Thousands of Aussies to face $13k fine

Hundreds of thousands of people could face hefty penalties for failing to meet strict new director rules introduced this year by the Australian Taxation Office (ATO).

Anyone who has been appointed as the director of a company or considered an “eligible officer” was required to apply for a director ID with the ATO by Wednesday or risk a fine of up to $13,200.

The new system was implemented earlier this year as the tax office scrutinises “phoenixing” – where a new company rises from the ashes of another in a practice that costs the Australian economy billions of dollars annually.

“Having a director ID will help prevent the use of false or fraudulent director identities and identify and help eliminate director involvement in unlawful activity, such as illegal phoenix activity,” a statement on the ATO website said.

Directors who were appointed to their posts before November 2021 originally had until November 30 to submit an application for director ID, but the deadline was extended by two weeks to December 14, with the ATO saying it wanted to take a “reasonable approach to those directors who try to do the right thing”.

Those appointed between November 1 and April 4 had to apply within 28 days of their appointment, while from April 5, directors have had to file for the ID before their appointment to the role.

The ATO warned it was a criminal offence if directors did not apply on time, and ASIC would enforce offences from the Corporations Act 2001, including a fine of up to $13,200 for failing to have a director ID when required to do so.

Those found with multiple IDs could face a $26,640 fine and a one-year jail sentence, with the same penalty for “misrepresenting” the director ID.

Fines could soar as high as $1.1m for individuals if they are pursued in a civil suit.

An estimated 700,000 company directors had not applied for ID in time to meet the initial November 30 deadline, the ATO revealed at the end of last month.