What is an Australian Business Number (ABN)?

ABN vs Tax File Number (TFN)

ABN’s are used to identify a business, however a TFN is used for individual and personal tax purposes. TFN’s are used for dealing with the Australian Tax Office (ATO) at the individual level, an ABN will be used for anything related to the business (also inclusive of 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

ABN’s 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 to 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: which 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: this is 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 deductable: to help you claim anything related to running your business to help with 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.