Tax Basics

Guide to registering for the new tax system

About this guide
This guide provides information about the new Australian Business Number (ABN). It also provides information about how to register for an ABN, for goods and services tax (GST) and for a number of other elements of The New Tax System.

You can register for most of these elements on a single application. A set of instructions comes with the application to help you fill it in. If you need a replacement application and instructions, contact the Australian Taxation Office's business Tax Reform Infoline on 13 24 78.

When we refer to 'you' in this guide we are referring to you as an 'entity'.

Some of the terms used in this guide may be new to you. These terms are shown in bold when first used in the guide and are linked to the list of definitions at the bottom of the guide.

Further information
Further information about tax reform and registering for The New Tax System is available from the contact points listed at the back of this guide.

Part 1 The New Tax System
Tax reforms now being put in place mean the tax system will be fairer for all Australians and more streamlined for business.

Major elements of The New Tax System include:

a single number for each business entity, an Australian Business Number (ABN), which will eventually be used as a single identifying number for dealings with government at all levels
a goods and services tax (GST) which will enable the Government to reduce income tax and abolish a range of hidden taxes such as wholesale sales tax
a proposed Pay As You Go (PAYG) system which will replace a number of systems, including Pay As You Earn, the Prescribed Payments System, the Reportable Payments System, provisional tax and company instalments
changes to the Diesel Fuel Rebate Scheme
a luxury car tax
a wine equalisation tax and changes to excise on alcohol
proposed requirements for endorsement as a deductible gift recipient or as an income tax exempt charity, and
reporting fringe benefits on employees' group certificates.
The new system will simplify the way businesses report to the Australian Taxation Office (ATO). Businesses will report their business tax entitlements and obligations on a single form, called a Business Activity Statement, every month and/or quarter. This will reduce the number of times businesses report to the ATO. Some small taxpayers with business and investment income who are not required to be registered for GST may choose to pay annually.

Registration for most elements of The New Tax System is as simple as filling in the application that comes with this registration package. You can register electronically through the Business Entry Point at www.business.gov.au or send your completed application to the ATO. Your tax agent can also lodge your application through the Electronic Lodgment System.

Organisations seeking endorsement as a deductible gift recipient or an income tax exempt charity should indicate that they want to apply for endorsement on the application. They then apply for endorsement on a separate application form. See the section on charities and deductible gift recipients in Part 4 of this guide for more details.

Registration for fringe benefits tax is done on a separate fringe benefits tax form. See the section on fringe benefits tax registration in Part 4 of this guide for more details.

The major elements of The New Tax System are discussed in the following parts of this guide.

Part 2 The new Australian Business Number
What is an ABN?
For some time, businesses have been calling for a system which allows them to use a single identifying number when dealing with government departments and agencies. Businesses have also been asking for a single interaction point with government.

In response to these calls, the Government is introducing the Australian Business Number (ABN).

Initially you will use your ABN for certain business dealings with the Australian Taxation Office (ATO). These include:

goods and services tax (GST)
the proposed Pay As You Go (PAYG) system
the Diesel and Alternative Fuels Grants Scheme
luxury car tax
wine equalisation tax
deductible gift recipient and charity income tax exemption endorsement, and
fringe benefits tax.
You will also use your ABN to claim credits for wholesale sales tax paid on stock on hand at the start of 1 July 2000.

Your ABN details will become part of the Australian Business Register, which the ATO will maintain for all Commonwealth purposes. The Registrar of the Australian Business Register (who is also the Commissioner of Taxation) will administer the register. In future the register will also be available to State, Territory and local governments to extend the ABN arrangements to cover government dealings at all levels.

You will be able to access the register through the Business Entry Point at www.business.gov.au

Your ABN will eventually become the only number you will need for your business dealings with government. For example, when the system is fully operational, you will only need to notify any one government agency once of any changes to your details in the Australian Business Register.

Your ABN will not cover all your dealings with the ATO. For example, you will still need to quote your private tax file number when lodging your personal and business income tax returns. Applying for an ABN does not replace your registration requirements with other agencies, for example, registering your business name.

Who is entitled to an ABN?
To be entitled to an ABN you must be:

a company registered under corporations law in Australia
a government department or agency, or
an entity carrying on an enterprise in Australia.
The definitions of an 'entity' carrying on an 'enterprise' are quite broad and are provided in the boxes below.

However, not everyone will be entitled to an ABN. For example, employees, hobbyists and individuals who are conducting activities without a reasonable expectation of profit will not be entitled to an ABN. Self-funded retirees will generally not need an ABN - they will continue to use their tax file number when reporting their PAYG instalments to the ATO and lodging their tax return.

Entity
An entity means an individual (sole trader), a body corporate, a corporation sole, a body politic, a partnership, an unincorporated association or body of persons, a trust or a superannuation fund.

