Demystifying ABNs: Do You Need One?

The Australian Business Number (ABN) is a unique 11-digit identifier assigned to businesses in Australia. It was introduced by the Australian government to streamline business dealings and interactions with various government departments and agencies. The ABN is used for various purposes, including taxation, business registration, and identification.

The ABN serves as a single identification number for businesses and is widely recognized and accepted across Australia. It is designed to provide a consistent and standardized way of identifying businesses, regardless of their structure or location.

To obtain an ABN, businesses need to apply through the Australian Business Register (ABR), which is managed by the Australian Taxation Office (ATO). The registration process involves providing relevant information about the business, such as its legal name, trading name, business structure, and contact details. Once approved, the business is issued an ABN, which is used in various business transactions and interactions with government entities.

Customers, vendors, and the government in Australia all use something called an Australian Business Number (ABN) to identify your firm. This number is made up of 11 digits. It is retained in addition to a Tax File Number and is distinct from both an Australian Company Number (ACN) and a business name. Additionally, it is required to be kept.

You can do the following with an ABN:

  • When ordering and invoicing, confirm your company’s identity to others.
  • Avoid having your business clients withhold a portion of any cash you get
  • Make a business name registration
  • Register a,, or domain name

How Much Tax Do I Pay On ABN?

The amount of tax you pay on an Australian Business Number (ABN) depends on several factors, including your business structure, income level, and deductions.

  • Sole Trader: If you operate your business as a sole trader, your business income is treated as part of your personal income. You will be required to report your business income and expenses on your individual tax return. The tax you pay will be based on the individual income tax rates, which are progressive. The rates range from 0% for income up to a certain threshold to a maximum rate of 45% for income above the highest threshold. Additionally, you may be liable for the Medicare Levy, which is a percentage of your taxable income.
  • Company: If your business is set up as a company with an ABN, the company is a separate legal entity responsible for its own tax obligations. The current corporate tax rate for most companies in Australia is 30% of their taxable income.
  • Partnership or Trust: If your business operates as a partnership or trust, the income generated is generally distributed to the partners or beneficiaries, who then include that income in their personal tax returns. The partners or beneficiaries will pay tax on their share of the distributed income at the individual tax rates applicable to them.

It is important to note that tax laws and rates may change over time, so it is recommended to consult with a qualified tax professional or the Australian Taxation Office (ATO) for the most up-to-date information and guidance specific to your situation.

Determine if you require an ABN

It is not necessary for everyone to have an ABN. You need to be the owner or operator of a business or other operation in order to get one (as opposed to a hobby).

Visit the website of the Australian Business Register (ABR) to determine whether or not you are eligible to apply for an ABN.

If you apply for an ABN but don’t qualify, your application may be rejected. The Australian Taxation Office will explain the basis for the refusal.

Many various types of businesses, from major enterprises to freelancers, have an ABN.

If you plan to start or already own a business in Australia, you are required to obtain an ABN. What it means to “carry on an enterprise” is to operate a company or participate in a commercial activity of some kind, such as the buying and selling of goods and services. The definition of an enterprise provided by the Australian Business Register encompasses not-for-profit organisations like charities as well as property renting and leasing businesses.

If you want to register for Goods and Services Tax, you’ll need an ABN (GST).

The eligibility conditions for each business structure are different:

  • Individual entrepreneurs
  • Sole traders are the lone owners of a firm and are legally accountable for all elements of it. Partnerships are eligible for an ABN.
  • Partnerships
  • Partnerships are eligible for an ABN as two or more people or entities who run a business and distribute income and losses between themselves
  • Companies
  • Companies that are registered with the Australian Securities & Investments Commission (ASIC) can apply for an ABN
  • Trusts
  • A trust runs a business, holds property or assets for the benefit of others (beneficiaries) and is eligible for an ABN

If you’re based in the Christmas or Cocos Islands, or have a joint venture with partners who each have their own ABN, you don’t require an ABN.

The Business Registration Service can help you get an ABN and other important business registrations. Make sure you have the following items before registering:

  • identified your business structure
  • proof of identity
  • details of your business activities and associates ready

The Australian Business Number (ABN) is a one-of-a-kind 11-digit number assigned to all organisations registered with the Australian Business Register (ABR).

