Just because your employer tells you to get an ABN, doesn't mean you should!

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The following things mean you’re entitled to an Australian Business Number (ABN): 

  • You're carrying on or starting an enterprise in Australia.
  • Or, you're making supplies connected with Australia’s indirect tax zone.
  • Or, you're a Corporations Act company.

Noticeably missing from the above list is “because my employer said I have to have one”. 

The Australian Business Register are cracking down on ineligible ABN holders. This is because many employees in 'irregular' or casual jobs (such as performers, musicians, labourers and consultants) are commonly being asked to get an ABN by employers, when they are not actually eligible for one.

Despite the fact that an employer can't ask someone to get an ABN as a condition of employment, some are still telling workers that they need one in an attempt to treat employees as independent contractors. 

The reason for this? As a contractor, you can be paid less and miss out on superannuation, and paid leave entitlements that you may be eligible for as an employee. But just because they call you a "contractor", that doesn't mean you actually are.

A genuine contractor is running a business, which means they:

  • Pay their own income tax and GST directly to the ATO.
  • Source their own clients (e.g. through advertising).
  • Delegate work to others, without approval from any employers or managers.
  • Are responsible for quoting work, including setting or negotiating their own prices and invoicing.
  • Have a separate business bank account.
  • Pay for their own business insurance (e.g. public liability).

If none of those things apply to you, then you’re an employee and you're not eligible for an ABN! 

The Australian Business Register (ABR) identifies and cancels ABNs where there is no entitlement. They are currently conducting regular ABN entitlement reviews, particularly in industries where there are high levels of misuse.

You should always cancel your ABN if your business has been sold, has closed down or is no longer operating in Australia. If you want to restart your business in the future, it’s easy to get your ABN back.

Employers please note: If you operate a business and engage a worker, you're responsible for determining whether a worker is an employee or contractor. If you employ workers incorrectly under an ABN you can be penalised.

For more info, visit the ABR website.