How to set up your Director ID

Directors are now required to register for a unique identification number that they will keep for life.

What is a director ID?

A director ID is a 15 digit identification number that, once issued, will remain with that director for life regardless of whether they stop being a director, change companies, change their name, or move overseas.

The introduction of the Director Identification Number (DIN) is part of the Government’s Modernisation of Business Registers (MBR) Program creating greater transparency, and preventing the potential for fraud and phoenix company activity. The MBR will unify the Australian Business Register and 31 ASIC business registers, including the register of companies. In effect, the system will create one source of truth across Government agencies for individuals and entities and will be managed by the Australian Taxation Office (ATO).

For those concerned about their privacy, the director ID will not be searchable by the public and will not be disclosed without the consent of the Director.

Who needs a director ID?

All directors of a company, registered Australian body, registered foreign company or Aboriginal and Torres Strait Islander corporation will need a director ID. This includes directors of a corporate trustee of self-managed super funds (SMSF).

You do not need a director ID if you are running a business as a sole trader or partnership, or you are a director in your job title but have not been appointed as a director under the Corporations Act or Corporations (Aboriginal and Torres Strait Islander) Act (CATSI).

The company secretary or officeholder should keep a register of the IDs of their directors in a secure place - director IDs are governed by the same privacy rules that apply to Tax File Numbers (TFNs) and should not be disclosed unless required.

Timeframes for registration

For Corporation Act directors:

Date you become a director Date you must apply
On or before 31 October 2021 By 30 November 2022
Between 1 November 2021 and 4 April 2022 Within 28 days of appointment
From 5 April 2022 Before appointment

For CATSI directors:

Date you become a director Date you must apply
On or before 31 October 2022 By 30 November 2023
From 1 November 2022 Before appointment

If the company intends to appoint new directors, it will be important to ensure that they are aware of the requirements and timeframes to establish their director ID if they do not already have one.

How to set up a director ID

If you are an Australian resident director, you will need to complete a number of steps and have a number of identification documents available and ready (for non-resident directors see Foreign directors and the director ID system below).

1 - Verify your identify
If you establish your director ID online, and you have not already set up myGovID, you will need to download the app onto your phone or device and create an account.

The myGovID does not create your director ID - the app’s only purpose is to validate your identity, and once validated, issue a code that can be used to identify you on government online services without going through the same verification process.

myGovID uses your phone/device’s camera to scan your forms of ID such as your passport, driver’s license and/ or VISA (check the documentation requirements here), to validate who you say you are. Be careful when you are scanning your documentation as the system does not always read the scan correctly.

2 - Apply for your director ID through Australian Business Registry Services
Once you have set up your myGovID, you need to apply to the Australian Business Registry Services (ABRS) for your director ID. Use the email you used to create your myGovID to start the process.

In addition to your myGovID, you will need to have on hand documentation that matches the information held by the ATO. If you have a myGov account linked to the ATO, you can find the details on your profile. You will need:

  • Your tax file number
  • The residential address held on file by the ATO; and
  • Two documents that verify your identify such as:
    • Your bank account details held by the ATO (on your myGov ATO account, see ‘my profile/financial institution details’).
    • Dividend statement investment reference number
    • Notice of assessment (NOA) – date of issue and the reference number (on your myGov ATO account, see Tax/lodgements/income tax/history).
    • The gross amount from your PAYG payment summary
    • Superannuation details including your super fund’s ABN and your member account number

The final stage requests your personal contact details (not the company’s).

Once complete, your director ID will be issued immediately on screen. This information should be provided to your company secretary or office holder.

If any of your details change, for example a change of residential address or phone number, you will need to update your details through the ABR. You will also need to notify your company within seven days (14 days for CATSI Act directors) and the company will then need to notify the Australian Securities and Investments Commission (ASIC) within 28 days.

Applying by phone or using paper forms
You can choose to verify your identify and apply for your director ID by phone (13 62 50) or on paper. You will need to have your identification documents available. If you are applying using the paper form, your identify documentation will need to be certified by an authorised certifier such as a Barrister, Justice of the Peace etc.

Foreign directors and the director ID system

Foreign directors of Australian companies have the same requirements and deadlines as Australian resident directors, however, the verification process is only accessible in paper form.

