In response to findings from the Black Economy Taskforce, Treasury has released a consultation paper with proposals for reforming the current ABN system to crack down on participants in the black economy using the system to provide a false sense of legitimacy to their business.
Possible changes to the ABN system include adjusting ABN entitlement rules, imposing conditions on ABN holders, and introducing a renewal process including a renewal fee.
The consultation paper stated that periodic renewals would prompt ABN holders to reconsider their eligibility, update their details, and serve as a reminder of the associated penalties for supplying false information, Treasury said.
Treasury is also proposing that a fee be charged for renewal, consistent with the fees charged renewing a company or business name. As it stands, it’s $36 to register a business name, and $36 annually to renew.
Insyt chief executive Darren Wynen said given that SMSFs apply for an ABN when they register the SMSF with the ATO, SMSFs could also be impacted by these proposals, even though they’re not the target of the reforms.
“The target is really participants in the black economy who are using the ABN system illegitimately, but there’s been no suggestion that SMSFs have been using ABNs in that way so it would to be a bit of a fee grab if SMSFs were forced to pay some sort of renewal fee for their ABN,” said Mr Wynen.
If cancellation is a consequence of failing to renew the ABN, Mr Wynen said it could also be very problematic for SMSFs from a compliance perspective.
“All of a sudden they could be put in the same basket as non-complying funds or funds that don’t comply with the lodgement of returns and have their regulation details withheld [by the ATO],” he warned.
“Certainly that could create a problem if regulation details are withheld, that might prevent rollovers being made to the fund for example.”
In the paper, Treasury noted some of the problems that could arise if cancellation was a consequence of failing to meet ABN obligations.
Treasury is inviting interested parties to comment on the consultation until 31 August 2018.
The only reason a SMSF has an ABN is for super fund lookup purposes. They do not need one, unless registered for GST, for any other reason. Therefore, the superfund can do away with the ABN as long as the ATO brings back its SMSF number of old, which was stopped when the ABN’s came in. Therefor the SMSF doesn’t need an ABN and it also takes it out of the ABN statistics.
SMSFs get an ABN when they register with the ATO and choose to become a regulated fund. GST registration is a separate issue for SMSFs – they will usually have an ABN (I haven’t come across any without, unless someone has messed up), and usually not have a GST registration.
A SMSF can choose to apply for an ABN if their turnover is less than $70kpa. If above this threshold, and they are providing taxable supplies, they must register for GST. Why, would a SMSF be exempt from review, if that is what becomes the requirement for holders of ABNs?
As it’s not compulsory to obtain an ABN, might SMSF’s let their ABN lapse? Generally only SMSF’s with property register for GST and would need an ABN.
Yet another greedy cash grab increasing costs for smsf’s. Why not simply exempt smsf’s already subject to an exorbitant supervisory levy and annual fee for corporate trustees actuarial fee tax agent fees audit fees accounting fees investment advice fees stamp duty and brokerage on investments gst on investment expenses investment and insurance commissions income tax and so the list goes on and on.
Why would you bother when there are so many maggots eating away at your hard earned nest egg.