What is an ABN and Do I Need One?

An Australian Business Number (ABN) is an eleven digit number that is unique to your business or organisation. The government, other businesses and organisations, and the general public use your ABN to identify your business.

ABNs are issued by the Australian Business Register (ABR) which is a branch of the Australian Tax Office (ATO). Although issued by a branch of the ATO, an ABN will not replace your Tax File Number (TFN); nor will it replace your Australian Company Number (ACN) if you have one.

Do You Need an Australian Business Number (ABN)?

If you are carrying on an enterprise in Australia, you are entitled to register for an ABN. If you are not carrying on an enterprise in Australia and you apply for an ABN, your application may be refused.

If your enterprise is a hobby, you do not need an ABN. If your enterprise is a business, you may benefit from obtaining an ABN. If the annual turnover of your business is $75,000 or more, you will be required to obtain an ABN so you can register for GST.

Additionally, if you want to do any of the following, you will need an ABN:

Form a company
Register a business name
Register a trademark
Register for Goods and Services Tax (GST)
Claim GST credits
Claim fuel tax credits
Claim energy grant credits
Register an Australian domain name
Avoid some Pay As You Go (PAYG) tax on payments you receive

Are You Running a Business or a Hobby?

As you do not need an ABN if your activity is a hobby, it is important to first determine whether you are running a business or a hobby. There is no single, clear-cut rule for answering this question, however the ATO has determined that an activity may be regarded as a business if:

The activity is of a reasonable, commercial size and scale
There is an intention to make a profit from the activity
The activity is repeated
The activity is conducted in a systematic, business-like manner
Records are kept
The activity is run in a similar way to other businesses
There is sufficient knowledge or skill required

As you can see, this is a grey area. To find out more about the rules for determining whether you are running a business or a hobby, visit the ABR website.

How To Apply for an ABN

You can apply for an ABN for free by going to the Australian Business Register and submitting your details online. You should receive a reply within 14 days letting you know whether your application has been successful.

Benefits of Having an ABN

There are several benefits to having in Australian Business Number (ABN) for your business, including:

You can register a business name with ASIC
You can form a company
You can register for Goods and Services Tax (GST) with the ATO
You can claim GST credits if you have registered for GST
You can claim fuel tax credits
You can claim energy grant credits
You may avoid Pay As You Go (PAYG) tax being deducted from payments you receive
You can register .com.au Australian domain names

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