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Should You Get The Director Identification Number (DIN) Before the Deadline?

The Australian government has taken the initiative to impose a deadline to obtain the Director IN. It is compulsory for the directors of the companies to get the IN as per the new regulations. Non-compliance to this regulation can have a severe impact on the existing and new directors of companies.

What is a Director Identification Number (DIN)

The Director Identification Number is a unique number like the Australian Business Number (ABN) and Australian Company Number (ACN). However the DIN is issued to each individual director to identify them apart from each other. The DIN must only be applied for once and keep it forever.

Why the government is taking this initiative

The Federal Government proposed this new initiative in 2018. The government implements this initiative with the acceptance of Modernizing Business Registers (MBR) legislation in Australia.

One of the main reasons to implement this initiative is to prevent the use of fake director identities. This new DIN system will make it easy for the government to trace the relationship between the directors and their companies. Thereby linking the directors to the actions and decisions that they take.

The government expects to identify, trace and eliminate the involvement of directors in unlawful and illegal activities. Thereby protecting the general public and the economy of Australia from such illegal involvements.

Who should apply for the Director IN

The current legislature suggests that a person who is a director or an alternate director of a company registered under the following acts must obtain the DIN.

The Corporations Act 2001
Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act)

The legislature defines an alternate director as to a person appointed by a director to act on his behalf for a certain time period.

Accordingly the directors or alternate directors of following entities must obtain the director identification number.

Public Companies – The companies which are listed on the Australian Stock Exchange that the public could buy shares in. These companies will have an Australian Company Number (CAN) and their names would include Limited or Ltd.
Private Companies – Small companies which are not listed on the stock exchange but has an ACN. These companies have Propriety Limited or Pty Ltd attached to their name.
Aboriginal and Torres Strait Islander Corporations – The companies which are registered under the Aboriginal and Torres Strait Islander Act which are designed to suit the needs of indigenous people. These companies are regulated by the Office of Registrar of Indigenous Corporations. Such companies will have a Indigenous Corporation Number (ICN)
Registered foreign companies – The foreign companies established in Australia must be registered under the Corporations Act. Therefore they must have an Australian Registered Body Number (ARBN). Their names would include Limited, Ltd, Proprietary Limited or Pty Ltd.
Certain incorporated associations – These are not-for-profit organizations who operates outside the state or territory which they are incorporated. Such organizations must be registered under the Corporation Act. These organizations will have Incorporated or Inc. in their names and will have an ARBN.
Registered charities – The not-for-profit charities who registers themselves with the Australian Charities and Not-for-profit Commission (ACNC).

What is the deadline to get the Director IN

From November 2021 the directors will have to verify their identity as a part of the Director IN requirement. The government has declared the following dates to be the deadlines to apply for a Director Identification Number.

Director Type	Deadline to apply for Director IN
Existing Directors under Corporation Act	30^th November 2022
Existing Directors under CATSI Act	30^th November 2022
New Directors under Corporation Act appointed before 31^st October 2021	30^th November 2022
New Directors under CATSI Act appointed before 31^st October 2021	30^th November 2022
New Directors appointed from 1^st November 2021 to 4^th April 2022	Within 28 days of appointment
New Directors appointed on and after 5^th April 2022	Director IN required before appointment
New Directors under CATSI Act appointed from 1^st November 2022	Director IN required before appointment

What is the penalty for non-compliance

The government has announced that all the directors of the respective companies must adhere to the respective deadline as mentioned in the above table. Non-compliance to this regulation could have a serious impact on the individuals.

Under the law, the directors who fail to comply would face criminal and civil penalties of 5000 units (which is currently $1.11 million).

The law dictates that, other than failure to comply with the deadlines, the following offences would also lead to civil and criminal penalties.

Deliberately providing false identity information to the registrar.
Providing a false Director IN to a government body intentionally.
Applying for multiple Director IN intentionally.

Who shouldn’t get the Director IN

The government specifically states that it is not required to get the Director IN under following circumstances.

A company secretary but not a director.
Acting as an external administrator of a company.
Running the business as a sole trader or partnership.

Summary

The law dictates that, it is compulsory and crucial to obtain the Director Identification Number if you are an eligible person of a registered company. You would get a unique identification number different from other individuals. This helps the government to trace and track the link between each director to the company.

The identification number is for a life time and you only have to apply for it once. Non-compliance can lead to both civil and criminal penalties with severe consequences.

