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AU Government introducing Director Identification Numbers

AU Government introducing Director Identification Numbers Raising awareness of phoenix activity has part of the Australian Government's strategy to reclaim the more than $3 billion a year in debt that goes unpaid to employees and government agencies by the illegal practice.

While particularly prevalent in the construction industry, phoenix activity - the illegal act of liquidating and restarting a company in order to avoid paying debts to stakeholders - can occur in almost any sector and have a devastating impact.

An estimated 2,000 businesses a year are affected by phoenix activity, leaving behind unpaid employees, suppliers, customers and sub-contractors.

But the next step in the government's strategy, announced this week, is aiming to take more decisive action against phoenix practices. Company directors across Australia will be designated a unique Director Identification Number (DIN), allowing government agencies to track individuals when they establish a business, as well as any businesses or relationships associated with that person.

The introduction of a DIN registry is just part of a package of reforms up for consultation that will make it easier for government to track and penalise phoenix practices. The policy package could also see company directors personally responsible for GST liabilities, prevent individuals from resigning from a company leaving it without a director, and prohibiting those suspected of phoenix activity appointing a liquidator.

Consultation has begun on these reforms. Any submissions can be made through the Treasury website.

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