Director IDs are Here: Here’s What You Need to Know

Director identification numbers (simply called Director IDs) are now compulsory for Australian company directors. From November 2021, the 2.7 million company directors across Australia have now been required to apply for their Director IDs. This is a significant change to Australia’s company regulations, and penalties apply for directors who don’t register within the required timeframes. 

If you’re a director of a company, then keep on reading. We’ll outline exactly what you need to know about the new Director IDs including precisely what they are, how to apply for one, why the change was introduced, what exemptions apply and the timeframes you have to register. 

What is a Director ID? 

The director ID is a new requirement for all Australian Company Directors. It is a 15-digit identification number unique to each particular director. 

You’ll only ever have one director ID. This is the case even if you become a director of another company, cease being a director, move to another state (or overseas) or even change your name. 

The register of Director IDs is administered by the Australian Business Registry Services (ABRS). This is new service as part of the Federal Government’s 2020 Budget Digital Business Plan, and is overseen by the Australian Tax Office (ATO).  

You cannot search Director IDs on a public database at the time of writing. 

Why do you need a Director ID? 

You need a Director ID due to recent changes in company law. In June 2020, the Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2019 was passed, creating changes to both the Corporations Act 2001 and the Corporations (Aboriginal and Torres Strait Islander) Act 2006. These changes now require new and current directors to apply or Director IDs. 

There are several reasons why this new requirement was introduced, including: 

• Improving the director identification process. This is important for specific individuals ranging from creditors and employees to shareholders. For example, creditors who want to loan finance to a company may wish to carry out a thorough identification process for their due diligence. 

• Preventing unlawful company activity such as ID fraud and phoenixing. Businesses and their employees lose billions every year due to company illegal activity. Director IDs create a new lawyer of verification and can also prevent directors from deliberately liquidating their companies to avoid debts and then transferring all that company’s assets to another company. 

How do you apply for one? 

You can apply for a Director ID on the Australian Business Registry Services (ABRS) website or by downloading the myGovID mobile app. Note that myGovID is not MyGov, which people normally use to access government services such as Medicare and the Australian Tax Office. 

It only takes a few minutes to apply online or through the app. Once you apply, the director ID is issued immediately, and you don’t have to wait. You will typically only need one primary and one secondary identity document if you apply online. 

You can also apply for a Director ID on paper or over the phone. 

You cannot get somebody (not even your accountant) to apply on your behalf. Directors must apply for their own Director ID. 

Who needs a Director ID? 

You will need to apply for a Director ID if you’re a director of: 

• a company with an Australian Company Number (ACN) or Aboriginal and Torres Strait Islander corporation (including a charity or not-for profit organisation) 
• a corporate trustee 
• a registered Australian body with an Australian Registered Body Number (ABRN) 
• a foreign company registered with the Australian Securities Investments Commission (ASIC) and carrying on business in Australia 

The Australian Institute of Company Directors has put together a detailed guide precisely wo needs a director ID. 

Exemptions 

You don’t need a Director ID if you’re a: 

• sole trader 
• member of a partnership 

• director of an incorporated association (with no ABRN) and registered with the Australian Charities and Not-for-profits Commission (ACNC) 
• company secretary (without being a director) 
• an external administrator of a company 

By when do you need to apply for a Director ID? 

When you’ll need to apply for a director ID will depend on what type of director you are and when you became a director. We’ve put together the below table to assist in determining which deadline applies to you. 

If you’re a director under the Corporations Act 2001 

If you’re a director under the Corporations (Aboriginal and Torres Strait Islander) Act 2006  

Can I apply for an extension?  

Yes, you can apply for an extension. Further details about how you can apply will likely be released on the ABRS website sometime in November 2021. 

What are the penalties if I don’t comply? 

Both civil and criminal penalties apply if you: 

• don’t register for a Director ID in the required timeframe 
• intentionally apply for more than one Director ID 
• give a false Director ID 

You may also be liable if you’re actively involved in contravening any of these offences. 

Directors who don’t apply within the required time frame could face fines of up to 5,000 penalty units. This equates to around $1.1 million at the time of writing. 

Don’t procrastinate – apply for your director ID as soon as possible 

Don’t delay in applying for a Director ID. The process may take longer than you at first consider because of your particular circumstances. You don’t want to expose yourself to criminal or civil liability simply due to a time-lapse. 

If you need assistance in any aspect of your application for a director ID, contact our experts here at 2account.