Written byAn Australian business number (ABN) is the unique 11-digit identifier the ATO issues to a business or other entity through the Australian Business Register.
Also known as: ABN, Australian business number, ABN number
Key points
- A sole trader, company or trust can hold one, but only if it is carrying on an enterprise, which the ATO checks at application.
- You quote it on invoices and use it to register for GST, PAYG withholding and other tax obligations.
- Your ABN, entity type and GST registration date are public on ABN Lookup, which lenders check when they assess a business application.
- An ABN on its own does not make you a company: an ACN is a separate number ASIC issues when a company is registered.
How an ABN works
The Australian Business Register (ABR) is run by the ATO and holds the identity details of every entity that registers for an ABN. You apply online, free of charge, and in most cases the number is issued straight away; some applications are held for review. To be entitled you need to be carrying on an enterprise, or be about to start one, which is why the ATO asks about your activities, start date and structure.
Once issued, the ABN sits on your tax invoices and quotes, and it is the number you use to register for GST and to deal with the ATO online. If you stop trading, or the ATO decides you are not carrying on an enterprise, the ABN is cancelled and shows as cancelled on ABN Lookup.
Why lenders ask for your ABN
For a business loan, car loan or equipment finance, the ABN is the first thing a lender verifies. ABN Lookup shows when the number was registered, whether it is active, the entity type and whether the business is registered for GST, so it doubles as a quick check on how long you have been trading.
Many lenders set a minimum period of ABN registration before they will lend, and a longer history usually opens up more finance options and lighter documentation. Low doc finance leans on this record in place of full financials, which is why a recently registered ABN tends to mean a smaller panel of lenders and more paperwork.
ABN, ACN and business names
A company registered with ASIC receives a nine-digit ACN, and most companies then apply for an ABN as well; the ABN is often the ACN with two extra digits at the front. A sole trader or partnership has an ABN but no ACN because there is no company to register.
A business name is different again. It is the trading name you register with ASIC if you trade under anything other than your own name, and it is linked to your ABN rather than replacing it.
Example
An electrician in Ballarat leaves her employer to work for herself. She applies for an ABN as a sole trader, quotes it on her first invoices and registers for GST once her turnover is heading past the threshold. Eighteen months later she applies for finance on a work van. The lender looks up her ABN, sees it has been active since she started and that she has been GST-registered for most of that time, and treats the application as an established sole trader rather than a start-up, which widens the finance options open to her.
Frequently asked questions
Do I need an ABN to get a business loan?
In practice, yes. Lenders use the ABN to confirm the business exists, how long it has been trading and whether it is registered for GST. Some finance options accept a newly registered ABN, but most business lending assumes an active ABN, and a longer registration history usually means more choice and less paperwork.
How much does it cost to get an ABN?
Applying for an ABN through the Australian Business Register is free. Some private services charge a fee to lodge the application for you, but they are not required. You can apply yourself online through the ABR or the Business Registration Service, and most applications are decided immediately.
What happens if I don't quote an ABN on an invoice?
If you supply goods or services to another business and do not quote an ABN, the business paying you may be required to withhold tax from the payment at the top rate and send it to the ATO. You can claim a credit for the amount withheld when you lodge your tax return, but it is a cashflow hit you can avoid by quoting your ABN.
Is an ABN the same as a tax file number?
No. A tax file number (TFN) is a private number used for your dealings with the ATO, and it is best kept private. An ABN is a public business identifier that appears on invoices and ABN Lookup. A sole trader has both: a personal TFN and a business ABN.
How long does my ABN need to be active before I can get finance?
It varies by lender and by finance type. Many lenders prefer to see an ABN that has been active for a year or more, and some ask for GST registration as well. Others will finance a vehicle or equipment for a newer business with a deposit or extra documents. A young ABN narrows the field rather than ruling you out.
Related terms
Sole trader
A sole trader is the simplest Australian business structure: one person owns and runs the business, keeps the profits, and is personally liable for its debts.
Read definitionGoods and services tax (GST)
Goods and services tax (GST) is a broad-based 10% tax on most goods and services sold in Australia, which registered businesses collect on sales and pay to the ATO.
Read definitionCompany
A company is a separate legal entity, formed under the Corporations Act 2001, that can own property, borrow and be sued in its own name, independently of its shareholders.
Read definitionTax invoice
A tax invoice is a document issued for a taxable sale, normally by the GST-registered seller, recording the sale and the GST payable so the buyer can claim a credit.
Read definitionATO
The ATO is the Australian Taxation Office, the national tax authority that collects income tax, GST and PAYG, administers superannuation rules, issues rulings and enforces compliance.
Read definitionPartnership
A partnership is a business structure in which two or more people or entities carry on a business together with a view to profit, sharing profits, losses and liabilities.
Read definitionGo deeper
Sources
This article is general information only and is not financial advice.