Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)
General outline and financial impact
The A New Tax System (Australian Business Number) Bill 1998 (the Bill) introduces a new single business identifier - the Australian Business Number (ABN). The introduction of an ABN will eventually allow businesses to have a single business identifier for all Commonwealth purposes, and will provide an important opportunity to improve tax compliance. This system will be available to State, Territory and local government bodies to facilitate single entry point arrangements for all government dealings.
An ABN will be available to all companies registered under the Corporations Law, to government and to other business entities in Australia. An ABN will also be available to other entities which need to be registered for the Goods and Services Tax (GST) such as charitable and religious institutions.
Date of effect : The Bill will apply from the date of Royal Assent.
Proposal announced : Announced by the Government on 13 August 1998, as part of its Tax Reform Package, in Tax Reform: not a new tax, a new tax system: The Howard Government's Plan for a New Tax System .
Financial impact : The effect of an ABN on the revenue cannot be separated from that of the GST and other tax reform measures that the ABN will facilitate. A gain to the revenue resulting from increased compliance of business with the tax laws from the introduction of the ABN and the GST is estimated to be $800 million in 2000-01, $1.43 billion in 2001-02 and $1.35 billion in 2002-03.
Compliance cost impact : There are expected to be initially 2.1 million ABN registrations.
Business will incur a small, but unquantifiable, cost to register for the ABN. However, this will be offset by reductions in the costs associated with dealing with government.
The impact of introducing an ABN may vary among entities. However, these costs are not expected to be significant as they mainly involve completing a form with readily available information (such as the business name and address).
Any costs to business associated with the introduction of the ABN will be reduced by any eligible tax deductions.
Once businesses have registered for ABN purposes the benefit will be ongoing.
The ABN will enable business to be identified by one number for all government purposes and will allow business to comply with regulatory requirements and receive government assistance and advice through fewer entry points. For example, if a business changes its address it will only need to notify one authority. These measures are consistent with the recommendations of the Small Business Deregulation Taskforce .
The cost to the Government of implementing this measure is estimated to be $12 million in 1998-99, $45 million in 1999-2000 and $35 million in 2000-01.
Introduction of new single business identifier for all Commonwealth purposes.
- Facilitate businesses being able to meet their regulatory obligations and access information and assistance through one or as few as possible entry points to government.
- Available to:
- companies registered under the Corporations Law;
- government bodies;
- business entities; and
- other entities which need to be registered for the GST.
Introduce a new unique business identifier for all Commonwealth purposes to facilitate business being able to meet its regulatory obligations and access information and assistance through the business entry point to government.