Minister for Revenue and Financial Services, Kelly O’Dwyer, said the Australian Business Number (ABN) system is “the backbone of business registration”, with 860,000 new ABNs issued last financial year alone.
“The ABN is increasingly acting as a business enabler, underpinning laws targeted at business, and signalling a business’ credentials. It is therefore timely to consider whether the ABN system remains fit to support the expanded range of purposes an ABN serves today,” she said.
Ms O’Dwyer said the reforms are designed to address “a significant disconnect” between what ABN users perceive the number does and what it achieves in reality, which was identified by the Black Economy Taskforce.
“The taskforce highlighted that the ABN system is being used by some participants in the black economy to create a false sense of legitimacy to their business. This places businesses not prepared to do the right thing on the same footing as honest businesses,” she claimed.
“It increases the risk of people being misled and creates opportunities for tax avoidance. We will balance these priorities against the need to keep the system simple in its operation and free of undue regulatory processes.”
The proposed changes include restricting eligibility to obtaining an ABN, imposing “conditions on ABN holders”, and changing the longevity of an ABN through the introduction of a renewal system, which would attract a new fee for businesses.
The latter point is likely to be unpopular with business leaders, after Ms O’Dwyer admitted that ASIC registry search fees are nothing more than revenue raising.
However, the renewal system idea is being put forward in a bid to address market perceptions that holding an ABN is a right, regardless of compliance history.
Other points put up for consultation are the idea that all businesses should be required to register for GST regardless of turnover, and restricting the supply of ABN renewals to only those who are meeting their tax obligations.
It is also proposed that an updated ABN system would work in conjunction with the controversial Director Identification Number (DIN), which was first proposed last year.
The full consultation paper can be found on the treasury’s website. Business leaders can provide their views on the proposal until 31 August 2018.
Responding to My Business' request for additional comment, a spokesperson for Minister O’Dwyer said that a “broad range of options in relation to ABN reform” are on the table for public discussion, with the aim of finding “which reform options may be most effective" in addressing the issues raised by the Black Economy Taskforce's final report.
However the spokesperson confirmed that amendments to the ABN system would not replace the proposed rollout of Director Identification Numbers.
“The Government remains committed to progressing with a DIN [system],” the spokesperson said.