One million company directors risking $13,200 fine as November 30 Director ID deadline looms
The Australian Business Registry Services says some 1.1 million business leaders are yet to sign up for their unique identifying number.
Company directors have only one week left to apply for a Director ID before the November 30 deadline, but the Australian Business Registry Services (ABRS) says some 1.1 million business leaders are yet to sign up for their unique identifying number.
The Director ID system, introduced in November last year, requires company leaders to sign up for a 15-digit number linked to their personal details and business dealings.
Director IDs are required for those directing a company, charities and not-for-profits counted as companies, incorporated associations registered with ASIC, corporate trusts, and foreign companies operating in Australia.
Most sole traders and those operating in a partnership are exempt — excluding those whose business affairs are organised under a company structure.
The federal government scheme is designed to cut down on illegal and unfair corporate activity, including phoenixing activities — in which company directors improperly shutter one business and transfer its assets to another, sidestepping their obligations to employees and creditors.
“By applying for a director ID, you’re helping to protect the community from those doing the wrong thing,” ABRS deputy registrar Karen Foat said Wednesday.
Anyone appointed as a director on or before October 31, 2021 must sign up for a Director ID.
Those appointed between November 1, 2021, and April 4, 2022, were granted 28 days to sign up for a Director ID, and from April 5, 2022, all prospective directors must sign up before their official appointment.
“Directors of corporations under the Corporations (Aboriginal and Torres Strait Islander) Act 2006, or CATSI Act, have an additional 12 months to 30 November 2023 to apply for a director ID, the ATO states.
Despite those requirements, the ATO says some 1.1 million of Australia’s estimated director population of 2.5 million people are yet to register.
Foat says the shortfall may be due to the fact some company directors may not even recognise their role.
“If you run a small business, self-managed super fund, a not-for-profit or even a large sporting club, you may be a director, which means you’ll need a director ID,” she said.
While the ATO and the ABRS have taken a gentle approach to remind directors of their obligations, less forgiving are the penalties for directors found to have breached corporate rules without a Director ID in place.
The maximum criminal penalty for not having a Director ID when required to do so, or failure to apply for one when directed by the Registrar, sits at $13,200, with civil penalties extending to $1.1 million.
Maximum criminal penalties are even harsher for those misrepresenting their Director IDs or applying for more than one: in addition to the maximum civil penalties of $1.1 million, directors can be slogged with criminal fines of $26,640, a year behind bars, or both.
Company directors must apply for a Director ID themselves through the ABRS website, and require a valid MyGovID.
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