Are you a director of an Australian company? If so, the deadline to apply for a Director Identification Number is tomorrow.

The deadline for the application depends on when you were appointed as a director:

1. If your appointment was before 1 November 2021, you must apply by 30 November 2022;

2. If your appointment was between 1 November 2021 and 4 April 2022, you had to apply within 28 days of your appointment; and

3. From 5 April 2022, anticipated directors must apply before their appointment.

What happens if I don’t comply? ? Penalties

The team at GPA Law are experienced in applying for director identification numbers and are happy to provide further information and assistance in understanding and navigating the application process.

Application Deadline of 30 November 2022 for Director Identification Number is Fast Approaching: How-to-Guide

Are you a director of a company or anticipate becoming one? If so, due to legislative reforms, you are now required to register for a Director Identification Number (Director ID). A Director ID is a one-off 15-digit unique identifier as an additional security measure against fraudulent breaches of director identification. Additionally, the Director ID serves as a beneficial tool in keeping track of the relationships between directors and corporate entities.

The Deadline

The deadline for the application depends on when you were appointed as a director:

1. If your appointment was before 1 November 2021, you must apply by 30 November 2022;

2. If your appointment was between 1 November 2021 and 4 April 2022, you must apply within 28 days of your appointment; and

3. From 5 April 2022, anticipated directors must apply before their appointment.

Given the upcoming deadline please keep in mind that the team at GPA Law are experienced in applying for the Director ID and are happy to provide further information and assistance in understanding and navigating the Director ID application process.

Further, for additional information on this topic, please click on the below links to two of our other previous articles discussing the introduction and implications of Directors IDs.  All of our firm’s previous articles, coupled with this one, provide you with a comprehensive analysis and assistance which we hope answers most, if not all, of the question you may have.

Penalties

It is a criminal offence if the application is performed outside of the prescribed time period. Failing to have a Director ID incurs a $13,200 penalty. For more information on penalties, please visit: https://asic.gov.au/for-business/running-a-company/company-officeholder-duties/director-identification-number/#faq3.

The Identification Reasoning

If your company is in Australia, the Director ID will start with 036. In the event that you are a director of multiple companies, you only have to apply for one Director ID. Once applied for, the allocated Director ID will be one that you have forever, regardless of the following:

1. If you change companies;

2. Terminate being a director;

3. Process a change of name; or

4. Change your residency status to an interstate or international residence.

The Application Process

Time to apply: 20-30 minutes (subject to the availability of identity documents).

Below is a step-by-step process to assist you and any of your company director clients. Please copy and paste the links into your browser bar.

Step 1 | Set up your MyGovID

The application is performed via the Australian Business Registry Service at https://www.abrs.gov.au/director-identification-number/apply-director-identification-number.

If you have not already set up your MyGovID profile, this will be your first step.

Note: It is recommended that you download the MyGovID app from the app store or Google Play on your mobile/smart telephone and follow the prompts ensuring that your identification strength is strong. For your identification strength to be strong we recommend that you use your passport. Below is a list of Australian Identity Documents you can choose from in order to identify yourself:

• Passport ? no more than 3 years expired;

• Driver’s licence (including learner’s permit);

• Birth certificate;

• Visa (using your foreign passport);

• Citizenship Certificate; or

• Medicare card ? (once you verify one of the documents above in the app, you’ll have the option to verify your Medicare card).

Step 2 | Verification of Identity

If you have previously verified your identity on the MyGovID website, you can skip this step and go directly to Step 3 below. Otherwise, you will need the following to complete the verification process via MyGovID.

If you do not have these Australian Identity Documents then you will need the following:

1. Your individual tax file number (Note: this is not compulsory, however, it will speed up the application process); and

2. Your residential address as recorded by the Australian Taxation Office (ATO); and

3. Any two of the following: 

• A bank account statement

• An ATO notice of assessment

• A superannuation statement

• A dividend statement

• A Centrelink payment summary

• A PAYG payment summary

Step 3 | Complete Your Application

Apply online now ? Complete your Application.

When you are ready to complete your application make sure your mobile/smart telephone which has the MyGovID app on it is on the same WIFI as your computer. This will allow your computer to provide you with a 4 digit code so that you can proceed with the application.

1. On your computer, enter your MyGovID email and click login;

2. On your mobile/smart telephone enter the MyGovID 4 digit code;

3. On your computer agree to sharing your Digital Identification with the ATO; and

4. On your computer provide your address and TFN as held by the ATO. Your ATO record should then be found.

Your Application for your Director ID can then commence. This final stage is done completely on your computer.

