ABN needed or not?

Discussion in 'Accounting & Tax' started by thesuperman, 31st Mar, 2020.

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  1. thesuperman

    thesuperman Well-Known Member

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    If someone is share trading as a business in their personal name, is it a must for them to register an ABN?

    If someone had an ABN from 10 years ago which has been deactivated, is it be possible to re-activate the same ABN from a date in the past? If so, is there a time limit as to how far back you can backdate the ABN? Eg. 1 month, 1 year, etc.
     
  2. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    No. You dont make taxable supplies and it is a financial transaction. You are not entitled to a ABN. If you were to engage staff you will as then you are conducting a enterprise which is slightly different to a share trading activity conducted in a business like manner.
     
  3. thesuperman

    thesuperman Well-Known Member

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    Ok thanks Paul. The reason I ask is because I've read somewhere else where other share traders said they have an ABN. Are the below assumptions by the below two people incorrect?

    One person said:
    Another person said:
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    Look at the legislation
     
  5. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Fact
    The cost to account for GST, report and so on will often far outweigh the net 75% GST tax credit. The ATO view is that a trader can choose to be like any investor and treat the supplies as input taxed. If they were to go to the trouble all GST on share sales is remitted to the ATO less 75% of the ITC on acquiistions. There would be feww 100% business costs subject to GST.

    SMSF are a good example. The trivial GST makes GST on shares trades etc really impractical. I have a high volume share trader client and he asked this question. It would cost him around $300 each quarter and his net GST benefit would be $45 over a year. At 15% tax`rate thats a tax`saving of ... $6.75. Hardly worthwhile. And total accounting costs would add $2K maybe as GST throws more complexity into every trade. SMSFs are the only entity that must have a ABN and can freely choose to register for GST. But should they ? Its same with share trading

    Fact
    Some accountants are so impractical. Bet they didnt actually mention this and were thinking of the fee per BAS.
     
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