The Governance Institute
While our thoughts have been dominated by the immediate task of managing during a pandemic, there is another important issue bubbling just below the surface that is about to demand your attention: Director IDs. This article from The Governance Institute explains what you need to know about Director IDs.
Part of a major modernisation of Australia's business registries, the introduction of Director IDs – a unique identifier that a director will keep indefinitely – is designed to help stamp out illegal phoenixing and other fraudulent activity, enabling government to verify and track the corporate history of individual directors.
In a major step, the Australian Tax Office has just launched its Australian Business Registry Services website, enabling directors to now apply for their ID when applications open next month.
When you need to apply depends on the date you were appointed as a director.
New directors appointed between 1 November 2021 and 4 April 2022 will need to apply for their Director ID within 28 days of their appointment.
Existing directors (appointed on or before 31 October 2021) will have until 30 November 2022 to apply, and will also be able to apply from November 2021. They are encouraged to sign up for their MyGovID now in preparation.
We will keep you updated on this, but in the meantime, if you are a director, or support your organisations directors, it is imperative that you get across the requirements.
First step: Get your MyGovID
If you haven't already done so – and we suspect many have not - now is the time to apply for a MyGovID number (not to be confused with the MyGov platform).
This will ensure you are ready to use the Director ID platform when it is launched. Find out more here.
Can I apply for an extension?
New directors facing a rapidly approaching 28-day deadline may experience administrative hurdles in applying.
This may be especially true for foreign directors of corporations operating in Australia. These directors will not have access to the MyGovID platform as they are not Australian citizens and can access a paper-based application process.
Charities and not-for-profits are also likely to require some extra assistance in this transition, due to many being short on the resources required to keep up with each step of the process.
The ATO is aware of these challenges and has confirmed there will be a process to apply for extensions of time. "If you can't apply by the date you need to, you can apply for an extension. Information on how you can do this will be available here in November," the new ABRS website says.
We will update members when further information is released.
Modernising business registers
Director ID is the first service offered by ABRS as part of a wider business modernisation project that will combine more than 30 ASIC registers and the current Australian Business Register on a single system overseen by the ATO.
It's a massive overhaul and Governance Institute has been actively engaged every step of the way as a member of the Modernising Business Registers (MBR) Business Advisory Group.
Over two million directors in the spotlight
The scale of this project is significant.
With approximately 2.7 million companies on the Australian Company Register and an average of 224,000 new companies added each year, more than two million directors are likely to be transitioned onto the new system.
But as we begin the potentially long COVID-19 recovery, Director IDs will play a role in cracking down on fraudulent phoenixing activity that harms the economy.
While preventing fraud is the main reason for Director IDs, it's not the only reason.
The original legislation made clear the scheme is also meant to protect the privacy of directors by allowing them to be identified on public registers without disclosing, dates of birth, full names and residential addresses, etc.
At a time when cyber security attacks, identity theft and other threats are on the rise, it's important this is followed through.
Read the original article here