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How to get an ABN?

How to get an ABN?

When you decide to work in Australia, whether you are a backpacker or not, some paperwork must be done. In most cases, you will only need to create a TFN (Tax File Number). It is a requirement to work legally in Australian territory. However, an increasing number of travellors decide to be self-employed. To make it happen, they have to create an ABN. We will explain here what an ABN is and which procedure to follow before obtaining it.

What is an ABN?

If you are willing to work in Australia as an employee you will be asked for a TFN. The TFN (Taxe File Number) is a unique 9 figure number delivered by the Australian Taxation Office. This number is compulsory to work in Australia. You will be asked for it by your Australian employer.

For more information about the TFN: Arriving in Australia – First steps

However if you have a trade for example and you want to be self-employed while living in Australia, it is totally feasible and for that, you will need an ABN. An ABN is a unique 11 figure number. It is necessary to get it when you are willing to work for yourself. Indeed, it is nothing else but your business number. Your ABN gives you the right to be your own boss and work freelance in the sector of your choice (cleaning, delivery, construction as a contractor, etc.). With an ABN you are actually invoicing your clients instead of receiving a payslip. You cannot invoice anybody without having an ABN.

Note: When you are under contract with your employer you won’t need an ABN, instead you will work under your TFN. It is only if you are self-employed that you will need your ABN.

You need to hold a TFN to be able to get an ABN. When you will be filling in your application you will be asked for your TFN.

How to get an ABN?

Applying for an ABN is free. The application is to be made online, on the Australian Government website: https://abr.gov.au/.

You will only need to complete a series of questions to make sure your activity is eligible for an ABN and obtain it.

You will be asked for the type of business (usually individual sole trader) and the nature of your activity. People working on a construction site will for example answer “labourer”, for those wanting to be freelance will answer “in a kind of business”.

Then you will have to add your personal information: name, address, date of birth and TFN.

The postal address you include in your application form is where you will be receiving your ABN after maximum of 28 days.

What is the go with taxes?

Be really careful, you will be asked to pay for your tax at the end of the year instead of paying all year long.

When you are an employee, taxes are deducted directly from your pay. At the end of the year you only need to report on the ATO website or office the amount paid by your employer and written on your payment summary(ies).

When you are self-employed, the procedure is totally different. You will have to pay for the taxes earned yourself at the end of the financial year. Technically, you will be receiving a payment from your client and then it is your responsibility to pay for your taxes. For this reason it is extremely important to save money all year long to be able to pay your taxes at the end of the financial year.

In the case where you would have been working under both TFN and ABN during the financial year, you would have to declare all your income on the same declaration.

ABN and GST

Some people wonder what GST is. In Australia, GST is 10% of a product or service. However, you only start paying GST if your income is superior to $75 000. Under $75 000 you don’t have to worry about it.

Important: Remember to always save money all year long to be able to pay for your taxes at the end of the year. You must pay it to the ATO or you will have a debt to the Australian government.

Backpackers Guide
Written by Backpackers Guide

The ultimate guide to work and travel around Australia with a Working Holiday Visa ! Get all the tips and advice from other backpackers. The first travel guide written by Backpackers for Backpackers in Australia!!!