As a part of the 2020 Budget Digital Business Plan, Australian Government has taken steps towards the full implementation of the Modernising Business Registers (MBR) program. The MBR program looks to unify the ABR (Australian Business Register) and 31 other registers administered by ASIC (Australian Securities and Investments Commission) on a modern, digital registry platform. Introduced with the MBR was a unique identifier for directors to keep forever – a Director Identification Number or DIN for short.

Currently the Australian Taxation Office is consulting the members of the community, professional associations, industry representatives, other ATO groups and forums, directors present and prospective, company office holders as well as administrators and intermediaries, tax practitioners and businesses in general on DIN and company registration changes. The ATO is expecting to complete the consultation by June 2021. The purpose of the ATO consultation at this stage is to co-design and test the proposed solutions with their intended users through a series of phases outlined by as:

  • Director Identification Number (Director ID) regime
  • Company registrations and maintenance
  • Search functions

Australian Taxation Office describes the purpose of the modernisation of business registers, including the Director ID scheme as a part of a package of reforms aiming to address illegal phoenixing.

What is a Director Identification Number?

The Director Identification Number is a unique identifier permanently assigned to an individual who is an existing director of a company or wants to become one. It was designed to stop appointment of fictional directors and to make a director’s profile and their relationships with companies over time traceable and transparent. As mentioned above, one of the primary objectives behind the implementation of the Director Identification Number scheme, is the reduction and mitigation of illegal phoenix activities. Illegal phoenixing refers to the creation of new companies to continue on a business of a company deliberately shut down to avoid paying its debts.

Directors will be able to engage with government agencies using their DIN; the regulators will gain the ability to verify the identity of directors and their relationships with other businesses or entities. The DIN aims to give both prospective clients and government agencies improved confidence in knowing exactly who are the people they are doing business with.

There are two important frequently asked questions in relation to these new requirements placed on existing and prospective directors:

1.    Can a Person Be Appointed as a Director Without a DIN?

As per the 2019 Parliament of the Commonwealth of Australia House of Representatives Explanatory Memorandum “Directors must apply for a DIN prior to be being appointed” – The new law will place the following several obligations in relation to Director Identification Numbers: a director is required to apply for a DIN prior to being appointed and they are required to apply for a DIN within a specific timeframe as directed by the registrar; they are also prohibited from misrepresenting a DIN to a government or a registered body.

2.    Can a Director Have Two Director Identification Numbers?

Directors are prohibited from knowingly applying for multiple Director Identification Numbers. As per the Business Names Registration (Fees) Amendment (Registries Modernisation) Bill 2019, there are criminal penalties in place for intentionally applying for multiple DINs (amongst other infringements aiming to undermine the purpose of the scheme).

The MBR program, along with the DIN was set to be administered over a period of four years as of the 19th of October 2020, at which point no action was required yet. The Australian Business Register website committed to widely communicate when the action becomes a requirement.

At Taggart & Partners we are expert business accountants and a business advisory Brisbane business owners and directors trust to help them build performing, profitable and sustainable businesses. Call us on (07) 3391 1188, e-mail us on enquiries@taggartandpartners.com.au or get it touch online today and speak to us to find out how we can help to improve your company as well.

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