Budget 2019: Government proposes income tax red tape for ABN holders

The government has proposed adding red tape to the Australian Business Number (ABN) system to safeguard it against black economy behaviour.

Nestled in budget measures for 2019-20 on Tuesday, the government wants to make lodging an income tax return a requirement for holding an ABN from July 1, 2021.

Further, from July 1, 2022, the government proposes requiring ABN holders to “confirm the accuracy” of the details provided on ABN applications annually.

The efforts are designed to make ABN holders “more accountable” to the law but have, according to budget papers, been drafted to “minimise the regulatory impact on businesses doing the right thing”.

Treasury would net an estimated $22.2 million through to 2022-23 under the plan.

“This measure will target ABN misuse, enhance the quality of the Australian Business Register data and improve ABN holder engagement and compliance,” the government said of the proposal in its budget overview.

The proposal comes amid a broader overhaul in Australian Business Registers, with impending director ID laws set to track business owners beyond individual companies.

Tackling black economy and particularly pheonixing activity has been a central pillar of government policy reform in recent years as the ATO’s detection and enforcement mechanisms have become more sophisticated.

While business owners already lodge income tax returns with the ATO each year, the new requirement would effectively put those who fail to do so at risk of losing their ABNs.

The tax office would also receive an additional $1 billion under the government’s budget proposals to extend the operation of its tax avoidance taskforce, which would not focus on small business but instead large corporates, multi-nationals and “high-wealth individuals”.

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