1. Confirm you are an eligible officer or intend to become an eligible officer within 12 months of your application;

2. Acknowledge that you understand that to be a director you must meet the requirements of the Corporations Act 2001 and /or the Corporations (Aboriginal and Torres Strait Islander) Act 2006;

3. Confirm your full name, date and place of birth, your current residential address and contact details;

4. Review and submit your application providing a declaration that all the information you have provided is true and correct; and

5. You will then automatically be provided with your Director ID on screen. You can print and save this in PDF format.

Alternative Telephone or Paper Application

In the alternative, a paper application or telephone application is also available. Details for this are set out as follows:

If you currently live in Australia and can’t apply online, telephone the Australian Business Registry Service to apply for a Director ID.

To apply by telephone, you’ll be asked to verify your identity. You’ll need:

? Your tax file number (TFN) ? optional but it will help speed up the process

? Your residential address as held by the ATO

? A primary and secondary Australian identity document

? Information from 2 other documents to answer any questions the Australian Business Registry Service has for you. This may include:

• Bank account details

• Notices of assessment

• Super account details

• Dividend statements

• Centrelink payment summaries

• PAYG payment summaries

If you currently live outside Australia and can’t apply online, you can apply using a paper application form: https://www.abrs.gov.au/sites/default/files/2022-07/Application_for_a_director_identification_number_for_those_living_outside_Australia.pdf

In addition to completing this application form, you must also provide certified copies of your documents that verify your identity. Your Director ID will be sent to the postal address on your application. It may take up to 56 business days for your application to be processed.

How Gavin Parsons and Associates can help?

If you are a CATSI director (a director under the Corporations (Aboriginal and Torres Strait Islander) Act 2006, different provisions may apply to you. If you are, kindly contact our office for more information and further guidance.

As aforementioned, the team at GPA Law are experienced in applying for the Director ID and are happy to provide further information and assistance in understanding the application process, and how it affects you, your business or clients. To obtain this information or our assistance, please contact Gavin Parsons of Gavin Parsons and Associates on (02) 9262 4471 or at gavin@gpalaw.com.au.

As you would be aware, the ATO put the collection of overdue taxes on ice during the COVID-19 pandemic. However, this is no more and the ATO are once again issuing Director Penalty Notices (DPNs) with some very stringent changes. These changes have been put in place due to the massive $55 billion tax debt the ATO announced in November 2021. Whilst some of these changes apply to everyone, Directors in particular have been squarely put on notice. As such, we have seen an increase in DPNs and Garnishee Notices being issued by the ATO.

The ATO has confirmed that they have sent out 29,552 'awareness letters' to taxpayers for the disclosure of business tax debts and a whopping 52,319 'awareness letters' to taxpayers regarding the use of DPNs, with some 30 to 40 DPNs being issued each day. This significant course of action has been adopted by the ATO as they begin targeting taxpayers that represent higher risk and/or a refuse to engage with the ATO. As such, don't ignore the ATO! This is expected to see an increase in insolvencies across a wide range of industries, as is evident with the recent struggles of the construction and hospitality sectors.

In the event that a company has an outstanding tax debt or has not met its Superannuation Guarantee Charge, the Director(s) of the company may be issued with a DPN, which makes them personally liable. Traditionally, to avoid personal liability, upon receipt of such a DPN, the Director(s) would predominately choose (of their many options) to enter into a repayment plan arrangement with the ATO. However, this option is no longer available to directors.

This decision clearly mirrors the judgment made in Clifton (Liquidator) v Kerry J Investment Pty Ltd trading as Clenergy [2020] FCAFC 5 (7 February 2020).

There are now only four (4) clear avenues to remit a DPN. They are as follows:

• Paying the debt in full;

• Placing the company into administration;

• Placing the company into liquidation;

• Appointing a Small Business Restructuring Practitioner.

These options are likely to lead to an increase in companies being placed into administration or liquidation.

It must be clarified that regardless of which of these four (4) options the Director(s) elect to proceed with, the Director(s) must exercise the option within 21 days of the DPN being issued.

During the COVID-19 pandemic we saw many people leave their positions for various reasons. It is crucial to remember that even if you are no longer the Director of a company you may still be personally liable for a debt that was due prior to your resignation. As such, we seek to remind you of some of the applicable legislation regarding the resignation of a Director.

Section 203A of the Corporations Act 2001 (Cth) is as follows;

'A director of a company may resign as a director of the company by giving a written notice of resignation to the company at its registered office'.

Section 205A (1) of the Corporations Act 2001 (Cth) is as follows;

'If a director, secretary or alternate director retires or resigns, they may give ASIC written notice of the retirement or resignation. The notice must be in the prescribed form.'

Section 205B (5) of the Corporations Act 2001 (Cth) is as follows;

'If a person stops being a director, alternate director or secretary of the company, the company must lodge with ASIC notice of the fact within 28 days. The notice must be in the prescribed form.'

When placing these legislative provisions alongside the ATO's recent changes, it is clear that there will be an increase in the number of Directors who find themselves in unwanted situations and this may include incurring significant personal liability for the companies' debts.

