Why the Director ID Matters for Electrical Company Compliance

The Basics of Your Director Identification Number

A Director Identification Number is a unique 15-digit identifier that you need if you’re running your electrical business as a company. Think of it like a driver’s licence for company directors – it proves you’ve gone through the proper verification process to legally run a company in Australia.

Your director id starts with 036 (Australia’s country code) and includes an 11-digit number plus a check digit. Once you get it, you keep the same Director Identification Number forever, even if you change companies, stop being a company director for a while, or move interstate.

Why the Government Introduced Director IDs

The government introduced director ids to stop people from using fraudulent director identities to run companies and then disappearing when things go wrong, leaving employees and suppliers unpaid. For electrical contractors who’ve seen dodgy competitors undercut jobs only to vanish when payment time comes, this system helps level the playing field by making it easier to trace directors relationships across different companies.

Who Needs to Apply for a Director ID in the Electrical Industry

Understanding who needs a Director Identification Number helps you determine if this requirement applies to your electrical business setup.

Company Structure Requirements

If you run your electrical business as a company, you need a Director Identification Number. This includes most electrical contractors who’ve set up their business as a Pty Ltd company rather than operating as a sole trader or partnership.

You also need director ids if you’re a company director of any of these electrical business structures:

• Your main electrical contracting company

• A corporate trustee for your SMSF (many tradies set these up for tax benefits)

• Any other companies you might be involved with, like property investment companies

Business Structures That Don’t Need Director IDs

Note that if you operate as a sole trader or partnership, you don’t need a Director Identification Number since these business structures don’t have company directors. The requirement only applies to corporations and companies, including registered foreign companies operating in Australia.

The requirement applies whether your electrical company is actively trading or just holding assets. Even if you’ve got a small electrical business that only does residential work on weekends, if it’s a company structure, you need the director id number.

Current Director ID Application Deadlines and Penalties

The timeline for getting your Director Identification Number and the consequences of missing deadlines are serious matters that every electrical contractor needs to understand.

Application Deadlines Based on When You Became a Director

The deadlines for getting your Director Identification Number depend on when you became a company director. If you were already appointed as a director before 1 November 2021, you should have applied by 30 November 2022. New directors appointed after 5 April 2022 must apply for a director id before they’re officially appointed.

Current Penalty Structure

Here’s the reality: if you haven’t got your Director Identification Number yet and you’re supposed to have one, you’re already in non-compliance. The Australian Securities and Investments Commission isn’t messing around with enforcement anymore.

The penalties are serious. You can face fines up to $13,320 for not having a director id when required. Under civil law, the penalties can reach up to $1,100,000. The government has already started prosecuting company directors, with cases appearing in court throughout 2024.

Two Western Australian directors were convicted in Perth Magistrates Court and fined $5,000 each for failing to comply with Director Identification Number requirements. This shows the Australian Securities and Investments Commission is actively pursuing these cases across the country, not just making empty threats.

How ASIC Is Actively Enforcing Director ID Requirements

The enforcement approach has shifted from warnings to active prosecution, making compliance more urgent for electrical contractors.

Recent Prosecution Cases

The Australian Securities and Investments Commission brought its first prosecution action against a company director for failing to have a Director Identification Number in March 2024. The director faced a maximum penalty of $13,320, sending a clear message that the grace period is over.

The Enforcement Process

The enforcement process works like this: if you don’t have a director id when required, the Australian Securities and Investments Commission may ask you to attend an interview to explain why you haven’t obtained one. If you still don’t comply, they’ll consider investigation and prosecution.

The government has been issuing letters to company directors warning that further action will be taken if they fail to apply for a Director Identification Number. They’re not giving unlimited second chances – the message is clear that enforcement is ramping up significantly.

For electrical contractors, this means you can’t just ignore the requirement hoping it will go away. The Australian Securities and Investments Commission has access to company details and can easily identify which directors don’t have their required director ids.

Step-by-Step Guide: Getting Your Director ID as an Electrical Contractor

Getting your Director Identification Number is straightforward when you follow the right process and have the required documents ready.

Setting Up Your Digital Identity First

The process for getting your Director Identification Number is simple when you understand the steps. The easiest way to apply is through the Australian Business Registry Services website.

First, you’ll need a myGovID with at least standard identity strength. If you don’t have one, you’ll need to set this up first through the myGov website. This involves using the MyID app to verify your identity using documents like your driver’s licence and passport.

Completing Your Application Online

Once you have your myGovID set up, log into the ABRS online system and complete the Director Identification Number application. The system will ask for personal details and verify your identity against government records. If everything checks out, your director id is issued instantly.

You need to apply for a Director Identification Number yourself – your accountant or business advisor can’t do it for you because the system requires personal identity verification. It’s free to apply for a director id, so there’s no cost involved beyond your time.

Even if there’s more than one director in your electrical business, each person needs their own Director Identification Number. A company secretary doesn’t need a director id unless they’re also appointed as a company director.

What Happens If You Don’t Get Your Director ID

The consequences of not having a Director Identification Number create both immediate legal problems and ongoing business risks for your electrical company.

Legal and Financial Consequences

The consequences of not having a Director Identification Number go beyond just the fines. Without a director id, you’re technically operating your electrical company illegally if it’s structured as a company.

If the Australian Securities and Investments Commission takes enforcement action, you could end up in court facing criminal charges. The stress and time involved in dealing with legal proceedings would take you away from running your electrical business and supporting your family.

Business and Reputation Impact

This creates several practical problems for your electrical business. Banks and suppliers may become reluctant to deal with non compliance companies. Insurance companies might question your coverage if you’re not meeting basic compliance requirements. Major clients who do compliance checks might refuse to work with non compliant contractors.

The reputational damage from being prosecuted for failing to meet basic director obligations could also impact your ability to win electrical contracts, especially from larger commercial clients who check compliance records.

Protecting Your Electrical Business Through Proper Compliance

Maintaining compliance with Director Identification Number requirements is part of building a solid foundation for your electrical business growth.

Managing Your Director ID Once You Have It

Getting your Director Identification Number is just one part of running a compliant electrical business, but it’s a crucial foundation. Once you have your director id, make sure you understand your ongoing obligations as a company director.

Keep your Director Identification Number safe and provide it to your accountant and anyone else who needs it for company filings. Unlike some other business numbers, you don’t need to provide your director id to the Australian Securities and Investments Commission for routine company changes, but you should keep a record of it.

Building a Compliance Framework

Consider working with an accountant who understands the electrical industry and can help you stay on top of all compliance obligations. They can’t get your Director Identification Number for you, but they can help ensure your business meets all other regulatory requirements.

The electrical industry already has enough regulatory requirements with licensing, safety compliance, and electrical work standards. Don’t let a missing director id add unnecessary stress and financial penalties to your business operations.

Getting Help With Director ID and Business Compliance

If you’re feeling overwhelmed by all the compliance requirements for your electrical business, you’re not alone. Many electrical contractors find themselves spending more time on paperwork than actual electrical work.

The good news is that getting your Director Identification Number sorted is a one-time task that you can complete in about 30 minutes online. Once it’s done, you’ll have one less compliance issue to worry about.

Ready to get your business compliance sorted so you can focus on what you do best – electrical work? We help electrical contractors throughout the ACT and surrounding regions stay compliant while maximising their profit. Our team understands the unique challenges facing electrical businesses and can take the paperwork burden off your shoulders.