Most businesses in Australia have a registered Australian Business Number (ABN) which identifies their business. However, the ATO does have the discretion to cancel your ABN. This can mean serious trouble if you run a commercially viable business. Further, the penalties for running a business without an ABN can be severe. In this article, we’ll explain why your ABN may have been cancelled and how you can go about reactivating it.
Why Was My ABN Cancelled?
The Australian Business Review (ABR) is responsible for reviewing ABNs. The ABR prides itself as a trusted source of business information and checks regularly that its information is accurate. In addition, government agencies rely on the information the ABR provides, including when assessing possible grants. As a result, the ABR undertakes regular reviews that reveal ABNs which appear to be inactive. Indicators of inactivity can include:
- Not lodging tax returns for your business
- Not lodging Business Activity Statements (BAS) when required
- Failing to lodge your individual tax return if you’re a sole trader
- The Australian Securities and Investment Commission (ASIC) deregisters your company
- Other inactivity
When it appears you are not running an enterprise, your ABN may be cancelled. However, the ABR will usually send you a letter or email informing you that your ABN is no longer active. If you’ve changed the contact details of your business, you should inform the ABR so you don’t miss any important correspondence.
Start your ABN application in minutes!
Need an Australian Business Number to start a casual job? We've got you covered.
Example
Chuck runs a laptop repair business from his home as a side income. Lately, Chuck has become too busy with his primary job and loses focus. As a result, Chuck has started to forget to lodge the required business documents on time. Consequently, the ABR believes the business is now inactive and decides to cancel Chuck’s ABN. However, as the business is still running, Chuck can attempt to reactivate the ABN.
How Do I Show That I Am Carrying Out an Enterprise?
Certain activities will clearly indicate to the ABR that you are running a business. This conduct entitles you to retain your ABN and includes:
- Lodging all your business documents, accurately and on time
- Financial planning, licensing and insurance agreements, purchase of stock.
- Once your enterprise is set up, it should be run like a business! Is there profit incentive? Are you engaged in commercial activity such as selling products or services? Do you keep organised records and operate in a regular and consistent manner?
- Establish that you are in control. If it looks like you are in an employee relationship with another person or entity that controls you and your pay, you may not be truly carrying out an enterprise.
- When filling out your income tax return, don’t forget to declare income at the business labels.
- If you are registered for GST, you should be lodging business activity statements (BAS).
- Don’t forget to update or cancel your ABN to reflect changes in your enterprise.
Your business failing one or more of these may result in your ABN being cancelled. The ABR should send you a letter explaining why it has been cancelled; otherwise, you can check the ABN Lookup to make sure. Furthermore, you cannot continue using your ABN for business activities when the ABN has been cancelled. The date of cancellation may be when you receive notice or a set date can be stated.
Next Steps
The good news is, you can re-apply for an ABN, but you may need to make some changes to your business activity. For more information, you can read our guide How to Reactivate Your ABN. Otherwise, you can also object to the ABR’s reasoning to have your ABN reactivated.
Get a free legal document when you sign up to Lawpath
Sign up for one of our legal plans or get started for free today.
