Director Registry Aims to Track and End Illegal Company Activity

The Australian Tax Office (ATO), aided by ASIC registry staff, have continued their plan to modernise the way businesses are registered with the introduction of director identification numbers (director IDs).

Amalgamating all of ASIC’s 31 business registers into the newly coined Australian Business Registry Services (ABRS), the rollout of director IDs will be the ABRS’ initial project and begin to be enforced later this year.

As a company director, although IDs will eventually become mandatory, for now nothing will change in regards to your registry obligations or how you currently deal with ASIC, the ABR or ATO.

As the launch date approaches, the ABSR will make you aware of the new obligations under the regime.

A planned 15-month transition period will be granted for existing directors to apply.

For new directors, a 12-month grace period will be in place to apply for an ID, then as the new rules become compulsory, the application will need to be sought prior to being appointed as a director.

Not dissimilar to a driver’s licence or tax file number, the new director IDs will be a unique code that as a company director, you will have for life – regardless of whether you start a new company, change your name or move interstate or overseas.

The need for director IDs can be attributed to the current lack of integrity around company data and the plan to stamp out illegal ‘phoenixing’ activities.

There are currently no formal checks to ensure directors’ details are truthful, so the act of ‘phoenixing’ can involve repeatedly starting a new company using a false identity.

The previously liquidated company continues the same business activities without incurring the debt or resulting penalties.

Employees, suppliers and sub-contractors can also be left unpaid, which unfortunately is an all too common occurrence in the automotive industry.

The ABRS is part of the Modifying Business Registers program which will be rolled out progressively between 2021 and 2024 as the ATO uses a private beta to test user experiences, ensuring a smooth transition.

The MTA’s WR team will continue to monitor and update on the planned company director changes.