Director Identification Numbers are planned for the end of 2021. Will you be affected?
In 2018, the Federal Government proposed a new regime featuring a Director Identification Number (DIN). The DIN would operate similar to a ACN or ABN, but for directors, and will be unique to each director. The introduction of a DIN has the aim of preventing the appointment of fictitious directors and facilitate traceability of their profile and relationships with companies over time.
The introduction of the DIN is now being implemented as part of the government’s Modernising Business Registers (MBR) legislation which received Royal Assent in June 2020. The MBR program brings together the Australian Business Register and 31 other business registers administered by the Australian Securities and Investments Commission onto a single platform that will be administered by a new Commonwealth Registrar within the Australian Taxation Office (ATO).
1. Who does it affect?
The DIN will be required for directors, alternate directors, and any other officer of:
- Corporations Act entities – meaning companies, registered foreign companies, or companies that are responsible for managed investment schemes; and
- Aboriginal and Torres Strait Islander corporations registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act)
It will apply to companies registered under the Corporations Act that are also registered under another law, such as registered charities under the Australian Charities and Not-For Profits Commission Act 2012. It does not apply to entities that are not incorporated under either the Corporations Act or CATSI Act and so won’t affect ACNC registered charities that are not companies.
2. How will it work?
To obtain a unique DIN, directors will be required to confirm their identity. The process for confirming identity is similar to the ‘100 points’ identification system, akin to opening a bank account. The preferred means of applying for a director ID will be electronically via myGov. Foreign directors or directors unable to obtain a digital identity credential will follow the existing ATO proof-of-identity process, which is predominantly paper-based and may include certified copies of identity documents. Individuals are responsible for completing the director ID application form themselves, and an agent or other third party cannot apply for a director ID on behalf of a director except in limited circumstances.
3. When will it apply?
The new director ID system is undergoing testing before the full population of directors are onboarded into the system. Directors appointed under the Corporations Act will have between end of testing, which is expected in late 2021, and 30 November 2022 to obtain a Director Identification Number, with directors of indigenous corporations having an extra 12 months to apply for their DIN.
It is expected that existing directors will be notified when they are required to register for their DIN and so they should ensure that their contact details with ASIC are current. Penalties for individuals for non-compliance once the DIN system is operating start from $13,300.
If you have any questions, or would like any information on what these changes mean for you, please contact your Nexia Advisor.
Article by Martin Olde