What's an ABN and do I need one?
An Australian Business Number (ABN) is a unique 11 digit number that is used to identify your business by the government and other businesses. It's separate to the Tax File Number (TFN), but is used for tax and business purposes. Here are some of the most common questions about ABN registrations.
What are the benefits of having an ABN?
An ABN helps you to run your business much more smoothly. It allows you to:
- Avoid 47% of your sale price being withheld by other businesses as tax.
- Claim fuel entitlements.
- Reigster a .com.au or .net.au domain name.
- Register for GST and claim GST credits.
- Register for the Pay As You Go (PAYG) withholding system.
- Offer fringed benefits to employees.
Am I eligible for an ABN?
You can apply for an ABN if you are running an enterprise or have undertaken activities to start one.
How do I know if I’m running an enterprise?
An enterprise is considered to be an activity in the form of a business. This means that:
- The activity isn’t a hobby.
- It is of reasonable size and scale.
- You intend to make a profit from the activity.
- You have a business plan.
- There is a commercial sale of products.
- The activities are conducted in a business-like manner.
- You keep records.
If you are not currently running a business but are planning to start, undertaking any of the activities below will make you eligible for an ABN:
- Applying for finance.
- Advertising your business.
- Testing your business idea for feasibility.
- Consulting with financial or business advisors.
- Completing a business plan or financial projections.
- Leasing or purchasing premises or equipment to run the business.
- Obtaining licences or registrations required to operate.
Can I have multiple ABNs if I’m running more than one business?
You can operate as many businesses as you like under your ABN, so you don't need to register a new ABN for each additional business.
In fact, as a soletrader, you’ll only have one ABN per lifetime. This means that if your ABN is ever canceled and you want to start a new business, your previous number will simply be reactivated.
What if my boss has asked me to get an ABN?
Sometimes potential employees and apprentices are asked to obtain an ABN by their employers. This is known as ‘sham contracting’, and is done in an attempt to employ you as a contractor rather than as an employee. This means that:
- You will be in the business tax system and won't be considered an employee.
- You won’t be entitled to paid sick leave or annual leave.
- You are not entitled to superannuation payments from your employer.
- You will have to pay your own tax to the ATO.
- You may not be covered by workers’ compensation if you are injured at work.
- You may not be covered by any insurance.
If your employer asks you to get an ABN and you believe you are an employee, we recommend visiting the Fair Work Ombudsman website for further information and steps you can take.