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ABNs: Fact and fiction

Last updated: 4th Jun 2019

We want to make sure all of our businesses are as genuine and as committed to quality customer service as we are. So we’re making it compulsory for all new businesses to supply us with a valid Australian Business Number (ABN). With the introduction of this new function, we thought we’d give you a quick run-down (or refresh your memory) about the ins and outs of ABNs and what it might mean for you.

True: It is completely free.

False: It means you have to pay GST.

Many freelancers who earn under the $75,000 threshold assume that an ABN will force them into paying extra tax. This just isn’t true. In fact, there are tax claim benefits to having an ABN. An ABN allows your business to claim back GST credits, claim fuel tax credits you may be eligible for, offer fringe benefits to employees, and register to use a PAYG (pay as you go) withholding system.

True: If your business doesn’t quote an ABN on your invoices, other businesses are legally bound to withhold tax at a rate of 46.5% from any payments they make to you.

However, you don’t need to worry because you can claim it back at the end of the year. Everybody likes steady cash flow.

False: It is a headache to get one.

You can apply online via the Australian Business Register website. If you have all your information ready to go (i.e. your tax file number and business details), your ABN should be allocated immediately.

True: An ABN will make it easier for your business to deal with the government.

Not only does it help you deal with government agencies and departments, it also makes it easier to deal with other businesses.

False: You can register website domain name with an ‘.au’ extension without an ABN.

You must have an ABN to do so.

True: An ABN will allow potential customers to see that you’re authentic.

When you have a valid ABN, customers will see you as a more trustworthy and legitimate business.