One primary and two secondary forms of identification are required to accompany the application that have been certified by a notary publics or by staff at the nearest Australian embassy, high commission or consulate, including consulates headed by Austrade honorary consuls. Primary forms of identification include a birth certificate or passport, and secondary include driver’s licence, foreign government identifier, or national photo identification card.

In the presence of the applicant, the authorised certifier must certify that each copy is a true and correct copy of the original document by sighting the original document, stamping, signing and annotating the copy of the identity document to state, ‘I have sighted the original document and certify this to be a true and correct copy of the original document sighted'. initialling each page listing their name, date of certification, phone number and position.

The form and the accompanying documents will need to be sent by mail to Australian Business Registry Services using the details provided.

Directors in name only

It’s important that anyone agreeing to be a director understands the implications. Being a director is not just a title; it is a responsibility. At a financial level, directors are responsible for ensuring that the company does not trade while insolvent. The by-product of this is that the directors may be held personally liable for the debt incurred. The director penalty regime has also tightened up in recent years to ensure that directors are personally liable for PAYG withholding, net GST, and superannuation guarantee charge liabilities if the company fails to meet its obligations by the due date. For many small businesses, the directors are also often personally responsible for company loans secured against property such as the family home.

Failing to perform your duties as a director is a criminal offence with fines of up to $200,000 and five years in prison.

Ignorance is not a legal defence. Don’t sign anything unless you understand the consequences.


3 Mindset Shifts to improve Cashflow

More than 80% of Small businesses fail in Australia due to cashflow issues. Frightening stats!

I want to share with you 3 mindset shifts to increase your ability to keep your business moving, save a load of stress and anxiety, improve your cash flow and increase your profits.

Our mindset is the most important part of our business and ultimately our ability to manage our cash flow and create profits.

Have you ever heard of the money thermostat? We all have one! Our thermostat was created by the beliefs we took on from our parents, carers, teachers basically anyone we’ve ever spent time with. We heard them say things like “money doesn’t grow on tree’s”, “you have to work hard”, “if you don’t have an education you will never get anywhere”, “people with money are crooks” are just a few of the beliefs many of us have taken on. These beliefs show up subconsciously and impact us in many ways. They can impact our ability to make money, to save money, to spend money.

Our thermostat is the dollar value you think you are worth, what you believe to be your earning capacity. It dictates how big we dream, what we think is and isn’t possible.

Have you ever given any thought to what your money story is? The story that created your belief around how big you dream and how much you achieve?

I want to share with you 3 mindset shifts to inspire you to improve your cash flow and increase profits.

  1. Change your money story
  • What do you tell yourself about money?
  • Do you tell yourself you’re not good with money?
  • Do you avoid dealing with money issues or avoid investing time in managing your finances?
  • Do you avoid chasing money for fear of upsetting the customer?

Continue with these money stories and nothing will ever change!

Create a new money story –

  • I am an exceptional money manager
  • I seek help when needed to manage any money issues
  • I provide excellent service and deserve to be paid well for my efforts
  • My customers appreciate my efforts and pay me on time every time
  • I make time weekly to review my finance
  • I have plenty of money
  • I can help more people when I have money

 

  1. Change your identity

Unfortunately, a lot of small business owners have a misguided mindset about the role they play in their business. They get trapped being the worker instead of developing strengths as the CEO (Chief Entrepreneurial Officer).

By changing and improving your mindset about the role you really need to play you will also activate a powerful worthiness principle – you deserve to be paid well as a CEO! Conditioning yourself to think, act and lead your business as a CEO, you also make much better decisions for the overall health of your business.

  1. Take responsibility

This mindset shift isn’t just relevant to money - it’s an essential mindset shift to create change and achieve the results and success that you deserve. When shit happens, when failures occur take 100% responsibility. It can be tempting to blame someone else but do you really want to become the victim?

When you play the role of victim you are choosing to give away your control. You are living at the effect of others. In order to change and improve your money mindset, you absolutely must take 100% responsibility for your actions. Be in control, choose how you live your life. Take time every day to reflect and see what you can learn from each experience and interaction, what can you improve what did you do well that you could implement in other areas of your work and life.

