What is a director identification number?
A director identification number (DIN) is a unique identifier that will be assigned to each person who is or becomes a director of an Australian business. This number will be permanently linked to any individuals, even if they step down or go into bankruptcy. A person can only be assigned one DIN during their lifetime.
Why are DINs being made law?
The new identifiers are being introduced in Australia to prevent company’s directors stripping cash and assets and hiding them, liquidating the company and then bringing it back to life, typically under a different name (referred to as phonenixing), as well as other illegal business activities, such as using fake names.
While director’s details are required to be registered with the Australian Securities and Investment Commission (ASIC), it’s not legally required to verify those identities, making it easier to carry out fraudulent behaviour. The ASIC released an economic impact report on the cost of potential illegal activity. The report discovered phoenixing and illegal business activities results in annual losses of between $AU 2.9 billion and $AU 5.1 billion. These amounts may include but is not limited to withholding wages, GST and super payments and loss of tax revenue.
What difference will DINs make?
Aside from making it more difficult to carry our illegal business activities, the new DIN identifiers will allow easier and more effective tracking of directors’ history, streamline the process for administrators and liquidators and better security.
Do I need to apply for a DIN?
Yes, as soon as DINs are introduced in Australian, if you are a director of an Australian company or want to become a director, you will be required to apply for a DIN. There will be a transnational period to ensure business directors and new directors have additional time to apply, after the transition period expires, there is a 28-day grace period but failure to comply with application deadlines could result in fines and/or imprisonment.
Any fraudulent activity in an attempt to acquire extra DINs or providing false details can also be subject to severe penalties.
When does the new DIN law come into effect in Australia?
The actual date is still yet to be specified, however it is expected the DINs will come into effect approximately June 2022. Although, this date is subject to change at the discretion of the Australian Governor General.
If you need assistance to ensure your business is ready for the upcoming DIN regime, or you’re currently a director of a company and wish to remove yourself from the company, our team of corporate accountants can help ensure your business is compliant and ready to navigate any law changes.