An ABN is short for Australian Business Number. It is a unique 9 digit number which helps the Australian Tax Office and other government organizations identify your business.
An ABN allows businesses with which you trade, to easily confirm you company’s details for ordering and billing. An ABN helps with GST claims, fuel tax credits and prevents excessive PAYG withholding; if you do not have an ABN a business which buys from you is required by law to withhold 46.5% of what they pay you and must then forward that amount to the ATO.
Although not all businesses choose to apply for an ABN, it is a necessity once your annual turnover reaches $75,000. At this point you will need to apply for GST which you can only do once you have an ABN.
It is important to note that the ATO does not authorize everyone who applies for an ABN. In order to be eligible for an ABN, you must be carrying on or be taking all the necessary steps that prove your commitment to starting a business where you will be producing goods or services in order to yield a profit. If you are conducting an activity primarily as a pastime or hobby and it will not create
revenue, you will not be assigned an ABN.
The process of getting an ABN is not very complicated and should be relatively quick. Completing the ABN form should take approximately 15-20 minutes. Once an application is submitted, providing all your data is validated, an ABN should be disbursed in real time. If there are issues which arise such as an incomplete application or the details are incorrect or need checking it may take up to 28 days
to process the application.
There are a few ways to go about getting your ABN. You can apply either:
- through the Australian Business Register website (you are eligible to lodge an electronic application if you are a sole trader*, company, partnership, trust or super fund),
- telephonically with the Tax Office,
- through a tax agent or accountant,
- manually with a paper application sourced from the ATO,
- or, through a corporate service provider, which can be a one-stop-shop for all of your business set-up needs such as business or company registration as well as other ongoing requirements like your annual ASIC review.
*If you are applying as a sole trader, you are required to have a tax file number before applying for an ABN.
Once you receive your ABN there are certain requirements you must adhere to:
- When applying for an ABN you are signalling to the ATO that you are commencing a business and financial transactions will occur. All earnings, even as small as $1.00 must be reported on your tax return to the ATO.
- The ATO must be informed of any changes to your personal details within 28 days of the changes incurring. An example of such a change would be a new address, or the change to your surname. If such changes are not communicated to the ATO penalties may be applied.
- You must cancel your ABN if you terminate your business. This closure is not final. If you start another business you will be re-issued the ABN.
When your ABN is assigned, some of the details of your business will be placed on the Australian Business Register. The ABR is administered by the Australian Business Registrar, who is also the Commissioner of Taxation.
For more information on how to get an ABN you can visit:
www.ato.gov.au to download publications, rulings and other general tax information for businesses.
www.business.gov.au for an interactive service which provides access to business information and transactions with the government.
www.shelcom.com.au a corporate service provider happy to answer any questions pertaining to ABN’s, TFN’s and company and business name registration.
Guest post written by Gosia Slotala an expert in business name registration at Shelcom Corporate Services, a corporate service provider helping Australians set up in business since 1987.