GST issues registers

Primary production industry partnership

1 Australian business number (ABN)

1.1 Verification/Quotation

1.1.1 Responsibility to check ABN legitimacy

Question

Am I responsible for ensuring that a supplier's quoted ABN is correct?

Answer

You may accept a quoted ABN provided you have no reason to suspect its validity.

However, if you have reason to suspect that the quoted ABN might not be genuine or that it does not belong to the supplier who quoted it, you should make further enquiries. Circumstances that may alert you to the need to make further enquiries include:

•

Wrong configuration. An ABN has 11 digits. An entity may quote a 14 digit number. This would be their ABN plus a GST Branch Registration number. In both cases there are no letters.

•

Sequential numbers, repeating numbers or unusual number patterns. You can check the mathematical validity of the number by referring to the fact sheet Format of the Australian Business Number.

•

Invoice details do not match the details of the person you believed was supplying you or the type of supplies you are receiving.

•

You will be able to check an ABN by using the Australian Business Register, which provides details of the names and addresses of suppliers holding valid ABNs. To use the register, please telephone 13 72 26.

If the ABN quoted on the invoice is not valid or the details do not match the supplier, you should withhold 48.5 per cent of the payment.

For further details please refer to Question 16 of ABN Questions and Answers

1.2 Registration

1.2.1 Hobby farmer declaration

Question

How does a supplier declare to a recipient that they are a hobby farmer and therefore are not required to have an ABN?

Answer

An ABN must be quoted to a recipient before they make any payment for a supply otherwise PAYG withholding provisions will apply. Normally an ABN will be quoted on the supplier's invoice.

If a supply is made in the supplier's private capacity, or as their hobby they will not be required to have an ABN. The supplier can give the recipient of the supply a written statement which states a reason why the supplier is not required to have an ABN.

A form is available for this purpose - Statement by a supplier (Reason for not quoting an ABN to an enterprise)

1.2.2 Branch registration

Question

Is an entity which is registered for GST, eligible to register a GST branch when the 'current annual turnover' of that branch is less than the $50,000 threshold figure?

Answer

Yes, an entity may register a GST branch irrespective of whether the 'current annual turnover' of that branch is less than $50,000 provided the requirements of subsection 54-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) are satisfied.

Explanation

There is no requirement in the provisions of section 54-5 of the GST Act for a GST branch to meet any turnover threshold figure.

Under subdivision 54-A of the GST Act a branch may register if the provisions of section 54-5 of the GST Act are met.

Section 54-5 of the GST Act provides:

54-5 Registration of GST branches

(1)

The Commissioner must* register a branch of a* registered entity if:

(a)

the registered entity applies, in the *approved form, for registration of the branch; and

(b)

the Commissioner is satisfied that the branch maintains an independent system of accounting, and can be separately identified by reference to:

(i)

the nature of the activities carried on through the branch; or

(ii)

the location of the branch; and

(c)

the Commissioner is satisfied that the registered entity is *carrying on an *enterprise through the branch, or intends to carry on an enterprise through the branch, from a particular date specified in the application.

A branch that is so registered is a GST branch.

(2)

A branch of a *registered entity can be registered as a *GST branch without all or any of the other branches of the entity being so registered.

(3)

However, a branch of a *registered entity cannot be registered as a *GST branch if the registered entity is a *member of a *GST group.

1.2.3 Responsibility to check ABN legitimacy

Question

If a vendor client has applied for an Australian Business Number (ABN) but has not yet received it, can a letter be issued to the client to confirm that an ABN application has been lodged?

Answer

No. Explanation:

The no ABN withholding provisions contained in section 12-190 of Part 2-5, Schedule 1 of the Taxation Administration Act 1953 (TAA) provide that an entity (the payer) must withhold an amount from a payment it makes to another entity if:

(a)

the payment is for a supply1 that the other entity has made, or proposes to make, to the payer in the course or furtherance of an enterprise carried on in Australia by the other entity, and

(b)

none of the exceptions in this section apply.

The primary exception is that the no ABN withholding event does apply to a payment if a supplier or their agent quotes their ABN on an invoice, or some other document relating to the supply.

Where a supplier has not quoted an ABN before the payment is made, and no other exceptions apply, the payer would have an obligation to withhold an amount equal to 48.5% of that payment.

However, the Commissioner of Taxation on June 26, 2000 announced that the ATO would be issuing a 'safety net' letter to everyone who had lodged an ABN application by the 30th June 2000 and had not received an ABN.

The letter stated that the ATO had received the application and provided a variation of the no ABN quotation withholding rate to zero (0) %. The safety net letter was not an amnesty for those who had not lodged an application.

It also advised applicants who were registering for GST that they could issue tax invoices with the ABN being quoted as 'ABN pending'. These would be accepted as tax invoices.

On the back of the letter was a personalised notice that showed the name and address of the applicant. The notice was signed by Michael Carmody. It stated:

"The abovenamed supplier has made application for registration for the New Tax System. In accordance with my powers under the Taxation Administration Act 1953, I have varied the withholding rate that would normally apply to any payment for a supply where an Australian Business Number (ABN) is not quoted from 48.5% to 0%.

Accordingly, you should not withhold any amount from payments to this supplier in the period up to and including 31 July 2000 , provided that the supplier has completed the declaration below.

You should make a copy of this notice and retain it for 5 years with your other taxation records."

At the bottom of notice was a declaration to be signed by the supplier. The declaration stated that the entity should provide their ABN to all of the businesses they give the notice to, as soon as possible after the ABN is received.

Where an organisation had received a safety net letter, the no ABN withholding rate had been varied to nil. Therefore, there was no requirement on the part of the payer to withhold 48.5% of the payment.

ABN Applications received after 30 June 2000 will not be issued with a safety net letter and will not be subject to the variation provisions contained in the letter. Where a supplier has not quoted an ABN on an invoice or some other document relating to that supply before the payment is made, and no other exceptions apply, the payer would have an obligation to withhold an amount equal to 48.5% of that payment.

1.

For definition , see section 995-1 of the Income Tax Assessment Act 1997

© AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA

You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).