• Assuring the integrity of the ABR

    It is important that the Australian Business Register contains accurate information on businesses and that only those entitled to an ABN are issued an ABN, as the register:

    • is accessed by businesses and the community over 600 million times per year to verify business information
    • is used by over 500 government agencies to inform policy and service delivery decisions and to support their regulatory functions with the objective of reducing the costs of business in interacting with government.

    To be entitled to an ABN, you must be running a business or have taken sufficient steps to establish a business. An intention to start a business is not sufficient to be entitled to an ABN.

    See also:

    If people have an ABN when not entitled:

    • They can be generating significant red tape for themselves, eg, meeting tax lodgment and reporting obligations to government.
    • For those who obtained their ABN because their employer required them to, ‘despite the fact they are not entitled to an ABN’ then they are likely to be underpaid and missing out on employee entitlements such as annual leave, sick leave, superannuation guarantee payments and protection from unfair dismissal.
    • They are responsible for any public liability, professional indemnity and/or workers compensation/income protection insurance.

    If employers require workers to be engaged under an ABN incorrectly:

    • They are inappropriately reducing their labour costs.
    • They are likely to be engaged in sham contracting and exposing themselves to possible penalties from the ATO, State and Territory Revenue Offices and the Fair Work Ombudsman.
      • For example: In a recent case started by the FWO, a court penalised an employer $200,000 for underpaying worker’s their full entitlements.
    • Typically the worker is worse off even if on a higher hourly rate of pay
    • They may be contacted by multiple agencies as the ATO, State and Territory Revenue Offices and the Fair Work Ombudsman work together to take action against, and share information on, employers incorrectly engaging their workers
    • They have a competitive advantage over other businesses doing the right thing.

    Having an ABN comes with benefits and obligations as an ABN enables:

    • exemption from all withholding tax (TFN and ‘no ABN’ withholding tax)
    • recognition on the ABR as an ‘active’ business
    • collection of GST and
    • claiming of GST input tax credits
    • collection of Pay As You Go Withholding from staff salaries
    • access to a ’business name’
    • opening a business bank account
    • establishing a ‘.com.au’ website
    • access to government licencing
    • access to government grants, rebates and contracts
    • discounts on some purchases.

    An entity with an ABN may be required to:

    • Lodge tax and GST returns to government
    • Pay GST to the ATO
    • Pay PAYGW to the ATO
    • Pay staff superannuation to their nominated fund
    • Meet other federal, state and territory regulatory obligations (eg, payroll tax, worker’s compensation, and operating licences).
    • Last modified: 28 Jun 2017QC 1155