Small Business
What Are the Benefits of Working Under an ABN?
5 Benefits Of Working Under An ABN
Last updated 11 Jun 2021

Used by the government to identify your business, an Australian Business Number (ABN) is an 11-digit identifier that is required for any business that has a GST turnover above $75,000. Although it may be a legal requirement, there are also plenty of benefits to working under an ABN. Read on to learn more about some of these perks, from claiming tax credits to buying an Australian domain name.

Help identify your business

When a business is assigned an ABN it is added to the Australian Business Register (ABR), a register that stores information about businesses currently operating within the country. The register operates in the hope of allowing both the government and the community to verify the business details they are provided with. Being listed on the ABR ensures that other businesses, your suppliers and even your customers can confirm your business details are valid.

Even if you take the time to come up with what you believe is an original business name, it’s entirely possible that your small business may have a name that is very similar to, or the same as, another in Australia. Another benefit of having an ABN is that it allows anyone who deals with your business to distinguish between yours and others with similar names.

Avoid pay as you go tax on payments

In most circumstances, if a business does not have an ABN, anyone who is paying them for goods or services valued above $75 (excluding GST) must withhold 47% of the total payment, with the withheld sum being sent on to the Australian Tax Office (ATO). Businesses that do supply their ABN to their suppliers or other businesses that they interact with will instead receive their payments in full. If you’d like to make the most of this benefit of working under an ABN, register your business for an ABN and quote it on any invoices you create.

Claim tax credits

As you set up and run your business, there are likely to be some expenses that you can claim as tax deductions. If you’re wanting to claim business expenses when you lodge your next tax return, you will need to have an ABN to be eligible to do so. Without an ABN, you won’t be able to claim valid business deductions, such as motor vehicle expenses, travel expenses, operating expenses and any relevant capital expenses. As with all other tax deductions, you will need to keep a record of any expenses you wish to claim, and you will also need to prove that they were incurred for your business and not personal use. If they were partially for personal use, you will need to identify what portion applies to your business operations.

Claim energy grant credits

The Energy Grants (Credit) Scheme was established by the Australian government in 2003 to incentivise the use of cleaner fuels by businesses and other entities. For businesses that conduct activities that require the use of diesel fuel, a switch would need to be made to ultra-low sulphur diesel, for example. To be able to claim the credits that are distributed as part of the scheme, you will need to have an ABN. Without an ABN, your business will not be eligible.

Get an Australian domain name

For many businesses, a digital presence is incredibly important. Not only is a website a good place to display key information, such as your contact details, opening hours and information about your goods or services, but if you plan on operating an online business, you’ll also need somewhere to sell your goods.

In Australia, domain names that end in .com.au, .org.au and .au are administered by the Australian Domain Name Authority (auDA). They are referred to as country code Top Level Domains (ccTLD) and you must have an ABN to purchase one. In contrast, other domains, such as .com and .org don’t require an ABN and can be purchased by anyone around the world. Having an Australian ccTLD is not only a benefit of having an ABN but can also be important as it tells visitors to your website that you are an Australian-based business.

Want to learn more about ABNs and starting a small business? Visit our small business blog to discover some more great resources.

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Aon has taken care in the production of this document and the information contained in it has been obtained from sources that Aon believes to be reliable. Aon does not make any representation as to the accuracy of the information received from third parties and is unable to accept liability for any loss incurred by anyone who relies on it. The recipient of this document is responsible for their use of it.