Anne Nalder, CEO & founder of the Small Business Association of Australia was recently interviewed by Business Essentials Daily on the changes to Identification for business directors.
The federal government now requires all directors of any company, whether they’re large or small to register for a new public database.
A directors identification number is an ID that every director in Australia that operates a local or foreign business will now need. Sole traders do not need that particular ID.
- Directors appointed from the 1st of November 2021 will need to register for an ID within 28 Days.
- Directors appointed before the 31st of October 2021 will have until the 30th of November 2022 to register for an ID.
- If you’re starting a new company, you must apply for the ID before you have your company registered.
- Directors must apply themselves, they cannot be registered by their accountant or lawyer
- There are close to 24 million small businesses operating in Australia as of 2022.
- Directors of a company of any size must apply for an ID.
Why are these changes necessary?
- To track phoenix companies (Illegal phoenix activity occurs when a new company, for little or no value, continues the business of an existing company that has been liquidated or otherwise abandoned to avoid paying outstanding debts, which can include taxes, creditors and employee entitlements.)
- Directors with legitimate, registered businesses and unregistered illegitimate businesses may be splitting revenue between these businesses to avoid paying tax.
- To prevent as much fraud and wrongdoing as possible.
- Will streamline the Australian Business Register and allows ASIC and the ATO to easily track non-compliance.
- Will help to protect protect smaller companies and businesses from fraud.
- Businesses seeking government contracts will need their directors ID.
Is the new Directors ID Red Tape to small businesses?
- Not negative red tape. There must be rules and regulations to make operating a business in Australia fair and honest for all.
- Will streamline taxation issues.
- Makes operating a business more open and honest
How to register?
- You can easily register online, by phone or by paper.
- You must have current proof of identification.
