ABN – every business in Australia must have one. And the law states that every business making a payment must check the validity of their suppliers.  They must check that:

1. Suppliers have provided an ABN and that it is a valid ABN and it belongs to them.
2. Check that the supplier is allowed to charge GST.
3. You must obtain a valid tax invoice from suppliers.

If your supplier used an invalid ABN or is not registered for GST but they have charged it, and you pay it to that supplier then the ATO position is that you are not allowed to claim back that GST from the ATO.

There are increasing reports of the ATO conducting reviews of businesses in the areas of supplier registration and validity of GST claims. Therefore, you should understand that these are matters that should not be ignored and will be reviewed in an audit, with potential penalties applied by the ATO if GST is incorrectly claimed where you knew it shouldn’t have been claimed.

ABN Lookup

ABN Lookup is a great tool that you can use to verify the validity of suppliers ABN and to check their GST status. We recommend using this regularly, and particularly when working with new suppliers.

Our Recommendations

1. When a new supplier is being considered, or prior to any payment to a new supplier, check their GST status.
2. Once a year, check the ABN registration status of all major and/or regular suppliers you are conducting business with.
3. To be absolutely certain that you are entitled to claim back all GST charged to you by suppliers, the comprehensive system would be to check all suppliers before any payment is made – but this is not a legal requirement and in most instances just isn’t practical.
4. When you use the ABN Lookup, always keep a copy of the results for your reference.