The 11-digit ABN is made up of a 9-digit identifier with two check digits in front. The leading check digits are calculated using a modulus 89 calculation (remainder after dividing by 89).

To verify an ABN:

  • Subtract 1 from the first (left-most) digit of the ABN to give a new 11-digit number
  • Multiply each of the digits in this new number by a “weighting factor” based on its position as shown in the table below
  • Sum the resulting 11 products
  • Divide the sum total by 89, noting the remainder
  • If the remainder is zero the number is a valid ABN

Free of charge is the ability to apply for an ABN. On the other hand, you could have to pay some sort of fee if you have a tax agent handle everything on your behalf.

To apply for your ABN, you’ll need the following documents, depending on your circumstances:

  • Any previous ABNs you’ve had
  • Your tax file number (TFN)
  • You’ll also need the TFNs of any associates like partners, directors and trustees
  • Your Australian Company Number (ACN) or Australian Registered Body Number (ARBN)
  • If you already have these, remember your ACN can be applied for at the same time as the ABN
  • Your legal entity name
  • This name appears on all official documents and legal paperwork, and it can be applied for simultaneously at the ABN
  • The date your ABN is required
  • They must have permission to make modifications or update data on behalf of the entity.
  • The licence number of your professional advisor
  • If you’ve engaged one, for example, an Australian Financial Services (AFS) licence
  • Your tax agent registration number
  • Any other authorised contacts that are available
  • They need to be granted permission to make alterations or updates to the information on the entity’s behalf.
  • Any associates’ details like shareholders or directors
  • The qualifications to become an associate vary depending on the type of company.
  • Your company’s operations
  • Agriculture, construction, investing, and manufacturing are examples of businesses where this is the primary source of revenue.
  • Your place of business
  • Unless there is a risk to individuals’ safety, such as a women’s refuge, provide business locations for any premises run by your company.

As soon as you submit your application, you will obtain your ABN. It may take up to 28 days to complete your application if you omit key facts or they cannot be validated.

Requirements for Business Activity Statements

When you apply for an ABN and GST, the ATO will send you a business activity statement (BAS) when it’s time to file. You can use your BAS to record and pay various taxes, such as:

  • tax on goods and services (GST)
  • luxury car tax
  • wine equalisation tax
  • pay as you go (PAYG) withholding
  • Pay-as-you-go (PAYG) instalments
  • fringe benefits tax (FBT) instalments

You have various alternatives for filing your BAS, but most firms that file their own choice do it online.

Do You Need To File A Tax Return?

Depending on the complexity of your company and your tax situation, you have the option of filing your return on your own or hiring a professional to do so on your behalf.

You can file your tax return by going to:

  • with a registered tax agent
  • online with myTax if you’re a sole trader
  • with standard business, reporting-enabled software if you’re a company, trust or partnership

You can file a BAS by:

  • through a registered tax or BAS agent
  • online (online services in myGov, the business portal or SBR-enabled software)
  • by phone (for nil BAS statements only)
  • by mail

Make sure your tax or BAS agent is registered with the Tax Practitioners Board (TPB). Search the TPB registry for them to see if they’re registered.

Closing Thoughts

Obtaining an Australian Business Number (ABN) is an important step for businesses operating in Australia. Whether you are a sole trader, a company, or part of a partnership or trust, understanding the criteria for requiring an ABN is crucial. It allows you to comply with tax obligations, engage in business transactions, claim GST credits, and operate within specific industry requirements.

Determining if you need an ABN involves considering factors such as running a business, reaching the GST threshold, dealing with other businesses, and operating in certain industries. It is advisable to stay informed about the current regulations and consult with professionals or the Australian Taxation Office (ATO) for personalized guidance.

By obtaining an ABN, you establish your business identity, streamline your interactions with government entities, and ensure compliance with relevant taxation and reporting obligations. Take the necessary steps to obtain an ABN if it is required for your business, enabling you to operate with confidence and clarity in the Australian business landscape.