The ABN (Australian Business Number) is cancelled when your business operations have ended or significant changes occur in your business structure. Be it a shift into employment, moving overseas, or closing your firm, it is essential to understand when and how you should cancel your ABN in Australia.
The process is straightforward, from using tools like ABN lookup to determine your current status to submitting an ABN cancellation form or email. How much does it cost to cancel an ABN? Fortunately, canceling your ABN online is free.
Let’s look at the right time and method to ensure the cancellation of ABN goes smoothly.
When Your Business Ceases Permanently
Key indicators that your business has stopped operating:
- No longer trading or offering goods/services: If you have stopped selling products or services, that is a sign that your business is no longer operational.
- Closing or inactivating business bank accounts: When you close or stop using your company bank accounts, financial transactions are no longer occurring.
- Stopping business advertising and marketing efforts: If you have stopped running ads, social media promotions, and other advertising, it is a big indicator that the company is no longer operational.
- Ceasing to pay employees or contractors: The lack of payments to your employees or contractors means business operations are not ongoing.
- Terminating active contracts or agreements: When you do not have active contracts or agreements running with clients, suppliers, and other partners, your activities probably end.
- Discontinuing regular customer or supplier interactions: Not communicating with your customers and suppliers is a clear signal that your firm operations have gone into inactivity, requiring the cancellation of the ABN.
Steps to Take Before Cancelling Your ABN
Step 1: Finalise All Tax Returns and BAS
Ensure all outstanding tax returns and Business Activity Statements (BAS) are lodged with the ATO.
Step 2: Settle Any Outstanding Debts and Invoices
Pay any outstanding firm debts and settle invoices with suppliers or contractors.
Step 3: Notify Clients and Suppliers
Advise your clients, customers, and suppliers of your operations closure and deal with continuing contracts or orders on hand.
Step 4: Close Business Bank Accounts
Close any firm bank accounts and ensure no further transactions are pending.
Step 5: Cancel GST Registration (if applicable)
If your company was registered for GST, lodge the cancellation of your GST registration with the ATO once all the GST obligations have been met.
Step 6: Check Your ABN Status Using ABN Lookup
Utilize ABN lookup and check your ABN details, ensuring all the information is correct before starting the cancellation process.
Step 7: Consult a Professional (if necessary)
Consult an accountant or tax professional to ensure all legal and financial matters are properly addressed before your ABN is cancelled.
How to Cancel ABN
You can cancel your ABN through the government portal at myGovID. The information provided on this page is intended for general purposes only and pertains to our products and services. It does not constitute professional advice of any kind and should not be treated as such. We recommend seeking tailored financial, legal, or professional advice before acting on any content found here.
Failure to do so means you acknowledge and accept the risk that the information may not address your specific business needs.Our liability is limited to the fullest extent allowed by applicable law, as outlined in our website’s terms and conditions.
Why employees don’t need an ABN
- Employees work for an employer, not as business owners.
- Employers manage tax deductions, including income tax and superannuation.
- Employees do not need to lodge Business Activity Statements (BAS).
- Employees do not handle GST on their earnings; their employer manages it.
- Wages or salaries are paid directly to employees, removing the need for an ABN.
- Employees are not required to register for GST or other company taxes.
- ABNs are for firms that supply goods or services, not for those in traditional employment.
- Employees don’t have control over their work contracts or invoices, which are the employer’s responsibility.
How to manage outstanding business obligations
- Complete all tax returns: Lodge any outstanding tax returns, including BAS, with the ATO. This will keep your records up to date.
- Pay off any outstanding debts: Pay all business-related debts, loans, or unpaid invoices to suppliers and contractors. This ensures that no financial issues remain after your firm has closed.
- Cancel business registrations: Cancel your GST registration and any other business-related licenses with the ATO. This ensures you’re no longer obligated for taxes or reporting.
- Close business bank accounts: Close your accounts once all transactions are complete to avoid unnecessary fees or account activity.
- Resolve outstanding contracts: Let clients and suppliers know that your firm is closing down and wrap up any outstanding contracts or commitments. This may prevent legal issues and go a long way in the winding-up process.
- Keep accurate records: Keep a record of your firm activities for reference or litigation purposes, such as taxes filed, debts paid, and the sale of assets.
Implications of mergers, partnerships, or restructuring
The legal and tax obligations may change when your firm undergoes a merger, partnership, or restructuring. These changes could affect how your company is taxed, how liabilities are managed, and how profits are distributed. Understanding the new structure is essential to ensure tax laws and regulations compliance.
Cancelling your old ABN and registering for a new one
If the structure of your business changes significantly, for example, through a merger or restructuring, you may have to cancel your existing ABN and apply for a new one. This correctly identifies your company under its new structure and avoids confusion with the ATO about your tax obligations and reporting.
Recommended Read: Difference Between a Business Name and a Company Name?
How moving overseas affects your ABN status
- Loss of Australian business operations: If you are not operating your business in Australia anymore, you may not need the ABN because, after all, this number is used when you conduct business in Australia.
- Need to cancel your ABN: If you’re moving overseas and no longer have an Australian-based business, you must cancel your ABN with the ATO to avoid ongoing tax and legal obligations.
