March 8, 2022

Apply for your director ID right now!

By URY ZHANG

Apply for your director ID right now!

A new law has come into effect on 1 November 2021 which requires all eligible directors of a company (including Australian bodies, foreign companies, and Aboriginal and Torres Strait Islander corporations) to apply for a director identification numbers (Director ID), through the Australian Business Registry Services (ABRS) website.

This requirement was included as part of the Treasury Laws Amendment Act 2020 by the Australian Government, as a measure to deal with illegal phoenix activities and improve the traceability of company directors over time, by cutting down on the use of false or fraudulent director identities through assigning a unique ID to directors that lasts forever.

What is a director ID?

A Director ID is a unique 15-digit identification number that only takes minutes to apply online but will remain with that director for life, providing greater identity security regardless of whether they change their name, career, companies, or move overseas.

Why are director IDs significant?

The purpose of introducing the direct ID is to improve and remedy three significant issues:

  • Prevent the use of fake directors
    • By undergoing a substantial identity verification check, directors are less likely to use fake identities, and will help protect against fraud.
  • Make it easier to associate directors with companies
    • Stakeholders, including shareholders, employees, creditors, and other external administrators, are entitled to know the names and identifying details of company directors. Director ID can therefore help stakeholders to trace director’s relationship with companies over time.
  • Prevent illegal activity, such as phoenixing
    • Since director’s activities will be connected to their identification number, it is much more difficult for directors to simply abandon the old company and transfer all company assets into a new company to avoid paying the debts.

How do directors apply for a director ID?

You can apply through the Australian Business Registry Services through the following steps:

Apply through myGov:

  • Step 1: Verify your identity online
    • You have to download the ‘myGovID’ app and create an account. Then, you need to set up or verify your identity using myGovID.
    • You need to provide proof of your identity following the documentation requirements, including your passport, birth certificate, citizenship certificate (if applicable to you), driver’s license and/ or VISA.
  • Step 2: Apply for your director ID
    • Go to the Australian Business Registry Services first. Then, you are required to provide on-hand documentation that matches the information held by the ATO, including you tax file number, residential address held on file by the ATO, and information from two documents to verify your identity. You can find more details on your myGov account.
    • You need to provide your personal contact details (not the company’s)

You will immediately receive your director ID once the above processes are completed.

When do directors need to apply?

For Company directors:

Date you become a director Date you must apply
On or before 31 October 2021 By 30 November 2022
Between 1 November 2021 and 4 April 2022 Within 28 days of the appointment
From 5 April 2022 Before appointment

Frequently asked questions (FAQ)

What are the penalties if directors fail to comply?

Failing to apply for director ID within the required timeframe may result in civil or criminal prosecution, with maximum penalties of $13,320 and/or a 1-year imprisonment.

Offence Legislative section Maximum penalties for individuals
Failure to have a director ID within required timeframe s1272C $13,200 (criminal)
$1,100,000 (civil)
Failure to apply for a director ID when directed by the Registrar s1272D $13,200 (criminal)
$1,100,000 (civil)
Applying for multiple director IDs s1272G $26,640, 12-months imprisonment or both (criminal)
$1,100,000 (civil)
Misrepresenting director ID s1272H $26,640, 12-months imprisonment or both (criminal)
$1,100,000 (civil)

It is imperative that ensure that you understand your obligations as a company director under the new changes and protect yourself against legal liability. Biz Lawyers & Advisory are located in Sydney CBD and we have a team of commercial lawyers to help you with any of your business legal needs. If you need any help, please do not hesitate to contact us on 1800 893 836.

We are here to help

Drop us a call for a free initial consultation today!

BOOK FREE CONSULT

Linked Associations

Law Society PEXA