This month marks the commencement of the phasing period of Director Identification Number (DIN) for all company directors.
Recently, the Corporations Act 2001 has been amended so that every director will now be required by law to have a Director Identification Number in an attempt to address illegal activities such as phoenixing.
What is a Director Identification Number (DIN)?
The DIN is designed to be a unique identifier for all new and current company directors that, once registered, will be used to identify them permanently, even if they cease being a director in the future.
Who should apply for a Director Identification Number?
You will need to apply for a Director ID if you are (or are planning to become) a director of a:
- Company
- Corporate trustee
- Aboriginal and Torres Strait Islander corporation
- Charity or not-for-profit organisation that is a company or Aboriginal and Torres Strait Islander corporation
- Australian body registered with ASIC; and
- Foreign company registered with ASIC and carrying on business in Australia
You will also need to apply if you are acting in the capacity of an alternate director.
The following entities are not required to have a Director ID:
- Sole traders or partnerships
- Non-director company secretaries
- External administrator
- Directors of registered charities not registered with ASIC
- Referred to as a ‘director’ in your job title but have not been appointed as a director under the Corporations Act or the CATSI Act
- Officers of an unincorporated association, cooperative or incorporated association established under state or territory legislation (unless the organisation is also a registered Australian body)
What are the time requirements for making an application for DINs?
All directors can begin applying from November 2021.
Most importantly, the application must be made by the director, as they will need to provide proof of identity. A third party, such as an advisor, cannot apply for you.
Depending on the date you became a director, the deadlines are as follows:
| Date of director’s appointment | Deadline for application |
| On or before 31/10/21 | 30 November 2022 |
| From 1/11/21 to 4/4/22 | Within 28 days of appointment |
| From 5/4/22 | Before appointment |
How does this effect your business?
Businesses are unlikely to be significantly impacted by this new legislation but for the minimal efforts of updating of policies and procedures to ensure compliance with this legislation.
However, there may potentially be some hurdles in obtaining a DIN for directors that are not Australian residents (and therefore do not have a Tax File Number) as the extent of documentation the ATO will require to satisfy their identification requirements is yet to be clarified.
Are there any penalties for non-compliance?
Non-compliance with the new legislation (including not applying when directed to do so, applying for a Director ID outside the relevant timeframe, applying for more than one, or misrepresentation of your ID, such as providing false details) could potentially lead to civil and criminal consequences under the legislation including imprisonment.
Additional information, including details on the application process, can be found on the relevant section of the ABRS website.
For more information contact our lawyers.
