Director Identification Number introduced to combat illegal phoenixing
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The government’s effort to suppress illegal phoenixing activities ramps up with the passage of the Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2019.
The Bill establishes a consolidated Commonwealth business registry system that will unify 32 existing registries, including the Australian Business Register and the Companies Register. The new mega-registry will be administered by the Australian Taxation Office and aims to enhance compliance efficacy, streamline reporting and licensing processes, and make business information more transparent and accessible.
Integral to the new regulatory system is the introduction of Director Identification Number (DIN), which is a unique identifier that anyone who consents to be a company director must have prior to appointment. Applicants need to submit prescribed personal information to the ASIC, and upon passing a 100-point identity verification will be issued with a DIN by the registrar. No person will be issued with more than one DIN, and once assigned a DIN will attach to its holder permanently even if they cease to be a director.
Upon the Act’s commencement, existing directors will have 18 months to verify their identity and obtain a DIN. As for newly appointed directors, they have 28 days to obtain a DIN during the first twelve months of commencement. After that transition period, directors will need to obtain a DIN prior to their appointment unless the regulations extend the prescribed period or the registrar provides an exemption or extension. Civil and criminal penalties will apply for directors that fail to apply for a DIN within the applicable timeframe.
The Bill is part of the government’s concerted effort to stamp out illegal phoenixing activities (detailed Here), which a 2015 Productivity Commission report estimated to cost the Australian economy $5 billion a year in unpaid debts and taxes. By tracking a director’s movement and relationships across companies, the DIN scheme aims to deter the use of fraudulent identities and assist regulators and external administrators to detect and investigate illegal phoenix activity.
The team at Collins Wentworth are experienced in business financial matters. If you wish to know more about how we can assist you, contact us today.
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