ABN rules may lock out late lodgers

ABN SMSF trustees

Proposed changes to the Australian business number (ABN) system may lock late-lodging trustees out of their funds until they submit required information.

Proposed changes to the Australian business number (ABN) system will have the potential to lock out SMSF practitioners and trustees, blocking their ability to manage a fund’s tax affairs, according to an SMSF technical specialist.

Heffron SMSF technical and education services director Leigh Mansell said draft legislation, titled Treasury Laws Amendment (Measures 4 for Consultation) Bill 2022: 5 Strengthening the ABN system, would introduce an obligation to ensure ABN details were updated annually and a failure to do so would lead to the number’s cancellation.

“What this means from an SMSF perspective is if a client doesn’t lodge two or more SMSF annual returns, the ABN will be cancelled,” Mansell said during a practitioner briefing last week.

“Additionally, if a fund’s trustees don’t confirm the details of the SMSF are correct, then the registrar – the Australian Business Registry Services – will have the power to cancel a SMSF’s ABN.”

She noted some may ignore this change given that where an SMSF annual return is overdue by two weeks, the regulation details of the related fund on the Super Fund Lookup portal would be removed.

“In that event, other funds won’t be able to roll over to an SMSF or employers can’t make contributions to that fund, but the cancelling of an ABN is different,” she said.

“The main difference is that when an ABN gets cancelled, the fund will not appear on Super Fund Lookup at all.

“If the ABN gets cancelled and you are the tax agent for your client, your login credentials might be cancelled altogether, which means you can’t do anything for that client.”

She added the lack of an ABN would also create issues regarding goods and services tax (GST) and withholding tax.

“If somebody doesn’t have an ABN, the payer of something is required to withhold tax at 45 per cent from any payments made. Imagine a fund with a rental property registered for GST and the ABN gets cancelled and the tenant being required to withhold tax from those rental payments,” she said.

The draft legislation indicated the process to overturn an ABN cancellation would be straightforward once the relevant information was lodged,” she said.

“My reading of it is the fund will get the same ABN back as it appears the rules will hide it and then flick it back on as soon as you get your act into gear,” she said.

The proposed ABN changes were first put forward in the 2019/20 budget and were part of a consultation process that closed on 29 November. If introduced into parliament and passed, they would take effect on the first day of the next quarter after receiving royal assent.

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