Enterprise
An enterprise covers various activities but does not include hobbies. It includes the activities of entities such as charities, deductible gift recipients, and religious and government organisations. Activities which constitute an enterprise are those done:

in the form of a business
in the form of an adventure or concern in the nature of trade
on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property
by a trustee of a fund or by an authority or institution to which deductible gifts can be made
by a charitable institution or by a trustee of a charitable fund
by a religious institution, or
by the Commonwealth, a State or a Territory, or by a body corporate or corporation sole established for a public purpose by or under a law of the Commonwealth, a State or a Territory.
An enterprise does not include activities done:

as an employee, or in connection with earning payment as a company director, office holder or under a labour hire arrangement
as a private recreational pursuit or hobby
by an individual or partnership (all members of which are individuals) without a reasonable expectation of profit or gain, or
as a member of a local governing body established by or under a law of a State or Territory, for example, a member of a shire council or a member of a State board or authority.
You can use the questions in the following box to work out if you are entitled to an ABN.

Are you entitled to an ABN?
Step 1. Are you a:

company incorporated under corporations law
charitable institution or trustee of a charitable fund
deductible gift recipient, or
religious institution?
Yes Go to step 7. No Go to step 2.

Step 2. Do you believe your activity is carried out in the:

form of a business
nature of trade, or
form of a regular or continuous grant of a lease, licence or interest in property?
Yes Go to step 3. No Go to step 8.

Step 3. Is your activity carried out as an employee or in connection with earning payment as a company director, office holder or under a labour hire arrangement?

Yes Go to step 8. No Go to step 4.

An employee is a person who receives a salary or wage in return for work or services rendered.

You are not considered an employee for ABN registration purposes if you have your own business but also receive a salary or wage from an activity related to your business.

Step 4. Is your activity a private recreational pursuit or hobby?

Yes Go to step 8. No Go to step 5.

Your activity must be more than the enjoyment of a recreational pursuit or hobby. The activity should have the characteristics of a business.

Step 5. If you are an individual or a partnership consisting only of individuals, is there a reasonable expectation of a profit being made?

Yes Go to step 6. No Go to step 8.

It is important that you can show that your activity has a reasonable expectation of profit. This will be the case even though you may not make a profit in the short term. It is not sufficient that you believe you will make a profit. The test is whether a reasonable person, having regard to all the facts and circumstances, would believe that your activities may result in a profit.

Step 6. Is your activity conducted as a member of a local government body, for example, as an elected member of a city, town or shire council?

Yes Go to step 8. No Go to step 7.

Step 7. You are entitled to an ABN.

Step 8. You are not entitled to an ABN.

Does the entity or the enterprise receive an ABN?
It is the entity that receives an ABN. Your entity will receive one ABN regardless of the number of commercial activities or enterprises it undertakes. However, if your enterprise is carried on by a number of different entity types, each entity must register in its own right. This is explained in the following examples.

EXAMPLE

an entity with several business enterprises

If your entity is currently operating a cafe, a takeaway food delivery service and a newsagency, from different premises, it will have only one ABN that will cover all of these activities.

EXAMPLE
different entity types conducting an enterprise

An enterprise such as a professional practice may be conducted by several entities, as follows.

Services Pty Ltd, a corporations law company, is responsible for the day-to-day business operations of the enterprise.

Jones Property Trust owns the building in which the business operations occur.

Jones Services Trust pays for all business services provided to Services Pty Ltd.

Each entity within this structure will need to be registered individually for an ABN. In this case Services Pty Ltd will be registered as it is a corporations law company; and Jones Property Trust and Jones Services Trust will be registered as they are entities carrying on an enterprise - leasing a building or paying for services for a business activity.

Why register for an ABN?
An ABN will enable you to do the following.

Interact with the ATO on GST, the proposed PAYG system, the Diesel and Alternative Fuels Grants Scheme, luxury car tax, wine equalisation tax and fringe benefits tax.
Apply for endorsement as a deductible gift recipient or an income tax exempt charity.
Participate in the GST system. When you pay for goods, services or anything else from suppliers who have an ABN, you can claim an input tax credit for the GST included in the price you paid for those supplies. You cannot make a claim if the invoice you hold does not quote an ABN or if you bought the supplies for a private purpose or for making input taxed supplies.
Account for or offset your tax obligations on a single Business Activity Statement, which is personalised with your ABN and other details to save you time. You will then be able to pay a net amount owing or receive a net refund payable to your nominated financial institution account.
Have a single identifying number which you will eventually use for your business dealings with government at all levels.
Quoting an ABN on an invoice also means that when you supply goods, services or anything else to another business, they will not have to withhold tax (at the top marginal rate plus Medicare levy) from their payment to you.

It is proposed that the PAYG system will replace a number of systems, including Pay As You Earn, the Prescribed Payments System, the Reportable Payments System, provisional tax and company instalments. If your business is currently or potentially liable for these obligations, you should register for an ABN, which will be used to identify you as part of the PAYG system.

