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  • The importance of an ABN

    An Australian business number (ABN) makes it easier to keep track of business transactions for tax purposes.

    It is compulsory for businesses with a GST turnover of $75,000 or more to have an ABN and to be registered for GST. Businesses with a GST turnover of less than $75,000 can still apply for an ABN and may choose to register for GST once they have an ABN.

    You need to have an ABN and be registered for GST in order to claim GST credits for any GST you have paid for goods or services you have used in your business.

    Sellers of scrap metal without an ABN

    Not all scrap metal industry sellers will have an ABN. Some businesses with a GST turnover of less than $75,000 may choose not to apply for an ABN. This does not prevent them from making a sale.

    If the seller does not quote an ABN, the buyer must withhold 47% (from 1 July 2017) of the sale – this is what we refer to as the ‘no-ABN withholding rule’. This allows businesses with an ABN to buy scrap metal from sellers who cannot quote a valid ABN.

    An exception is when a specific reason as to why the no-ABN withholding rule does not apply is completed in a Statement by a supplier and reasonable enquiries have been made to verify the reason provided.

    The no-ABN withholding rule is designed to ensure that businesses, especially those that are not required to be registered for GST, do not request cash payments in an attempt to avoid their tax obligations.

    By following the record-keeping requirements outlined in the code of compliance, scrap metal buyers are able to validate any GST or expense claim they are entitled to for these purchases.

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      Last modified: 30 Jun 2017QC 17300