5 Reasons You May (or May Not) Need an ABN (Australian Business Number)

What is an ABN (Australian Business Number) and do you need one?

Do-I-need-an-ABN

If you’re starting a business in Australia you should consider if you need an ABN (Australian Business Number).

An ABN is a unique 11 digit number that identifies your business or organisation and used to manage your tax and deal with other businesses or government.

If you’re doing business in Australia you may need an ABN to access various concessions and comply with your organisation’s tax obligations.

Here are 5 reasons you may (or may not) need an ABN

1. Interacting with government

An ABN is a single identifier used to deal with the Australian Taxation Office and other government departments and agencies.

Depending on your organisation you may need it to apply for registration as a charity with the Australian Charities and Not-for-profits Commission (ACNC) or register a business name with the Australian Securities & Investments Commission (ASIC).

It can be used for getting an an AUSkey to transact online with government agencies as well as applying as a deductible gift recipient or tax concession charity.

2. Managing tax obligations

An ABN is sometimes required to meet tax obligations and is needed to register for Goods and Services Tax (GST).

It can be used to deal with government on taxes, such as fringe benefits tax (FBT) and facilitate a single Business Activity Statement (BAS).

An ABN is also required for claiming GST credits.

3. Providing credibility 

Your ABN registration details become part of the Australian Business Register (ABR), a publicly available register that enables individuals and organisations to check who they are doing business with.

Having an ABN can provide credibility by confirming your identity, which may be critical for your suppliers and/or customers as well as dealing with investment bodies.

4. Avoiding Pay as You Go (PAYG) tax on payments you receive

An ABN is important if you are planning issuing invoices. When a supplier does not quote an ABN, PAYG withholding tax may be deducted from the payment to the supplier. Any PAYG withholding tax deducted, due to an ABN not being quoted, is included on the BAS for the businesses and paid to the ATO.

5. Securing an Australian domain name.

If you wish to create a website with a .com.au domain name (eg http://www.yourname.com.au) you will be required to provide an ABN. If you are doing business predominately in Australia, having a .com.au address is considered important from a marketing perspective.

What next?

You will need to check whether you’re entitled to an ABN.

You will need to be able to demonstrate that your business structure is in place. These business structures may include individual/sole trader, partnership, company, trust, superannuation entity or deceased estate. You will need to meet one (or more) of the following:

  • a company registered under the Corporations Act 2001
  • an entity carrying on an enterprise in Australia
  • an entity that, in the course or furtherance of carrying on an enterprise, makes supplies that are connected with Australia
  • a government entity
  • a non-profit sub-entity – for GST purposes
  • a superannuation fund.

Entities can include charities, not for profit clubs, societies and associations. An enterprise also includes an activity or series of activities performed by either a charity or a gift deductible entity. Apprentices, trade assistants, labourers and other types of employees are not entitled to an ABN.

How do I apply for an ABN?

It is free to apply for an ABN when you register with the Australian Business Register (ABR). Apply for your ABN with the ABR via here. You can apply for your ABN and register for GST and a business name at the same time. Once your ABN application is successful or if you get a reference number you can continue and apply for other registrations including GST, PAYG and registering your business name.

Don’t forget to check out our 5 Steps to Starting a Business.