ABN explained: What is it and who needs one?

If you’re starting a business in Australia—or even freelancing on the side—you’ve probably heard of an Australian Business Number (ABN). But what exactly is it, and do you really need one?

An ABN is more than just a formality—it’s a vital part of running a business legally and efficiently. It helps identify your business to the government, customers, and suppliers, while also opening the door to benefits like GST registration and tax deductions.

In this guide, we’ll break down everything you need to know about this important business number, including what it is, who needs one, and how to get an ABN number.

What is an ABN?

An ABN is a unique 11-digit identifier issued by the Australian Business Register (ABR) and operated by the Australian Taxation Office (ATO) [1]. It identifies your business to the government, other businesses, and the public. 

You can use your ABN to [1][2]:

• Register for GST (Goods and Services Tax) and claim GST credits
• Claim business expenses as tax deductions
• Avoid Pay-As-You-Go (PAYG) tax on payments you receive
• Verify your business to others when engaging in business transactions like ordering or invoicing
• Set your business up to use government services online
• Get an Australian (.au) domain name

If you're seeking finance to grow your business, consolidate debt, or invest in equipment, you'll also need an ABN. Lenders rely on your ABN to assess your business’s financial history and credit profile, helping them determine whether you're eligible for a loan. 

Looking for a business loan to take your venture to the next level? At Valiant, we compare loans from over 90 lenders to match you with ones that work with your unique needs. We handle the application from start to finish—so you focus on building your business. Reach out today to get started.

Who needs an ABN?

Not everyone needs (or is entitled to) an ABN. You can easily check your eligibility on the Australian Business Register (ABR) website. Generally, you can apply if you're

• Running or starting an enterprise in Australia,
• Making supplies connected with Australia's indirect tax zone, or
• Registered under the Corporations Act.

There are also situations where a business has to apply for an ABN in order to operate legally or meet tax and regulatory requirements, particularly if:

• Your business has a GST turnover exceeding $75,000 and, as such, needs to register for GST,
• You send invoices or quotes for work as a contractor,
• You import or export goods for business purposes, or
• You need to register for other tax obligations, such as PAYG withholding, FBT, or luxury car tax.

You don't need an ABN if:

• You're earning income from a hobby or personal project (like selling handmade items or doing photography on the side),
• You're working as an employee, or
• You're freelancing occasionally but don’t meet the ATO's definition of carrying on an enterprise.

If you're unsure, the ATO’s “Are you in business?” page can help clarify your situation.

Applying for an ABN

Applying for an ABN is quick and free when done through the official government website:

Step 1: Check your eligibility based on the criteria detailed above.

Step 2: Gather your information—your TFN (for sole traders), details of your business structure, your business name (if registered), your contact details, and a description of your key business activities. 

Step 3: Apply online through the ABR website—the application typically takes 15-20 minutes to complete.

Step 4: Receive your 11-digit identifier. In most cases, it is issued immediately, but if the ABR needs to review your application, it may take up to 20 days [3].

Note: Getting an ABN doesn’t automatically register your business name. If you want to trade under a name other than your own, you’ll also need to register it with ASIC [4].

When to cancel your ABN

You should cancel your ABN if your business has been sold, has closed down, has changed its structures, or is no longer operating in or making supplies connected with Australia.

Before you cancel it, make sure you've met all your lodgement, reporting, and payment obligations with the relevant government agencies—such as repaying any GST credit refunds or paying any outstanding tax liabilities. It's recommended that you wait until all processes are finalised before proceeding with the cancellation.

Keep in mind that cancelling your ABN will automatically cancel related registrations such as GST, fuel tax credits, wine equalisation tax, and luxury car tax. It will also remove access for any authorised representatives using your business login credentials (which may limit your ability to use certain online government services).

FAQs

Can I have more than one ABN?

You can only have one ABN per business structure. If you operate multiple businesses under the same structure (for instance, as a sole trader), you generally only need one ABN. However, if you run businesses under different structures (for instance, one as a sole trader and another one as a company), you’ll need a separate business number for each one.

Is an ABN free?

Yes, you can apply for an ABN for free through the Australian Business Register (ABR).

What if my ABN is cancelled?

Your ABN may be cancelled, for instance, if the ATO believes you're no longer operating a business, in which case you'll receive a notice. If you think your ABN was cancelled by mistake or you’ve started operating again, you can reapply or request to have it reinstated through the ABR.

Do I need an ABN as a freelancer?

It depends. If you're regularly invoicing clients, advertising your services, or intending to make a profit—in other words, if you're freelancing as a business—you likely do need an ABN. If you're freelancing occasionally and don't have a clear business structure or profit intent, you may not be entitled to one.

References

1. https://business.gov.au/registrations/register-for-an-australian-business-number-abn 
2. http://ato.gov.au/businesses-and-organisations/starting-registering-or-closing-a-business/registration-obligations-for-businesses/work-out-which-registrations-you-need/business-or-company-registrations 
3. https://www.abr.gov.au/tax-professionals/applying-abn 
4. https://asic.gov.au/for-business/registering-a-business-name/