End of Director ID amnesty exposes 500,000 Australian corporate leaders to severe fines

As many as 500,000 company directors are now exposed to criminal penalties of $13,200 after the Australian Taxation Office’s amnesty on late Director ID applications passed on Wednesday.

SmartCompany understands nearly 2 million Director IDs have been issued by the Australian Taxation Office (ATO) and the Australian Business Registry Services (ABRS) as of December 14, the final date for corporate leaders to apply before running the risk of being hit with severe penalties.

However, with a total Australian director population of around 2.5 million, hundreds of thousands of directors are now technically in breach of corporate law.

The application process remains open, and the ATO says enforcement activities will only target the worst offenders.

“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,” an ATO spokesperson told SmartCompany Friday.

“However, director ID is a requirement for all directors under the law, meaning penalties may apply to those who have missed the deadline.”

The year-old Director ID system pairs business leaders with a unique 15-digit code, which company directors must carry through their careers.

The ATO says the scheme, administered by the ABRS, will help regulators track bad corporate actors and cut down on illegal phoenixing activities.

Director IDs are required for small business owners, those who run a self-managed superannuation fund, not-for-profit leaders, directors based overseas, and directors of registered foreign companies, among other corporate leaders.

Significant fines can apply for those who go without.

The Australian Securities and Investments Commission, the regulator responsible for enforcing Director ID offences, lists criminal penalties of up to $13,200 for directors who fail to apply for a Director ID when directed by the ABRS, and for those who fail to hold a Director ID when it is required to do so.

The Director ID application process opened in November 2021 and officially closed on November 30, 2022.

After that date, company directors without a Director ID were technically in breach of the law — and theoretically ran the risk of those criminal penalties.

However, a broad lack of awareness among company directors, and technical difficulties faced by those filing last-minute applications, meant hundreds of thousands of company directors failed to file an application in the days before the November 30 deadline.

As the November 30 deadline approached, the ATO granted a 14-day amnesty to those latecomers, declaring it would take a gentle approach to those who filed an application before December 14.

With that final cut-off now fading into the past, it appears the threat of heavy fines, and the reach of the ATO’s $3.2 million advertising campaign, were not enough to reach every director covered by the scheme.

Directors yet to sign up can still file an application online, via phone, or through the post.

“We encourage all directors who haven’t already to apply for their director ID as soon as possible,” the ATO spokesperson said.

Those who believe they have a legitimate reason barring them from registering can apply for an extension via the ABRS website.

Notably, some company directors are covered by different application timelines.

Exemptions apply for directors of Aboriginal and Torres Strait Islander corporations covered by the Corporations Aboriginal and Torres Strait Islander (CATSI) Act 2006.

Individuals who became a director of an Aboriginal and Torres Strait Islander corporation before or on October 31, 2022 must apply for a Director ID by November 30, 2023.

Those who become a director from November 1, 2022, must acquire a Director ID before their appointment.