Therefore it is always better to apply for the Director IN and comply with the law before the given deadline.

Do you Need any Help? Our expert team at SPS Business Consultants can help you. We have catered to hundreds of highly satisfied customers over ten successful years of operations. Do not hesitate to contact us for more information.

Sources: Australian Institute of company directors [1][2], Australian Securities and Investments Commission [3], Australian Business Registry Services [4][5].

Superannuation Rate Increased to 10%

On 1 July 2021, the super guarantee rate will rise from 9.5% to 10%. If you have employees, you will need to ensure your payroll and accounting systems are updated to incorporate the increase to the super rate.

If you need help to work out how much super you need to pay for your employees after the rate increases, you can use ATO’s super guarantee contributions calculator. For salary and wage payments made on or after 1 July 2021, the minimum superannuation guarantee contribution rate of 10% will need to be applied.

It’s important you pay your workers the correct amount of super. ATO’s superannuation guarantee eligibility decision tool will help you determine if your employees are eligible for super, including any contractors treated as employees for super purposes.

The super rate is scheduled to progressively increase to 12% by July 2025. You can find the scheduled rate increases and dates on ATO website.

Source – https://www.ato.gov.au/Business/Business-bulletins-newsroom/Employer-information/Super-Guarantee-rate-rising-1-July/

Providing Work Cars For Your Employees

Providing a work car to your employees can be a great incentive.

If you provide a car to an employee for their private use, you may need to pay fringe benefits tax (FBT).

You make a car available for private use by an employee on any day that the car is either:

actually used for private purposes by the employee, or
available for the private use of the employee.

A car is considered available for your employee’s private use when it is:

used to travel to and from work
not at your premises and they are allowed to use it for private purposes
garaged at their home – regardless of whether they have permission to use it for private purposes.

For FBT purposes, a ‘car’ includes:

a sedan or station wagon
any other goods-carrying vehicle with a carrying capacity of less than one tonne, such as a panel van or utility (including four-wheel drive vehicles)
any other passenger-carrying vehicle designed to carry fewer than nine passengers.

If you’re not sure if you’re providing a car fringe benefit, we can help you figure it out.

If you need any help with anything related to accounting and taxation, give our team at SPS Business Consultants a call on (03) 9904 9261.

ATO penalties will resume

Taxpayers falling behind on tax debts and lodgement obligations can soon expect contact from the ATO as it confirms the resumption of its compliance activities in the wake of JobKeeper ending.

With the JobKeeper program officially over, the Tax Office has now confirmed that it will resume pursuing and enforcing debt recovery action.

The change in approach comes after the ATO began sending letters to taxpayers in February to warn them of potential sterner action if they failed to make good on their obligations and had refused to get in touch with the Tax Office.

Changes to Company Tax Rates

There are changes to company tax rates. While the full company tax rate is 30%, your company may be eligible for a lower company rate.

If you are a ‘base rate entity’, your company tax rate is:

27.5% from the 2017–18 to 2019–20 income years
26% for the 2020–21 income year
25% from the 2021–22 income year onwards.

For your company to be a ‘base rate entity’, it needs to meet the following eligibility criteria:

aggregated turnover of less than $25 million for the 2017–18 income year or $50 million from the 2018–19 income year onwards, and
if your company earns passive income, it cannot exceed 80% of the company’s assessable income, which can include:
- corporate distributions and franking credits on these distributions
- royalties and rent
- interest income
- gains on qualifying securities
- a net capital gain.

Are You Using Your Company Money And Assets?

Your company is a separate legal entity from you as a director or shareholder. The money your business earns and its assets belong to the company.

This means it’s important to keep appropriate records and correctly report transactions if you use company money or assets. This includes if you:

take money out of your company for yourself or your family
receive money from it (for example, as a director, shareholder or an associate)
use your company’s assets for private purposes.

For example, you may do it through:

salary, wages or director’s fees
repayments of a loan you have previously made to the company
a fringe benefit, such an employee using a company car
dividends
a loan from the company.

Not correctly reporting and keeping appropriate records for transactions can result in an unfranked deemed dividend being included in your assessable income.

If you realise that you’re not correctly reporting these transactions or keeping appropriate records, talk to a registered tax professional and make sure that you correctly report the use of company money or assets in your next tax return.

If you have made a mistake or left something out of your previous tax returns, you can lodge an amendment.