Legal Tip 366: Company Director Identification Numbers

From 1 Nov 2021 the new Director Identification Number system will be introduced.

All directors of existing and new companies will require a Director ID number.

This has been designed to prevent fraud – some people start companies up using fake names, and people being recorded under different spellings of their names.

There are 2,700,000 existing directors in Australia at the moment, they will have 13 months to identify themselves and get director ID.

Any new directors appointed after 1 Nov will have 28 days to apply for Director IDs.

Any director appointed after 5 April 2022 new a Director ID before they are appointed as a director.

Anyone can just apply for a Director ID in advance of becoming a director, however if they haven’t been appointed after 12 months their Director ID will be canceled.

The individuals will be able to apply for a Director ID on MyGov or via phone or via a paper application. From there they have to log into ABRS (Australian Business Registry Services Welcome to Australian Business Registry Services | Australian Business Registry Services (ABRS)) and add additional details.

Watch out if you have not lodged tax returns for a number of years as you could get tripped up.

Impact on loans:
Some borrowers are not showing up as directors on their credit reports at the moment. This is possibly due to different spellings, missing middle names, same names as others etc. This means the lender doesn’t know about the company and doesn’t ask about it. The new system should put an end to this.

 

The issue is actually more Big Brother than many realise.

The ASIC area where business names are managed is being migrated to the Australian Business Register (a part of the ATO) which is now renamed to be called the Australian Business Registry Services (ABRS) which will govern the old ABR (which is retained for now) and what is now an ASIC process. This team have already been transitioned. The ATO has already implemented ABR and ATO processes to be "real time" for some basic matters...more will follow in the coming years. They are now doing same with companies and other ASIC data. Already some ASIC changes immediately update the ABR. The process is planned as a 3 year project so no "immediate" race. The focus initially will be on fixing issues rather than beating into submission. By 2023 when the data is then "live". So its 2 years of "offline" then it goes live. Lenders wont see the new regime until Sept 2023. Until then they see ASIC's data. Right or wrong.

Longer term paper forms will cease use. Maybe 2023. Probably a gradual phase out.

Warning ...the ability to self register a company is being expanded despite legal warning about the mistakes in this process eg no consitution or rules including those rules governing share classes , no legal registers etc. Lawyers have been ignored again. A further warning. In the near future NEW companies will need a Director ID before they can be formed.

Think of it this way. ....All companies have a ACN and that is matched to a ABN or TFN However some may have neither (eg a trustee company). The ATO has now created a invisible record of these without a TFN until requested. Its invisible. The Governmnet want to create a MATCH between all data and a unique identifier for Directors. Its bound together by MyGov ID...not MYGov.

Next step is the ID verification process. through MyGov ID....Not MyGov. MyGov ID : Home | myGovID MyGov ID is a higher level ID app that sits BESIDE MyGov for now. They can then be joined so access to myGov is easier with the MyGov ID app. Soon son of MyGov will be rolled out with its own app including messaging as a inbox...Soon. So the first step is each person whould follow the process to obtain MyGov ID. Once thats done they can LINK their MyGov to the MyGov ID. This allows login to MyGov using the enhanced app features. This incldues matching photo verification. MyGov ID scores points for duifferent forms of ID and you build the profile until its complete. I have that with my passport PHOTO. I took my own image in the approved form of a selfie and matched it to my passport photo and ID details (date of birthetc). AI confirmed I am me. Some data is also invisible. eg The TFN is matched but it doesnt tell you that. . If insufficient info exists it may reject it. If data is inconsistent it may be refused. In which case company corrections may be needed. . Also the entity will be "mapped" so all officers can be seen by Government. In real time as ASIC data changes so will the ATO. SO...If shareholders change the ATO will now know !! and much more. This isnt 100% foolproof since the ATO wont know "who" a shareholder is in every instance. A example of this is non-beneficial shares. ASIC dont know who that beneficial interest is. They just see shares held by Mr John X Smith. He may be trustee for two trusts. But its a start.

ASIC agents will soon be managing the process of IDs for approx 70% of companies who use ASIC agents.....Their software has been readied to assist and support this rollout. It may be easier for some companies to migrate to IDs through ASIC agents rather than DIY. One a person has one ID recorded the whole database will update for all entities. It is done just ONCE.

IDs will be private and unsearchable. Big penalties if ID rules are not complied with.

