Verifying ABN's

The ATO requires businesses to ensure that a supplier's ABN is correct prior to claiming any GST on an invoice.

If an ABN is invalid or not provided on an invoice of more than $87.50 you are unable to claim the GST on the invoice and are required to withhold 47% of the invoice value. The withheld amount is then paid to the ATO at BAS time.

While it is your responsibility to ensure that your business has accurate ABN records and is claiming (or withholding) the correct amounts, we do our best to verify each supplier's ABN. This is a time consuming task and, in reality, not every invoice/ABN can be checked.

We are in the process of implementing a tool that verifies the data in your Xero file and alerts us to issues. One of the many checks that it performs is the verification of all suppliers and their invoices. It alerts your Bookkeeper when:

• No ABN is recorded against the supplier's contact card in Xero.
• An incorrect/invalid ABN has been supplied on an invoice.

If we identify any suppliers with incorrect ABN's (which happens quite often) we will advise you and seek instructions. Remedies may include:

• Advising the supplier and asking them for the correct ABN
• Advising the supplier that you need to withhold 47% of the invoice value 

This system helps to ensure that you remain compliant and comes at no cost to you.