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Director Digital ID Extension of Time Until Plus New Corporations Act Amendments and Petition

Despite the Government of Australia extending the time to apply for a Director Digital ID until the 14th of December 2022, if the reports are correct, over one million Directors are yet to apply.


And, what about all of those mum and dad Directors of self managed superfunds?


The director ID is a unique 15-digit identifier that is a requirement for all company directors.


Company directors will apply for a director ID once and keep the number forever.


It is administered by ABRS, managed by the Australian Taxation Office (ATO).


The information on the Australian Taxation Office website in relation to the matter includes the following:


On 21 November, a record 28,426 directors applied for their director ID. Most of these directors applied on the ABRS website using their myGovID, meaning their new number issued straight away.


The ABRS Deputy Registrar Karen Foat said the ABRS was glad to see such strong application numbers thus far, stating: “We’re really pleased that so many directors are getting their director ID, and we encourage all other directors to follow suit.”


Ms Foat reminded directors to sign up now to avoid penalties that may apply.


“Some people might not actually realise they are a director of a company. You don’t have to wear a suit or work in an office to be considered a director. If you run a small business, self-managed super fund, a not-for-profit or even a large sporting club, you may be a director, which means you’ll need a director ID.”


All directors of companies, registered Australian bodies and registered foreign companies must apply for a director ID – it is not optional. It’s free and available to directors within Australia and overseas.


Ms Foat explained: “There’s a common myth floating around that if you’ve got a registered tax agent, they can just apply for a director ID on your behalf, but that’s not true. All company directors must apply for it themselves, as they are required to verify their identity themselves. This robust identification process will help prevent the use of false and fraudulent director identities.”


Ms Foat said that by applying for their director ID, directors are helping regulators create a fairer playing field for honest businesses.


“Director ID helps the government to take action against illegal activity, for example a practice called phoenix activity. This is really dodgy behaviour and it’s where business owners illegally shut down their company and transfer assets into a new company to avoid paying what they owe to employees and suppliers.”


“By applying for a director ID, you’re helping to protect the community from those doing the wrong thing,” Ms Foat said.


Ms Foat clarified that whilst penalties can apply, the community can expect we will take a reasonable approach to support people to apply, particularly where directors have been impacted by circumstances like natural disasters.


It is also the position of the ABRS that recently resigned company directors who no longer hold the role on or after 1 December 2022 are required to apply for a director ID.


With an international push towards digital currency and digital ID's, there is currently a Parliamentary Petition to try and ensure cash can be used into the log term - legitimised in law as a legitimate form of payment.


Petition EN4638 - Disadvantages of Central Bank Digital Currencies (The eAUD)


Petition Reason - As Australian citizens we should be concerned about the disadvantages of a Central Bank Digital Currency.


Traceability: In the case where physical cash is eliminated entirely this eliminates our ability to transact in a fully anonymous manner.


Negative Rates: With CBDCs, you cannot withdraw your digital tokens and hold them under the mattress. If there is no option for physical cash this gives central banks ability to implement negative interest rates.


Programmability: CBDCs give central banks a unique opportunity to make money “programmable”.


For example: Expiration, with a direct relationship with your central bank, CBDCs could permit a currency expiration policy. Your money could be programmed so that if you don’t spend the $5000 in your account by next Saturday, it will expire.


Personalised monetary policy: With a bank of Big Data on individual spending habits, coupled with digital identification infrastructure, the central bank will have enough information to tailor its monetary policy personally.


For example: If it is known that lower earners have a higher propensity to consume, stimulus can be directly delivered to those people.


Personalised monetary policy could even become politicised. A government could segment its voters, identify communities where it is behind in polls, and deliver stimulus to these groups.

Petition Request - We therefore ask the House to enshrine the use of cash in law.



