ATO spends $3.2 million to push director ID registrations as deadline approaches

The Australian Taxation Office will launch a $3.2 million publicity and advertising blitz to jolt tardy company directors into obtaining their compulsory “director ID” credentials, ahead of a looming November 30 deadline, as key anti-phoenixing and counter-fraud measures come into effect.

Government tender documents reveal agency Universal McCann Media has scored the lucrative work under the government’s existing master media buying contract as the campaign was quietly launched last week by Financial Services Minister Stephen Jones.

Anyone who is a director of a company, registered Australian body, registered foreign company or Aboriginal and Torres Strait Islander corporation is required to register and director identification number (director ID) under amendments to Treasury laws passed in 2020.

The laws came after a succession of high-profile corporate implosions and frauds, including the Plutus Payroll scandal, that finally prompted the Australian Securities and Investments Commission to centralise the identities of company directors on a single register, and require those directors to prove their identities.

“By applying for your director ID, you’re helping to protect the community including small businesses and workers from those doing the wrong thing,” Jones said.

The director ID registration work is being undertaken by the ATO under the recently created Australian Business Registry Services (ABRS) and uses common infrastructure and standards with the myGovID credential that can also be used as a means of proof of identity.

“Director ID is a unique 15-digit identifier that is quick and easy to apply for online. Directors only need to apply once and will keep their director ID forever,” an ATO spokesperson told The Mandarin.

“The introduction of director ID is all about creating a fairer business environment and increasing the accuracy of business registers.

“Director ID will help prevent the use of false and fraudulent director identities and make it easier for government regulators to trace directors’ relationships with companies over time.”

That last point is the crucial one because it will allow the likes of ASIC, police, ATO and other government agencies to join the dots on companies run by people who are banned as directors in other jurisdictions or who change their name or assume identities to avoid detection.

It will also provide much greater transparency and clarity around the creation of so-called “straw directors” that are routinely used in the phoenixing and asset stripping of companies to leave liabilities in a worthless shell.

Whilst ASIC has primary carriage or company and corporate registrations, the ATO has a vested interest in weeding out deceptive and dishonest directors because it’s often the biggest creditor when companies are stripped and tanked, leaving unpaid tax bills behind.

In the case of the Plutus Payroll scandal, where billions in wages were passed through but tax withholdings siphoned off, straw directors were used to obfuscate the identities of the main culprits.

Subsequently, the ATO is picking up the megaphone.

“Some people don’t actually realise they are a director of a company. Individuals who run a company that is a small business, a self-managed super fund, a not-for-profit or even a large sporting club, are quite likely to be directors and will need to apply for a director ID, the ATO spokesperson said.

“Some people think that their registered tax agent can apply for their director ID on their behalf, but that’s not true. All company directors must apply for their director ID themselves, as they are required to verify their identity. This robust identification process will help prevent the use of false and fraudulent director identities.”

This article was first published by The Mandarin.