Most of us will be aware of the no ABN withholding rule, whereby if a supplier does not quote their ABN on an invoice then:
- If the price includes GST, you cannot claim the GST credit for that supply, and
- If the total payment for the goods or services is more than $75 (excluding any GST) you must withhold 46.5% of the payment, and then remit that amount to the Tax Office.
In its recent Compliance Focus, the Tax Office highlighted ABN/GST fraud as an emerging tax issue, whereby people quote a false ABN, claim they are registered for GST, and then ‘pocket’ the GST they illegally charge on a supply that they make. In cases such as this the question arises, will penalties apply?
Generally speaking, if the ABN quotation appears legitimate, you can accept it. You are not required to verify it on the Australian Business Register (ABR), and will not be penalised if you have failed to withhold. However, where you have reason to suspect that the ABN quoted may not be genuine or that it may not belong to the supplier who quoted it, you should check on the ABR.
You may have grounds for suspicion where:
- The ABN itself looks incorrect – e.g. it doesn’t have 11 digits, the first digit is zero, or there are sequential/repeating numbers.
Invoice details are vague and inappropriate to your business and the supplies you are receiving.
- If you use regular suppliers, those suppliers are permitted to provide you with a periodic quotation of their ABN which covers all the supplies they make to you for a specified period