The Australian Government's Ongoing Amendments to the Corporations Act

Due date:9 December 2022

Contact officer:Alix Kwan

Phone:(07) 3213 5590


Although the legislative instrument is subject to final determination, directors who have recently resigned from their director roles are not expected to apply for a director ID


Corporations Act 2001 I, Chris Jordan, Commissioner of Taxation, in my capacity as the Registrar make the following legislative instrument.


Draft Legislative Instrument 1. Name: This instrument is the Corporations (Eligible Officer Exclusion - non-individuals and resigned directors) Determination 2022.

2. Commencement (1)Each provision of this instrument specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms. Commencement information

The whole of this instrument 1 December 2022 Note: This table relates only to the provisions of this instrument as originally made.


It will not be amended to deal with any later amendments of this instrument.

(2) Any information in column 3 of the table is not part of this instrument. Information may be inserted in this column, or information in it may be edited, in any published version of this instrument.

3. Authority This instrument is made under subsection 1272B(3) of the Corporations Act 2001.

4. Classes of persons who are not eligible officers (1)For the purposes of subsection 1272B(3) of the Corporations Act 2001, the classes of persons specified in subsections (2) and (3) are not eligible officers.


(2)A person who: (a)was (i)an eligible officer, within the meaning of the Corporations Act 2001, immediately before 4 April 2021;

or (ii) not an eligible officer immediately before 4 April 2021, but became an eligible officer between 4 April 2021 and 31 October 2021;

and (b) does not hold any role as an appointed director or alternate director acting in that capacity (regardless of the name given to that position) of a company, a body corporate that is a registered Australian body, a registered foreign company, or an Aboriginal and Torres Strait Islander corporation after 30 November 2022;

and (c) does not have a director identification number.


(3) A person who: (a) would otherwise be an eligible officer within the meaning of the Corporations Act 2001; and (b) is not an individual. 5. Class of persons who are not eligible officers for the period 4 April 2021 to 30 November 2022 (1)For the purposes of subsection 1272B(3) of the Corporations Act 2001, the class of persons specified in subsection (2) are not eligible officers for the period 4 April 2021 to 30 November 2022.


(2)A person who: (a)was: (i)an eligible officer, within the meaning of the Corporations Act 2001, immediately before 4 April 2021;

or (ii) not an eligible officer immediately before 4 April 2021, but became an eligible officer between 4 April 2021 and 31 October 2021; and

(b) ceased to hold any role as an appointed director or alternate director acting in that capacity (regardless of the name given to that position) of a company, a body corporate that is a registered Australian body, a registered foreign company, or an Aboriginal and Torres Strait Islander corporation prior to 1 December 2022; and

(c) does not have a director identification number.

Consultation (1)Subsection 17(1) of the Legislation Act 2003 requires, before the making of a determination, that the Commissioner is satisfied that appropriate and reasonably practicable consultation has been undertaken.(2)As part of the consultation process, you are invited to comment on the draft determinations and their accompanying draft explanatory statement.

Please forward your comments to the contact officer by the due date.

Due date: 9 December 2022

Contact officer: Alix Kwan

Phone:(07) 3213 5590


THE DRAFT EXPLANATORY STATEMENT CAN BE FOUND HERE. (a) subsection 1272B(3) of the Corporations Act 2001 (Corporations Act) and (b) subsection 308-15(3) of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act). 2. The instruments specify classes of persons who are not eligible officers. This effectively relieves those classes of persons from having to obtain a director identification number (director ID) under the Corporations Act or CATSI Act.

3. The instruments are legislative instruments for the purposes of the Legislation Act 2003.

4. Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws) the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.

5. In accordance with section 5C of the Corporations Act 2001, the relevant version of the Acts Interpretation Act 1901 that applies to the Corporations Act 2001 and this instrument is the version as at 1 January 2005.

Date of effect

6. The instruments will relieve particular classes of persons from the obligation to obtain a director ID. To ensure that affected classes of persons benefit from this relief and do not become liable to any penalties for not applying for a director ID, the instrument for resigned directors and non-individual directors under the Corporations Act must take effect from 1 December 2022. The instrument for resigned directors under the CATSI Act must take effect from 1 December 2023.

