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Director ID scheme fails to sign up 1 in 5

Regulation

Extended deadline does little to encourage applications and ATO refuses to publish the final tally.

By Philip King 11 minute read

The director ID scheme has failed at the final hurdle with around one in five yet to apply despite an extended deadline, a comprehensive information campaign and the threat of substantial penalties.

Around 200,000 directors have applied and been issued with a number over the past two weeks, with the total hitting 1.96 million as of December 12, the ATO said.

But with a total population of about 2.5 million directors, that left half a million to apply over two days before the extended final deadline today, 14 December.

Absent a last-minute avalanche of applications, that means the scheme will attempt to prevent phoenix activity and other corporate misbehaviour with around 20 per cent of directors missing.

Moreover, the final tally will be unknown because the ATO has refused update the number when the deadline has passed.

It said penalties would now be applied after they were suspended during the two-week extension period.

“Director ID is a requirement for all directors under the law,” an ATO spokesperson said. “Following the introduction of the measure in 2021 and a transitional period, the deadline for most directors to get their obligation was 30 November 2022. The ATO confirmed penalties would not apply to anyone who applied prior to 14 December 2022. 

“The community can expect the ATO will take a reasonable approach to directors who have genuinely tried to meet their director ID obligation but have not been able to due to their circumstances.

“Extensions are available for directors who have a legitimate reason why they have not yet been able to apply.

“We encourage all directors who haven’t already to apply for their director ID as soon as possible. We will take a reasonable approach to those directors who have tried to do the right thing.”

The ATO confirmed that ASIC was responsible for enforcing the scheme and its website lists offences including a failure to apply for an ID and failure to hold an ID, with both attracting criminal penalties of $13,200. Applying for multiple IDs or misrepresenting an ID is punishable by a $26,640 fine or a year in jail, or both.

An information campaign about the scheme has been running for around 18 months with instructions translated into 10 different languages including Chinese, Arabic, Vietnamese and Hindi.

With an estimated 35,000 Australian directors based overseas, the ATO said it had worked with the Department of Foreign Affairs and Trade “to share information on how to apply through their international advocacy network”.

While paper forms are available, the scheme encouraged applications online and that required a director to apply in person and to have a myGovID — stipulations that frustrated many accountants who have attempted to get clients to comply.

Comments to Accountants Daily express anger with process and even the scheme itself:

“Why did 99.99% of Australian directors have to go through this ill-conceived, bug-filled electronic-only process, just so you could clean up your database? Is it legitimate to make the honest law-abiding community pay for you to clean up alleged phoenix activity which may or may not exist?” – Bruno Gourdo.

“On Monday this week I had 6 clients apply for their director ID and the option said extension to 31 January 2023 can be applied for. Why has the ABRS on Tuesday subsequently changed the date to 14 December 2022?” – Tim Wilshire.

“The ABRS are not even prepared to help the public over the phone — one client was told by the ABRS call centre yesterday that it was too late to apply, and they cannot assist them in applying over the phone.” – Vanessa Erasmus.

The ATO is believed to have mailed out thousands of paper applications to prompt compliance and confirmed it had completed that time-consuming process for just over 51,000 directors (around 2.6 per cent).

The ATO administers the scheme on behalf of Australian Business Registry Services and it forms an early stage of the modernising business registers project.

 

 

 

 

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Philip King

Philip King

AUTHOR

Philip King is editor of Accountants Daily and SMSF Adviser, the leading sources of news, insight, and educational content for professionals in the accounting and SMSF sectors.

Philip joined the titles in March 2022 and brings extensive experience from a variety of roles at The Australian national broadsheet daily, most recently as motoring editor. His background also takes in spells on diverse consumer and trade magazines.

You can email Philip on: This email address is being protected from spambots. You need JavaScript enabled to view it.

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