Do you have a family company or a corporate trustee for your self-managed superfund?

If you are a director of an Australian company, even if it is a private family company or the trustee of your self-managed superannuation fund, you will need to verify your identity on the new Director Identification Number (DIN) platform. This requirement came into force on 1 November 2021.

If you were appointed a director of a company on or before 31 October 2021, you must submit your DIN application by 30 November 2022. Directors appointed between 1 November 2021 and 4 April 2022 must submit their applications within 28 days of appointment. From 5 April 2022 onwards, a DIN application must be submitted before a director is appointed.

So why has the Commonwealth Government decided to impose this obligation which appears at first glance to be just another bureaucratic piece of red tape on so many Australians? The Government’s response is that the DIN program has been introduced to eliminate the risk of false or fraudulent director identities, particularly in the context of phoenix companies continuing to carry on the same business as that previously carried on by insolvent companies. A DIN is a unique identifier that a director applies for once and keeps indefinitely, and which will be used to trace individual directors’ relationships to companies over time.

So how do you apply for a DIN? All applications must be made through the Australian Business Registry Services website. An application for a DIN must be made by directors themselves as they will need to individually verify their own identities – it won’t be possible for someone else to submit an application on behalf of the director. All applicants for a DIN will be required to provide the following information:
their residential address as recorded with the Australian Taxation Office;answers to two personal questions in relation to any of the following:

1. superannuation account details;
2. a pay as you go (PAYG) summary; or
3. bank account details.

So what consequences will you face if you fail to comply with the new DIN requirements? The Government is taking this new legislation very seriously and has charged the Australian Securities and Investments Commission (ASIC) with the responsibility of enforcing the requirements of the DIN program. The maximum penalty for failing to hold a DIN is 60 penalty units (or $13,320 at the current penalty rate of $222 per unit) and one year’s imprisonment. The Government has indicated that non-compliance or breaches of the requirements by directors will lead to infringement notices being issued and possible civil and/or criminal prosecution.

The very strong message we want to convey to our clients who are company directors is that it would be prudent to apply for your DIN now while this new requirement is attracting so much media and corporate coverage.

Author: Peter Kenny (Partner) [retired]