The ATO has announced it is cleaning out its ABN cache

Not keeping lodgements current or missing reporting deadlines are some of the key indicators to the ATO that a business may no longer be operational. It says it uses information from tax returns, other lodgement activities and even from third parties to help it decide whether ABNs are still being used.

The ATO has announced that from the end of October 2019, it will be re-focusing its efforts on an ABN cancellation program that it had initiated some time ago. Its aim is to cancel the ABNs for businesses it is confident are no longer carrying on an enterprise.

To help it determine if ABNs are active or not, it looks to indicators for a business that is obviously still in operation. For example it can check:

  • Information in the ABN holder’s tax return and other lodgements
  • If the ABN holder has other compliance and/or lodgement documents outstanding
  • Third party information.

If, however, the ATO cancels one of your client’s ABNs in error, but your client still requires being able to use the ABN for business activities, they can:

  • Reapply for the same ABN if their business structure remains the same
  • Apply for a new ABN if their structure changes (for example the cancelled business was a sole trader, but the new one is structured as a company).

Last year, a Treasury consultation paper examining a reform of the ABN system suggested periodic renewals to ensure information is up-to-date, as well as renewal fees. The merit in introducing a renewal process would remind holders of ABN entitlement rules and prompt holders to notify the registrar of any changes in details, the Treasury paper said.

But it also warned of problems that could arise from the cancellation of ABNs as a consequence of not meeting tax obligations. “Cancelling an ABN does not cancel or deregister a business and they could continue trading,” said the paper. “Faced with these impacts, a business owner might decide to operate without an ABN in the black economy.

“Care would also need to be taken to ensure ABNs are not cancelled for minor issues, issues under dispute, or where the business has agreed to take corrective action in relation to their government obligations.”

For its part, the Australian Business Register says that cancelling inactive ABNs is important for other reasons. For example, the information at hand can be used by emergency services and other government agencies during times of natural disaster, and also by the government to identify where financial disaster relief may be needed. Business data can also be used by various agencies in assessing potential receivers of grants.

The Australian Business Register maintains the information available through ABN Lookup and is responsible for re-issuing ABNs. To re-apply for (reactivate) an ABN:

  • If your client’s ABN has been cancelled, they will need to re-apply (or you can on their behalf).
  • Only when they have been issued with an ABN will it show as “active” on ABN Lookup.
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