The Australian Taxation Office (ATO) is the Australian Government’s principal revenue collection agency, responsible for administering Australia’s tax and superannuation systems. In April 2021, the ATO’s role expanded to include administration of Australian Business Registry Services (ABRS).

ABRS is a new registry service being progressively established through the cross‑agency Modernising Business Registers (MBR) program. The MBR program will create a simpler, more transparent, and more efficient registry system for businesses operating in Australia. 

In November 2021, the MBR program delivered the first ABRS service – director identification number (director ID). The director ID initiative requires existing, new and intending directors to verify their identity and obtain a unique identifier.

Director ID was introduced to help address illegal phoenix activity, which occurs when a company is liquidated, wound up or abandoned to avoid paying its debts. A new company is then started to continue the same business activities without the debt. Illegal phoenix activity is estimated to cost the Australian economy more than $5 billion each year.

Illegal phoenix activity negatively impacts all Australians, depriving the community of valuable funds that could otherwise be used for essential services. Those engaged in illegal phoenix activity are blatantly stealing from employees, suppliers and sub-contractors. This leads to illegal phoenix operators gaining an unfair competitive advantage over honest businesses.

More than 1 in 10 Australians are directors in some form and the overwhelming majority of them do the right thing. Director ID will make it easier to identify and target illegal phoenix activity, ultimately benefiting all Australians.

In delivering the director ID initiative, the ATO had two key objectives:

• To create a world-class solution that provides an integrated, seamless, timely and accurate registry experience for directors, companies and the broader community.
• To provide services for businesses, communities and government agencies that unlock economic and social value for Australia.

As there are few countries in the world that have implemented a director ID regime, the ATO needed to use an innovative and agile approach to achieve the above objectives.

Led by the director ID project team, the ATO consulted and collaborated extensively with key stakeholders and partners, putting the user at the centre of the solution design. Throughout the various testing phases, ongoing improvements were made to the user experience in response to community feedback.

The project team worked closely with the vendor of the commercial off‑the‑shelf registry software to deliver the functionality needed to support director ID registration, while also facilitating the integration of the software with established IT systems and myGovID (as the whole-of-government identity verification system).

The project team collaborated with ATO data science experts to design the algorithm for the director ID identifier, ensuring it:

• meets a range of complex requirements
• provides around 1 billion possible number combinations
• supports future international use by incorporating an internationally recognised country identifier code.

Best-practice change management practices were used to prepare directors, intermediaries, staff and other stakeholders for the launch of ABRS and the introduction of the director ID requirement. The project team used an agile methodology to deliver director ID, which allowed the team to quickly adjust plans in response to changing priorities and circumstances, including the impacts of COVID‑19.

Director ID was successfully launched as the first ABRS service on 1 November 2021, with public beta testing successfully completed on 31 March 2022.

Through broad-reaching communications and engagement, the ATO and its partner agencies have built community confidence in, and awareness of, ABRS and the director ID initiative. So far, this approach has seen higher-than-forecast numbers of directors voluntarily complying with the new director ID requirement.  

More than 90% of director ID applications have been completed using the online system, with users consistently providing positive feedback on how easy it is to use, as well as the value of the director ID initiative.

Already, the director ID initiative is having positive impacts. Regulators are using director ID information to identify high-risk behaviour indicating that a person is potentially involved in illegal phoenix activity. Director ID is also supporting increased transparency of director appointments for regulators – a non-consenting director recently came forward after receiving correspondence from ABRS that provided advice and support on the application process.  

More broadly, the director ID project has built a strong foundation for the continuing delivery of the MBR program, setting it up for success.

For further information on ABRS and director ID, visit www.abrs.gov.au.

For further information on the MBR program, visit www.ato.gov.au/General/Gen/Modernising-Business-Registers.