How to Prevent The ATO From Cancelling Your ABN


ATO’s Intent To Cancel Inactive ABNs Program

The Australian Taxation Office (ATO) are currently undertaking a program of reviewing Australian Business Numbers (ABNs) to identify those that are potentially inactive and in need of cancellation.
The ATO may select an ABN for review and potential cancellation if:

  • that ABN has not reported business activity in a tax return;
  • there are no signs of business activity in other lodgements such as activity statements; or
  • there are no signs of business activity from other third-party information which the ATO has access to.

Are you a sole trader, partnership, or trust?

If yes, read carefully.

Did you declare business income for the last two years in your tax returns? If not, you might be at risk.

Or even worse you have forgotten to lodged business activity statements or income tax returns for more than two years?

The ABR checks are happening throughout 2018.

The solution is simple. Contact your bookkeeper to bring your BASes up-to-date and lodge your outstanding tax returns.

Consistent compliance with taxation office rules is a must.

Sole Trader Myth

Who knows how myths are created. In a lot of cases they are created with good intentions. As Samuel Jackson said: “Hell is paved with good intentions”.

Sometimes sole traders have not lodged forms with ATO because they think they don’t need to lodge if their income is below the tax-free threshold.

Tax-Free Threshold through the last two decades:

1991-2000 – $5,400
2000-2012 – $6,000
2012-now – $18,200
This myth is dangerous. It causes people to forget about their compliance obligations.

The truth is that regardless of the income, sole traders need to:

Lodge individual tax return, including the supplementary section.
Lodge business and professional items schedule for individuals.
Pay their IAS, and if Nil they must lodge a Nil.

Why inactive ABNs are not ideal

Inactive ABNs are, in most cases, an unwanted distraction for both advisors and the business owners. Some of the reasons for this include:

  1. If tax registrations are attached to the ABN (e.g., a GST registration), it can lead to activity statements being unnecessarily issued and penalties accruing if not lodged on time;
  2. The ABN will continue to appear as “active” on the Australian Business Register (ABR) if searched by the general public, which could be undesirable for various reasons;
  3. Emergency services and government agencies use information from the ABR during natural disasters to identify where financial disaster relief is needed to help businesses;
  4. The ABN may result in the client being misclassified in a certain way by the ATO (or other government departments), which could cause the business to be incorrectly selected for a compliance review of some kind;
  5. The ABN may trigger involvement in government surveys, such as those conducted by the Australian Bureau of Statistics (ABS) from time to time.

The impact of an ABN being cancelled on a legitimate business

Under the ATO’s ABN Intent to Cancel program, a legitimate and active business could see its ABN be the subject of review (and potentially cancelled) if it has fallen behind on the lodgement of tax returns and activity statements.

If an ABN is cancelled for a genuine business, the business owner is said to have no legal business and is thus held to be operating illegally. Among other things, this will cause problems for customers and suppliers who use the ABR to verify that they are dealing with a legitimate business (particularly at the commencement of a business relationship). If there is no ABN appearing on the register because it has been cancelled, then that customer or supplier may withhold 45% of any payments due to the business and may subsequently cease to deal with the business.

Moreover, customers will need a valid ABN on tax invoices to claim GST credits in relation to purchases made.

Considerations for the cancellation of an ABN

The reality is that some ABNs are no longer needed. In these cases, it is best to take a proactive approach to avoid later contact by the ATO.

If your client’s business is no longer operating, consideration should be given to the cancellation of the ABN. Likewise, if a business structure has changed – for example, a client’s business has changed from being a sole trader to a company – then the old structure’s ABN may need to be cancelled.

Before any action is taken to cancel an ABN, it is imperative to check with both the client and the tax agent. Sometimes an ABN will be in existence for reasons unbeknown to the BAS Agent (or, for that matter, the client). Indeed, it is not always the case that just because an ABN exists, a business in the usual sense of the word is being operated. The GST Act uses the notion of “enterprise” to determine GST registration requirements (and, in turn, the requirement to hold an ABN). Enterprise is a broader term than business and extends to commercial activities, charitable activities, religious and government activities, and non-profit activities.

