The corporate regulator has taken up compliance duties on the Director ID scheme, contacting company directors who are yet to obtain one and had ignored formal directions to apply.
As many 200,000 directors are still in breach of the scheme a year after it came into force and face heavy fines.
Director IDs — unique 15-digit identifiers – have been required by law for the last year and are typically obtained by directors verifying their identity a myGovID.
Designed to crack down on illegal phoenixing activity, the Director ID scheme is the lone surviving upgrade from a scrapped overhaul of dozens of business registers that was costing $12 million every month before being abandoned in August.
The life-long ID is aimed at curtailing the $5 billion lost to illegal phoenix activity each year. Phoenixing occurs when a new company is established to continue the business of a company that has been liquidated to avoid paying debts, creditors and employee entitlements.
A spokesperson for the Australian Taxation Office has confirmed up to 200,000 directors are yet to obtain one.
“The vast majority of directors have obtained one, with almost 2.5 million director IDs having now issued,” an ATO spokesperson told InnovationAus.com.
“The total number of directors is subject to natural growth and is currently estimated to be around 2.7 million.”
Director IDs have been required since December 2022, but around 500,000 directors missed the deadline, and around 300,000 were still without one in September. Not obtaining one risks criminal and civil penalties over $1 million. Directors can also be jailed for applying for multiple IDs or misrepresenting them.
The Australian Business Registry Services (ABRS) established to administer Director ID has been contacting directors without one throughout the year, urging them to apply.
“Where directors fail to apply for a director ID, despite repeated contact, we may issue a formal direction to apply,” the spokesperson said.
The Australian Securities and investment Commission is responsible for enforcing director ID offences, which includes failing to obtain a director ID.
The regulator has now gotten involved, telling directors of their need to apply, but has not yet needed to launch prosecutions. “To date, all directors contacted by ASIC following an ABRS referral have applied for a director ID, a spokesperson told InnovationAus.com.
Director ID has become a target for fringe political groups, claiming it forces people to obtain a government digital identification to get one.
While most directors have obtained a Director ID from the Australian Taxation Office using the government’s myGovID, directors can also apply over the phone or by using a paper application form.