There are many areas where data inconsistencies will pose a major issue. eg ASIC shows address as different to the ATO known home address. ASIC can impose penalties !! Remember the residential home address must be used according to the Corporations Act unless exemption is applied for. Using your parents address etc could see penalties. Migration to clean up this data will be important and wehere ASIC agents may be able to assist with uniform data tied to

How to fix a "wrong" Director...They can resign and a new Director could be appointed. The transition period is when this will need to occur.

FAQ
- Where are the forms for MyGov ID? There are none. It is a 100% online process. It uses devices. See the app store and MyGov ID website.
- If I am John Smith in one place and John david Smith how will that work. No problem. The same ID will intially be OK. In time the ABRS will udate so the complete ID will adopt the proper full name/s
- How will be privacy be impacted ? Its not secretive like a TFN however it is private unsearchable and not public use data. A Director ID is used between the person and the ABRS. Its like a ABN is to a company.
- Foreign Directors. This IS a big one. There are likely some people who are the ONLY Directors who are not resident. That is a breach of the Corporations Act with some tax issues impacted. Foreign Directors may need to apply and submit using paper. Any legal issues should be corrected in transition. If the comapny has loans this may be a bigger issue. A local Director may need to be appointed. Legal advice may be recommeded. We are yet to determine how a foreign person can access MyGov ID as it is a blocked app from offshore with reduced function. More info to follow.
- I dont want my home address shown. Thats fine. Approval must be applied for. You cannot opt to use a non-residential address now and wont be allowed later either.
- I cant validate my ID ? This is a MyGov ID issue. Contact them. I have seen many with incorrect dates of birth in ATO data for example. It can all be fixed.
- We have a false named person. How is that fixed. A new Director must be appointed and the incorrect one removed before the due date in Nvember 2022.
- My wifes name is her former name. How does this work ? The MyGov ID process is to be followed. MyGov ID is the bridge between data,
- How much does this cost ? There is no fee. However some aspects could involve time or assistance by a ASIC agent and this could involve costs.
- Do I need to provide my TFN ? No. MyGov ID is the ID bridge. You will not enter any ID data with ASIC. MyGov ID can be linked to the ATO but this doesnt link the ATO to ASIC.
- Should I save my Director ID. YES. It could be used repetitively and quoting it will avoid any further complex issues, ASIC agents can just enter the number in their software and it will keep it. They can later see it and use it.
- Bill and Betty Smith have a common email address. How will that affect thibngs ? MyGov ID requires each individual use a unique email address. Their default email login for their device may be useful. ALL device owners already have a unique email.
- Betty doesnt have a device. How will she use MyGov ID?. Betty will need to follow the MyGov ID process. If she doesnt she may cease to be a eleigible Director to comply with these new laws. Large fines apply. It is a new cost of being a Director.
- Does this apply to dormant companies ? Yes.
- Does this apply to non-trading companies? Yes. It applies to all companies.
- I think I am a Director but its just to help someone. What happens? You are straw person. You are a Director and lawfully responsible. Seek legal advice. You may seek to resign or exercise YOUR rights as Director. Laws dont protect "puppets"

 

It's on the MyGovID not MyGov.

 

They dont apply in MyGov ID. They apply at ASIC but validate their ID using the app. It merely links their ID to the MyGov iD to bridge them. MyGov ID is merely a identication app intended for whole of Government in due course. It will also soon replace the ATO voice print which doesnt meet "proof of life" standards (as it accepts a recording). MyGov ID does. It just asked me today to take a selfie so it could tell it was still me when I went to do a specific thing that seemed outside my usual profile.

Think of it like a google / apple account. You can use that to validate yourself with some apps in place of signing up.

 

And the relevant legislation is to be found in Chapter 9, Part 9.1A, of the Corporations Act 2001
ss 1272 onwards
CORPORATIONS ACT 2001 - SECT 1272 Giving and cancelling director identification numbers

 

For those, such as myself, who do not use a smart phone for anything apart from texts and phone calls, you will need to register via a phone call or in writing. See "How to apply for your director ID."

