1. What Exactly is a Director ID?

A Director Identification Number is a unique 15-digit identifier that a director will apply for once and keep forever. Think of it like a Tax File Number (TFN) but for company directors. It is permanently linked to an individual, not to the company they work for. Even if you cease to be a director, change companies, move interstate or overseas, or change your name, your Director ID will remain the same.

The program is administered by the Australian Business Registry Services (ABRS), a new single-entry point that brings together ASIC's business registers and the Australian Business Register (ABR).

Why Has the Director ID Been Introduced?

The primary goal of the Director ID initiative is to enhance corporate governance and accountability. It aims to:

1. Prevent the use of false or fraudulent director identities: By verifying each director's identity, it becomes much harder to appoint fictitious directors.
2. Combat illegal phoenixing: This is where a company is deliberately liquidated to avoid paying its debts. A new company is then started to continue the same business, leaving employees, creditors, and the tax office out of pocket. A Director ID makes it easier for regulators to track directors of failed companies and hold them accountable.
3. Increase transparency: It allows regulators and the public to have a clearer picture of a director's corporate history and affiliations.
4. Streamline business processes: Over time, the unique identifier will simplify the process of managing a director's appointments and corporate records.

2. Who Needs to Apply for a Director ID?

You need a Director ID if you are a director, or an alternate director acting in that capacity, of:

• A company, a registered Australian body, or a registered foreign company under the Corporations Act 2001.
• An Aboriginal and Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act).

This includes directors of small family-run 'Pty Ltd' companies, self-managed superannuation fund (SMSF) corporate trustees, not-for-profit organisations, and large publicly listed companies. If your title is 'director', you need one.

You do not need a Director ID if you are a sole trader, in a partnership, a company secretary (but not a director), or running a business as a trust.

3. When Do You Need to Apply?

The deadline for applying for your Director ID depended on when you were first appointed as a director. While the main deadline for existing directors has now passed (30 November 2022), the rules for new directors are critical to understand.

• For directors appointed from 1 December 2022 onwards: You must apply for your Director ID before being appointed.
• For directors of CATSI corporations: The deadlines are different. It is best to check the ABRS website for specific dates relevant to your situation.

It is now a legal requirement for all new directors to have their Director ID in place prior to their appointment. There can be significant civil and criminal penalties for failing to comply with this requirement.

4. How to Apply for Your Director ID: A Step-by-Step Guide

The application process is free, and the fastest way to apply is online. You must apply for the Director ID yourself; an agent or advisor like Tax Savers cannot apply on your behalf, as you need to personally verify your identity.

Here's what you need to do for the online application:

Step 1: Set up your myGovID
You will need a myGovID with at least a Standard identity strength. This is different from a MyGov account. myGovID is an app you download to your smart device that proves who you are. To reach the Standard strength, you will need to verify two Australian identity documents (e.g., driver's licence, passport, Medicare card).

Step 2: Gather Your Documents
You will need to have some information on hand that the ATO knows about you to complete the verification process. This includes:

• Your Tax File Number (TFN)
• Your residential address as held by the ATO
• Information from two documents to verify your identity, such as:
  • An ATO notice of assessment
  • A PAYG payment summary
  • A superannuation account statement
  • A Centrelink payment summary
  • A bank account statement

Step 3: Complete the Online Application
Once you have your myGovID and documents ready:

1. Visit the Australian Business Registry Services (ABRS) website.
2. Log in using your myGovID.
3. Follow the prompts to complete the application and verification process.

The entire online process is quick and you should receive your Director ID instantly on screen.

Alternative Application Methods: If you cannot apply online, there are options to apply by phone or with a paper form, although these methods are slower.

5. Your Obligations as a Director

Obtaining a Director ID is just one part of your ASIC director obligations. It’s a reminder of the serious responsibilities that come with managing a company. This is where professional guidance can be invaluable.

The team at Tax Savers in Tarneit provides comprehensive support for company directors and businesses, including:

• Corporate Secretarial Services: We can help you manage your ASIC compliance, including lodging annual statements, updating company details, and preparing resolutions.
• Business Structuring Advice: We can help you understand the responsibilities of a company structure and ensure it’s the right fit for you.
• Compliance Guidance: We can ensure you understand all your obligations, from Director IDs to tax and superannuation, helping you avoid costly penalties.

While you must apply for your Director ID personally, we can guide you through the process and manage all other aspects of your corporate compliance.

Are you a company director or thinking of becoming one?

Don't leave your legal obligations to chance. Ensure you are fully compliant and understand your responsibilities. Contact the expert Tarneit business advisors at Tax Savers today.

Call Tax Savers on 03 8721 0365 or visit our website at taxsavers.com.au to book a consultation. Let us help you manage your compliance, so you can focus on leading your business.