A Basic Overview for Lay People

• Please note that the following material is not intended to be tax advice.
• If you are running a business and you expect to have a turnover (this means income, or sales - it does not mean profit) of more than $50,000 per year, then you MUST register for GST.
• If you are running a business and you expect to have a turnover of less than $50,000 per year then you MAY register for the GST. If you don't register for GST, then your customers MUST deduct tax from what they pay you at the highest tax rate.
• If you spend money on things for your business and you want to get the GST back from the government, then you must get an ABN and register for the GST.
• To be able to register for the GST you must first apply for an ABN. Don't worry about why. That is the Government's process.
• If you want FACCS to assist you, then you must first Register a Business Name or Form a Company or if you are an individual, you must already have a Tax File Number.
• If you are an individual, sole trader, sub-contractor or individual trades person, FACCS can still assist you. However, you must already have an individual Tax File Number. FACCS can not process an application for a Tax File Number from an individual.

The following material applies to commercial enterprises and is based on information provided by the ATO.

What is an ABN?

The Australian Business Number (ABN) is a single identifier for all business dealings with the Australian Taxation Office (ATO) and for dealings with other government departments and agencies.

Do I need an ABN?

Not everyone is entitled to an ABN.

• Companies registered under the Corporations Law and business entities carrying on an enterprise in Australia are entitled to an ABN.
• Employees and hobbyists are not entitled to an ABN as they are not carrying on an enterprise.

Is the ABN compulsory?

Applying for an ABN is not compulsory. However, if you are required to register for GST, you will need to apply for an ABN as well. All businesses with an annual turnover of $50,000 or more must register for GST and will need an ABN to do this. Organisations with a lower annual turnover may choose to register for the GST and can still apply for an ABN.

Why might my enterprise need an ABN?

You need an ABN and GST registration in order to claim GST credits for any GST you have paid for goods and/or services you have used in your business. If you are supplying goods or services, you will need to be able to quote an ABN so that other businesses do not withhold tax at the top marginal rate when they pay you.

How does the ABN affect relations between businesses?

Businesses registered for GST are required to issue tax invoices that quote their ABN. Under Pay As You Go taxation, businesses receiving an invoice are required to withhold tax from their payments for goods and services if an ABN is not quoted. So, if you run a business and issue invoices, then your customers are required to deduct tax at the maximum rate from what they pay you.

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