Input Taxed Supplies not Affected by no ABN Withholding Rules

The Treasurer announced today that supplies that are wholly input taxed under GST will

not be subject to no ABN withholding.

Input taxed supplies include, for example, supplies of residential premises by sale or

lease and financial supplies.

Under the no ABN withholding rules if a business does not quote an ABN the purchasing

business has to withhold 48.5% of the payment.

The main aim of the no ABN withholding rules is to ensure that the right amount of

income tax is paid. In addition, the ABN will make it easier for business by effectively

eliminating multiple government registration numbers.

Income payments by the financial services industry, such as interest and dividends, are

already subject to a no-Tax File Number withholding and there would be little gained in

applying no ABN withholding to financial services.

Residential rent and sales of residential properties are not generally enterprise to

enterprise transactions and usually involve at least one person operating in a private

domestic capacity. The no ABN withholding rules will apply only to enterprise to

enterprise transactions and are not intended to apply where the transaction is effectively

private consumption.

Accordingly, when the New Tax System commences on 1 July, no ABN withholding will not

apply to supplies that are input taxed under the GST.

CANBERRA

9 June 2000