are about to be mandatory for directors of Australian corporations and registered foreign companies. DINs will be administered by the ABRS and recorded in a database that is administered and operated by the ATO and will be available to the public in a push for more transparency and accountability from directors.
If you want to know more about how the ABRS and DINs will affect you, get in touch with us today.