ABN Registrations

Not everyone is entitled to an Australian Business Number (ABN).

Companies registered under the Corporations Law and business entities carrying on an enterprise in Australia are entitled to an ABN.

Employees and hobbyists are not entitled to an ABN as they are not carrying on an enterprise.

Self-funded retirees do not need an ABN. They continue to use their tax file number when reporting their annual income to the Tax Office.

Is The ABN Compulsory?

Applying for an ABN is not compulsory. However, if you are required to register for GST, you will need to apply for an ABN as well.

All businesses with a GST turnover of $75, 000 or more must register for GST and will need an ABN to do this. This can be done on the same form. Organisations with a lower annual turnover may choose to register.

If you are not required to register for GST, you can still apply for an ABN.

All non-profit organisations with a GST turnover of $150, 000 or more must register for GST and therefore need an ABN. Also, businesses that need to be endorsed as a gift deductible recipient or an income tax exempt charity or both, require an ABN.

Why Might My Enterprise Need An ABN?

You need an ABN and GST registration in order to claim GST credits for any GST you have paid for goods and/or services you have used in your business. If you are supplying goods or services, you will need to be able to quote an ABN so that others businesses do not withhold tax at the top marginal rate when they pay you.

How Does The ABN Affect Relations Between Businesses?

Businesses registered for GST are required to issue tax invoices that quote their ABN. Under pay as you go taxation, businesses receiving an invoice are required to withhold tax from their payments for goods and services if an ABN is not quoted.

No ABN WIthholding Overview

What to do when your supplier does not quote an ABN. Below are questions and answers to assist you.

Q: What do I need to to when ordering supplier or services from another business?

A: Ask the other business if they have an Australian business number (ABN).

When the supplier does not have an ABN:

The price includes goods and services tax (GST), you cannot claim the GST input tax credit for that supply.
The total payment for the goods or services is more than $75 excluding any GST, you will have to withhold 46.5% of the payment and pay it to the ATO.

If the supplier has an ABN, make sure they quote it on their invoice to you.

If the supplier says they have applied for an ABN but not yet received it from the ATO, you could offer to delay the payment for a few days until the ABN is received.

The amount withheld is the top marginal rate plus Medicare levy, which is currently a total of 46.5%

Q: If I buy supplies or services from a business that does not quote an ABN, what do I have to do?

A: When you come to make the payment, if there is no ABN on the supplier's invoice or other document relating to the transaction - such as a quote or order form, will have to withhold 46.5% of the payment. If you are not registered for withholding under the PAYG withholding system, you must apply to be registered as soon as you know you need to withhold.

When you pay the remaining 53.5%, you should give the supplier an original and a copy of a payment summary. The supplier will need to attach the copy of the payment summary to their tax return. You will be able to get payment summary forms later by phoning the Australian Taxation Office. If you want to create your own, it must contain:

Business name and ABN or withholding number
Name of the supplier and address (if you have it)
Total amount invoiced
Amount you withheld
Date you paid and withheld, and
Signature, or that of a person authorised to sign for the business.

Keep a copy of the payment summary to help prepare your annual report for PAYG withholding where no ABN is quoted.

Keep records of transactions in which you withheld 46.5% separate from other payment records, because you cannot claim any GST input tax credits for these payments if GST was included in the price.

Apply now for an ABN