Is Your ABN At Risk?

Posted on 8 August '23 by , under business.

You might not have thought about it, but ABN cancellations could be a distinct possibility for businesses, especially after the last few years of considerable business 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 (a Pty Ltd 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.

If you have yet to report 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 inactive, the Australian Taxation Office (ATO) may select it as a candidate for cancellation. If 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 ensure that the information on the Australian Business Register (ABR) is correct.

The ABR’s information is used in the event of natural disasters by emergency services and government agencies to identify where financial disaster relief is needed to help businesses.

If there are defunct or inactive ABNs in the ABR, they may incorrectly receive funds they are not 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.

One of the leading 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.