The Government has passed new laws that will require all current and new company directors will to verify their identity and get a Director Identification Number (DIN) for life under new anti-phoenixing laws. The DIN will act as a unique identifier that will be kept permanently even if the individual ceases to be a director.
“Mega-Registry” to be created for business
The new director identification number system is expected to begin in the first half of 2021, once the application system has been developed and deployed. A “mega-registry” will also be created from 32 different corporate and business registries as part of a program to simplify and streamline business reporting and licensing.
The program will consolidate 31 ASIC business registers including the Companies Register, with approximately 2.6 million registered companies, and the Australian Business Register, with approximately 7.9 million active ABNs.
The Australian Taxation Office will be the operator of the new super registry which will provide a powerful foundation to both manage fraud and to build regulatory functions.
The aim is to also link the new super registry into private business systems to automate compliance and other requirements.
The ATO allows private accounting systems to integrate with its single touch payroll reporting system, creating a powerful platform of services and applications.
The ATO will also manage the administrative data associated with the registries. Near real-time ATO payroll data has been used during the pandemic to better understand the impact of business closures.
The passage of the business registration bill (Treasure Laws Amendment [Registries Modernisation and Other Measures] Bill 2019 through Parliament late last week comes as the Deregulation Task Force reviews electronic communications laws.
The aim is to enable businesses to lawfully transact with government and each other using digital communications and applications, including block chain and other technologies.
Assistant Minister to the Prime Minister Ben Morton is leading the government’s deregulation program.
He announced Treasury will be working with the states to simplify occupational licensing and promote national recognition of qualifications.
“Twenty per cent of workers in the economy are required to be licensed or registered, while there are in excess of 800 licences in manual trades across states and territories,” Mr Morton said.
Transition period for directors to verify for director identification number (DIN)
Under the transition rules for the new director identity system, for the first 12 months of the system new directors will have 28 days to verify themselves and obtain a directors identity number. After that period, new directors will have to have a director identification number before they can be registered.
Current directors are to be given 18 months to verify their identity.
Directors currently do not have to verify identity, leading to many false names being used, such as Elvis Presley, Bob Marley and Homer Simpson.
The new directors identity number (DIN) laws follow a 2015 Productivity Commission report highlighting the practice of phoenixing. The government announced it would roll out the DIN in 2017. Phoenixing is when companies deliberately avoid paying liabilities by shutting down an indebted company and transferring assets to another company.
This hurts trade creditors, employees and the public through lost taxes.According to the explanatory memorandum, phoenixing costs the Australian economy between $2.9 billion and $5.1 billion a year.
The DIN is a unique identifier that a director will keep forever, enabling regulators to better track directors of failed companies who use fictitious identities.
Director Identification Number Frequently Asked Questions (FAQs)
The following are common questions regarding director identification numbers (DIN):
What documents are required when applying for a DIN number?
Although not specifically mentioned in the Explanatory Memorandum, it’s likely that the document requirements will be similar to that of the existing and commonly used 100 point identification system, where primary and secondary documents such as driver’s licence, passport, birth certificate and medicare card are used to verify a directors identity.
It’s also possibly the Registrar will leverage the existing myGovID system to in regards of the documents required for a new or existing director to obtain a director identification number.
How can you apply for a Director Identification Number (DIN) online?
At this stage it’s unknown how the application process will work for a DIN, however it will likely be online either via MyGov and will likely leverage the existing MyGovID system.
More detailed questions and answers will be available when the new registration system for DINs is up and running. If you have any specific questions on how the director identification number system may impact you, please contact us.