What is ABN (Australian Business Number)?
The Australian Business Number is an 11-digit identifier issued to businesses by the Australian Business Register. Without an ABN, payers must withhold 47% from your invoice. Required for GST registration, business name registration, and most B2B trading.
Example
A new freelance designer applies for an ABN free via abr.gov.au, receives it within minutes, and quotes it on every invoice. Without the ABN, clients would withhold 47% of payments.
How ABN (Australian Business Number) works in Australia
The ABN is the primary identifier for any business entity operating in Australia. It is a free, publicly visible 11-digit number issued by the Australian Business Register (ABR), which is administered by the ATO. All sole traders, companies, partnerships, trusts, and non-profit organisations can obtain an ABN.
**Who needs an ABN?**
You need an ABN if you are carrying on an enterprise in Australia. This includes: - Sole traders running any business activity for profit - Companies, partnerships, and trusts - Self-employed contractors and consultants - Landlords who are in the business of renting property - Non-profit organisations and charities
You do not need an ABN if you are purely an employee (your employer has the ABN), a hobbyist (not running a business), or providing purely domestic services.
**Applying for an ABN**
Applications are made online at abr.gov.au and are free. Most applications are processed immediately (within minutes), though some require manual review and may take up to 28 days. You will need: - Your Tax File Number (TFN) - Business structure (sole trader, company, trust, partnership) - Business start date and registered address - ASIC company details if applying as a company
**The 47% no-ABN withholding rule**
This is why every business must have an ABN. If you invoice another business and do not provide a valid ABN, that business is legally required to withhold 47% of the payment and remit it to the ATO before paying you. This is called no-ABN withholding. You can reclaim the withheld amount via your tax return, but the cash flow delay is significant.
The rule applies to B2B transactions only — individual consumers do not need to withhold, but most legitimate Australian businesses will not pay without an ABN.
**What an ABN is used for**
- Quoting on invoices to avoid the 47% withholding - Registering for GST (required if turnover exceeds A$75,000) - Registering a business name with ASIC - Opening a business bank account (most banks require an ABN) - Applying for government grants and contracts - Making voluntary agreements with the ATO for PAYG withholding arrangements - Super contributions and super choice forms
**ABN vs ACN vs TFN**
- ABN: 11-digit business identifier, all business entities, publicly visible on ABR - ACN: 9-digit company identifier from ASIC, only for registered companies, appears on company documents - TFN: 9-digit tax identifier, private, used for tax returns and payroll
For a Pty Ltd company, the ABN is typically the ACN with 2 digits prefixed — they are linked. The ACN must appear on company documents; the ABN must appear on invoices and tax-related correspondence.
**Cancelling an ABN**
If you cease business activity, you must cancel your ABN via abr.gov.au. A cancelled ABN means you can no longer claim GST credits or issue valid tax invoices. Keeping a dormant ABN active when you are no longer in business is a minor ATO compliance risk and should be avoided.
Related terms
The Australian Company Number is the 9-digit identifier ASIC issues to every registered Australian company. It must appear on company stationery, websites, and public documents. Companies also have an ABN; the ABN typically incorporates the ACN.
The Tax File Number is a 9-digit personal tax identifier issued by the ATO. Every Australian taxpayer needs one to lodge tax returns, receive Medicare, and avoid having tax withheld at the top marginal rate (47%). Companies have a separate company TFN.
GST is a flat 10% tax on most goods, services and other supplies in Australia. Businesses with turnover of A$75,000+ (A$150,000 for non-profits) must register and remit GST quarterly via the Business Activity Statement (BAS).
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