When do you need an ABN?

Business Advice & Assistance Starting a Business

If you’re about to start a new business or you just have you’re probably wondering when do you need an ABN (Australian Business Number).  There are some situations that legally require you to register an ABN, while there are other situations where registering an ABN is optional but advantageous.   This article will list the major reasons why you would want to or need to register an Australian Business Number.

Business GST Turnover of $75,000 or More

According to the Australian Tax Office you must register for GST (Goods and Services Tax) when your business GST turnover is $75,000 or more.  GST Turnover means your gross business income less GST.   On the same page of the ATO website it says “Before you register for standard GST you need to have an Australian Business Number (ABN)”.  

Therefore you must register for an ABN once your business turnover is  $75,000 or more.

You’ve Started a New Business and Expect First Year GST Turnover of $75,000 or More

If you’re just starting a new business and expect that your GST turnover will be $75,000 or more in the first year of operation you must register for GST.  As mentioned earlier you must register an ABN to be registered for GST.

If you expect to exceed the $75,000 GST turnover limit the first year of a new business you must register an ABN.

You Want to Claim GST Credits on your Purchases

If you want to claim GST credits on your business purchases you must (of course) be registered for GST.  As mentioned earlier you must have an ABN to be registered for GST.

Registration of an ABN is required when you want to claim GST credits on your purchases.

You Operate a Limousine, Taxi, or Ride Sourcing Business

According to the Australian Tax Office you must register for GST (and therefore register an ABN) if you are operating a Taxi, Limousine, or Ride Sourcing Business (such as Uber, DiDi or Ola).  This is required regardless of GST turnover.

Registration of an ABN is required when you are running a ride sourcing, taxi, or limousine business.

You Want to Register a Business Name

The Australian Securities and Investment Commission (ASIC) will not allow you to register a business name without a valid ABN or be in the process of applying for one.  It’s important to remember that you cannot trade under a name other than your own without a business name, so this is a very powerful reason for getting an ABN.

You must have an ABN or be in the process of applying for one to register an Australian business name.

You want to Register a .com.au Domain Name for Your Business

The Australian Domain Name Authority policy documents have a range of requirements for a business to register a .com.au domain.  None of them explicitly mentions the requirement for an ABN, but the simplest requirement to register a domain name is to have a registered business name.  Registering a business name does indeed require an ABN.

The simplest way of registering a .com.au domain for your business is with a registered business name which requires an ABN.

You Provide Goods or Services to Businesses

If you do not quote an ABN to a business when supplying it with goods or services valued at $75 or more (excluding GST) then that business must withhold 47% of your payment and report on it in their next Business Activity Statement (BAS).  Your customer will also have to complete a payment summary that you can then use to claim the withheld tax back on your income tax return.   You can read more about withholding tax if an ABN isn’t supplied here.

If you supply goods or services to a business worth $75 or more and do not want them to withhold 47% of your payment then you must register for and quote your ABN to them.

There are a range of reasons why you MUST register an ABN for your business, and a range of situations where it is desirable to have an ABN for your business.  If you’re still not sure if your business needs an ABN or not contact a Polaris Centre business advisor via email or give us a phone call on (08) 8260 8205.

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