Is your ABN at risk of cancellation?

You might not have thought about it, but it’s a distinct possibility for businesses, especially after a few years of considerable fluctuations.

As a resident of Australia, you are entitled to an ABN if you’re:

  • carrying on or starting an enterprise in Australia
  • making supplies connected with Australia’s indirect tax zone
  • a Corporations Act company

You may also be entitled to an Australian Business number if you are a non-resident who is:

  • Carrying on or starting an enterprise in Australia
  • Making supplies connected with Australia’s direct tax zone.

In a time where businesses may have been in reduced operations, this may be something of a concern to you.

If you have not reported business activity in your tax return or there are no other signs of business activity in other lodgments or third-party information, your Australian Business Number may be flagged for inactivity.

If an ABN is identified as being inactive, the Australian Taxation Office (ATO) may select it as a candidate for cancellation. In the event that your ABN is cancelled, you will not have a legal business in operation.

Would your customers deal with an illegal business? Most likely no, they would not. Losing customers means losing revenue, and that’s not an event that your business wants to happen.

It is your responsibility to maintain your ABN details. If you lapse, the ATO will notify you of the pending cancellation.

The ATO periodically checks ABNs for inactivity to make sure that the information available on the Australian Business Register is correct. The ABR’s information is used in the event of natural disasters by emergency services and government agencies and to identify where financial disaster relief is needed to help businesses.

In the event that there are defunct or inactive ABNs in the ABR, they may incorrectly receive funds that they are not actually eligible to receive.

If your ABN is cancelled and you need it later:

  • you can reapply for the same ABN if your business structure is the same
  • you’ll get a different ABN if your business structure is different (e.g. you were a sole trader but are now a company)

If the ATO cancels your ABN and you disagree with the decision, you can contact them directly to try to resolve the issue directly.

One of the main causes for ABN cancellation is a failure to lodge business activity in your tax returns. Remember that registered tax agents like us can assist you during that process, and help you avoid losing your ABN.