In July, Treasury released a consultation paper as part of the government’s plan to reform the ABN system, which included suggestions including periodic renewals and fees associated with it, in a bid to prompt ABN holders to have “closer engagement with the ABN system”.
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, BDO national tax director Lance Cunningham believes no fees should be imposed on a public identifier such as an ABN, and that the lodgement of a tax return could be utilised as the de facto annual renewal of an ABN.
“We should be encouraging the appropriate entities to have an ABN and imposing a fee could discourage some entities from applying for an ABN and encourage them to work outside the system,” Mr Cunningham told Accountants Daily.
“The requirement to lodge a tax return already applies to almost all ABN holders and most of the information that would be required for a ABN renewal is provided in the tax return, or if it is not, it would be a simple matter of including a request for such information in the tax return for relevant taxpayers.
“The tax return lodgement system is already in place, so it makes sense to utilise this system instead of establishing a new ABN renewal system. It would also act as an incentive for ABN holders to lodge their tax returns within the lodgement periods or apply for extensions of time to lodge. In these circumstances, the ABN should not be cancelled unless the taxpayer does not respond to the ATO reminder to lodge after the expiry of the original or extended lodgement date.”
Likewise, Institute of Public Accountants (IPA) general manager of technical policy Tony Greco said the professional body was not supportive of attaching a fee to an ABN, noting that it was an identifier akin to a tax file number.
Mr Greco also believes there is merit in utilising accountants in the application process of an ABN, noting the government’s concern with ABN holders who do not satisfy eligibility or are unaware of their obligations.
“Who else is on the ground across the country that can perform that assurance role? We’re saying if you use the extensive network of accountants, then it will give the government a higher level of assurance in regards to eligibility criteria as opposed to somebody off the street applying for an ABN,” Mr Greco said.
“If you tighten up the application process, I think it sets the business up for better compliance in the future, and in the end, that’s going to save the government a lot of money as well that’s not going to end up as a tax debt that becomes very difficult to chase once the horse has bolted.”
CA ANZ tax leader Michael Croker had earlier told Accountants Daily that the ATO should rely on accountants and advisers in the ABN application process to ensure ABN applicants understand their obligations prior to applying for an ABN.
“You’re in a pretty good position to ensure regulators like the ATO that this is a genuine start-up business, there are no ifs, buts and maybes. That sort of communication from an accountant in that sort of circumstances should be given the green light to get that ABN and the other clearances that regulators need to give,” Mr Croker said.
“From the ATO’s perspective, that start-up has a lower risk profile in terms of the ATO’s risk differentiation framework. I’m not sure why the ATO doesn’t make use of us.”