According to the budget papers, the government is consulting with the Black Economy Taskforce on designing a new regulatory framework for the ABN system in 2018-19.
Speaking to Accountants Daily, Thomson Reuters tax consultant, Terry Hayes, said the ATO is “already starting to turn the screws” in cancelling ABNs that haven’t been used for a few years.
However, he noted the lack of further detail in the budget papers on how the government would revamp the ABN framework.
“I guess that will come, but there's just so little to focus on at the moment,” Mr Hayes said.
“There must be a reasonable portion of it going on in order for the Tax Office to take the action it does. I guess what it will also do, is encourage businesses to contact the Tax Office if their ABN has been cancelled.”
“Also, accountants need to keep an eye on it for their clients if, for a good and valid reason, they have not used their ABN for a little while.”
One of the first measures it will implement is removing deductions for payments made by businesses to contractors where the contractor does not provide an ABN and the business does not withhold any amount of Pay As You Go (PAYG) despite the withholding requirements applying.
The measure is scheduled to take effect from 1 July 2019.
Mr Hayes said that, in some respect, it’s convenient that the government can link both PAYG and ABN together as a way to combat the black economy.
“Tax deductions certainly have a strong monetary effect on a particular business, so that certainly gets their attention, which is what they want,” he said.
“The government basically wants all these people to just operate within the tax system, which means deducting tax when you should, quoting your ABN when you should, all those sorts of things.”
The ATO cancelled 810,000 redundant ABNs in 2016-17, about half of which were due to the non-lodgement of tax returns.
There is review program in place for high-risk areas, for example, where intentional misuse is suspected.