Feb 15, 2017

5 Common Causes for ABN Delay

The jubilation that follows a successful company registration can quickly sour if an ABN registration is refused or delayed for any length of time. Absence of an active ABN can affect your ability to open a company bank account and to effectively commence trading. We’ve identified five common causes for these frustrating delays and we’re keen to share this wisdom…

1. International Associates

Individual

If an individual non-resident associate does not have a TFN, it is highly unlikely that the ATO has a record for them. Failure to provide a valid personal TFN will almost always result in a refusal or manual review for up to 28 days. During this time an ATO representative should contact you to advise how to rectify the issue.

To avoid delay, this is what the ATO will communicate:

  • The associate should apply for a TFN as an individual residing outside Australia; or
  • The associate should post certified copies of the identification documentation ordinarily required to apply for a TFN to the ATO’s non-resident team. This should be accompanied by a letter expressing why he/she would like to proceed without a TFN, also citing the manual review reference number that has been issued.

Further instructions outlining the process that must be followed are available here .

Company

The involvement of a company incorporated outside of Australia will automatically flag your application for manual review. In this situation, advise the EasyCompanies team that an international company is a shareholder and we will liaise with the ATO on your behalf to quicken the processing of your ABN application.

2. Personal Details of Associates

This is the most common reason for an ABN application to be refused or flagged for manual review. The details in the application must match the existing personal ATO record for each associate. Consider whether the full legal name has been entered.

To ensure that you are listing the correct information, please review each associate’s most recent tax return. Pay attention to the current full name, date of birth, TFN and residential address. If you are unsure, call the ATO to confirm that what you are entering into the application matches their records.

This is a good opportunity to ensure each associate’s personal information is accurate, particularly if place of residence changed or if a legal name change has occurred. If the latter is true and the official name change or marriage certificate was lodged with Australia’s Births, Deaths and Marriages register, call the ATO to amend the legal name on their records.

N.B. The personal details listed in the company register should exactly match those that are held by the ATO. Any inconsistency may cause undue issues when setting up company bank accounts, applying for business loans and entering into contracts. Any changes should be reflected on the company register by lodging an electronic Form 484 with ASIC.

3. Hyphen in Associate’s name

If an associate has a double-barrelled first, middle or surname, this could cause an error in the ATO’s portal.

You have two options:

a) The affected associate can call the ATO to temporarily remove the hyphen in their recorded legal name. Re-submit the ABN application and contact the ATO to reinstate the hyphen.

b) Contact the EasyCompanies team who can sort this out on your behalf provided that you supply the required information to authorise our assistance.

4. Formatting Issues

It is crucial to enter only the required information into the textboxes provided. For example, if asked for the suburb name, please type that alone - Sydney, not Sydney NSW 2000.

This error will not usually result in a refusal or manual review though it will cause an unnecessary and avoidable delay.

5. A Minor as an Associate

It is legally acceptable for a minor (person below 18 years of age) to be a company shareholder. When applying for a company ABN, you will be required to cite their TFN to avoid delay. If the minor does not have a TFN, the minor will need to apply. There is no minimum age requirement for a TFN application.

Please note that a shareholder is required to consent to his/her involvement with a company. If a minor cannot give written consent, it would be essential to consider whether including the minor in the company is appropriate.

This information is of a general nature only and does not constitute professional advice. You must seek professional advice in relation to your particular circumstances before acting.

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