Two common examples of undertakings where ABNs are required, despite arguably there not being a business in the usual sense of the word, are self-managed superannuation funds and commercial property ventures (including those where two or more parties are deriving income from a commercial property).In the case of genuine businesses that have ceased (such as through an outright cessation, sale or change of structure), it may still be the case that the ABN needs to be preserved for a reasonable period to deal with the finalisation of the business’ expenses.

Cancelling an ABN

The fastest way to update your ABN is online through the ABR. or contact us and we will help you sort it out

For businesses that have cancelled an ABN,  you will need to lodge an income tax return for the structure which held the ABN regardless of the result of the business. Even in the case of a sole trader, there is no tax-free threshold for sole traders with an ABN and they will need to report all business income greater than $1.

What to do if contacted by the ATO

If your ABN is identified for cancellation, the ATO may contact you and advise what actions you need to take to prevent them cancelling it. This may include lodging outstanding returns of activity statements showing business income.

The ATO have also introduced a new automated process which allows you or your BAS agent to confirm if the ABN is still required via a secure voice response system, so it is possible your contact from the ATO could be by this means.

If you are no longer in business and the ABN is no longer required, no action is needed apart from the attendance to any outstanding activity statement and tax return requirements.

Reactivation of a cancelled ABN

If your ABN is cancelled (voluntarily or otherwise) and you need it a later point in time, you can reapply to reactivate it via the ABR. If successful, this will bring back to life the former ABN as opposed to a new ABN being issued.

When reactivating a cancelled ABN, you can list your previous ABN on the application for a new ABN. Reactivating a cancelled ABN is free.

Bear in mind that reactivation of a former ABN is only possible if a business structure remains the same. If a business structure has changed, you will need to apply for a new ABN (for example, if your client was a sole trader but now operates through a company structure).

The ATO may conduct a manual review when you reactivate a cancelled ABN. Generally, this will be to determine eligibility and entitlement for an ABN. Eligibility depends upon whether you are carrying on an enterprise.

Maintaining accurate ABN details

Quite aside from the issue of cancelling unneeded ABNs, it is also best practice to ensure that accurate details of genuine ABNs are maintained on the ABR. It is common for ABN holders (or their agents) to forget to update their ABN details in the ABR when their circumstances or details change.

The ABR promotes the maintenance of accurate details on the register for three reasons:

  • ensuring the right people have the right permissions to act on behalf of a business;
  • enabling government agencies to have current information, for example, if emergency services need to contact businesses during natural disasters; and
  • ensuring businesses are ready for new government services when they become available.

Your ABN details will be most effective if you also list your own address and business details, not just your BAS agent’s address as your agent. This allows ABN holders to be located and contacted quickly with direct updates, critical information and financial support in times of emergency or natural disaster.

Details must be updated with the ABR within 28 days of becoming aware of changes. Once again, the fastest way to update your details is to contact us so we can update it online through the ABR’s Tax professional’s services.

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By the end of your Xero Setup, you and your new Xero bookkeeping system are ready to go!

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The new Director ID: Do you need one?



From November 2021, company directors will need to verify their identity as part of a new director identification number (Director ID) regime. The Director ID will be a unique identifier that a director will apply for once and will keep forever. The new regime is expected to cover more than 2.5 million directors.


As part of its Digital Business Plan, the government announced the full implementation of the Modernising Business Registers (MBR) program. This program will:

  •  establish the new Australian Business Registry Services (ABRS)
  •  streamline how you register, view and maintain your business information with government.
    The ABRS will:
  • Progressively roll out between 2021 and 2024
  • Bring together the Australian Business Register (ABR) and more than 30 Australian Securities and Investments Commission (ASIC) registers in one place
  • Introduce the Director ID initiative.

