Many clients who have an ABN which has been inactive will have or may receive correspondence from the ATO or ASIC wanting to cancel your ABN. If this happens the responsibility will be on you to prove that you are still in business.

Reasons why ASIC or the ATO may initiate the cancellation of a business name

Some of the common reasons include:

  • The business name holder does not renew their business name registration
  • The business name holder is a company that has been deregistered
  • We become aware of a matter after registration that would have affected our initial decision to register the business name
  • We become aware that the entity is disqualified from holding a business name
  • We are satisfied the entity is not carrying on a business under the business name (for example, the Australian Business Number (ABN) has been cancelled) and has Not been carrying on a business for the last three months
  • The entity fails to notify us of a change in information within the required time, or
  • The entity fails to respond to an ASIC request for information.
  • The ATO may also cancel your ABN if they believe that you are not in business and it is just a hobby as happened in the case below.
  • A Look at Un-profitability and Hobby versus Enterprise Cancellations
  • A February 20, 2007 judgment by the president of the Administrative Appeals Tribunal highlights one case in which your ABN can be cancelled due to lack of profitability. The conflict arouse when the defendant’s ABN was cancelled in 2000 because it was believed that he was no longer operating a business or had any hope of gaining a profit.
  • The business owner was adamant that he operated until late 2004 and, based on the proof presented, the tribunal agreed that he did in fact operate an enterprise. It was also decided that he had reasonable assumptions that a profit was possible; however, he did not make one so the ABN was still cancelled. The difference is the date of cancellation was made effective as of 2004 instead of 2000.