The Tax Institute welcomes the opportunity to make a submission to the Treasury in relation to Treasury Laws Amendment (Measures for Consultation) Bill 2022: Strengthening the ABN system (Draft Bill) and accompanying draft explanatory memorandum (Draft EM).
In the development of this submission, we have closely consulted with our National Goods and Services Tax Technical Committee and National Small and Medium Enterprise Technical Committee to prepare a considered response that represents the views of the broader membership of The Tax Institute.
It is important to ensure integrity and confidence in the issue and management of Australian Business Numbers (ABNs) and that taxpayers with an ABN are meeting their obligations. As highlighted in the findings of the Black Economy Taskforce, entities operating in the black economy are likely to not be meeting their taxation and other reporting requirements. These entities may be using ABNs as a front to give the perception of legitimacy to their business operations. Changes to the ABN system to target and correct the behaviour that is part of the black economy is important. However, changes should not impose a significant compliance burden or impact on the business operations of taxpayers who are doing the right thing and not part of the black economy.
The Tax Institute is of the view that the Draft Bill needs to be amended to better achieve this balance, prioritising changes that supports simplified and streamlined taxpayer compliance. We have concerns that the draft legislation likely to impose disproportionate consequences on taxpayers who are not the intended group. In particular, it is inequitable to cancel a taxpayer’s ABN in instances where they simply do not update their details on the ABN register, especially if taxpayers have already provided this information through their lodgment requirements or to other government bodies.
We consider that some aspects of the Draft Bill should be amended to ensure that a more reasonable balance between integrity and compliance burdens is achieved. This includes increasing the threshold of tax or annual returns not lodged from two years to three years, better allowing taxpayers to be compliant with their obligations and account for unforeseen instances. Taxpayers also need timely reinstatement of their ABN once they rectify any registration deficiencies. Legislating the reinstatement timeframes and rights to streamlined appeals processes will better ensure that impacts on the business operations of taxpayers with cancelled ABNs are minimised.
The Draft EM would also benefit from clarification of key aspects of the Draft Bill. This includes how a taxpayer evidences an intention to lodge for the purposes of reinstatement, and any subsequent implications for goods and services tax (GST) registration.