Start-ups could face fines in excess of $10,000 if they make false or misleading statements when applying for an Australian Business Number, after the tax office received special funding in the 2013 federal budget for a crackdown.
StartupSmart revealed last night the federal government will crack down on the Australian Business Numbers regime in the hope of generating an additional $106.4 million in revenue from non-complying new businesses.
The Australian Taxation Office and the Department of Finance and Deregulation will receive more than $80 million to standardise the business name and reporting process for start-ups, which are expected to face more upfront checks.
This will ensure new companies and sole traders are adhering to the rules from the start.
The ATO was contacted by StartupSmart but declined to comment on the announcement, while Treasury and the Department of Finance and Deregulation could not be reached for comment.
But according to Pitcher Partners’ partner Greg Nielsen, small businesses can expect a higher level of enquiry when registering their business, such as providing more documentation.
“I’d recommend that businesses be well prepared when putting together their application for registration and they have all the necessary information ready to go and ensure that information is correct at the time of registration,” Nielsen told StartupSmart.
“That includes details of directors, the registered address of both the business and the company, any information regarding approved contracts… That’s about it.
“The ATO hasn’t indicated any increases to any fees associated with non-compliance or increasing penalties.
“I think it will simply be a case that the ATO will be more quick off the mark in respect to identifying any registration discrepancy.”
If you do not take reasonable care and make a false or misleading statement when you apply for an ABN, you could be penalised up to $10,200.
However, if you make a voluntary disclosure about a false or misleading statement prior to being contacted by the Australian Business Register, the penalty will be reduced to nil.
According to the ATO, companies registered under the Corporations Law and businesses carrying on an enterprise in Australia are entitled to an ABN.
Applying for an ABN is not compulsory. However, if you are required to register for GST, you will need to apply for an ABN as well.
All businesses with a GST turnover of $75,000 or more must register for GST and will need an ABN to do this, while organisations with a lower annual turnover may choose to register.
You can still apply for an ABN even if you are not required to register for GST.
You need an ABN and GST registration in order to claim GST credits for any GST you have paid for goods and/or services you have used in your business.
If you are supplying goods or services, you will need to be able to quote an ABN so others do not withhold tax at the top marginal rate when they pay you.
Businesses registered for GST are required to issue tax invoices quoting their ABN.
Under the Pay As You Go (PAYG) system, businesses receiving an invoice are required to withhold tax from their payments for goods and services if an ABN is not quoted.