On 15 April 2021, the Commissioner of Taxation issued a legislative instrument “Corporations Director Identification Number Data Standard 2021”, that brings the implementation of Director Identification Numbers one step closer. This legislative instrument is part of the Modernising Business Registers (MBR) program that was announced in the 2020 Federal Budget.
What is a Director Identification Number (DIN)
A Director Identification Number (DIN) is a unique identifier number to be issued to each person who is a director or acting alternate director of a company or the equivalent role (such as a management committee member) of some incorporated associations.
Why are DINs being introduced?
The purpose of the DIN program is primarily to deter and penalise illegal phoenixing of companies. However, the DIN program will have a much wider impact as it will require all directors to confirm their identity and be issued with a DIN. As such, it is important that current directors, and those contemplating holding director positions, understand these new obligations as there are both criminal and civil penalties for non-compliance.
Who has to apply for a DIN?
The DIN requirements apply to appointed directors and acting directors of Australian companies and registered foreign companies under the Corporations Act 2001.
An individual can only have one DIN, however, once issued, the DIN will apply to the individual permanently (even if they cease to be a director).
When will DINs be required?
The DIN requirement is set to commence on 22 June 2022 or on such earlier day as may be proclaimed by the Governor-General.
For the first 12 months after the DIN requirements take effect, newly appointed directors will have an additional 28 days to apply for a DIN. In other words, for the first 12 months a person must apply for a DIN within 28 days of being appointed as a director. After the first year anniversary of the DIN requirement taking effect, a DIN must be applied for prior to being appointed as a director.
It is currently unclear how long a person who is a director at the time the DIN requirement comes into effect will have to apply for a DIN.
To provide greater flexibility, the law allows individuals who are not directors but who intend to become directors within 12 months to apply for a DIN. This means people who have not yet been appointed as a director may apply for a DIN proactively. However, a DIN allocated to a prospective director is automatically cancelled if that person does not become a director within 12 months of being given a DIN. The DIN may be reallocated to the same person should they later reapply.
How will the DIN be applied for and the information be collected?
To obtain or update an individual’s DIN, the following information will be required:
- Name and former names
- Address and former addresses
- Contact details (phone, mobile etc)
- Date and place of birth
- Tax File Number (can be requested but not required to be provided)
- Identity documents*
*Currently this information includes drivers’ licence, passport, birth certificate, Australian visa, and Medicare card, however, additional documents may be accepted in the future.
Generally, the information will be collected electronically, however, there may be circumstances where paper applications may be accepted. For example, foreign directors or directors that are unable to obtain a digital identity credentials may need to provide paper-based documents which may include certified copies of identity documents.
The individual will need to complete the DIN application on their own behalf. However, where the individual is unable to make an application, for example, due to disability, an agent or third party may be permitted assist (it appears this will be addressed on a case-by-case basis).
Non-compliance implications
It is crucial that directors comply with the DIN requirements once they come into effect because criminal and civil penalties can apply where an individual doesn’t comply with the DIN requirements, for example, by:
- Failing to apply for a DIN with the required timeframes (or if the Regulator directs);
- Intentionally apply for more than one DIN;
- Provide a false DIN; or
- Are actively involved in the contravention of any of the above.
The DIN system is now undergoing testing but once complete, it is expected that current directors will have until 30 November 2022 to obtain a DIN. We will continue to provide updates but, in the meantime, please contact us if you’d like to discuss your specific situation.
The articles, templates, and media posted on this blog do not give business, accounting, taxation or financial planning advice and should not be relied upon as such. The articles are intended to provide information in a summary form and are general in nature. Formal business, accounting, taxation or financial planning advice should be sought in particular matters. O’Connells OBM Pty Ltd accepts no liability in respect of this information and any person acting solely on the information contained within does so entirely at their own risk.