You may have started doing some freelance work before getting your ABN sorted, or you might be working as an individual rather than a business entity. Whatever the reason, invoicing without an ABN in Australia comes with serious consequences that you need to understand before you send that first invoice.
The 47% withholding rule
If you supply goods or services to another business and do not quote your ABN on your invoice, that business is legally required to withhold 47% of the payment and send it to the ATO. This is called the “no-ABN withholding” rule under the Tax Administration Act 1953.
In practice, this means if you invoice $1,000 without an ABN, your client must pay $470 to the ATO and only send you $530. You can claim this back when you lodge your tax return, but it means you are out of pocket until then. Most clients simply refuse to pay without an ABN, which is their legal right.
When you can invoice without an ABN
There are narrow exceptions to the no-ABN withholding rule. The payer does NOT have to withhold tax if:
- The total payment is $75 or less (excluding GST)
- The supplier is not conducting a business — for example, an individual selling a personal asset
- The supplier is a foreign resident and the payment is for a service that qualifies for a different withholding arrangement
- The supplier has quoted their Tax File Number (TFN) instead (for certain arrangements)
For most freelancers and contractors, none of these exceptions apply. If you are running a business — even a very small one — you need an ABN.
How to get an ABN
Getting an ABN is free and takes about 15 minutes online at the Australian Business Register (abr.business.gov.au). You can apply as a sole trader, partnership, company, or trust. Most sole traders and freelancers are eligible immediately.
To apply you will need:
- Your Tax File Number (TFN)
- Your personal details (name, date of birth, address)
- Information about the type of business you are running
- Your business address (can be your home address)
Your ABN is usually issued immediately upon completing the online application. Once you have it, add it to every invoice you send.
What if a client asks for an invoice before your ABN arrives?
If you have applied for an ABN and are waiting for it, you can explain the situation to your client and ask them to hold the invoice until your ABN arrives. You can also ask them to pay in full and agree to provide the ABN-inclusive invoice retrospectively (though this requires their agreement and trust).
Alternatively, some clients will accept a statutory declaration explaining that you have applied for an ABN and it is in progress — though this is uncommon and depends on your client's policies.
The difference between ABN and GST registration
An ABN and GST registration are two separate things. Every business needs an ABN. GST registration is only required (or optional) depending on your turnover. You can have an ABN without being registered for GST — and this is the correct situation for most new freelancers whose turnover is under $75,000. See our guide on the $75,000 GST threshold.