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A director ID is a 15-digit identification number that, once issued, will remain with that director for life regardless of whether they stop being a director, change companies, change their name, move overseas or win tattslotto.
The introduction of the Director Identification Number (DIN) is part of the Federal Government’s Modernisation of Business Registers (MBR) Program designed to create greater transparency and prevent the potential for fraud and phoenix company activities.
To alleviate privacy concerns (some may recall Bob Hawke’s infamous attempt to introduce an Australian Card, a few decades ago), the director ID is not searchable by the public and cannot be disclosed without the consent of the Director.
Who needs a director ID?
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All directors of a company
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Directors of Registered Australian bodies
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Directors of a registered foreign company, or Aboriginal and Torres Strait Islander corporation
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Directors of a corporate trustee of self-managed super funds (SMSF).
You do not need a director ID if you are running a business as a sole trader or partnership, or you are a director in your job title but have not been appointed as a director under the Corporations Act or Corporations (Aboriginal and Torres Strait Islander) Act (CATSI).
It is important to note the director IDs are governed by the same privacy rules that apply to Tax File Numbers (TFNs) and should not be disclosed unless absolutely required.
When do you need to register?
When you must apply depends on when you were appointed as a director:
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Existing directors have until 30 November 2022 to apply;
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New directors appointed between 1 November 2021 and 4 April 2022 must apply within 28 days of their appointment.
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From 5 April 2022, intending directors must apply before being appointed.
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If the company intends to appoint new directors, it will be important to ensure that they are aware of the requirements and timeframes to establish their director ID if they do not already have one.
Directors in name only
It is important that anyone agreeing to be a director understands the implications. Being a director is not just a title; it is a responsibility. At a financial level, directors are responsible for ensuring that the company does not trade while insolvent, otherwise they will be personally liable for the debt.
The director penalty regime has also tightened up in recent years to ensure directors are personally liable for PAYG Withholding, net GST, and superannuation guarantee charge liabilities if the company fails to meet its obligations by the due date. For many small businesses, the directors are also often personally responsible for company loans secured against property such as the family home.
Failing to perform your duties as a director is a criminal offence with fines of up to $200,000 and five years in prison. Ignorance is not a legal defence. Do not sign anything unless you fully understand the consequences.
DBM can guide you through all aspects of being a director to ensure your business and personal goals are not compromised.
