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Company directors to face thousands in fines if ID regulations not met by 30 November

Don't let you or your clients become a statistic!

In response to the ATO’s crackdown on fraudulent ‘phoenixing’, the Australian Bookkeepers Network (ABN) Director, Darren Hagarty, reminds BAS and tax agents to get themselves or their clients a Director ID by month-end or risk major fines.

By 30 November, Director IDs will be essential for all company directors covered by the Corporations Act, including those running major entities, small businesses, charities, and even not-for-profits.

There are concerns many will not be ready in time, with the ABC revealing just weeks out from deadline that almost half of Australia’s estimated 2.5 million company directors have yet to be issued a Director ID.

“Those most likely to not realise they need a Director ID are those trustees of self-managed super funds or family trusts set up as ‘corporate’ trustees, rather than ‘individual’ trustees,” said Darren.

“Many BAS agents are themselves likely to need a Director ID,” continued Darren. “It’s important they also make their clients aware too, because the fines can add up to $1.1 million for serious cases and directors could become ineligible to run companies.”

A Director ID is a 15-digit identifier given to a director that allows authorities to track activities through various government databases.

While it can be a simple 10-minute process to get a Director ID, the application process requires an individual to have their MyGov app properly set-up. It is one of those administration tasks that can only be done by the individual themselves.

“A BAS or tax agent can show their clients through the process face-to-face when the client has the MyGov app installed on their phone,” said Darren. “For those who don’t have the app, it’s more efficient the client sorts out that app registration signup first. There’s numerous questions and proof of identity requirements needed to get the identity strength app set-up properly.”

The ATO’s new Director ID comes in the wake of recent corporate data breaches, heightening nervousness about digital scams and identity theft.

Complimenting the introduction of Director ID are new ATO Proof of Identity regulations introduced earlier this year for BAS and tax agents to use when onboarding new clients.

Darren says the ABN welcomes these changes that further protect BAS and tax agents from working with fraudulent clients as well as offering extra assurance to credible company directors.

“Director ID is an important steppingstone to the protection of company director identity and the advisors who support them,” said Darren.

See the ABRS website for more information to sign up for Director ID.

14 Nov 2022
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