What is an ABN

By: Tash Hughes of Word Constructions

If you are starting your own business one of the first things suppliers, customers and the bank will need to know is your ABN. But what is it? How do you get one? Do you have to get one?

The following information is a summary and should not be taken in place of a tax agent’s advice. For further information, please check the ABR FAQs and the ABR Services, or talk with a registered tax agent.

What is an ABN?

ABN literally stands for Australian Business Number. Like a Tax File Number (TFN), it is a unique number that represents that business to the tax office and other official bodies.

When registering for an ABN, you also have the option of registering for GST and PAYG (tax withdrawals for employees.)

Once you have an ABN, this will be recorded on the Australian Business Register (ABR) and some details will publicly viewable. Some of the information can be suppressed upon request.

The ABN will incorporate the ACN (Australian Company Number) issued by ASIC when applicable. This allows companies to use their ABN whenever the ACN or ABN may be required.

Do I need an ABN?

There is a list of criteria for who is entitled to have an ABN at the ATO.

In terms of you running your own business, you are entitled to an ABN if you have a business rather than a hobby and are not carrying out the business tasks as an employee for someone else.

Sometimes, it is the definition of business versus hobby that confuses people. Essentially, if you are treating it as a business with the serious intention to make money from it, it is probably a business. Check with the ATO if you are unsure of your status.

It is possible to run a business without an ABN. However, other businesses will be obliged to deduct 48.5% from all payments to you for taxation purposes and you will be unable to register for GST without an ABN. GST registration is compulsory for businesses with an annual turnover greater than $50,000.

How do I get an ABN?

There is no cost to applying for or having an ABN. To apply for one, either go to ABN Application or it can be done off line through forms available at the ATO or your tax agent.

In order to complete the application, you will need to provide the following information:

• business name/trading name
• your legal name
• your postal address
• business address
• business type – sole trader, partnership, company, etc
• business function (i.e. the industry and type of work carried out)
• contact details – for you and/or any person entitled to make changes to ABR details
• Australian company number (ACN) or Australian Registered Body Number (ARBN) - if applicable
• names of the public officer and trustee(s) (if applicable)
• email address – optional unless you have a turnover greater than $20 million

You may also provide your TFN (tax file number), bank details and tax agent details.

If applying online, you will receive your ABN as soon as your application is sent, with paper confirmation being mailed within 28 days. Other forms or application will have to wait for the paper confirmation to come through.

How many ABNs do I need?

Regardless of how many functions are carried out by your business, it can only have one ABN. For instance, business XYZ has a shop, an e-commerce site and does consultancy work, but it will still have one ABN.

If, on the other hand, you run two distinct businesses doing different functions, you may require two ABNs.

In some circumstances, you will be able to reactivate an old ABN if you are recommencing the same business under the same legal structure. See the Reactivation Policy for details.