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Does your Agribusiness have a registered Australian Business Number (ABN), or do you still have an ABN that is registered for an agribusiness that is no longer trading?Does your Agribusiness have a registered Australian Business Number (ABN), or do you still have an ABN that is registered for an agribusiness that is no longer trading?
NOT EVERYONE IS REQUIRED TO HAVE AN ABN. YOU ONLY NEED AN ABN IF:
- You are carrying on or starting a business in Australia,
- You are making supplies connected with Australia’s Indirect Tax Zone
- Your trading entity is a Corporations Act registered Company
Having an ABN can apply to all entity types including Companies, Trusts, Partnership, and Individuals. There is no single test to determine if you are carrying on a business. There are guidelines that will give you a good reference as to whether you are in fact carrying on a business.
These guidelines can be found on the Australian Government, Australian Business Register (ABR) website.
It is important to note that if you are an individual and are an employee only, you are not required to have an ABN.
Starting your farming business and registering for an ABN is a fairly common practice. Once the ABN is issued, it stays with that farming entity for the life cycle of that business. In some farming structures, this can mean that an ABN will stay with that farming business for a very long time.
Having an ABN does not automatically also give your business a registration for Goods & Services Tax (GST), Pay As You Go Withholding (PAYGW) Tax, or Fuel Tax Credits (FTC).
These registrations need to be obtained separately from the ABN. Each registration should be done so on the basis that it applies to your farming business. Not all farming operations require all registrations.
It is fairly common practice to have separate parts of the farming operation in different structures. For example, it is common to have a farm trading entity along with other entities within the family farming group that may just hold assets on their own.
Often, when the farming business is wound up or closed, the ABN is never canceled. The cancellation process is undertaken via the ABR website.
There are special rules for changes made to the structure of farming partnerships during their lifetime and the implications for their ABN. There may be situations where the farming partnership will cease, and a new partnership that requires a new ABN will start. In other situations, the same farming partnership will be deemed to be continuing despite the changes made and the same ABN will continue with it.
The ABN is reported to the ATO on an annual basis with the lodgement of the farming businesses' relevant income tax return. The ATO will also contact any taxpayer registered with an ABN that has no reported business income or expenses in their tax return. This can often lead to confusion and concern over the tax obligations and also further queries from the ATO about your farm's business affairs.
All ABN holders are responsible for keeping their business details up to date. If a farm business is ceased, taxpayers are required to notify the tax office via the ABR website of the change in circumstances to their business and ABN status within 28 days of the business ceasing.
Whilst there is currently no penalty for not complying with the ATO & ABR requirements, it is good practice and does avoid unnecessary confusion.
Please reach out to your local RSM adviser today to discuss any matters outlined above.
