Australian company directors – including salon owners –  will have until the end of 2022 to apply for a director identification number, as part of the federal government’s efforts to stamp out illegal phoenix activity. 

According to draft legislative instruments issued by the Treasury, the deadline for new and existing company directors to apply for a director ID will be November 30, 2022. 

The federal government has been working for a number of years towards the introduction of a director ID regime, which will effectively allow directors to be traced across companies. 

The aim is to prevent the use of false identities and help prevent illegal phoenix activity, where directors deliberately liquidate companies to avoid paying debts, which is estimated to cost the Australian economy between $1.8 billion and $3.2 billion each year.

According to the Treasury, the new director ID system is expected to cover 10% of the Australian population, or 2.5 million individuals. 

How will it work?
The director ID system will be administered by the Commonwealth Registrar, which will operate under a separate statutory function of the Australian Taxation Office (ATO). 

All directors will be required to establish their identity with the Commonwealth Registrar before receiving their unique director ID, which they will retain throughout their lifetime, even if they cease to be a company director. 

This process will involve directors providing their names and former names, addresses and former addresses, contact details, and their date and place of birth. 

Directors will also need to prove their identity using key identifying documents, such as a driver’s licence, passport, birth certificate or visa, and may be asked to provide their tax file number (TFN). 

While the Commonwealth Registrar will operate separately to the ATO, it may ask the ATO to provide the TFN of applicants in order to verify their identities, and details provided to the registry may be cross-checked against the taxation office’s records. 

More information is available here.

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