An Australian Business Number (ABN) is a unique number applied to Australian business and is a legal requirement for anybody who starts a business or enterprise or wants to register for the Goods and Services Tax (GST). An ABN register will still be required if you have a business but don’t register for GST.
An ABN becomes necessary when you are conducting certain business activities such as forming a corporation, applying for a trademark, or registering a business name.
You may have a hobby which brings in a little cash, but if you are only spending between 1 and 10 hours on that hobby, then you probably don’t need an ABN registration.
However, if you find yourself spending more than 10 hours a week on your hobby and are buying materials or performing services to create a profit, then your hobby has most likely turned into a business.
As your hobby grows, you may find yourself organising it into more of a business like structure such as planning for jobs, buying advertising, and spending a lot of time talking to customers. In these circumstances, it would also be safe to say that the time has come to register an ABN.
Renters of investment properties do not require an ABN as they do not attract GST or pay as you go withholdings.
You also do not qualify for an ABN if you are conducting operations as an employee, which includes employment as a trade assistant, labourer, or apprentice, and even when your employer considers it to be contract work.
If your enterprise conducts activities as a business, you can apply for an ABN. Other activities which can qualify as carrying on with an enterprise include leasing and renting a property, running a charity, or acting as trustee for a super fund.
There a no standard qualifiers to determine if you are running a business, but you can use the following common features of an enterprise as a guide.
If the business hasn’t yet started operating, you may still apply for an ABN number if you have conducted advertising, set up a social media account or created a business website.
You may also qualify for ABN register if you have:
Not all the above requirements need to be met, but for a successful ABN registration, you will have at least completed or be in the process of completing at least some of them.
A foreign business operating outside of Australia may qualify for an ABN register if the organisation is carrying on with an enterprise that manufactures supplies connected with Australia’s indirect tax zone, which includes Australia but not any of the external territories or some offshore locations.
You are going to need quite a bit of information to get through the ABN register process. Firstly you will need your Tax File Number (TFN) and the TFN of any of your associates, partners, or directors. The date your ABN is required, or when you expect to start operations as a business, will need to be within six months of the application date.
You will also need to supply a description of your primary business activity, or your primary source of income, such as web design, or computer programming. All business locations where you conduct your operations will also need to be recorded against the ABN.
Having an ABN registration can save your business time and money because other organisations are legally required to withhold tax from payments to your business if you haven’t or are unable to quote an ABN on your invoices.
The tax withheld is also at the maximum tax rate of 46.5 per cent. Of course, you can claim the tax back at the end of the financial year, but this will be very inconvenient for your cash flow.
An ABN also gives you the capacity to claim fuel tax and GST credits on your business activity statement (BAS). Australian Business Numbers can also be applied to multiple enterprises to simplify your tax obligations.
To create a website these days does not require extensive coding or design experience, so more Australians find themselves wondering if it is possible to register an Australian domain (the one that ends in .au) without an ABN.
Unfortunately, the short answer is no, because Australian .com.au, .org.au, and .net.au websites are required to be registered by Australian sole traders, registered businesses, and companies through a domain registrar which is approved by the Australian Domain Authority (auDA).
The requirement may seem like an inconvenience, but it is there for a good reason; to protect the namespace so Australians can continue to trust and rely on its integrity.
Australians who are unable to apply for an ABN still have the option of the top level domains .com, .org, and .net, which are still widely respected and are suitable for an international audience.