The Australian Taxation Office (ATO) is bringing in new rules for millions of Aussies next week, with fines of $13,000 for those who fail to meet the deadline.
From November 30, it will be mandatory for all company directors covered by the Corporations Act to have a unique director ID.
The new rules will apply to all Aussie directors, including small businesses, larger corporations, charities, not-for-profit groups and directors of self-managed super funds. It does not apply to Aussies running a business as a sole trader or partnership.
According to the ATO, more than 1.4 million directors have already applied for their director ID, but around 1 million still need to apply for the 15-digit identifier.
“Some people might not actually realise they are a director of a company,” Australian Business Registry Services (ABRS) deputy registrar Karen Foat said.
“You don’t have to wear a suit or work in an office to be considered a director. If you run a small business, self-managed super fund, a not-for-profit or even a large sporting club, you may be a director, which means you’ll need a director ID.”
If you’re not sure if you need to apply for an ID, Foat said you could check the ABRS website or talk to your registered tax agent for advice.
The new rules are being introduced to crack down on illegal activities.
“Director ID helps the Government to take action against illegal activity - for example, a practice called phoenix activity,” Foat said.
“This is really dodgy behaviour and it’s where business owners illegally shut down their company and transfer assets into a new company to avoid paying what they owe to employees and suppliers.”
Australian directors can apply for an ID through the ABRS, which is managed by the ATO. It is free to do and available for directors within Australia and overseas. The number stays with the director forever, so you only need to apply once.