Director Identification Number scheme and anti-phoenix activity

The Minister for Revenue and Financial Services has announced that every company director in Australia will be assigned a unique identifier, or Director Identification Number (DIN), that will be tracked by a range of government agencies.

The intention is that the scheme will allow the Australian Taxation Office, the Australian Securities and Investments Commission and other government agencies to catch out company directors committing illegal phoenixing.

Phoenix activity involves company directors transferring assets from one business entity to another in order to avoid paying debts to stakeholders, including creditors and the ATO.

In addition to the DIN, the Government will consult on implementing a range of other measures to deter and disrupt the core behaviours of phoenix operators, including non-directors such as facilitators and advisers. These include:

  • Specific phoenixing offences to better enable regulators to take decisive action against those who engage in this illegal activity;
  • The establishment of a dedicated phoenix hotline to provide the public with a single point of contact for reporting illegal phoenix activity;
  • The extension of the penalties that apply to those who promote tax avoidance schemes to capture advisers who assist phoenix operators;
  • Stronger powers for the ATO to recover a security deposit from suspected phoenix operators, which can be used to cover outstanding tax liabilities, should they arise;
  • Making directors¬† personally liable for GST liabilities as part of extended director penalty provisions;
  • Preventing directors from backdating their resignations to avoid personal liability or from resigning and leaving a company with no directors; and
  • Prohibiting related entities to the phoenix operator from appointing a liquidator.
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