In an effort to combat illegal phoenix activity and fraudulent activity, the Australian Taxation Office (“ATO”) has introduced Director Identification Numbers (“Director ID”) to help prevent false or fraudulent use of director identities.
What is Director ID?
A Director ID is a 15-digit identifier given to a director (or someone who intends to become a director) who has verified their identity with the ATO.
A Director ID:
- starts with 036, which is the 3-digit country code for Australia under International Standard ISO 3166
- ends with an 11-digit number and one ‘check’ digit for error detection.
Directors need to apply for their own director ID and it’s free to apply.
Directors will only ever have one director ID. You will keep it forever even if you:
- change companies
- stop being a director
- change your name
- move interstate or overseas.
Why Director ID is Necessary
Shareholders, employees, creditors, consumers, external administrators and regulators are entitled to know the names and certain details of the directors of a company.
All directors are required by law to verify their identity with the ATO before receiving a Director ID. This is important because it will help to:
- prevent the use of false or fraudulent director identities
- make it easier for external administrators and regulators to trace directors’ relationships with companies over time
- identify and eliminate director involvement in unlawful activity, such as illegal phoenix activity.
Illegal phoenix activity is when a company is liquidated, wound up or abandoned to avoid paying its debts. A new company is then started to continue the same business activities without the debt.
As the result of illegal phoenix activity:
- employees miss out on wages, superannuation and entitlements
- suppliers or sub-contractors are left unpaid
- other businesses are put at a competitive disadvantage
- the community misses out on revenue that could have contributed to community services.
Who Needs Director ID?
You need a director ID if you’re a director of a:
- Aboriginal and Torres Strait Islander corporation
- corporate trustee, for example, of a self-managed super fund
- charity or not-for-profit organisation that is a company or Aboriginal and Torres Strait Islander corporation
- registered Australian body, for example, an incorporated association that is registered with the Australian Securities and Investments Commission (ASIC) and trades outside the state or territory in which it is incorporated
- foreign company registered with ASIC and carrying on business in Australia (regardless of where you live).
When you Need to Apply for Director ID
- If you were a director before 1 November 2021, you will need to apply for Director ID by 30 November 2022.
- If you became a director any time between 1 November 2021 and 4 April 2022, you were required to apply within 28 days of appointment.
- If you intend to become a director any time from 5 April 2022, you’ll need to apply before you can be appointed as a director.
How to Apply
Before you can apply for director ID, you will need myGovID set up first. Importantly, myGovID is different to myGov; myGovID is an app whereas myGov is an account.
Directors must apply for their director ID themselves because they need to verify their identity. No one can apply on their behalf. The fastest way is to do this is to apply online.
You will need to have some information the ATO knows about you when you apply for your director ID, including:
- your tax file number (TFN)
- your residential address as held by the ATO
- information from two documents to verify your identity.
Examples of the documents you can use to verify your identity include:
- bank account details
- an ATO notice of assessment
- super account details
- a dividend statement
- a Centrelink payment summary
- PAYG payment summary
To complete your director ID application, you can log in to the Australian Business Registry Services (“ABRS”). If you cannot get a myGovID, you may be able to apply by phone or using a paper form.
If you would like help with respect to Director Identification Numbers (Director ID), contact our team of experienced tax accountants by calling us on 1300 QUINNS or alternatively, +61 2 9223 9166 to arrange a teleconference or appointment.
Updated 25 May 2022