This is a letter written by the ATO. Someone sent it to me. The letter is not addressed to me. I’m not joking or making it up
Cancelling your Australian business number For your information and action
We wish to advise you that your Australian business number (ABN) xxxxxxxxx may be cancelled.
Recently we conducted a review of the Australian Business Register to identify persons who may no longer be entitled to an ABN. Your registration was selected in that process.
The Registrar of the Australian Business Register has the authority to cancel your ABN if satisfied that you are no longer entitled to have an ABN.
As you have not reported any business income in your 2007 and 2008 income tax returns, it is unlikely that you are carrying on an enterprise.
What happens next
If you have no objection to your ABN being cancelled, you do not need to do anything. We will automatically cancel it from the Australian Business Register.If you commence an enterprise as a sole trader in the future you can reapply for your ABN. When you apply you will be issued with the same ABN that you had previously (emphasis added – and there goes my last surviving hypothesis as to what the ATO is trying to achieve from this correspondence). This ensures that you can re-use items such as stationery and business cards when you return to your business.
If you do not agree that your ABN should be cancelled, you must complete and return the enclosed form within 28 days of this letter being issued. We will use your responses to assess your entitlement to an ABN.
Mail your form to:
Registrar Initiated ABN Cancellations Australian Taxation Office
PO Box 3373
Penrith NSW 2740For further information on entitlement to an ABN you can visit our website at www.ato.gov.au or you can phone us on 13 28 66 between 8.00 and 6.00pm, Monday to Friday.
Protecting your privacy when you phone us
If you phone we need to know we are talking to the correct person before discussing ABN eligibility. We will ask you for details only you or your authorised representative would know. It will also be helpful if you have your tax file number or ABN ready when you phone us.Yours sincerely
Michael D’Ascenzo
Registrar of the Australian Business Register Commissioner of Taxation
I am relieved to know that, no matter how farcical the activity, privacy is protected at all times.
Still, perhaps I am being unfair. Perhaps there is some logic to this – but it sure is hard to see what it is. The only logic I can see in this is that it might be possible to use ABNs to aid fraud or some other nastiness in some way, but since all you’d need to do to misuse an ABN is send in a tax return (however dodgy, or just small scale) it’s pretty hard for me to imagine any sense whatever in any of this.
Unless it’s taking a leaf out of J. M. Keynes when he says that, if you can’t think of anything better for governments to fund in a depression, it’s better to fund people digging holes in the ground and filling them in than to let people go idle. Perhaps this is a somewhat more geneel equivalent.
Oh Come on, Nicholas! Surely you’re not advocating that business people, small, medium or large it doesn’t matter a jot, should be permitted to go along year after year without submitting taxation returns, but still enjoy the benefits of a GST registered ABN??!
This tactic by the ATO has been going on for some time now and frankly, good thing too, as far as I’m concerned. I’m sick of dealing with ignoramuses who think it’s some kind of right to continue to borrow, supposedly for business purposes, on lo-doc products because their tax returns aren’t up to date. Granted, the lo-doc product has a place, but I have absolutely no sympathy for those stung by the ATO in this manner because they’re too bloody lazy to do their tax. As a wage earner, I have no choice, so why should a SME be granted any leniency beyond the usual nine month way-period granted to businesses for submission?
I’m going to go right out on an limb here and presume that the ABN in question was not actually trading, in which case there are no “benefits” involved. If the ABN was trading then my understanding is that they would be obliged to fill in BAS each quarter.
With regard to the lo-doc loans, I was not aware that the ATO offered these things. Are they difficult to get? What sort of interest rates are we talking about here?
That’s a remarkably versatile explanation.
Niall,
I have no idea what you’re talking about – but please don’t fill me in. I know as much as I want to know.
The ATO seems to have developed some strange ideas lately.
I registered a new company a while back, and quite unexpectedly was told I would have to wait for 28 days for the issuance of an ABN (this is not related to GST registration – that’s an entirely separate issue)
I don’t get it. I am required to have an ABN to conduct a business, yet appararently issuance of the ABN is a discretion of the ATO? Huh? Do I now have to submit a business plan to the ATO and get approval or something?
