Registration on the Australian Business Register carries no government fee, and most applications return a number quickly.
Who is actually entitled to an ABN?
Someone carrying on an enterprise in Australia: running a business activity on their own account rather than under someone else's direction. A delivery rider choosing their own hours, a freelance designer with several clients and a harvest contractor invoicing a labour hire company all qualify. An employee does not, no matter what the employer prefers.
This question decides everything else about the application, and it is the one most commonly answered without thought. If a business is telling you to get an ABN before your first shift on a job that is rostered, supervised and equipped by them, you are not carrying on an enterprise, and the arrangement is likely to be sham contracting rather than contracting. Registering anyway does not make it legal and does not stop the super and award entitlements from being owed to you.
What does an application turn on?
A Tax File Number, first of all. An ABN application not matched to a TFN is far more likely to go into manual review, and that is where the delays live.
The rest turns on your identity details matching your passport exactly, and on a description of the enterprise the register can actually classify. Applications are usually held up for one of those two reasons rather than for anything to do with the work itself.
Where does GST come into it?
At $75,000 of turnover, which is the threshold above which GST registration becomes compulsory. Almost no working holiday maker reaches it, and staying below it keeps GST and the quarterly Business Activity Statements out of your life entirely.
A GST registration taken on by mistake is not harmless. It creates a reporting obligation every quarter whether or not there is income to report, and it has to be cancelled deliberately.
What does the ABN change once you have it?
It changes who is responsible for your tax, completely. Nothing is withheld from an invoice, so the whole liability sits with you until the tax return is lodged, at the working holiday maker rate of 15% on the first $45,000 of combined income. Genuine business expenses are deductible, which is the compensation for carrying the risk.
It also changes what your invoices have to carry. A payer receiving an invoice with no valid ABN on it is required to withhold 47% of the payment, and the excess is recovered at tax time. Quoting the number correctly on every invoice avoids the whole situation.
- Your name, and any business name you trade under
- Your ABN, quoted in full
- The date of issue and a description of the work done
- The amount payable and your contact details
When should you cancel it?
When the enterprise ends, which for most working holiday makers is when they stop contracting rather than when they leave the country. An ABN left active after you go keeps you on the register as a business, and any GST registration attached to it keeps generating Business Activity Statement obligations whether or not income exists.
Cancelling too early can cause problems if a final invoice is still outstanding, and cancelling late is untidy rather than expensive. Our guide to cancelling an ABN before leaving Australia sets out what has to be settled first.