No matter the size of the business, all businesses require an Australian Business Number. An ABN is a unique 11-digit numerical identifier used to engage with customers, other businesses, and the government.
ABN vs Tax File Number (TFN)
ABNs are used to identify a business, whereas a TFN is used for individual and personal tax purposes. TFNs are used for dealing with the Australian Tax Office (ATO) at the individual level, while an ABN will be used for anything related to the business, including tax with the ATO. In order to apply for an ABN, you will also be required to have a TFN.
Before you apply for an ABN
ABNs are issued by the Australian Government as part of the Australian Business Register. It’s important to ensure, before applying for an ABN, that the purpose and use of the number will be legally fulfilled. From the Australian Government’s website, this means the applicant needs to:
Ensure they are going to operate a genuine business
Provide evidence of ABN entitlement
Be aware that false or misleading applications can be subject to a penalty of up to $12,600
Be prepared to have application information verified
Review the requirements when it comes to changes or cancellations related to the business once an ABN has been assigned
You can find out more about who is qualified to apply for an ABN here.
Do I need an ABN to operate my business?
As soon as a business is going to be used for trade, it will need to be registered with an ABN. Not to be confused with a hobby, an activity becomes a business once you decide to make a profit on the activities you’re conducting. Obtaining an ABN doesn’t take long, and once you begin dealing with other businesses or government agencies, it will be expected that you’re able to provide an ABN.
What are the benefits of having an ABN?
According to Lawpath, having an ABN is useful for:
Avoiding mistaken identity: ensures people can associate your business with your unique 11-digit ABN rather than potentially mistakenly adding the wrong business name
Makes your business easy to identify: useful for seeking government assistance, validating suppliers, government development, or in case of emergency
Allows you to get an Australian domain name: adding .org.au or .com.au to your website
Tax deductible: helps you claim anything related to running your business for tax reductions
Other tax benefits: such as claiming GST credits and tax fuel credits, leveraging the income-free threshold of $21,885, and claiming energy grant schemes
How do I get an ABN?
Applying or reapplying for an ABN is simple, just head to the Australian Government’s website.
