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Withholding of Tax when there is no ABN on Invoice

Australian Business Number (ABN) is required by all the business which operate within Australia. All the business entities operating in Australia are required to quote ABN number in their invoices for supply of goods or services.

In case supplier of goods or service has not quoted ABN number on the invoice and if the invoice amount exceeds 75$, the business is required to withhold tax at maximum marginal rate from the total amount to be paid to the business.

Exception to general rule:
This rule does not apply in case the business is not located in Australia or if the supply is made in private capacity as a hobby and there is no intention of trade.

Rate of Withholding:
At present the rate of withholding is 46.5%.Credit of GST on such invoice: However business cannot receive any GST credit for the invoices received from the vendor not having ABN.

Selection of Tax Code

Screen for selection of tax code

Penal Provisions:
There would be penal provision for business in case the amount is not withheld.
Deduction of same as business Expenditure: In case withholding tax is paid at higher level business cannot claim deduction for the same.

Annual reporting:
Business needs to be complete an Annual report summarizing all such payments and send the same to ATO.

Reporting in Business Activity statement :
Amount withheld from the payments to such vendors needs to be reported in BAS statement which would be filed quarterly with the ATO.

PAYG tax withheld

Extract of BAS form to be filled in case No ABN is quoted

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