Are you changing your business structure?

Take outs:

• Before changing your business structure, it’s crucial to seek advice from a professional to address potential tax issues during the transition.
  
  
• If you’re changing your business structure (e.g., from a sole trader to a company), you will likely need a new ABN.
  
  
• Incorrect ABN details on invoices can result in other businesses withholding payments at the highest tax rate.

What to do if you're thinking about changing your business structure

There are many reasons why you may consider changing your structure including saving on tax or the needs or size of your business changing. The first thing you should do if you're considering changing your business structure is to contact your accountant/tax adviser as tax issues are nearly inevitable when it comes to this transition.  

Do I need a new ABN? 

Did you know that emergency services and government agencies use ABN details to help identify businesses in affected areas during times of emergency or natural disaster? It is therefore important to ensure your ABN details are correct and up to date. Details you need to ensure are correct include: 

• authorised contacts (we advise listing your own contact details, not your accountant or tax adviser's details);
• the physical location of the business;
• the postal address and the email address; and
• the phone number.

If you are changing your business structure, for example from a sole trader to a company, you will need a new ABN. Other situations where you need to cancel your ABN and apply for a new ABN include where changing from:

• individual/sole trader to partnership or trust;
• individual/sole trader to company or trust
• partnership to company or trust.

You must ensure that your ABN details are updated on your tax invoices. This is essential as your ABN is used to:

• identify your business identity to others when ordering and invoicing; and
• claim GST credits.

Other businesses and entities must withhold payment at the top marginal tax rate if the ABN quoted on the invoice is incorrect or the details do not match up.

Remember to ensure that you update your GST registration details whenever you get a new ABN.