Director News
Director Identification Numbers (DINs)
As part of the 2020 Budget, the government announced the full implementation of the Modernising Business Registers (MBR) program. The MBR program includes the introduction of a director identification number (director ID) – a unique identifier that a director will keep forever. - ATO
In June last year, the government passed legislation containing an initiative that will require all directors, including directors of a corporate trustee for an SMSF, to obtain a Director Identification Number (DIN).
So, what’s a DIN?
A DIN number is a unique identifier that attaches to each person who consents to be a company director. This number is kept permanently (so it only needs to be applied for once), even if you cease to be a director.
This number allows your relationships across companies to be tracked. The aim is for regulators to be able to better detect, deter and disrupt a director's involvement in unlawful activities, like illegal phoenixing. It will also improve the efficiency of the insolvency process and data integrity.
What if you are already a director?
The transitional rules apply for directors (both new and existing) for the first year in which the new DIN rules are in operation to provide additional time to become familiar with your obligations. The advice suggests that existing directors will have between the end of testing and 30 November 2022 to obtain a DIN.
Please note, until the period is specified, there is no requirement to apply for a DIN.
Increased Personal Liability of Directors
In case you missed it… amendments to the scope of the director penalty regime mean directors are now personally liable (by way of a penalty) for a company’s GST debts that relate to tax periods commencing on or after 1 April 2020.
Prior to this, the director penalty regime has operated to allow the ATO to circumvent the ‘corporate veil’ to make directors personally liable in certain circumstances where a company of which they are a director fails to:
remit PAYG withholding (‘PAYGW’) amounts to the ATO;
pay superannuation guarantee charge (‘SGC’) liabilities; or
pay estimates of PAYGW or SGC liabilities made under the ‘estimates’ regime.
So, what’s changed?
The expansion of the director penalty and estimates regimes means that the personal risks of being a company director are greater than before. Therefore, existing directors should check that tax debts are up to date and if they are not, taking appropriate action to rectify this should be a priority. - NTAA 2020 Tax Hot Spots II
What about new directors?
Anyone considering becoming a director should ensure that a due diligence of the company includes, at a minimum, reviewing its tax compliance with PAYGW, superannuation guarantee and GST obligations as well the company’s ability to pay these on time.
New directors (broadly, those appointed after the ‘due date’ for the relevant company tax obligation) will become personally liable for any historical unpaid PAYGW, SGC and, from 1 April 2020, GST liabilities of the company if, 30 days after they become director, the liabilities remain unpaid and the company has neither gone into administration nor begun to be wound up. Refer to S.269-20(3).
In effect, new directors have 30 days from their appointment to ensure action is taken before they become liable for a director penalty in respect of those debts. - NTAA 2020 Tax Hot Spots II
You can find out more about your liabilities as a director, including the updates to the regime, by clicking the button below.