7. As a consequence of the timing of the registration of this instrument, it is necessary to give the instrument made under the Corporations Act retrospective commencement from 1 December 2022.

8. The instrument made under the CATSI Act can commence prospectively.

Background

9. There is a requirement for directors of a company, or of a body corporate that is a registered Australian body or registered foreign company, who is appointed to the position of a director or alternate director acting in that capacity (eligible officer) to obtain a director ID. The requirement to obtain director IDs: •promotes good corporate conduct and deters and penalises illegal phoenix activity in order to protect those who are negatively affected by such fraudulent behaviour•assists regulators and external administrators to investigate director's involvement in other unlawful activities; and•provides traceability of a director's relationships across companies, enabling better tracking of directors of failed companies and will prevent the use of fictitious identities. 10. The director ID regime achieves this by requiring eligible officers to satisfy the Registrar of their identity and requiring the Registrar to record a unique identifier (the director ID) for each individual who consents to being an eligible officer.

11. The director ID regime also provides the Registrar with the power to exclude persons from being an eligible officer. This power allows the Registrar to provide relief to eligible officers from needing to obtain a director ID in circumstances where the requirement would have unintended consequence or would otherwise be unsuitable.

Effect of the instruments

12. The instruments will exclude certain classes of persons from being an eligible officer, relieving them of the obligation to apply for a director ID in certain circumstances. 13. Broadly there are two categories of persons excluded from being an eligible officer: •Resigned directors - persons who have ceased to hold any role as a 'director or alternate director acting in that capacity' (directors) prior to 1 December 2022 (for directors under the Corporations Act) or 1 December 2023 (for directors under the CATSI Act), and•Corporate directors - non-individual entities that hold a role as a director under the Corporations Act.

Compliance cost assessment

14. To be advised.

Detailed explanation

Resigned directors 15. The law presently provides the following transitional timeframes for certain eligible officers to apply for a director ID: •Transitional period for existing eligible officers under the Corporations Act: persons who were an eligible officer prior to commencement of the director ID provisions on 4 April 2021 must apply for a director ID no later than 30 November 2022;

•Transitional period for new eligible officers under the Corporations Act: persons who were not an eligible officer prior to commencement of the director ID provisions on 4 April 2021, but became an eligible officer between 4 April 2021 and 31 October 2021, must apply for a director ID no later than 30 November 2022;

•Transitional period for existing eligible officers under the CATSI Act: persons who were an eligible officer prior to commencement of the director ID provisions on 4 April 2021 must apply for a director ID no later than 30 November 2023; and

•Transitional period for new eligible officers under the CATSI Act: persons who were not an eligible officer prior to commencement of the director ID provisions on 4 April 2021, but became an eligible officer between 4 April 2021 and 31 October 2022, must apply for a director ID no later than 30 November 2023. 16. These instruments do not apply to eligible officers who are not in the above categories. People who are not in these categories have different dates to apply for a director ID, depending on when they were appointed.

17. Broadly, the law requires that eligible officers have a director ID before their appointment.


[1] However, eligible officers in the above categories were provided with transitional timeframes to accommodate the establishment of director ID systems and processes, and to allow sufficient time for those eligible officers to understand the new requirement and apply for a director ID.

18. Some eligible officers may have resigned in the transitional period, before they were due to obtain a director ID (i.e. before 30 November 2022, or 30 November 2023 for directors of Indigenous corporations). Requiring these persons to obtain a director ID would not achieve the policy intent underlying the director ID regime and would impose a compliance burden on them.

19. The Registrar considers that requiring a director ID in these circumstances is unsuitable. He has determined, via these instruments, that persons within the prescribed classes are not eligible officers and are therefore not required to obtain a director ID.

