Director ID Numbers – Why, When, and How

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Insights From MCA Accountants

Director ID Numbers – Why, When, and How

Action Points

Every company Director will be required to obtain a Director ID number with registrations opening from 1 November 2021. Existing Directors will have 13 months to get their Director ID – and while that is a fair way away, we would recommend not putting it off because the penalties for not getting it are steep.

Key Links

We highly recommend you have a read of https://www.abrs.gov.au/director-identification-number, and watch our video tutorial at https://youtu.be/hyfl_QTDieE (also available towards the bottom of this article).

WHAT IS A DIRECTOR ID?

Essentially it’s like a Tax File Number, but specifically for the new business register.

The question that probably pops into your mind is “why don’t they just use my Tax File Number?”, and the reason is because the Director ID will be required to be provided to various businesses and organisations and handing out your TFN would compromise the integrity of everyone’s tax records.

Each individual (that becomes a company director) will have one Director ID, and that number will be recorded against all companies you are the Director of (and eventually against all sorts of business registrations like business names, ABN records, and so on).

WHY DO WE NEED A DIRECTOR ID?

At the moment when you become a Director there are limited ID checks in place. You provide a name, address, date of birth, etc, and that info is lodged with ASIC.

Did you notice that we stated “a name…” and not “your name…”? Currently there are very limited ID checks in place to ensure that these details are actually for real people… rumour has it Mickey Mouse is actually listed as a Director with ASIC.

Aside from the potential for deliberate fraud, this has also resulted in the same person having multiple identities in Government systems. Some will be John Smith, some John Citizen Smith, some John C Smith, and some with different addresses.

With a single ID number, backed by an official ID check (think of your 100 point ID check at the bank), this becomes impossible. It will clean up multiple Government registers and help prevent fraud.

WHEN DO WE NEED A DIRECTOR ID BY?

While applications open in November 2021, you don’t need to obtain a Director ID immediately, and the time-frame depends on when you first became a Director of a company:

  • Existing Directors as of 31 October 2021 have until 30 November 2022;
  • If you become a Director between 1 November 2021 and 4 April 2022, you have 28 days from your appointment; and
  • If you become a Director after 4 April 2022, you must obtain your Director ID before your appointment as a Director.


While unclear at this point, we believe that if you are an existing Director but accept a second Directorship after 31 October 2021, you still have until November 2022 to get your Director ID.

WHAT IF I DON'T GET A DIRECTOR ID?

Make sure you are sitting down…

Maximum penalties within the Director ID rules are $1.1 million and/or a criminal conviction (including potential jail).

Yes… Million. Now, we dare say that the Government won’t impose that on people that are late or make an honest mistake – but it’s an indication of how serious the Government is treating this obligation.

Our tip – just go and get it now so you don’t risk a penalty.

HOW DO I GET IT?

In order to get your Director ID, the recommended way is to apply online. The Government’s instructions are detailed at https://www.abrs.gov.au/director-identification-number/apply-director-identification-number and our video tutorial can be seen on our YouTube Channel or directly below.

Basically the process is:

  1. Create a MyGovID (if you haven’t already). We have a video that will step you through the process available at https://youtu.be/NAhBrx6485M;
  2. Gather the following documents:
    1. your Tax File Number;
    2. your current residential address according to the ATO’s records – which you can look that up in your ATO online services account (we have info on accessing this at https://www.mcaaccountants.com.au/resources/insights/ato-online-services/);
    3. two of the documents listed at https://www.abrs.gov.au/director-identification-number/apply-director-identification-number/verify-your-identity (bank account details, ATO notice of assessment, superannuation account details, group certificate, etc) – we note that these details much match ATO records, and:
      1. the bank account details are likely to be our trust account (see your tax return for those details); and
      2. the postal address is likely to be our PO Box (PO Box 8095, Carrum Downs, VIC, 3201).
  3. Apply online at https://www.abrs.gov.au/director-identification-number/apply-director-identification-number.

It is possible to apply over the phone or via post. This will be a longer process and in the case of a paper application will involve you sending certified documents to the ABRS. We note that accountants are not among the list of people able to certify these documents (probably because we are part of the process to create companies).

You can read more about this at https://www.abrs.gov.au/director-identification-number/apply-director-identification-number, and of course watch our video tutorial above.

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