How do you register for an ABN?
Registering for an ABN is as simple as filling in the application that comes with this registration package for The New Tax System. Use the accompanying instructions to help you fill in your application. This guide provides more detail on some areas which may be of specific interest to you.

You can also register for GST, wine equalisation tax and luxury car tax on the same application.

A separate application form will be sent to those who indicate on the application to register for The New Tax System that they are a deductible gift recipient or an income tax exempt charity.

A separate application form will also be sent to those who indicate they want to register for the Diesel Fuel Rebate Scheme or Diesel and Alternative Fuels Grants Scheme.

You can complete the application details:

electronically through the Business Entry Point at www.business.gov.au

on the paper application provided and return it to the ATO, or
via your tax agent through the Electronic Lodgment System.
When do you register for an ABN?
You can register for an ABN from November 1999.

You will need to apply for an ABN:

by 31 May 2000 if you are required to be, or wish to be, registered for GST by 1 July 2000
any time after 1 June 2000 if you become required to be, or wish to be, registered for GST from that date
as early as possible before 31 May 2000 if you want to be endorsed as a deductible gift recipient or an income tax exempt charity as at 1 July 2000, or
when you set up a new business and need to report and/or make payments to the ATO for any of the following - GST, Diesel and Alternative Fuels Grants Scheme, luxury car tax or wine equalisation tax
To be registered for The New Tax System from 1 July 2000 you need to lodge your application by 31 May 2000.

How does an ABN relate to current ATO account numbers?
The ABN will reduce the number of different account numbers you currently have with the ATO. The ABN will be the number you quote when you want to deal with the ATO about such things as:

changing your ABN registration details
making enquiries about new and existing business accounts, and
making payments to the ATO.
Initially you will still need to quote your tax file number when lodging your personal and business income tax returns.

How will you be notified of your ABN registration?
Once you are registered, the Registrar will advise you in writing of:

your registration number
the date of effect of registration, and
details entered in the Australian Business Register about your entity.
Can your ABN be cancelled?
The Registrar may cancel a registration in the Australian Business Register if satisfied that the entity:

was registered under a false identity
was not entitled to have an ABN at the time of registration, or is no longer entitled to an ABN.
If the Registrar cancels your registration in the Australian Business Register, you will be advised in writing of the reasons for the cancellation and the date of effect.

If you want to cancel your registration in the Australian Business Register, you can apply to the Registrar. However, except in the circumstances outlined above, the Registrar will not cancel your registration if you are still carrying on an enterprise. If cancellation is approved, the Registrar will notify you in writing, stating the date of effect.

Can your ABN be reinstated?
The Registrar may reinstate your registration in the Australian Business Register if satisfied that it should never have been cancelled. The Registrar will provide you with a written notice of the reinstatement. The reinstatement will be backdated to the date when the registration was cancelled.

What if you disagree with the Registrar's decision?
If you disagree with the Registrar's decision about your ABN registration, you may apply to the Administrative Appeals Tribunal to review that decision if it relates to:

date of effect for registration
refusal to register you for an ABN cancellation of your registration in the Australian Business Register
refusal to cancel your registration in the Australian Business Register, or
date of effect for cancelling your registration in the Australian Business Register.
If you are refused an ABN and you apply to the Administrative Appeals Tribunal for a review of the decision, the tribunal can order that you be registered until your review is finalised.

Publicly available material and your privacy
Only some of the information you supply to the ATO on your application is available to the public. The following information will be held in the Australian Business Register:

ABN
date of effect of your registration
legal name
entity type
trading or business name
postal address for service of notices and correspondence
main business address
e-mail address for service of notices and correspondence
Australian Company Number or Australian Registered Body Number (if applicable)
name of the public officer, or the trustee(s) of a trust
GST registration status and date of effect
deductible gift recipient status and date of effect (if applicable)
date of effect of reinstatement in the Australian Business Register, and
industry code.
The information about your business that is entered in the Australian Business Register will be provided to you with your registration advice. Members of the public can obtain this information by applying to the Registrar and paying a fee. Limited information to enable confirmation of a business's ABN will be provided free on the internet and by telephone.

The publicly available information will allow people to find out whether they are dealing with registered entities, whether those entities are registered for GST, or whether gifts they make may be tax deductible.

The remainder of the information you supply will not be available to the public. However, the Registrar may provide some of this information to other government agencies authorised by law to receive it, for example, the Australian Bureau of Statistics.

While some of the information provided for your ABN will be publicly available, all of the details you supply on your tax return will have the same privacy safeguards as currently exist.

What if your details in the Australian Business Register change?
You must notify the Registrar within 28 days of any details that appear in the Australian Business Register that are no longer correct.

If you fail to notify the Registrar of these changes, you may commit an offence under the Taxation Administration Act 1953.

What happens if an ABN is misused?
An entity misuses an ABN if it identifies itself or an associate by using a number that is not an ABN or by using an ABN that is not its own.

Anyone convicted of misusing an ABN may be imprisoned for up to two years.

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