Directors who have resigned or ceased to have directorships prior to 1 December 2022 will no longer be required to obtain a director identification number (director ID) by the 30 November 2022 deadline under proposed amendments to the director ID eligibility rules.
With only two weeks before the deadline for directors to apply for their director ID, the Commissioner of Taxation, Chris Jordon, in his capacity as the Registrar of the Australian Business Registry Services (ABRS) has used his powers under the Corporations Act 2001 (Corporations Act) to issue a draft legislative instrument to carve out a certain class of directors from being defined as an ‘eligible officer’, effectively relieving them of the obligation to apply for a director ID.
The draft Instrument, Corporations (Eligible Officer Exclusion - non-individuals and resigned directors) Determination 2022 (Instrument) was issued on 15 November 2022 for public consultation until the 9 December 2022. As a result of the timing of the Instrument and the director ID deadline, it is necessary to give the Instrument retrospective commencement from 1 December 2022.
Broadly, the Instrument details two categories of directors excluded from being an eligible officer, namely:
Resigned directors - persons who have ceased to hold any role as a 'director or alternate director acting in that capacity' prior to 1 December 2022; and
Corporate directors - non-individual entities that hold a role as a director under the Corporations Act.
In simple terms, the Instrument relieves those persons who were directors on or before 31 October 2021 and who have resigned or ceased as directors during the 13-month transition period from the requirement to apply for a director ID. This is conditional on the person not being a director of any company as at 1 December 2022. This includes directors who ceased following the deregistration of their company before 30 November, directors who have died and those who have vacated their role due to unsound mind.
We have all embraced this common sense approach, which is more in line with the intent of the director ID laws. Requiring resigned or ceased directors to apply for a director ID if they have no intention to act as directors again would be illogical and unreasonable.
If this is the first time you are hearing that resigned directors actually needed to apply (ignoring the Instrument), that’s because this interpretation of the director ID eligibility only emerged mid-September, some 10 months into the transition period.
If you missed all the confusion and contradictory advice coming out of the ABRS and professional bodies regarding this over the last few months, consider yourself lucky. We have come full circle on this.
Streamlining the online application
Just over a million of the estimated 2.5 million directors still needed to apply for their director ID as at the end of October 2022!
In an effort to encourage as many directors as possible to apply before the impending 30 November deadline, the ABRS has simplified the online application process for those directors who set up and use a myGovID with a ‘strong identity strength’. These directors will now have reduced identify document requirements when applying for their director ID. Once they have logged onto the ABRS website, they will only need one of the following to complete the proof of ownership of tax record step:
tax file number
residential address as held by the ATO.
If a ‘standard identity strength’ myGovID is used, directors will still need to provide the additional personal information from 2 documents to verify their identity and then complete their director ID application.
Key message – Apply Now
If you are a director of a company and you have not yet applied for your director ID, time is running out to apply before the deadline. Please refer to the ABRS website here for more information on how to apply or listen to the How to apply for a director ID instructional video.
Enforcement and Penalties
It will take the ABRS and ASIC some time (if not months) to identify and take the appropriate compliance action against all those directors who did not apply before the deadline.
Thousands of directors who did not or could not apply before the deadline will not wake up on 1 December 2022 to a $13,200 penalty.
The ABRS has indicated that they will take a reasonable approach for those directors who miss the deadline and eventually do the right thing. Comprehensive media campaigns are currently underway across a number of channels throughout Australia to ensure that the message to apply reaches as many directors as possible. Only after repeated directions to apply from the Registrar are ignored, will directors be prosecuted and severe penalties incurred.