Before resignation, any Director intending to do so should also review the company's constitution and potentially any Shareholders Agreement to identify any applicable duties or obligations placed on them. Further, please note that s203A of the Corporations Act 2001 (Cth) forms part of the 'replaceable rules' and as such, depending on the company constitution the company may have contracted out of the replaceable rules and replaced same with the constitution. However, please be aware that unless the constitution is prepared properly, a company can be governed by a combination of the constitution and the replaceable rules.

For those of you who have recently become a company Director, it is crucially important to ensure you have an understanding of how these changes may affect you going forward. If you are a Director, any DPN you receive will be linked with this number.

If you have received a DPN, have recently left your position as a company Director and fear you may still be personally liable for company debts, would like further clarification or advice on the changes made by the ATO or otherwise, please reach out to Gavin and the team at Gavin Parsons and Associates on (02) 9262 4471 or at gavin@gpalaw.com.au.

As you would be aware, the ATO put the collection of overdue taxes on ice during the COVID-19 pandemic. However, this is no more and the ATO are once again issuing Director Penalty Notices (DPNs) with some very stringent changes. These changes have been put in place due to the massive $55 billion tax debt the ATO announced in November 2021. Whilst some of these changes apply to everyone, Directors in particular have been squarely put on notice. As such, we have seen an increase in DPNs and Garnishee Notices being issued by the ATO.

The ATO has confirmed that they have sent out 29,552 ?awareness letters? to taxpayers for the disclosure of business tax debts and a whopping 52,319 ?awareness letters? to taxpayers regarding the use of DPNs, with some 30 to 40 DPNs being issued each day. This significant course of action has been adopted by the ATO as they begin targeting taxpayers that represent higher risk and/or a refuse to engage with the ATO. As such, don’t ignore the ATO! This is expected to see an increase in insolvencies across a wide range of industries, as is evident with the recent struggles of the construction and hospitality sectors.

In the event that a company has an outstanding tax debt or has not met its Superannuation Guarantee Charge, the Director(s) of the company may be issued with a DPN, which makes them personally liable. Traditionally, to avoid personal liability, upon receipt of such a DPN, the Director(s) would predominately choose (of their many options) to enter into a repayment plan arrangement with the ATO. However, this option is no longer available to directors.

This decision clearly mirrors the judgment made in Clifton (Liquidator) v Kerry J Investment Pty Ltd trading as Clenergy [2020] FCAFC 5 (7 February 2020).

There are now only four (4) clear avenues to remit a DPN. They are as follows:

• Paying the debt in full;

• Placing the company into administration;

• Placing the company into liquidation;

• Appointing a Small Business Restructuring Practitioner.

These options are likely to lead to an increase in companies being placed into administration or liquidation.

It must be clarified that regardless of which of these four (4) options the Director(s) elect to proceed with, the Director(s) must exercise the option within 21 days of the DPN being issued.

During the COVID-19 pandemic we saw many people leave their positions for various reasons. It is crucial to remember that even if you are no longer the Director of a company you may still be personally liable for a debt that was due prior to your resignation. As such, we seek to remind you of some of the applicable legislation regarding the resignation of a Director.

Section 203A of the Corporations Act 2001 (Cth) is as follows;

?A director of a company may resign as a director of the company by giving a written notice of resignation to the company at its registered office’.

Section 205A (1) of the Corporations Act 2001 (Cth) is as follows;

?If a director, secretary or alternate director retires or resigns, they may give ASIC written notice of the retirement or resignation. The notice must be in the prescribed form.’

Section 205B (5) of the Corporations Act 2001 (Cth) is as follows;

?If a person stops being a director, alternate director or secretary of the company, the company must lodge with ASIC notice of the fact within 28 days. The notice must be in the prescribed form.’

When placing these legislative provisions alongside the ATO’s recent changes, it is clear that there will be an increase in the number of Directors who find themselves in unwanted situations and this may include incurring significant personal liability for the companies’ debts.

Before resignation, any Director intending to do so should also review the company’s constitution and potentially any Shareholders Agreement to identify any applicable duties or obligations placed on them. Further, please note that s203A of the Corporations Act 2001 (Cth) forms part of the ?replaceable rules? and as such, depending on the company constitution the company may have contracted out of the replaceable rules and replaced same with the constitution. However, please be aware that unless the constitution is prepared properly, a company can be governed by a combination of the constitution and the replaceable rules.

For those of you who have recently become a company Director, it is crucially important to ensure you have an understanding of how these changes may affect you going forward. If you are a Director we recommend reading the following article regarding Director Identification Numbers as any DPN you receive will be linked with this number.

If you have received a DPN, have recently left your position as a company Director and fear you may still be personally liable for company debts, would like further clarification or advice on the changes made by the ATO or otherwise, please reach out to Gavin and the team at Gavin Parsons and Associates on (02) 9262 4471 or at gavin@gpalaw.com.au.