Most business people reading this are either subcontractors in some way or engage with subcontractors to complete work.
Even with a push from Fair work, the tax department, unions and so many other organisations to limit the numbers, it is the way we now work and engage with people to help us complete projects, tasks or run a business.
The number of people employed by small businesses has declined by 7% over the last decade, so as businesses face uncertain futures and work, contracting seems a logical form of getting a job done.
But the dark side of subcontracting we have found there are many “fringe dwellers” who now play out a game of pretending to have an ABN, and issue a false ABN and even name, when completing some manual work for a short period of time.
We have had a large number of clients who have been caught. They have paid people who have or claim they have an ABN or have paid on an invoice and then when they can’t prove the ABN, or find out that the ABN wasn’t real, they now face the problem of paying tax on what they have paid the supposed subcontractor.
Bunnings Warehouse’s Australian Business Number is being used in more than 40 per cent of all ABNs quoted in the Northern Territory, according to Michael Andrew, the chair of Treasury’s Black Economy Taskforce.
Bunnings caught up in massive tradie tax fraud amid calls for ABN overhaul It’s cases like this that have the taxman chasing after the business and not the ABN fraudster.
A business that engages with a subcontractor must have three things
- An ABN that they look up – and recheck every month
- To see and copy identity – Make sure someone hasn’t looked up their own name to find someone with their own name in another state and used their ABN
- Only pay on invoice AND only pay on line.
Again, the responsibility has fallen on the business owner to patrol the ABN’s and if they don’t, they will be paying a lot more in tax.