Government to reform business registers, introduce director IDs
The introduction of Director Identification Numbers is one of the measures the government has proposed in modernising its business registers as part of efforts to tackle illegal phoenix activity.
Under the draft legislation, legal registers administered by ASIC and the Australian Business Register (ABR) will be moved to a modern registry platform, and administered by the ABR within the Australian Taxation Office.
In addition, the legislation will also progress Director Identification Numbers (DINs) by introducing a legal framework for the regime.
Assistant Treasurer Stuart Robert said the DIN is a unique identifier and provides traceability of a director’s relationships across companies and over time to assist regulators and external administrators investigate a director’s involvement in what may be unlawful activity, including illegal phoenix activity, which has been a perennial problem for successive governments.
He said the reforms will support open data and encourage innovative uses of business data.
“Modernising the business registers will help transform the way business interacts with government, making it easier and faster to start and run a business,” Mr Robert said.
“The government is committed to detecting, deterring and disrupting illegal phoenix activity for the benefit of all Australians.”
Mr Robert said the current legislative framework that covers ASIC’s business registers has not kept up with digital technology and restricts ASIC’s ability to interact with clients in their preferred manner.
For example, he noted that legislation has not been modernised in relation to what information to collect, how to collect it and then how to notify regulated entities.
Mr Robert said the consultation will be run in two parts. The first includes the core provisions that facilitate a modern government registry regime plus the bulk of the referrals of functions and consequential changes from other acts, while the second part includes the remainder of the referrals of functions and consequential changes.
In July, Institute of Public Accountants chief executive Andrew Conway said the government’s moves towards reforming the ABN system will address its current deficiencies and provide greater system integrity.
While he applauded a simple and efficient ABN system, he also added there aren’t enough checks and balances to ensure the registration of an ABN is appropriate or not.
“When the ABN system was introduced in 2000, it was supposed to hinder the black economy by strengthening the integrity of the tax system but that has simply not been the case,” Mr Conway said.
“The ease of applying for an ABN online by applicants who do not understand the legislative test for eligibility and their obligations has resulted in many obtaining one when not entitled.
“People involved in sham contracting who would otherwise be employees of a company fall into this category. There are also individuals applying for an ABN to legitimise a business that does not fully comply with its tax obligations.”