Director IDs: Tax boss gives directors 14 more days to apply to avoid penalties

Directors of Australian small businesses that have yet to apply for a Director ID number have been given a short reprieve, with the tax office confirming on Wednesday that it won’t throw the book at directors if they sign up for the new scheme by December 14.

Wednesday marks the original deadline for most company directors to register for a Director ID and according to the Australian Taxation Office (ATO), some 1.8 million directors have now done so, with close to 78,000 directors applying for their unique identification number alone on November 29.

However, with more than 2.5 million directors operating businesses across the country, that leaves around 700,000 directors who are yet to submit an application.

On Wednesday, commissioner of taxation Chris Jordan, who is also the registrar of the Australian Business Registry Services (ABRS), confirmed the ATO will adopt what he is calling a “pragmatic compliance approach” as long as these directors apply for their Director ID in the next fortnight.

“The ABRS will not apply compliance resources to determine whether individuals met their Director ID obligations by 30 November 2022 if they apply for a director ID by 14 December 2022,” Jordan said in a statement.

While Jordan says penalties and offences can still apply to directors who fail to register for the new system, “the community can expect ABRS to take a reasonable approach to support people to apply”.

It will be welcome news for those thousands of directors who are yet to submit their application form, given the maximum criminal penalty for not having a Director ID number is set at $13,200. Civil penalties can be as high as $1.1 million.

The mandatory system, which was introduced in November 2021, is designed in part to combat illegal phoenixing activity, which the ATO estimates costs Australia up to $5 billion a year.

All directors of Australian companies, registered Australian bodies and registered foreign companies must apply for the 15-digit identifier, which then follows them throughout their careers.

The deadline to apply for a Director ID for directors of corporations under the Corporations (Aboriginal and Torres Strait Islander) Act 2006, or CATSI Act is November 30, 2023.

More information about how to apply for a Director ID is available on the ABRS website here.