Announcements
Looking for information on the JobKeeper extension? Watch the video in our latest news article.

ATO Community

Re: Cancelled ABN

Highlighted

Newbie

Views 51

Replies 1

We have a contractor who has worked for the business for 20 years.

When they started we checked their ABN and all was good to go - GST free.  At their request we've always withheld some tax, generally 20%.   They also work for other businesses and individuals - not just us.   We have lodged the Taxable Payments Summary each year with their details listed. 

Apparently their ABN was cancelled somewhere in the past few years, but they have still been quoting their ABN on invoices.  

 We have advised them that we cannot continue to contract them until they fix their tax status - but what do we now do with the payments we have made YTD?   All payments were made in good faith assuming that the ABN was still valid.

1 ACCEPTED SOLUTION

Accepted Solutions
Highlighted

Most helpful response

Devotee

Replies 0

The ATO expect that you regularly check the status of your supplier's ABN's to avoid this issue. Obviously checking daily is unreasonable, but at least annually would be your minimum requirement so you avoid the situation of inadvertently paying suppliers that don't have an ABN without withholding the required amount of tax.

 

From memory, the ATO's position is that if you are regularly checking, they don't take action to recover unpaid withholding tax. In your case, it sounds like you never re-check, so it's possible the ATO would require you to pay the required withholding tax to them.

 

Realistically, these rules are all about ensuring that the suppliers pay tax and the TPAR system helps mitigate that so the risk. As you are doing your TPAR's, the risk of the ATO missing out on tax due to your mistake is minimal - so I think you should focus on getting it right moving forwards.

1 REPLY 1
Highlighted

Most helpful response

Devotee

Replies 0

The ATO expect that you regularly check the status of your supplier's ABN's to avoid this issue. Obviously checking daily is unreasonable, but at least annually would be your minimum requirement so you avoid the situation of inadvertently paying suppliers that don't have an ABN without withholding the required amount of tax.

 

From memory, the ATO's position is that if you are regularly checking, they don't take action to recover unpaid withholding tax. In your case, it sounds like you never re-check, so it's possible the ATO would require you to pay the required withholding tax to them.

 

Realistically, these rules are all about ensuring that the suppliers pay tax and the TPAR system helps mitigate that so the risk. As you are doing your TPAR's, the risk of the ATO missing out on tax due to your mistake is minimal - so I think you should focus on getting it right moving forwards.