Did you know that there are 31 different business registers that a business or company may need to be registered with that are a part of ASIC? Some of these registers are being brought together, in what will be known as the Australian Business Registry Services (ABRS).
The Commissioner of Taxation was appointed in April 2021 as the Commonwealth Registrar of the ABRS. In the near future, registering a company will be done through the ABRS instead of ASIC. This is a part of the government’s move towards a more efficient digital economy.
Previously, a company or business was registered through ASIC, where a Tax File Number and an Australian Business Number would be required. These are obtained through the Australian Taxation Office (ATO) and are a critical part of setting up a business or company.
Beginning from November 2021, there will be an additional step introduced in the registering of a company, involving a Director Identification Number (DIN).
This director identification number is a unique identifier that a director will apply for once and keep forever.
Every company director will need to have a DIN prior to 30 November 2022, with Indigenous directors having an additional year (till 30 November 2023) to adhere to the new requirement.
This applies to directors if their organisation is a company, registered foreign company, registered Australian body or Aboriginal and Torres Strait Islander corporation.
In the future, registering a company will be done through the ABRS instead of ASIC. This is a part of the government’s move towards a more efficient digital economy.
Directors will need to apply for their director ID themselves because they will need to verify their identity. Eligible persons that have sufficiently established their identity, will be provided a DIN that they will keep for their lifetime – even if they cease to be a Director.
No one else will be able to apply on their behalf.
The new DIN Requirements apply to appointed Directors and acting Directors of Australian corporations and registered foreign companies, which includes those companies who are responsible for managed investment schemes and registered charities. This is set out under the Corporations Act 2001 (Cth).
As of the time of writing, the DIN requirements do not extend to unincorporated bodies, de facto or shadow Directors, or company directors.
DIN’s will be recorded in a new database to be administered and operated by the Australian Tax Office and be made available to the public.
The ATO will also have the power to provide, record, cancel and re-issue a person’s DIN. A DIN will be automatically cancelled if the individual does not become a Director within 12 months of receiving the DIN.
Following the DIN, the ARBS will then take over the Australian Company Register, the Business Names Register, and the Australian Business Numbers (currently on the Australian Business Register).
The ABRS is responsible for the implementation and administration of director IDs. ASIC will then be responsible for the enforcement of associated offences.
It is expected that around 10% of all Australians will require a DIN.
Despite the small number, it is a crucial part of the plan to prevent and halt phoenix directors from being appointed to companies, who then rack up significant debts that no one is held accountable for.
It is believed that this change will make the process cheaper, faster, and easier, as companies will no longer need to be first set up through ASIC before dealing with the ATO for an ABN and TFN.
If you currently have a company and do not already possess a MyGov account, now is the time to rectify it in the move towards DINs.