Be the hero of your own story by overcoming the setbacks, learning from your failures, and creating an unstoppable money mindset.

“To make mistakes or be wrong is human. To admit those mistakes shows you have the ability to learn, and are growing wiser.”
― Donald L. Hicks


The Building Industry and Your Tax Debt

The building and construction industry has really taken a hit with these recent lockdowns.

Here at Tax Assure, we get it.

At the moment a number of factors are limiting your business’s potential; you haven’t been able to trade normally, access to worksites is restricted, there’s limited materials available, plus access to skilled labour is difficult, money is drying up fast, and there are too many unknowns at the moment.

What’s been the price tag so far?

In July, the ABC reported an estimate of a $1billion-per-week price tag on the Sydney lockdown. Estimates have also put the cost of Melbourne's lockdown around $700 million a week, which would also rise dramatically if it had to follow Sydney's lead and stop building work.

That was July… one can only imagine what the cost to our Australian economy will be at the end of these lockdowns.

And then there’s your business and the ATO. It’s almost impossible to stay on top of your statutory obligations when you’re faced with so many obstacles in your way.

What’s the ATO doing when it comes to your Tax Debt?

Recently, we have seen an uplift on collection and enforcement activity within the ATO’s firmer action team.

Accountants Daily has quoted the ATO stating, “we have not halted our debt and lodgement activities,” …. “The ATO’s decision not to pause all debt collection activities comes after it failed to hit its compliance revenue target by $1.3 billion last year, with collectable debt rising by 28 per cent to $34.1 billion.”

 

However, that said, the ATO has seen the importance of helping where it can through this pandemic and is willing to work with business.  This assistance however is only for businesses that engage with the ATO and ensure they remain in a position of compliance.  Even in these COVID times, the ATO insists on engagement.

Unfortunately, your debt won’t just disappear if you continue to ignore it.  It will still be there on the other side of this.

Top Tips

Our 3 major top tips for businesses with any tax debt at the moment are:

  • Don’t ignore your debt;
  • Engagement with the ATO is key; and
  • There are a variety of solutions and help available other than paying the debt in full or ignoring it.

The ATO have specifically stated engagement is the key and without this, the ATO will have no other alternative than to start legal recovery action.

The good news is engagement doesn’t mean the debt must be paid in full immediately.

With the right help, there are a variety of solutions available.  These including long term payment plans that match your current cash flow position and the possibility of reducing your overall debt with the remission of interest and penalties that may have incurred on your accounts.

If you continue to ignore the debt, this will not only severely affect your position of compliance with the ATO, and your future ongoing position with the ATO, but there are additional ramifications you may not be aware of.

Do you have more than $100,000 in Tax Debt?

The ATO can report a business with over $100,000 owing in Tax debt to credit reporting agencies.  This will immediately affect a business’s credit rating. The ATO has begun sending warning letters of their intent to disclose tax debt information to credit reporting bureaus if you do not make an effort to manage your debts within 28 days of receiving this warning letter.

This is in line with the ATO’s resumption of its collections work. Even though on the surface it may seem as if the ATO is quiet, they are still very much actively moving forward with their collections plan and work.

If a business is actively working with the ATO to manage their tax debt, including entering into a payment plan and engagement with the ATO, their tax debt will not be reported to credit reporting bureaus.

Ignoring the ATO can mean that it will be harder for you in many ways. Have a quick think:

  • Do you want to obtain a credit card in the future?
  • Do you want to obtain a loan from a bank, or finance provider in the future?
  • Maybe you want to buy a house but can’t pay cash? or
  • Will you need to perhaps rent?

This is one example of why it is vital that you continue to engage with the ATO during this difficult time.

 

The Tax Debt landscape has changed, and is continuing to change during this pandemic… these are for sure very difficult times. Here at Tax Assure, our aim is to support each and every business owner who needs assistance getting back on track, or have any concern, during these difficult times.

For more information or if you want to chat through any difficulties you are currently experiencing please call us: we are here to help.

 

Olga Koskie | Principal

T: 1300 952 295 | M: 0418 260 027

olga.koskie@taxassure.com.au

www.taxassure.com.au