Do Sole Traders need a Director ID in Australia?

Introduction

Sole Traders in Australia often wonder whether they need to obtain a Director Identification Number (Director ID). In this article, we provide a direct answer to this question, as well as a few things you may need to consider.

Short answer 

Sole Traders in Australia DO NOT need to obtain a Director Identification Number (Director ID). If, however, a Sole Trader is also a Director of another organisation (eg on the Board of a Not for Profit Organisation), they are likely to need a Director ID in that capacity.

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What is a Director Identification Number (Director ID)?

A Director Identification Number, commonly referred to as a Director ID, is a unique identifier issued by the Australian government. It aims to enhance transparency and accountability in the business sector by identifying directors of companies and certain other entities.

Director IDs are administered by the ABRS (Australian Business Registry Services). They were introduced in 2021 to help prevent phoenix companies (particularly in the construction industry) and help prevent fraud and use of fraudulent identities in Australian businesses: Source.

A Director ID is a 15-digit identifying number given to a Director (or someone who intends to become a Director) when they apply through the ABRS using MyGov online. The Director ID remains with a person, even if they change companies, stop being a Director, change their name or move interstate or overseas.

Sole Traders and Director IDs

As a Sole Trader, you operate your business as an individual, and you are not considered a Director of a company. The requirement to obtain a Director ID therefore does not apply to you.

The ABRS states that you don't need a Director ID if you're either:

  • a company secretary but not a director
  • acting as an external administrator of a company
  • running a business as a sole trader or partnership
  • referred to as a ‘director’ in your job title but have not been appointed as a director under the Corporations Act or the CATSI Act
  • a director of a registered charity with an organisation type that is not registered with ASIC or ORIC to operate throughout Australia
  • an officer of an unincorporated association, cooperative or incorporated association established under state or territory legislation, unless the organisation is also a registered Australian body
  • a director before 31 October 2021, but no longer hold any director roles on or after 1 December 2022.

Exemption for Sole Traders

As you can see from above, the Australian government has exempted Sole Traders from the Director ID requirements. This means that if you are a Sole Trader, you do not need to obtain a Director ID, regardless of the nature or scale of your business.

But you still need to comply with other Laws

Although Sole Traders do not require Director IDs, keep in mind that you still need to comply with all other legal and tax requirements applicable to your business structure.

Failure to meet tax, reporting, and regulatory requirements can result in penalties and legal consequences. So make sure you always maintain proper records and fulfill your tax obligations as a Sole Trader in Australia.

We provide Business Advisory services to dozens of Sole Traders around Australia.

Conclusion

Sole Traders in Australia do not need to obtain a Director ID. This exemption simplifies compliance for Sole Traders who run their businesses as individuals.

But while Director IDs are not a concern for Sole Traders, you still need to comply with all other legal and tax obligations relating to your industry, the goods and services you provide, and your specific business structure.

Contact us if you need advice about your compliance responsibilities as a Sole Trader in Australia.

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About the Author

Rachelle Hare

Rachelle Hare

Rachelle Hare is a highly experienced Construction Lawyer and Contract Lawyer, with over 23 years of experience in Tier 1 and Tier 2 Construction Firms, Top Tier Private Practice and Government.

With 23+ years of experience as a Senior Lawyer, Strategic Contracting Adviser and Management Consultant in Construction Law, Contracts, Major Projects, Commercial Advisory, Compliance, Procurement, Contract Management and Risk Management, Rachelle has the rare skills to offer you seamless business advice and legal advice to help support your organisation.


As well as a Lawyer and Business Adviser, Rachelle has also acted as a Strategic Procurement Adviser, Compliance Manager, Strategic Risk Adviser and Commercial Manager.

Rachelle owns
Blaze Business & Legal, a combined Commercial Law Firm and Business Advisory Firm located in Brisbane, Queensland, Australia. Blaze Business & Legal assists a broad range of clients in the Construction Industry and related industries, and advises owners, contractors, subcontractors, NFPs and other organisations on a broad range of Construction Law, Commercial Law, Business Advisory and Management Consulting issues in Brisbane, Queensland and around Australia.

Rachelle also owns Blaze Professional Learning, where she offers practical contracting skills, hands-on experience in drafting and working with contracts, and industry insights to help Professionals upskill and advance their careers with real-world skills.

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