April salutations to all, from everyone here at CGH Accounting Services. The cold is beginning to set in around Ballarat; though at our Torquay office, staff and clients are probably enjoying better weekend weather; enjoy it guys.
Our new office space in Ballarat is getting closer to completion, and it is looking impressive. We will hopefully be in, and snug as a bug in a rug, at our new boutique work complex, before the Central Highlands winter does set in.
This month, we are taking a look at the rules which apply to company directors. They will definitely affect our company, and more than likely most of the businesses and family companies which we help to support.
From all directors and staff at CGH Accounting Services – we wish everyone a very Happy Easter and hope you all enjoy a well-deserved break.
WHAT ARE THESE NEW RULES AND WHEN DO THEY KICK IN?
The legislation is fairly new. Basically, all company directors need to get a Director Identification Number or Director I.D. This applies to every existing Australian company director – i.e., who was appointed before November 1, 2021. You need to get this I.D. sorted out before November 30 this year. And, going forward, new directors must make the application prior to being appointed.
It is a unique identifier number, which you need to get once only and then it will stick for good. Applying is free, and not difficult. If you do have any issues with the process, of course we at CGH will be more than happy to assist with advice. However, you will have to make the application yourself, for proof of identity reasons.
WHY ARE THEY BRINGING THIS IN?
The legislation is now included as a section in Treasury Laws Amendment Act 2020. It is to generally improve traceability of directors and to crack down on ‘phoenix’ activities, which are of course illegal. It will help stamp out other fraudulent and false use of director status.
WHAT WILL IT LOOK LIKE?
The Director ID is a 15-digit item, which all company directors in Australia will need to have. You set it up with Australian Business Registry Services. It’s not dissimilar to an ABN. Directors’ dealings with various companies will be more easily trackable.
DO I DEFINITELY NEED ONE?
This is who it applies to: all Eligible Officers – according to the legislation:
- Under the Corporations Act 2001 – a company, registered Australian body or foreign company.
- Aboriginal or Torres Strait Islander Corporation registered under the Corporations Aboriginal and Torres Strait Islander Act 2006.
- You must apply if you are an Eligible Officer or Director or Alternate Director acting in such a capacity.
- If you are anticipating becoming an eligible officer within the next year, you should apply for a Director ID. Make sure you follow through with it though, because if the position doesn’t eventuate, the ID number will become inactive.
HOW DO I APPLY FOR ONE?
You just need to go on the Australian Business Registry Services website. You’ll need your myGovID. If you don’t have one, you should get one at www.mygovid.gov.au/set-up. MyGovID is different to simply having a myGov account.
The information they will require is as follows:
- Your Tax File Number (your individual TFN)
- Address as it is stated with the ATO
- ID questions – you need to answer 2 of them – i.e., bank details, ATO notice of assessment, superannuation account details, Centrelink or PAYG summaries, dividend statements.
- You can talk to the ATO over the phone if you’re having trouble.
WHAT’S THE TIMELINE?
If you are an existing or new director and you come under the category of the Corporations Act, as mentioned above, you need to apply now, or soon, anyway – and get it done before the end of November this year. If you became a director recently, this needs to be done within 28 days of your appointment. The cut-off date is April 5, 2022, which has obviously just ticked over. You are now supposed to have this done prior to being appointed.
If your directorship falls under the CATSI Act (abovementioned) then you have a bit longer; until November 30, 2023 and prior to being appointed as of November this year.
WHAT DO I DO WITH IT, ONCE I GET ONE?
Once you have your unique identifier number, you need to pass it on to an authorised business record holder, such as your company secretary, another director and CGH Accounting. If, down the track, you become a director of a different company, you will accordingly need to supply the ID number to an appropriate person who deals with the records. If there any changes to the ID number info, you need to let the ABRS know.
WHAT HAPPENS IF I DON’T GET A DIRECTOR ID?
If you don’t have one, pretty soon they will start looking into this and failure to comply might entail anything from a warning or infringement notice, all the way through to prosecution which can include a fine of up to $13,000 or even a year in jail, though it’s difficult to see the latter happening, except in the case of some sort of serial offender. Obviously, penalties will apply to people who attempt to falsify information or attempt to procure multiple IDs.