The consultation paper is based on the premise that the ABN remains an important business identifier and will be retained. However, it recognises that the underpinning ABN system is in need of
reform to support the growing importance and expanded uses of the ABN and the consequences that come with this.
The ABN data held within the Australian Business Register (ABR) is being used by business, government and the community for purposes outside the tax system such as business identity checks, disaster planning, policy design and targeting services to business.
The paper says that an ABN has become a de facto ‘licence to do business’, enabling businesses to register a business name, open a business bank account, register for GST and claim GST credits, avoid having tax withheld on payments received by the business, obtain an Australian domain name and confirm identity to others when ordering and invoicing. The ABN can also be used as a PayID for the New Payments Platform.
Treasury is seeking views on possible changes to the ABN system including adjusting ABN entitlement rules, imposing conditions on ABN holders, and introducing a renewal process including
a renewal fee.
The Taskforce expressed concern that not everyone obtaining an ABN is entitled to one. Some of the examples provided to the Taskforce included:
• Applications for multiple ABNs over time for what is essentially the same enterprise, to facilitate avoidance of employee, creditor, consumer and tax obligations (referred to as phoenixing);
• Individuals working as employees (and not entitled to an ABN) but applying for ABNs ostensibly as independent contractors, often due to a demand from their employer (referred to as sham
– This allows the employer to avoid responsibility for employee entitlements, thereby reducing their labour costs and potentially offering the employer an advantage over their competitors.
Examples of employees driving the use of sham contracting were also provided to the Taskforce, such as visa holders seeking to circumvent their visa work conditions.
• Individuals incorrectly obtaining an ABN when not entitled to avoid the ‘no ABN withholding’ rules.
• Individuals not carrying on an enterprise and therefore not entitled to an ABN obtaining an ABN in order to register for GST and fraudulently claim GST input tax credits.