The release of Director Identification Numbers is imminent, and directors and companies will be faced with serious penalties if they fail to comply.
This sentence alone is probably daunting for most directors. After all, any non-compliance with either the Australian Business Registry Services (ABRS) or the Australian Tax Office (ATO) can see businesses in some seriously hot water.
But what exactly are Director Indication Numbers (DIN), who has to apply, and how do you apply? If you’re baffled by any of these questions, then you’re in the right place. We’ve popped together a comprehensive guide about what DINs involve and how you can obtain one.
What is a DIN?
DIN is an acronym for the term Director Identification Number. Simply put, DINs are 16 digit numbers that will act as an identity number. This number will be assigned to the director of a company and will be permanent. Even if the director leaves the company and works elsewhere, they will carry their DIN with them.
DINs were created by the Australian Business Registry Services (ABRS), and are being implemented by the Australian Tax Office (ATO). They come into play from November 1st, 2021.
Who needs a DIN?
If you’re a director of a company in Australia, you will legally need to apply for a Director Indication Number. In formal terms, if you are a director, or an acting director of a business, falls into the following categories, you’ll need to apply.
- A company, a registered Australian body, or a registered foreign company under the Corporations Act 2001 (Corporations Act)
- An Aboriginal and Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act).
Do all Directors need a DIN by November 1st, 2021?
DINs are being to be implemented from the 1st of November, however, the time frame in which a DIN is required will be dependent on when the individual’s tenure started in the director position.
- If the director was appointed on or before October 31st, 2021, they’ll need to apply for a DIN before 30th November 2022.
- If the director was appointed on or before 1 November 2021 and 4 April 2022 they’ll need to apply for a DIN within 28 days of appointment.
- If the director is appointed after 5th April 2022, they’ll need to apply for a DIN before they begin their role.
Why are DINs being implemented?
DINs are an identification that’s tied to one person – similar to how a social security number is permanently attached to an individual in America.
One of the primary purposes of the new system is to combat illegal phoenixing. Illegal phoenixing is a practice where a company transfers their assets to a new company, and leaves the old company with debt and, often, liquidated. Because the director is permanently attached to the DIN, it makes it a lot easier for linked debt to be traced.
The official identification system also aims to help prevent fraud through false identities being linked to companies.
How do I apply for a DIN?
Most company directors employ the help of a personal assistant to help them take care of administrative work. This is why it’s so important to note that an assistant cannot apply for a DIN on behalf of the director, even if they are authorised to act for the director. DINs must be applied for by the director themselves.
The ABRS has detailed information on how to apply for a DIN, as well as a portal to apply for the number.
What happens if I don’t apply?
Applying for a DIN is straightforward, but directors who fail to apply within the given time frame may face some hefty fines and even criminal charges. Failure to comply can result in the penalty of 5000 units – which currently means a $1.11 million fine and may also face criminal prosecution.
If you would like to chat to someone further about how to apply for a DIN, or are confused as to which criteria you fall under, reach out to our team today! Contact us on 07 3367 3155, or email us at support@walkerhill.com.au.
