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Cancellation of ABNs of trusts no longer carrying on an enterprise

Cancellation of ABNs of trusts no longer carrying on an enterprise

The Registrar will cancel trust ABNs in February 2016 where information available indicates that, for the last two years, the trust has not lodged BASs and/or income tax returns.

You or your trust client will receive a letter that the trust’s ABN has been cancelled. The letter will include:

  • the reason for the cancellation, and
  • a phone number to call to get the ABN reinstated immediately if you don’t agree with the

Should your trust client’s ABN be cancelled and it is still carrying on an enterprise, the following serious ramifications may arise:

  • where the trust client makes a “supply” to a recipient, the recipient will be required to withhold an amount from the payment for the supply at the top marginal income tax rate plus the Medicare levy, and
  • where the trust client makes an “investment” and receives a payment in respect of the “investment”, the investment body will be required to withhold an amount from the payment at the top marginal income tax rate plus the Medicare

Exclusions

ABNs will not be cancelled for a trust that is registered with the Australian Charities and Not-for-profit Commission or is a non-reporting member of a GST or income tax group.

Risk mitigation actions

It is suggested you:

  • confirm that your trust client’s details on their ABN record are accurate and up to date
  • identify any trust clients that are carrying on an enterprise but which have not lodged a BAS or income tax return for the last two income years (see below for a pro-forma letter to send to such clients)
  • where necessary, contact the ABN Registrar to get the ABN reinstated, and
  • lodge all outstanding BASs and income tax returns of affected trust clients as soon as possible to avoid late lodgment fees and/or prosecution

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