If you are the director of a company you may have heard of a new director specific registration number. This is called a Director Identification Number (DIN) and we will be giving you the rundown on everything you need to know about it. The opening for existing directors to apply for a DIN is fast approaching in November 2021.
DINs are part of a new Australian Government Initiative called the Modernising Business Registers (MBR) program.
In this article, we’ll cover more on the MBR program and the changes you can expect in the near future.
What Is The Modernising Business Registers Program?
The MBR program is supposedly being introduced to make things a little easier for Australian businesses. Current registration steps contain a number of manual steps and the idea is that, by streamlining the process, companies can save time and focus on improving the business or engaging with customers.
This program will be progressively rolled out between 2021 and 2024.
As anyone who has had to navigate the various registers will know, the current system can be confusing. To address this issue, the MBR program will combine the Australian Business Register and up to 30 of ASIC’s registers in one place. An added benefit is that this process will make business information more trusted and valuable.
What Is A Director Identification Number (DIN)?
The establishment of the DIN is one of the initiatives being implemented under the MBR program. The DIN will be used to identify directors of companies personally, rather than by company. It is a unique 15 digit number that will never change once you apply for one.
The Australian Business Registry service (ABRS) will store these numbers, and be able to identify individual directors and where they have worked.
Do I Need A Director Identification Number?
New and existing directors of companies will need to register for a DIN.
A company includes:
- Companies registered under the Australian Corporations Act, both foreign and Australian.
- An Aboriginal or Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act.
- Charities and non-for-profit organisations that are public companies limited by guarantee.
If you are one of these parties then you must register for a DIN within the timeframes explored below. Operating as a director without a DIN or providing false information when registering a DIN comes with significant penalties enforced by ASIC.
When Do I Need One?
The timeframes for applying for obtaining a DIN will differ depending on when you became or if you are not yet a director.
Keep in mind the following dates which are relevant to your circumstances.
|Date you become a director||Date you must apply|
|On or before 31 October 2021||By 30 November 2022|
|Between 1 November 2021 and 4 April 2022||Within 28 days of appointment|
|From 5 April 2022||Before appointment|
How Do I Get A Director Identification Number?
From November 2021, you will be able to register for a DIN. Importantly, you cannot have anyone else register for you – you must register for it yourself.
The easiest way to get set up is to do it online by following these steps:
Step 1 – Set Up myGovID
myGovID is the government service which enables you to verify your identity.
You may have already set this up for other services such as the ATO’s Relationship Authorisation Manager to register for R&D, or when applying for JobKeeper.
Confusingly, myGovID (which you need for the DIN) is different to myGov, which you may have used for personal government services such as getting your ATO payment summaries, accessing Centrelink, and the Medicare app.
Step 2 – Gather Your Documents
When you apply for a DIN, the Australian Business Registry Services will need to verify your identity against information that the ATO has about you.
- your tax file number (TFN)
- your residential address as held by the ATO
- information from two documents to verify your identity
The Australian Business Registry Services lists the following documents as examples of documents to verify your identity:
- bank account details
- an ATO notice of assessment
- super account details
- a dividend statement
- a Centrelink payment summary
- PAYG payment summary
Step 3 – Complete Your Application
Once you’ve got myGovID and your identity documents ready, you can apply for a DIN here. This will be available from November 2021.
What If I Can’t Get A myGovID?
If you can’t get a myGovID, then it is possible to apply via the phone or by paper form.
However, it is likely this will take significantly longer as you’ll need to get identity documents certified. This will be particularly cumbersome for directors that live outside Australia who will need to gather extra identity documents.
So if you can, the online method will be much easier!
Why Do I Need A DIN?
DIN’s are being implemented to help prevent and track fraudulent activity.
The main fraudulent action that it aims to prevent is called “phoenixing.” In 2018, it was found that “phoenixing” had cost the Australian economy 5 billion dollars.
While there are already preventative measures in place to disincentivise this behaviour, it has been historically hard to stop. The point of the DIN is to help track and identify patterns of phonexing.
What Is Phoenixing?
Phoenixing occurs when someone incurs liabilities and debts on a company and then instead of paying back or honouring these debts and liabilities, they form another company under a different name and dissolve the original.
A key part of this process is registering a fraudulent name as the director. A DIN, being a unique and constant identifier, stops this from occurring because ASIC can now track directors through companies via the unique identifier.
|Example of Phoenix Activity: |
Noah is the director of an accounting company which is struggling to stay afloat. His company has blown out expenses on contractors and rent; it has several loans it cannot pay off.
Noah is desperate. He registers a new company under a similar name and changes the name of his current company. Noah’s new accounting company buys all the assets from his old accounting company.
Noah then moves all infrastructure from his old company minus the liabilities to his new company. After doing this, Noah arranges for liquidation of his old company. Without any assets his creditors, contractors and other stakeholders are left with nothing and he is able to continue business elsewhere.
Are There Any Benefits?
The proposed benefits are broad, although it is yet to be seen if they are effective.
By assisting to restrict fraud and increase accountability the DIN is supposed to assist in increasing trust in financial institutions. Overall, this is a good thing for corporations and directors in Australia.
The implementation of the DIN has been one of the first changes under the Modernising Business Registers Program. There are more changes to come which will make the process of registering streamlined and increase public confidence.
What Will Change?
The specifics of what will change between now and 2024 have not been fully released.
The new Australian Business Registry Service is now active and the DINs will soon be an enforceable obligation.
What Will Not Change?
The Australian Government has reassured those who will have to register information under the new system, or have their information transferred to the new system, that who this information is provided to will not change. All data management and data sharing practices that used to be in place will continue as is governed by the law.
DINs and the changes to the Modernising Business Registers Program are new laws and there are several obligations you need to stay on top of as a company. If you’re confused on how to stay compliant or unsure of next steps, we can help you out.
Get in touch with our team at 1800 730 617 or email@example.com for a free, no-obligation chat.
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