• ABR: towards a better business future

    The Australian Business Register (ABR or the Register) is a complete source of business identity information of 7.7 million entities that hold an Australian business number (ABN). The Register includes details such as ABN, goods and services tax (GST) registration status, entity type and broad business location. This information makes it easy for businesses to deal with each other and with government.

    For some time now, there have been concerns about the accuracy of the information contained in the Register, as well as the inappropriate use of ABNs. To address these concerns, we have been enhancing the integrity of the Register by encouraging businesses to ensure their information is accurate and up to date, and by removing entities that are not entitled to hold an ABN.

    Annual ABR survey results indicate that as at June 2014 approximately 28% of ABN holders no longer required their ABN. This means that there are more entities listed on the Register than there are active businesses.

    We also found that ABNs were sometimes used in ways not intended for the system. For example, some employers require their employees to have an ABN, incorrectly portraying the employment relationship, in an attempt to avoid their employer related obligations.

    Managing the Register effectively

    To improve the accuracy of information in the Register, the Towards a Better Business Future (TBBF) initiative was developed. This initiative was supported by government with additional funding in the 2012–13 BudgetExternal Link. The initiative is a four year project that aims to improve the accuracy, integrity and usability of the data in the Register.

    One of the key deliverables of the ATO annual plan 2013–14 was to have ‘a comprehensive, up to date and accessible business register'. In response to this deliverable, and in line with the TBBF initiative, we wanted to achieve:

    • a significant reduction in the number of ABNs listed in the Register for businesses not entitled to hold an ABN
    • increased accuracy of the business information in the Register
    • fewer opportunities for misuse of the system.

    The ABR compliance program continued to educate ABN holders about their entitlement to hold an ABN as well as their obligations to keep their details up–to-date.

    We contacted ABN holders by letter, email, SMS, phone and in person (through site visits), to ensure they understood their lawful obligations, and to check that their details were current and they were still entitled to hold an ABN. Inaccuracies were corrected in the Register as they were identified.

    Using a risk-based approach, we began contacting ABN holders in July 2013 and, by 30 June 2014, we had:

    • issued 460,000 Registrar-initiated ABN cancellation letters, resulting in 378,986 cancellations
    • issued 415,466 requests (via letter, email and SMS) for ABN holders to update their details in the ABR
    • conducted over 6,000 field visits to ABN holders to discuss if they were entitled to an ABN, resulting in over 745 cancellations.

    There were around 165,000 ABN cancellations where the client advised the registrar that they no longer needed their registration. In total, over 544,000 ABNs were cancelled in 2013–14.

    The Register also contains Australian and New Zealand Standard Industrial Classification (ANZSIC) codes which are important for use by government agencies in accurate profiling of the Register population by industry. We manually corrected the ANZSIC codes of over 35,000 ABNs.

    Verifying our program effectiveness

    This year we continued to make progress towards meeting the goals of the TBBF initiative.

    In addition to the outcomes of our compliance program a key indicator of success for us is whether the growth of the Register is in line with general economic growth. We measure this by comparing the growth in the number of new businesses with growth in the gross domestic product (GDP).

    Figure 1: Comparison of percentage growth in Register and GDP

    Comparison of percentage growth in Register and GDP

    In recent years, we have seen a steady reduction in net growth of the number of registered ABN holders. The growth had previously outstripped forecast and observed economic activity growth. If not for the dip in 2008–09 due to the over 434,000 Registrar-initiated cancellations – the first such program since the start of the Register – the trend would have been sustained.

    The net growth rate this year has slowed to 2.1%, which is in line with the growth in GDP of 2.9%. This can in part be attributed to our compliance strategies. In 2011–12, only 99,000 entities that were no longer entitled to be registered on the Register were identified and removed. In comparison, in 2012–13, more than 350,000 entities were identified and removed.

    Figure 2: Registrar-initiated ABN cancellations

    Registrar-initiated ABN cancellations

    It is more difficult to quantify the impact of our strategies for increasing compliance with the requirement to update ABN details. Indications are that majority significant percentage of ABN holders are not complying with the legal requirement to update their details within 28 days of a change. Our survey work indicated that around 61% ABN holders were aware of the obligation to update the Register when their details change. We are employing new strategies to change this trend, including communicating to businesses the value of keeping ABN information up to date.

    Future direction

    One of the benefits of the TBBF initiative is that our increased engagement with business during compliance activities is improving our knowledge about the integrity of the Register. Consequently, our future compliance strategies will be better able to identify and treat specific risk areas within the Register, such as questionable employer-employee arrangements.

    We have also recognised the need to apply other strategies such as communication and education campaigns to encourage ABN holders and new applicants to adhere to the requirements and fulfil their responsibilities in obtaining and holding an ABN.

    The longer-term components of the TBBF initiative and a new Reducing Business Costs initiative that will be implemented in December 2014 will see continued improvements, such as strengthening checks before issuing ABNs and improving the user experience through the registration process.

    We expect these initiatives to further enhance the integrity of the Register which, in turn, will help ensure a better future for Australian business.

    Last modified: 07 Mar 2016QC 37647