20. However, persons within the prescribed class who resigned before 1 December 2022 (or 1 December 2023, for directors of Indigenous corporations) and later become a director again are only excluded from being an eligible officer for the period 4 April 2021 to 30 November 2022 (or 4 April 2021 to 30 November 2023, for directors of Indigenous corporations).

21. This ensures persons who later become a director again are not permanently excluded from being an eligible officer. They will need to obtain a director ID prior to any subsequent appointments as eligible officer.

Corporate Directors 22. Registrable Australian bodies and registered foreign companies (as defined in section 9 of the Corporations Act) may have directors which are non-individuals (otherwise known as 'corporate directors'). Under the director ID regime, directors are given unique identifiers following verification of their identity. Corporate directors are not individuals and can be sufficiently identified by their Australian Company Number or Australian Registered Body Number. Therefore, the Registrar is of view that the requirement to obtain a director ID is unsuitable for corporate directors.

23. The instrument made under the Corporations Act excludes corporate directors from being eligible officers. There is no equivalent provision in the instrument made under the CATSI Act because it is not possible for corporate directors to be appointed under that Act. Consultation (1)Subsection 17(1) of the Legislation Act 2003 requires, before the making of a determination, that the Commissioner is satisfied that appropriate and reasonably practicable consultation has been undertaken.

(2)As part of the consultation process, you are invited to comment on the draft determinations and their accompanying draft explanatory statement.

Please forward your comments to the contact officer by the due date.

Due date: 9 December 2022

Contact officer: Alix Kwan

Phone:(07) 3213 5590

Statement of compatibility with Human Rights Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 Corporations (Eligible Officer Exclusion - non-individuals and resigned directors) Determination 2022 ; Corporations (Aboriginal and Torres Strait Islander) (Eligible Officer Exclusion - resigned directors) Determination 2022

These legislative instruments are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the legislative instruments

The instruments determine that particular classes of persons are not 'eligible officers' under the Corporations Act 2001 (Corporations Act) and the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act). This effectively relieves those classes of persons from the obligation to obtain a director identification number (director ID) under those Acts.

The classes of persons who are determined not to be eligible officers are: a)under the Corporations Act: a.persons who were eligible officers immediately before 4 April 2021, but never hold a role of 'director, or alternate director when acting in that capacity' (director) after 30 November 2022;

b.persons who were not eligible officers immediately before 4 April 2021, but became eligible officers between 4 April 2021 and 31 October 2021, and never hold a role of director after 30 November 2022;c.persons who are not natural persons;b)Under the Corporations Act, for the period 4 April 2021 to 30 November 2022: a.persons who were eligible officers immediately before 4 April 2021, but ceased to hold a role of director prior to 1 December 2022;b.persons who were not eligible officers immediately before 4 April 2021, but became eligible officers between 4 April 2021 and 31 October 2021, and ceased to hold a role of director prior to 1 December 2022;c)under the CATSI Act: a.persons who were eligible officers immediately before 4 April 2021, but never hold a role of director after 30 November 2023;b.persons who were not eligible officers immediately before 4 April 2021, but became eligible officers between 4 April 2021 and 31 October 2022, and never hold a role of director after 30 November 2023;d)under the CATSI Act, for the period 4 April 2021 to 30 November 2023: a.persons who were eligible officers immediately before 4 April 2021, but ceased to hold a role of director after prior to 1 December 2023; andb.persons who were not eligible officers immediately before 4 April 2021, but became eligible officers between 4 April 2021 and 31 October 2022, and ceased to hold a role of director prior to 1 December 2023. Human rights implications

The legislative instruments do not engage any of the applicable rights or freedoms.

Conclusion

The legislative instruments are compatible with human rights as they do not raise any human rights issues.

Footnotes [1] Corporations Act 2001 sub-s 1272C(1); Corporations (Aboriginal and Torres Strait Islander) Act 2006 sub-s 308-25(1)


I encourage you to make a submission.



Best,

Andrea.

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