Have you ever used the ABN Lookup? If not, have a go now and type in your ABN or business name to see what information others can access freely about your business. To go to the ABN lookup, click here. It will take you to the Australian Business Register. The Australian Business Register can tell you:
- The registered entity name of an ABN holder.
- The ABN of a registered business.
- If the Business is registered for GST and from what date it became registered.
- Whether the ABN is active or cancelled.
- The Entity type – whether the entity is a sole trader, company, trust, partnership etc.
- The main business location.
Generally, if a supplier invoice looks correct and you have no reason to query the invoice, you have no obligation to verify every supplier’s ABN.
In the event, however that you do check the supplier’s ABN and find the supplier is not registered for GST and does not have a valid ABN, you must:
- Not pay the GST Component
- Deduct ABN Withholding tax which is 49% of the remainder. Remit this on the next BAS report and complete an Annual Payment Summary for the payee
But what do you do if you have already paid the supplier invoice like my client did for $9,900 and later find that they were not registered for GST and the ABN was invalid?
Well, the situation is not an easy one. You must contact the supplier and ask for an explanation. You may request / demand repayment of the GST amount as it was charged unlawfully and you have already paid it. You may also request repayment of 49% of the ex GST amount as ABN Withholding tax and remit this on your next BAS lodgement.
If your supplier is unwilling, you may report them to the ATO. Either way, you may not claim the GST credit you have paid. As for whether this is still a business tax deduction, you must seek tax advice.
In the case of my client, they have potentially lost $900 in paid GST that they cannot claim and perhaps a $9000 tax deduction as
So, what is the best way to avoid all this?
Make a habit of checking every NEW supplier. Particularly sole traders and contractors. A good business practice is to check the ABN status and make a note on the file somewhere you have verified it. If their circumstances change, check the ABN status again. It’s a small task that will save you a headache or two down the track.