As an investor, it's integral to remain up to date with changes in market conditions as well as legislative requirements. Most Aussie investors are familiar with tax reporting and dividend distribution season, but a late 2021 addition to administrative requirements for some investment structures may have you wondering if and how a director ID applies to you.
If you're getting serious about your investment portfolio, we detail all you need to know about Director IDs and whether you need to apply for one.
What is a Director Identification Number?
A director identification number (director ID) is a unique identifier that all Australian company directors must now hold.
Why were director IDs introduced?
Director identification numbers are administered by the Australian Business Registry Services (ABRS) and were introduced to help combat unlawful activity around company ownership, such as phoenix activity. 'Phoenixing' occurs when a new company is established to carry on the activities of a business that was intentionally or deliberately liquidated to avoid paying its debts. The impact of illegal phoenix activity can mean that employees, suppliers and subcontractors are left unpaid and without superannuation or entitlements.
To provide transparency and prevent the use of false or fraudulent director identities, Director IDs remain with directors for life, and will never change, even if they move interstate or overseas, change their name or change companies. This also helps external administrators and regulators such as ASIC to trace directors' relationships with different companies over time.
Do I need a director ID?
Directors of a registered foreign company, registered Australian body, or Australian and Torres Strait Islander corporations are also required to hold a Director ID. In addition to company directors, an eligible officer (such as an alternate director acting in the capacity of a director) of an Australian company, registered body or Australian and Torres strait islander corporation must also apply for a director ID. Existing directors should have already applied for their director ID, as the cut-off date to apply was the 30th of November, 2022.
Applying for a Director ID
Since the 5th of April, 2022, anyone wishing to become a company director must apply for a director ID before being appointed. Previously, the date you first became a director determined when you needed to have applied by.
Some things to note about the application process for obtaining a director ID:
The Australian Business Registry Services website provides excellent instructions on how to apply for a Director ID online.
You have to apply for your own Director ID — an authorised agent, such as an authorised tax representative, can't apply on your behalf.
You will need to provide identity documents such as your passport, driver's licence and medicare card, on top of other identifying information such as your residential address and tax file number or ATO notice.
The company secretary, contact person or record holder should retain information about your director ID, and can then notify ASIC of your unique identification number.
What is my director ID obligation as an investor?
As more and more Aussies turn to using self-managed super funds as their primary retirement savings vehicle, they are faced with the choice of having individual or corporate trustees. There are several differences between a corporate vs individual trustee structure, however, if you choose a corporate trustee structure, the members of your fund will generally need to be a company director of the corporate trustee!
Sole-purpose companies are typically set up to be the trustee of SMSFs, meaning that the company will solely be used to act as trustee of the super fund and not for any other purpose. However, the same rules apply — the directors appointed will need to apply for a director ID! Of course, this also applies if you have any other corporate structure that you manage investments for, such as a testamentary trust.
If you're responsible for managing the investments of your self-managed super fund or simply want to access world-leading investment technology, HALO Technologies provides investment solutions for all investors.
Important Information
All information contained in this publication is provided on a factual or general advice basis only and is not intended or be construed as an offer, solicitation, or a recommendation for any financial product unless expressly stated. All investments carry risks and past performance is no indicator of future performance. Before making an investment decision, you should consider your personal circumstances, objectives and needs and seek a professional investment advice. Opinions, estimates and projections constitute the current judgement of the author as at the date of this publication. Any comments, suggestions or views presented in this communication are not necessarily those of HALO Technologies, Macrovue or any of their related entities (‘we’, ‘our’, ‘us’), nor do they warrant a complete or accurate statement.
The opinions and recommendations in this publication are based on a reasonable assessment by the author who wrote the report using information provided by industry resources and generally available in the market. Employees and/or associates of HALO Technologies or any of the other related entities may hold one or more of the investments reviewed in this report. Any personal holdings by HALO Technologies or any of the other related entities employees and/or associates should not be seen as an endorsement or recommendation in any way.
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