Is your ABN at risk of being cancelled?
You might not have thought about it, but it’s a distinct possibility for businesses, especially after a few years of considerable fluctuations.
Eligibility For An ABN
As a resident of Australia, you are eligible for an ABN if you’re:
- carrying on or starting an enterprise in Australia
- making supplies connected with Australia’s indirect tax zone
- a Corporations Act company
You may also be entitled to an Australian Business number if you are a non-resident who is:
- Carrying on or starting an enterprise in Australia
- Making supplies connected with Australia’s direct tax zone.
When businesses may have been in reduced operations, this may be something of a concern to you.
Suppose you have not reported business activity in your tax return, or there are no other signs of business activity in other lodgments or third-party information. In that case, the Australian Taxation Office (ATO) may flag your Australian Business Number for inactivity.
If an ABN meets the criteria as inactive, the ATO may select it as a candidate for cancellation. In that case, if the ATO cancels your ABN, you will not have a legal business in operation.
Would your customers deal with an illegal business? Most likely, no, they would not. Above all, Losing customers means losing revenue, and that’s not an event that your business wants to happen.
It is your responsibility to maintain your ABN details. If you lapse, the ATO will notify you of the pending cancellation.
The ATO periodically checks ABNs for inactivity to ensure that the information available on the Australian Business Register is correct. The ABR’s data is used in natural disasters by emergency services and government agencies to identify where financial disaster relief is needed to help businesses.
If there are defunct or inactive ABNs in the ABR, they may incorrectly receive funds that they are not eligible to receive.
What Happens If Your ABN Is Cancelled?
If the ATO cancels your ABN and you need it later:
- you can reapply for the same ABN if your business structure is the same
- you’ll get a different ABN if your business structure is different (e.g. you were a sole trader but are now a company)
If the ATO cancels your ABN and you disagree with the decision, you can contact them directly to resolve the issue.
One of the leading causes for ABN cancellation is a failure to lodge business activity in your tax returns. Remember that registered tax agents like us can assist you during that process and help you avoid losing your ABN.
