Currently, ABN holders are able to retain their ABN regardless whether they are meeting their income tax return lodgement obligation or the obligation to update their ABN details.

The measures announced in the federal budget were in response to a Treasury consultation paper released last year which stated that the current ABN system was in need of reform as it was being used by participants in the black economy to create a false sense of legitimacy to their business.

The consultation paper stated that periodic renewals would prompt ABN holders to reconsider their eligibility, update their details and serve as a reminder of the associated penalties for supplying false information.

An ATO spokesperson told SMSF Adviser that the government will be undertaking public consultation on the legislative changes required with implementing this measure and that it would look to minimise the regulatory impact on ABN holders.

“This includes allowing ABN holders to check their ABR details through existing business interactions, such as through the lodgement of income tax returns, without the need to introduce new reporting processes,” it stated.

Given that SMSFs apply for an ABN when they register for an SMSF with the ATO, Insyt chief executive Darren Wynen previously pointed out that changes to the ABN system will also have an impact on SMSFs.

Mr Wynen previously said that there could be extra compliance steps for SMSFs as a result of these changes, and consequences where they fail to comply with the lodgement of returns or comply with the new requirements.

“All of a sudden they could be put in the same basket as non-complying funds or funds that don’t comply with the lodgement of returns and have their regulation details withheld [by the ATO],” he warned.

“Certainly, that could create a problem if regulation details are withheld; that might prevent rollovers being made to the fund, for example.”