Spotlight on ABN entitlement

by By Cassandra Townsend, Thomson Reuters

The ATO recently announced it will review the entitlement of recently issued ABNs. The Australian Business Register (ABR) receives a high number of ABN registrations per month and wishes to ensure ABNs are only being issued where there is an entitlement.

Cleardocs has been arranging ABNs on behalf of customers for some months now. The ATO's eligibility criteria for ABNs for companies, trusts and SMSFs are outlined on the Cleardocs website and I revisit them below.

 ATO review of ABN registrations

The ABR receives about 80,000 ABN registrations applications each month. Approximately 91% of applications result in registrations being issued on the spot. The main reason for ABNs not being issued on the spot is a failure to establish the identity of the people behind the business (the associates).

The ATO says it has selected a representative sample of ABNs to review entitlement. It said these reviews will inform future focus areas to reduce the number of people applying for and receiving ABNs when they are not entitled.

Entitlement criteria for ABN registration

When you order your ABN through Cleardocs, you will be asked questions about the entity's situation. The answers will help determine the entity's entitlement to an ABN. The ATO's criteria is reproduced below:

Companies To be entitled to an ABN for a company, the company must:

  • be able to demonstrate that the business structure is in place.
  • be carrying on an enterprise in Australia; or
  • in the course of carrying on an enterprise make supplies connected with the indirect tax zone; or
  • have undertaken sufficient activities to commence an enterprise; or
  • be a Corporations Act company.

Trusts To be entitled to an ABN for a discretionary trust, the trust must be carrying on an enterprise and also have 3 essential elements:

  • a trustee;
  • trust property; and
  • a beneficiary, object or purpose.

SMSFs If an SMSF has the following in place, it can obtain an ABN:

  • at least one trustee;
  • governing rules (a trust deed);
  • identifiable members; and
  • assets put aside for the benefit of its members.

Source: This article was first published in Cleardocs' ClearLaw legal bulletin. To subscribe to ClearLaw legal bulletin, or for more information, please:


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