- Changes in tax obligations: Operating a firm from overseas may have different tax obligations in Australia and your new country of residence. You must ensure compliance with local tax laws before changing your ABN status.
- Impact on GST registration: If you are registered for GST in Australia, you might have to cancel your GST registration since your firm is no longer operating within the country.
- Finalizing financial records: To avoid complications later, you must ensure that all your financial and tax records are updated and that any outstanding taxes or payments are settled before cancelling your ABN.
- Reporting requirements: You may be required to lodge final reports or tax returns before the ATO cancels your ABN to determine whether all requirements have been met.
Handling tax and reporting obligations before cancellation
- Lodge any outstanding tax returns: Lodge any late returns, including BAS and income tax returns, to minimize the penalties.
- Pay all the outstanding taxes: Clear any unpaid taxes like GST, income, and payroll taxes.
- Pay your debtors: Pay any outstanding debts to suppliers and contractors from company operations.
- Cancel the GST registration: Notify the ATO to cancel the GST registration if not required.
- Employee entitlements: Pay the final wages of workers and superannuation.
- Review contracts: One must close all business deals and inform clients or partners about one’s closure.
Understanding eligibility requirements for an ABN
- Carrying on a business in Australia
- Having a clear and legitimate business purpose
- Operating as a legal entity (sole trader, partnership, company, or trust)
- Engaging in genuine business activities (e.g., selling products or services)
- Intending to make a profit or generate income
- Not conducting activities for personal or recreational purposes
- Meeting the ATO’s definition of “carrying on an enterprise”
- Keeping accurate firm records and fulfilling tax obligations
What to do if your business no longer qualifies for an ABN
- Notify the ATO: Inform the Australian Taxation Office (ATO) about the cessation of your firm activities.
- Cancel your ABN: Submit the ABN cancellation request to the ATO through their online portal.
- Settle outstanding tax obligations: Ensure all tax returns, payments, and Business Activity Statements (BAS) are filed and up to date.
- Clear any business debts: Pay off any outstanding debts to suppliers, employees, or contractors.
- Review contracts and agreements: Terminate or amend any contracts or business agreements related to your company.
- Submit final reports: Lodge any final tax reports or documents required by the ATO to shut down your company officially.
Finalizing financial, legal, and tax matters
- Settle outstanding debts: Pay off outstanding debts owed from any business loans, outstanding invoices, or due payments to suppliers and contractors.
- File final tax returns: Submit any overdue or final income tax returns, BAS (Business Activity Statements), and other required forms to the ATO.
- Pay outstanding taxes: Ensure that all the taxes, which include GST, payroll tax, and other liabilities, are settled.
- Cancel business licenses and registration: Cancel all licenses, permits, or registrations no longer needed.
- Review financial records: Ensure that all the financial records are accurate and up-to-date before the winding-up of the company.
- Handle employee entitlements: Pay final wages, superannuation, and other employee benefits owed.
Informing the clients, suppliers, and relevant authorities
Once your business is officially closed, you should inform clients, suppliers, and related business partners. This will typically include notification of outstanding orders, obligations, or deliveries. You must also notify authorities like the ATO and other relevant government agencies that you want to close the company. This will ensure that business-related operations are officially completed and you have met legal and regulatory requirements.
Recommended Read: What is the Difference Between an ABN and an ACN?
Conclusion
Cancelling your ABN is essential if your business has stopped operating or changed its structure. Settle all financial, legal, and tax matters first. Whether closing or transitioning your business, notify the relevant authorities and settle any outstanding obligations. ISM Accountants can help you with the cancellation of your ABN and ensure that you comply with all requirements.
With professional guidance, you can avoid further complications and confidently move forward. Let ISM Accountants help you handle your ABN cancellation and company transitions smoothly.
FAQs
You need to cancel your ABN when the business is no longer in operation, when it changes to another structure, or when you no longer satisfy the eligibility criteria. Moreover, you are supposed to cancel the ABN when one is migrating to another country or no longer requires an ABN for any business activities to avoid ongoing obligations.
You can cancel your ABN using the Australian Business Register online service or by lodging an ABN cancellation form through the ATO. Before canceling, you must ensure that any outstanding tax and financial liabilities have been settled to prevent any penalties or complications arising from the cancellation process.
If you don’t cancel your ABN, you may be obliged to lodge tax returns, BAS statements, and other compliance requirements. Unnecessary fines, penalties, and confusion as to the status of the business may arise, and therefore, it is important that you officially cancel it when you no longer need it.
Yes, this would be the case if you shift from a firm owner to an employee. No, an employee does not need an ABN; it is only necessary for individuals or entities carrying on an Australian business or undertaking. Yes, you should cancel your ABN once you become an employee.
If you are only temporarily closing your firm and will reopen later, you do not need to cancel your ABN. However, if you decide to close your business permanently, it’s important to officially cancel your ABN to avoid unnecessary reporting obligations and ensure you remain compliant.
No, there is no cost involved in cancelling your ABN. The cancellation process can be done for free through the ABR online portal or by submitting a form to the ATO. It’s a simple, no-cost process, but make sure all obligations are cleared before submission.