About director ID | Australian Business Registry Services (ABRS)

 

So you do have a email address and could access MyGov ID. Its a choice to be oppositional. Not having MyGov ID will in time compromise access to many services. The non-digital option to obtain a ID is a temporary feature only. Access to secure communications and post now relies on digital access and MyGov using MyGov ID as the access point is being rolled out. MyGov is being replaced by its "son" in the next few months (???) and it relies on MyGov ID as the entry point not crude sms codes. Contrary to MyGov the new beta version is excellent and is far easier and more robust. The hassle is getting MyGovID implemented but its wasnt that hard.

MyGov ID safeguards your identity with two factor triple access security that MyGov lacks. A cloned phone or android with compromised software and compromised email account can access MyGov and most phones will have the email account on it allowing bypass of any security. MyGov has a flaw that allows a spouse to access and manipulate access which also allows other third parties access. This can be a serious risk. The most secure level of protection in MyGov incldues ability to confirm proof of existence through a camera as well. As a tax agent I have that. My responsibiity is for my own data and that of all clients. Its very intolerant of hacking efforts and will punt the user and require re-identification. I lost my phone once and google automatically stripped the ID approval in myGov ID as part of the "Lost phone" tools which I thought was a brilliant idea. Apple is same. Low end phones arent compatible with MyGov ID and certain security features must remain enabled on the device.

The ATO are close to becoming paperless. All other agencies are doing same. The "big brother" elements of the future direction of MyGov is it will be a digital platform for all services with a user centric front end - even like facebook in some respects. As we have seen with covid there has been a huge reliance on the existing platform and the improvements are good but will be even better. MyGovs inbox and communication (eg tax notices) is a terrible experience and is the major issue to be changed soon. Changes include ability to apply for and manage centrelink benefits without forms or meetings, jobkeeper and other schemes, medicare cards and claims, vaccination documents and travel docs and the like. And to manage all tax interactions with AI prompted guidance and alerts. Increasingly paper options are being phased out. There is even potential for passports etc to have a digital version using the new version eventually.

 

That was fun.

My written application has been approved but only after a phone call from the ABRS as my birth certificate (I cannot locate my passport at present) showed as it being cancelled. You mean I haven't been born yet? Joy!!

Turns out the BC is a reissue I applied for as the previous one was very tatty.

PS: Interesting up to 5,000 penalty points or other penalities including if you fail to apply for a DIN within the given time-frame.

 

I did mine the other day too and it took like 2mins online. very easy

 

I did actually try mygovID. Not a success. Kept on crashing, hanging and other issues. Gave up after that. Luck of the draw I suppose.

 

MyGov is like mould. It grows and gets worse over time

 

I did mine the other day.

During the verification process, I found out the chip on my driver’s licence has my birth-date incorrectly recorded .

I was able to manually enter the correct date during the verification process to get my Director ID.

 

I registered to get my Director ID - but what now? How do register it against my companies? I tried searching but couldn't see anything about it.

Regards,

Jason

 

Yes that’s what I thought but it appears to be a transitional thing with that coming later

 

Thanks TerryW.

BTW - just listened to you on the a podcast this morning and thought it was really good. Picked up a few new things - despite having read most of your tax tips. Thanks!

 

I sent our IDs onto our accountant. They can sort it all out - that is why I pay them the big bucks

 

22 April 2022
Dear Registered Agent,
Below is an important message from Australian Business Registry Services
(ABRS), regarding director identification number (director ID) requirements,
which may affect you and your clients.
ABRS is responsible for delivering the director ID initiative and is contacting
new directors appointed for the first time after 1 November 2021, who have
not met their obligation to apply for a director ID.
Tax and ASIC Registered Agents are also being contacted to encourage their
new director clients to apply for their director ID within the prescribed
timeframes. From 5 April 2022, new directors appointed for the first time must
now apply for their director ID prior to their appointment.
ASIC is responsible for enforcing director ID offences set out in the
Corporations Act 2001. It is a criminal offence if you do not apply on time and
penalties may apply. For more information about director ID penalties, visit
asic.gov.au/director-id.
For more information about who needs to apply and when, including how to
apply, visit abrs.gov.au/directorID.

 

This is helpful information to share, since I am in the process of considering setting up a company.

As this is best left to the experts (accountants, solicitors, and such) to make sure it’s all done correctly, legally, and the like, I will be looking to outsource the company set-up. However, applying for the director ID, can it be done by an agent? Or it needs to be completed by the applicant/director-to-be? I am supposing technically there is no law preventing that?

 

You need to log into your mygov account so should do it yourself. It is easy enough