The Government announced in the Federal Budget in May 2018 that businesses will no longer be able to claim a tax deduction where an ABN is not quoted.
Note: These measures will apply from 1 July 2019.
If a business or contractor supplies goods or services to your business and they do not provide their ABN or it is incorrect, then you are required to withhold 47% tax from the payment. Failure to withhold tax will mean no tax deduction can be claimed for the payment.
The withholding rules have been in existence for many years, however, the change in regard to deductibility of the payment could result in your business being up to 47% out of pocket, depending on the structure of your business.
We recommend you check a supplier’s ABN at www.business.gov.au as the onus is on you to confirm the validity of an ABN provided.
If you have an occasion to withhold please contact us to register your business with the tax office and to provide the appropriate form to give the supplier.