Question

The supplier having received a payment for less than the amount for which they supplied an invoice contacts the business and provides an ABN. How should the business now deal with this?

Answer 1

ABN is here understood as ‘Australian Business Number’

Withholding of taxes if ABN not provided : If the supplier does not provide ABN and the aggregate payment for invoice is more than $75 (excluding GST) generally withholding is done at the top rate of tax from the payment and payment is made.

However, if the supplier has applied for an ABN you can offer to hold payment until they have obtained and quoted ABN. Care has to be taken to ensure that payment is not made to the supplier on an understanding that an ABN will be quoted later.

A business cannot claim input tax credit for payments withheld a record should be kept of these transactions separate from other payment records.

There are certain payments that don't require to withhold tax, regardless of whether an ABN is provided or not. However sufficient records must be there to show the reason for not withholding.

If tax is withheld from a supplier's payment complete payment summary must be prepared and given to him at the same time payment is released for the net amount or as soon as possible thereafter.