The director identification number (director ID) system is an example of how governments around the country are tightening things up.
One way or another, they are making it harder for business owners to operate unlawfully without suffering serious consequences.
While all of us (except for the bad guys) are applauding the good intentions behind the trend, we can’t escape the fact that complying with new rules and regulations can involve a bit of extra work. This is definitely the case with director ID.
So, what is director ID?
According to the website of Australian Business Registry Services, “A director ID is a unique identifier given to a director who has verified their identity with us. This will help to prevent the use of false or fraudulent director identities.”
An individual can have only one director ID. Once you have your director, it is yours for life regardless of whether you change companies, change your name or relocate anywhere in Australia or overseas. If you stop being a director, you will still have your director ID.
It is very clearly designed to stop ‘phoenix activity’ that sees one business entity replaced by another so the owners can avoid paying their debts including taxes, employee wages and entitlements, and subcontractors invoices.
Deadlines for getting a director ID
The deadline depends on when you became, or will become, a director.
- On or before 31 October 2021 – by 30 November 2022
- Between 1 November 2021 and 4 April 2022 – within 28 days of appointment
- From 5 April 2022 – before appointment
As you would expect, there are also some rules that define who does not need a director ID. A couple of examples are someone who is a company secretary but not a director, and someone who has the word ‘director’ in their job title but isn’t actually a company director under the law.
The process for getting a director ID
A word of advice – if you don’t already have a myGovID, which is the first step in the process, getting your director ID will be a bit complicated. It’s something you must work through one step at a time. Unless you are super fast at scanning identification documents and downloading apps, this is not a quick five-minute task.
For an introduction including an overview of the application process and a short video, see the Australian Business Registry Services (ABRS) website's information about director ID.
How to apply for your director ID
As mentioned above, first of all you need a myGovID. This is different to a myGov account that gives you access to Australian Government services.
To get a myGovID you need to download the myGovID app to your smartphone. Then, use the app to scan your identification and confirm your details.
For more about myGovID, see the myGovID website.
Once you have your myGovID, go to the ABRS website to apply for your director ID.
And yes, there are penalties for director ID offences
There are four director ID offences, including ‘Failure to have a director ID when required to do so’, ‘Failure to apply for a director ID when directed by the Registrar’, ‘Applying for multiple director IDs’, and ‘Misrepresenting director ID’.
Depending on whether the offence is decided under civil or criminal law, there are maximum penalties up to $1,100,000 or one year’s imprisonment.