In an online update, the tax office confirmed that over the next few months, it will increase its focus on cancelling ABNs, using a model to identify businesses that are no longer active or have forgotten to cancel their ABN when they ceased business.
The ATO will focus on ABNs that have stopped reporting business income or expenses and those that provide the agency with no other indications they may be in business.
“We have also been working to address some of the concerns that surfaced last year about the way we cancel ABNs, particularly in cases where we think a business has wrongly classified their workers as contractors and not employees,” said ATO assistant commissioner Emma Rosenzweig in an online post.
“Going forward, you will see us looking at these risks in particular industries, or with particular employers who we believe are at high risk, and taking a whole-of-ATO approach to any tax, super and ABN issues that we find.
“We know that sometimes people are in a difficult position if they are told to get an ABN in order to get a job. This is why we will be tackling these issues in a different way.”
Tax agents have been advised that if their client’s ABN is cancelled as part of the bulk cancellation program, they can either reapply if the business structure is the same, or contact the ATO if the decision is incorrect.
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 ABN holders of ABN entitlement rules and prompt holders to notify the registrar of any changes in details, argued Treasury.
However, the paper 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.”
The accounting industry has hit back at the proposal to attach fees to an ABN, and have instead called for tax agents to be utilised during the application process for an ABN to provide assurance that ABN holders will satisfy their obligations.