Do I Need an ABN to Invoice?

You don't strictly need an ABN to send an invoice — but if you're running a business, you almost certainly should have one. Without an ABN, the business paying you is generally required to withhold 47% of your invoice and send it to the ATO. So while it's legal to invoice without one, doing so as a business hurts your cash flow and looks unprofessional. This guide explains when you need an ABN, the exceptions, and how to get one for free.

The short answer: it depends on whether you're in business

An Australian Business Number (ABN) is an 11-digit identifier for businesses. Whether you need one to invoice comes down to a single question: are you carrying on an enterprise (a business), or is this a one-off, private or hobby activity?

• If you're carrying on a business — freelancing, contracting, running a trade, selling products regularly with the intention of making a profit — you should register for an ABN and quote it on every invoice.
• If it's a genuine hobby or private sale — you're not carrying on an enterprise — you're not required to have an ABN, and there's a simple form to hand the payer instead (more on that below).

The 47% no-ABN withholding rule

This is the rule that catches people out. Under the "no-ABN withholding" rules, if a business pays another business for goods or services and the supplier doesn't quote an ABN, the payer must withhold 47% of the payment — the top marginal tax rate — and remit it to the ATO.

So if you send a $1,000 invoice without an ABN, your client may only pay you $530 and forward $470 to the tax office. You can eventually reconcile that amount through your tax return, but in the meantime your cash flow takes a serious hit. That's why nearly every business quotes an ABN: it's the simplest way to make sure you get paid the full amount.

Exceptions: when no ABN is fine

The 47% withholding rule doesn't apply in a handful of situations. According to the ATO, a payer doesn't need to withhold when any of these apply:

• The supply is private or domestic in nature (for example, selling personal second-hand goods).
• The whole payment is $75 or less (excluding GST).
• The supplier is an individual under 18 and the payments don't exceed $350 a week.
• The supplier gives the payer a completed Statement by a supplier form, confirming that an ABN isn't required.

If one of these applies, you can invoice without an ABN and the payer keeps the full amount aside from any other obligations.

Hobby vs business: which are you?

The line between a hobby and a business matters, because a hobby doesn't need an ABN and its income generally isn't taxable, while business income is. There's no single test — the ATO and business.gov.au look at the overall picture, weighing factors such as:

• Whether you intend to make a profit, and whether there's a reasonable prospect of one.
• The size, scale and repetition of your activity — is it regular and organised like a business?
• Whether you keep business records, advertise, and operate in a businesslike way.
• Whether you're doing the activity to earn a living rather than for recreation.

A few one-off craft sales at a market is likely a hobby. Selling handmade goods every weekend with a storefront, marketing and a goal of turning a profit looks like a business. If you're unsure, the business.gov.au and ATO websites have detailed guidance, and it's worth getting advice if the amounts are significant.

The Statement by a supplier form

If your activity is a hobby, or you otherwise have a valid reason for not quoting an ABN, you can give the payer a Statement by a supplier form. It's a short ATO form where you declare the reason an ABN isn't required — for example, that the supply is made in the course of a private recreational pursuit or hobby. Once the payer has that statement, they don't withhold the 47%. You can download it from the ATO website.

How to get an ABN (it's free)

If you've decided you're in business, getting an ABN is quick and costs nothing. Apply through the Australian Business Register at abr.gov.au. You'll need details such as your tax file number, the business structure (sole trader, company, partnership), and a description of your activity. Most applications are processed immediately, and you can start quoting your ABN straight away.

One warning: an ABN is free directly from the government. Some third-party websites charge a fee to lodge the application on your behalf — you don't need to pay anyone. Go straight to abr.gov.au.

Having an ABN is separate from registering for GST. You only need to register for GST once your turnover reaches the $75,000 threshold (or if you drive taxi or rideshare). Many sole traders have an ABN but aren't registered for GST, which means they don't add 10% to their invoices.

Putting it on your invoice

Once you have an ABN, include it on every invoice. If you're not registered for GST, your document is just an "Invoice" showing your ABN. If you are registered, it becomes a "Tax Invoice" and must show the GST. For a full walkthrough of laying out the document, see our guide on how to write an invoice, and if you trade as a sole trader, our guide on how to invoice as a sole trader in Australia covers the specifics.

This article is general information, not financial or tax advice. Your circumstances are unique — check the ATO, business.gov.au and abr.gov.au, or speak to a registered tax agent, before acting.

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