The policy intent behind the introduction of the Director ID is to create a fairer business environment by helping prevent the use of false and fraudulent director identities. Additionally, the government expects the Director ID regime to help prevent illegal phoenixing by ensuring directors can be traced across companies. Illegal phoenix activity is when a company is liquidated, wound up or abandoned to avoid paying its debts. A new company is then started to continue the same business activities without the debt. When this happens, employees, creditors, competitor businesses and the community can be disadvantaged.
The ABRS is responsible for the implementation and administration of Director IDs. ASIC will be responsible for the enforcement of associated offences.

Why does this matter to me?

Bookkeepers and BAS Agents are not typically called upon to advise or assist clients in relation to their ASIC or Corporations Act obligations. These types of services – which go by a number of names, including “corporate admin”, “corporate secretarial” and “company office” – are usually taken care of by the client’s accountant (in their role as the client’s ASIC Registered Agent) or, in some cases, by the client themselves. That said, anecdotally, there are accounts of an increasing number of BAS Agents becoming ASIC Registered Agents.
In any event, it is important for several reasons that bookkeepers and BAS Agents are broadly across the new Director ID regime to:

  1. Promote general awareness of the Director ID regime with their corporate clients.
  2.  Field basic enquiries from clients and direct them to seek further advice where necessary.
  3. Obtain a Director ID for their own related entities, such as trading companies or corporate trustees.

What exactly is a Director ID?

A Director ID is a 15-digit identifier given to a director (or someone who intends to become a director) who has verified their identity.
A Director ID:

  • starts with 036, which is the 3-digit country code for Australia under International Standard ISO 3166
  • ends with an 11-digit number and one ‘check’ digit for error detection.
    Directors will only ever have one Director ID. They’ll keep it forever even if they:
  • change companies
  • stop being a director
  • change their name
  • move interstate or overseas.

Who needs a Director ID?

You need a Director ID if you’re an eligible officer of:

  •  a company, a registered Australian body or a registered foreign company under the Corporations Act 2001 (Corporations Act)
  • an Aboriginal and Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act).

An eligible officer is a person who is appointed as:

  •  a director
  • an alternate director who is acting in that capacity.
    Importantly, it is not only the directors of trading companies that need a Director ID. If you’re a director of a passive investment entity or indeed a corporate trustee (such as of a discretionary trust of a self-managed super fund), you too will need to apply for a Director ID.

Importantly, it is not only the directors of trading companies that need a Director ID. If you’re a director of a passive investment entity or indeed a corporate trustee (such as of a discretionary trust of a self-managed super fund), you too will need to apply for a Director ID.

When you need to apply

You can apply for a director ID now.

If you’re planning on becoming a director, you can apply before you’re appointed.

Corporations Act directors
When you must apply for your director ID depends on the date you become a director.

Date you become a director Date you must apply
On or before 31 October 2021 By 30 November 2022
Between 1 November 2021 and 4 April 2022 Within 28 days of appointment
From 5 April 2022 Before appointment

To be a director under the Corporations Act, you must:

  • be an individual who is at least 18 years old
  • not be disqualified from managing corporations, unless the appointment is made with the permission of ASIC or the Court.

For more information on the Corporations Act, visit the ASIC website.

CATSI Act directors
When you must apply for your director ID depends on the date you become a director.

Date you become a director Date you must apply
On or before 31 October 2022 By 30 November 2023
From 1 November 2022 Before appointment

Applying for your Director ID

From November 2021, you will need to apply for your Director ID on the ABRS website and log in using the myGovID app. The myGovID app is downloaded on your smart device to verify your digital identity and is different to your existing myGov account.

When applying for your Director ID, you are required to personally make the application so you can verify your identity.

There are varying application deadlines for the new identifier, with current directors (on or before 31 October 2021), having until 30 November 2022 to obtain their Director ID.

While existing directors have plenty of time, if you become a director between 1 November 2021 and 4 April 2022, you must apply for your Director ID within 28 days of your appointment to the board.

Directors appointed after 5 April 2022, must apply prior to taking up their directorship.

If you are unable to apply for your Director ID by the relevant deadline, you can apply for an extension.

