Black economy targeted in ABN tax reform

The proposed reforms to the ABN system are to disrupt black economy behaviour, Treasury said, given that its Black Economy Taskforce - established to “develop an innovative, forward-looking, multi-pronged policy response to combat the black economy in Australia” – had revealed issues in its Final Report, issued on 8 May 2017.

It highlighted the harm that the black economy causes to “honest businesses and the community, penalising honest taxpayers, undermining the integrity of Australia’s tax and welfare systems, and creating an uneven playing field for the majority of small businesses doing the right thing.”

As the FBAA’s Peter White agreed: “The additional two components are fair and very reasonable.”

“Disclosing changes and accuracy in ABN details and complying to income tax obligations are on us all, so we all need to be doing the right thing in meeting our legal obligations.

“And it’s not much to ask,” he said.

A two-pronged approach to tackling the issue

In the 2019-20 Budget, the former federal government announced an intention to make ongoing ABN registration contingent on ABN holders meeting 2 additional obligations:

- to comply with income tax return lodgement requirements, and

- to update the accuracy of their details on the Australian Business Register (ABR), annually.

The new conditions will make ABN holders more accountable for meeting their government obligations, while minimising the regulatory impact on businesses doing the right thing, Treasury explained.

“The Government is seeking the community’s views on the exposure draft legislation and accompanying explanatory materials,” it highlighted.

Bill amendment specifics on the table

The Bill amends the ABN Act to provide that the Registrar may cancel a person’s registration in the Australian Business Register (ABR - that is, the person’s ABN) in either of the following circumstances:

- Where a person is required to lodge income tax returns, they have failed to lodge returns for two or more income years and those returns remain outstanding.

- The person fails to confirm the accuracy of their details held by the Registrar in a 12-month period together with confirmation that their ABN is still required.

Brokers should note that where a person’s registration is cancelled in these circumstances, the Registrar must reinstate the registration if:

- The person lodges or makes arrangements with the Commissioner of Taxation to lodge the relevant income tax returns that had not been lodged.

- The person confirms the accuracy of their details held by the Registrar and that they still require an ABN.

Have your say about the changes – but hurry!

Treasury is seeking responses to this consultation up until 29 November 2022, it stated.

“Interested parties are invited to comment on this consultation,” it confirmed.

“While submissions may be lodged electronically or by post, electronic lodgement is preferred.

“For accessibility reasons, please submit responses sent via email in a Word or RTF format.

“An additional PDF version may also be submitted,” it added.

According to Treasury, all information (including name and address details) contained in submissions will be made available to the public on the Treasury website unless responders indicate they’d like all, or part of, their submission to remain in confidence.

“Automatically generated confidentiality statements in emails do not suffice for this purpose,” it warned.

“Respondents who would like part of their submission to remain in confidence should provide this information marked as such in a separate attachment.

“Legal requirements, such as those imposed by the Freedom of Information Act 1982, may affect the confidentiality of your submission.”

[Related: ATO to act on SME tax debt, brokers warned]