In an exposure draft of the Treasury Legislation Amendment (Spring Repeal Day) Bill 2015, the Government has proposed amendments to the Corporations Act and to tax legislation, to abolish the concept of the Australian Company Number (ACN) for new companies.
Companies to be formed with ABNs instead of ACNs
Instead, every newly-formed company must have obtained an Australian Business Number (ABN) under the A New Tax System (Australian Business Register) Act 1999 before it can be registered under the Corporations Act. For this purpose, the Registrar of the Australian Business Register will allocate an ABN before the company is registered under the Corporations Act, but will not enter the details in the Register before the company is actually registered.
Companies must then use the ABN on documents, in circumstances where they are currently required under s153 of the Corporations Act to use either the ABN or ACN.
If enacted, the new system will apply to companies formed on or after 1 July 2016.
Existing companies will continue to have an ACN, and may continue to use either the ACN or ABN on documents.
ABNs used instead of TFNs
A company with an ABN will also be able to use it instead of a tax file number (TFN). It will still be possible to apply for a TFN, but there will be no need to do so.
Status of the reform
The exposure draft was released for a period of public consultation by Treasury on its Consultations webpage. The consultation period has now closed, and it will be interesting to see whether the Government proceeds with the reform.
The bill has been put forward as a deregulatory measure, reducing the number of corporate identifiers that a company has to use. It does have the potential to do that. It probably also has the potential to simplify administration and investigation work for the Australian Taxation Office.
Once ground for confusion may be where a company acts as trustee of multiple trusts, and has separate ABNs for the company in its own capacity and as trustee of each trust. At present the ACN stands out as the corporate identifier which clearly identifies the company in its corporate capacity. The amended s153 of the Corporations Act will require that the company set out ‘the company’s ABN’ on relevant documents – presumably this is intended to mean the company’s ABN held in its own capacity rather than any trust capacity, or perhaps a trust ABN where the company is issuing or signing the document as trustee, but this is not really made clear.