Once you receive your new Director ID, you will need to pass it on to your company recordholder who is usually the company secretary or authorised agent. The ABRS is not permitted to disclose Director IDs to the public without consent and your details won’t be searchable on the register.

If you would like more information about Director IDs, whether you need one and how to go about applying, please get in touch.

Getting Technical – Stapling Of Super Funds



The Your Super, Your Future Legislation Was Passed Into Law On 24 June. A Key Feature Is The New Superfund Stapling Rules Which Will Impact The Many Bookkeepers Who Handle A Client’s Payroll, Superannuation And The Setting Up Of New Employees In These Systems. This New Measure Commences In Just A Few Short Weeks On 1 November 2021! 

The New Rules Ensure That When A Worker Moves Jobs The Super Fund That They Used With Their Former Employer Will Be ‘Stapled’ Automatically To Them, To Protect Their Retirement Savings Being Drained By The Costs Of Unintended, Multiple Accounts.


Unintentional multiple accounts are created when a worker changes jobs and does not nominate a superannuation fund to the new employer under the super choice system. For background, under Australia’s compulsory superannuation system, employers must nominate a superannuation fund on behalf of their workers (default funds). Employers pay a worker’s compulsory contributions into their default fund if a worker does not choose their own fund. If you change jobs multiple times over your working life and do not nominate a superannuation fund, you could end up with multiple superannuation accounts, all charging their own fees and insurance premiums.

The latest data from the ATO indicates there are approximately six million multiple accounts held by 4.4 million people. Over one-third of multiple accounts are held by people aged 35 or younger. These multiple accounts collectively charge $450 million in fees per year. Eliminating these multiple accounts, through stapling, will eradicate these fees and, in turn, boost the retirement savings of affected individuals.

The New Rules

Under the new rules, effective 1 November, an employer can comply with the choice of fund rules by making contributions to the stapled fund of an employee who:

  • started their employment on or after 1 November 2021
  • has a stapled fund, and
  • has not chosen a fund to receive superannuation contributions.

Employers can continue to make contributions to their own default fund in compliance with the choice of fund rules if the employee does not have a stapled fund.

To support the new stapled fund rules, the amendments allow employers to request that the ATO identify any stapled fund held by an employee. This request must be made in the approved form (see later). Where a valid request is made, the ATO must notify the employer they can identify a stapled fund for the employee as soon as practicable.

Identifying The Stapled Fund

You’ll be able to request an employee’s stapled super fund from the ATO after the employer (or their BAS Agent or Tax Agent on their behalf) has submitted a Tax file number declaration or Single Touch Payroll pay event linking the employer to them. There is no limit to the number of requests you can make. To request a stapled super fund, employers, or their authorised representative such as their BAS Agent, need to:

  1. log into ATO online services.
  2. enter the employee’s details, including their:
    • TFN – an exemption code can be entered where an employee cannot provide their TFN, but this could result in processing delays
    • full name – including ‘other given name’ if known
    • date of birth
    • address (residential or postal), if TFN not given.

The ATO’s online system will use rules based on the regulations to work out and return a stapled super fund in response to a request.

You will receive the response on-screen. You should be notified of the result of the stapled super fund request within minutes.

ATO Compliance Approach

The new superannuation stapled fund rules will see the ATO adopt a gently-gently approach to employer compliance. The new guidelines are contained in SPR 2021/D1 – choice of fund – written guidelines for the reduction of an increase in an employer’s individual superannuation guarantee shortfall determination 2021.

A transitional period will apply from 1 November 2021 until 31 October 2022. During this time employers will, in the first instance, be provided with help and assistance to comply with the stapled fund requirements. The Commissioner will reduce any choice shortfall to nil where that shortfall arose due to an emloyer’s lack of knowledge of the stapled fund requirements (as opposed to an intentional disregard). This lenient transitional approach is confined to the stapled fund changes – not to existing superannuation choice rules. From 1 November 2022, the transitional approach will end. By that time, penalties may be applied on a stricter basis.

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