You need an ABN if you're running a business in Australia, meaning a real commercial activity with a profit motive, and it's free to get. You can't get one for a hobby or for work you do as an employee, and if you're in business but don't quote an ABN, the businesses paying you must withhold 47%.
The ABN question comes up the moment a hobby starts earning or a new "contract" job asks for one. The answer isn't always yes, and sometimes it's "you're not allowed". Here's how the Australian Business Register and business.gov.au draw the line.
ABN: yes, no or not allowed
| Your situation | ABN? |
|---|---|
| Running or starting a business with a profit motive | Yes, you're entitled to one |
| Hobby for enjoyment, occasional sales | No, you're not eligible for an ABN for a hobby |
| Employee, even if the employer calls it contracting | No, you're not entitled to one |
| Ride-sourcing driver | Yes, the ATO says you must have one and register for GST |
| Selling to businesses as a hobby | No ABN; use a Statement by a supplier form |
What counts as running a business
The ABR says there's no single test, but lists the features of a business: a significant commercial activity of reasonable size and scale, an intention to make a profit shown by a business plan, being systematic and organised with records kept, and being run in a similar way to others in the same industry.
If you're only getting started, the ABR expects some commencement activities, such as advertising or a social media account or website for the business, licences or insurance, or buying equipment or stock. You don't need all of them, but you'd be expected to show some if asked, because the ABR can review your entitlement at any time.
The catch: an ABN you're not entitled to
This is serious. The ABR warns you may face prosecution or criminal charges if you apply for an ABN, register for GST and claim GST refunds when you're not entitled. And it's clear that employees, including apprentices, trade assistants and labourers, aren't entitled to an ABN for that work even if the employer calls it contracting. An employer shouldn't ask you to get an ABN as a condition of employment. If that's happening to you, it's worth checking your rights as an employee.
Hobby vs business: what changes
| Hobby | Business | |
|---|---|---|
| Declare income to the ATO | No | Yes, in your annual return |
| Claim losses or deductions | No losses claimed | Yes, and you generally need an ABN to do it |
| Keep records | Not required, but good practice | Required |
| ABN | Not eligible | Entitled; free to get |
Selling to businesses without an ABN
If you sell to businesses as a hobby, they may ask for an ABN. The ATO's Statement by a supplier form lets you explain why you're not quoting one, so they don't withhold. You can use it, for example, if the supply is a private recreational pursuit or hobby, if you're under 18 and the payment isn't over 350 dollars a week, or if the payment isn't over 75 dollars excluding GST. You can't use it if you're an employee or if you're running a business and entitled to an ABN. If the payer thinks your statement is false, they must withhold 47%.
Getting an ABN when you do need one
If you're in business, applying is free through the Australian Business Register. You'll be asked questions designed to work out whether you're carrying on an enterprise, so answer them plainly and keep evidence of what you've done to start, such as a website, a business social media account, insurance or stock bought. If you drive for a ride-sourcing app, the ATO says you need an ABN and GST registration before your very first trip, whatever you earn.
Once you have one, put it on your invoices. That's what stops a business customer withholding 47% from what they pay you, and it's how they know you're a supplier rather than an employee.
ABN vs TFN
They're different numbers for different jobs. Your tax file number is your personal tax ID for life. An ABN identifies a business. A sole trader uses their own TFN for their personal tax return and an ABN for the business side, such as invoicing and GST.
How to decide in five questions
- Am I trying to make a profit, or mainly doing this for enjoyment?
- Is it regular and organised, with records?
- Have I done anything to set it up as a business, like a website, insurance or stock?
- Am I really an employee of the person paying me?
- Are businesses I sell to likely to withhold 47% if I don't quote an ABN?
My verdict
If you're in business, get the ABN: it's free and saves you from 47% withholding. If it's a hobby, don't apply, and use the supplier statement when a business asks. And never accept an ABN as a condition of a job. For Australian online income, see Payoneer in Australia, TikTok Shop in Australia and Patreon in Australia.
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Frequently asked questions
Do I need an ABN for a side hustle?
If it's a business, with a profit motive and regular commercial activity, you're entitled to one and it's free. If it's a hobby, you're not eligible for an ABN.
Can I get an ABN for a hobby?
No. Business.gov.au says you're not eligible for an ABN for a hobby.
What happens if I don't have an ABN?
If you're in business and don't quote one, other businesses must withhold 47% from their payments to you.
Can my employer ask me to get an ABN?
The ABR says an employer shouldn't ask you to get an ABN as a condition of employment, and employees aren't entitled to an ABN for that work.
Is an ABN the same as a TFN?
No. A tax file number is your personal tax ID. An ABN identifies a business, and a sole trader uses both.
Can I use a Statement by a supplier instead of an ABN?
Only in set cases, such as a hobby or a private recreational pursuit, or a payment of 75 dollars or less excluding GST. You can't use it if you're running a business.
Does an ABN cost anything?
No. Business.gov.au says getting an ABN is free.