After all I’m not aware that they withhold tax file numbers from other participants in the economy. What makes an ABN any different?
(And before anyone complains, yes this did throw a spanner in the works of real economic activity, it delayed payments to my new company by 6 weeks because I couldn’t open a bank account and I spent a few happy weeks fending off a nervous bank manager.)
I understand you’re only obliged to submit a BAS if your business has greater than $70k (from memory) a year turnover. And there are plenty of “zombie” ABNs out there. The ATO just wants to archive these off, which seems reasonable. Having lots of easily accessible inactive ABNs out there is an invitation for someone to work out a way to use them for fraud.
And yes, if you want a low doc loan because you’re self employed you’ll need an ABN. And if you’re not really self-employed but want a low doc loan anyway then getting hold of a zombie ABN would be useful.
Not really unrelated – ABNs only exist to facilitate GST. So unrelated in a very related way :)
DD’s comments seem quite sensible to me.
That letter has nothing to do with archiving off ‘zombie’ ABN’s. It’s an increasingly prevalent tactic of the ATO to force lackadaisical business operators to submit timely tax returns, or lose their ABN. You really ought to stay in touch with the finance marketplace at a more grass roots level, Nicholas.
Niall, you are responding to DD, not Nick.
Also, strictly speaking, ABNs are only relevant to the BAS returns, and not the income tax returns. I would be surprised if many business operators are so very lackadaisical in relation to the BAS as they are with the income since they can’t get input tax credits refunded otherwise (if they are dodgy then GST paid will exceed GST charged and they are net refund).
It was a joint response, Patrick. I try to be economic where possible. As to the intent of the ABN letter, I can only pass on what I’m picking up from a number of small business clients who have received similar letters. None had lodged income tax returns for at least three years. Like I say, no sympathy at all from me.
DD,
There are low docs you can get without an ABN. And I don’t know if you were implying as Niall was saying, that it’s the ATO’s business to somehow help out the low doc industry by providing it with verification of the state of someone’s business. If they want that they can ask and get permission to check books, records, tax returns, credit records etc.
Also for the benefit of others, the person who received the ABN note completes their tax return on time every year.
Patrick #6: “ABNs only exist to facilitate GST.”
No. You need an ABN to run anything bigger than a paper round. You are required to have an ABN regardless of whether you are registered for GST or not. You can be paid – short term – absent GST registration because you claim the GST later. There are some exceptions to this but they are specifically written into the legislation. Taxi drivers with low turnover are a good example.
You cannot open a bank account without an ABN, you can without GST registration. You cannot even be insured without one and insurance is often a requirement placed on you by clients.
ABN’s and GST registration are entirely separate issues. An ABN is like a tax file number, you cannot, just cannot operate without one. It is a gateway to being able to operate at all.
So generally speaking you need an ABN. Short of asking the ATO to approve a drug smuggling cartel, why is there any discretion at all? To refuse means they have to assess whether or not an otherwise legitimate activity meets some criteria. What are those criteria? Don’t know.
To insist on the right to delay means there might be some economic damage in the meantime, and in the case of refusal it would mean the ATO would have terminated a legitimate business activity for a purely tax related purposes. You’re familiar with Part IVa of the tax act? The bit that allows the ATO to set aside a legal structure if its primary purpose is avoidance?
This is the flip side. The ATO can apparently “set aside” (read prevent from operating) legitimate businesses, or delay their cash flows, solely on its own whim.
yes, there are lo-docs you can get without an ABN, but if you’re self employed, there’s not a lender in the country that will touch you unless you have one. None that I’ve come across in 35 years, at any rate. Actually, the thrust of my initial comment was nothing to do with the ATO assisting people achieve Lo-Doc lending, which Nicholas would be well aware of. I am curious though, that the holder of a ABN who completes their tax returns annually, on time, should receive a letter from the ATO claiming they hadn’t done so for two years.
Niall,
Why am I responding to you? Who knows? A kind of neurosis I guess. it’s certainly not rational.
The original letter from the ATO doesn’t say the recipient hadn’t completed their tax returns> It says they have completed their incomes.
Sigh . . .
By application of Willie Sutton’s principle, the tax office is primarily interested in profits. No profit? No ABN.