Consultation launches on ‘modernising’ the ABN system

According to the findings of the Black Economy Taskforce last year, the ABN system, which was first introduced in 2000, is being used by participants in the black economy to provide a false sense of legitimacy to their business, thus increasing the risk of people being misled and creating opportunities for tax avoidance.

The consultation paper reads: “A false perception of legitimacy places businesses not prepared to do the right thing on the same footing as honest businesses. It increases the risk of people being misled and exploited by these businesses and creates opportunities for tax evasion. Any reforms to the ABN system should ensure that the system works for ABN holders, but also that it works for those who deal with ABN holders since it is important that customers, investors and employees have confidence in the identity and legitimacy of a business.”

As such, the government is consulting on changing the system “without adding unnecessary complexity or compliance costs”.

These include suggested changes to the conditions of granting an ABN, such as the taskforce’s recommendation that ABN holders should only be allowed to continue to hold their ABN if they comply with government and taxation obligations.

The 18 questions asked in the consultation include:

• Is an ABN viewed as a sign of authenticity or legitimacy?
• Who should be entitled to an ABN? Who should not be entitled to an ABN?
• What are the risks or benefits from any changes to ABN entitlement rules?
• What is the best way of ensuring that only those who are entitled apply for and are granted an ABN?
• Should individual contractors holding ABNs be required to register for GST regardless of the amount of their annual turnover?
• Should an ABN holder be required to meet certain conditions or undertake certain obligations? If so, what obligations should apply and when?
• Are changes to the ABN system, or related systems and laws, needed to support easier verification of an ABN holder?
• How could the quality of ABN data be improved?
• What information would you want to be publicly available on the Australian Business Register (ABR)?
• Should ABN holders have to renew their ABNs?
• Should the same renewal period apply for all ABN holder entity types?
• Are ABN registration and renewal fees the most appropriate way to fund an ABN renewal process? 

The consultation comes as the government considers bringing in a suite of reforms as part of the Digital Transformation Agenda. 

These reforms will improve business identity and verification through modernising business registers, implementing a digital identity framework and introducing director identification numbers. 

Launching the consultation, Minister O’Dwyer said: “The ABN system is the backbone of business registration with around 7.7 million ABN registrations, and around 860,000 new ABNs issued in 2017–18. 

“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.”

Stakeholders are asked to submit their responses to the consultation paper by 31 August 2018.

[Related: Budget aims to help SMEs ‘grow, export and create jobs’]