No, you may not need an ABN to sell at markets in Australia. However, it all boils down to the nature and scale of your operation and if your primary intention is to make profit or solely for leisure. In Australia, there are two approaches you can take to a business: a casual or a more commercially-oriented approach. Note that the first approach is an ideal way to make a bit of pocket money and cover the cost of your supplies. With this approach you are not required to have an ABN.
However, if you make enough profits to pay the bills, your hobby has turned into a business. Note that this is when you will be mandated to have an ABN. If you are running a market stall twice a week and that is your primary source of income, then you will need to register for an ABN. In addition, if your business sources to wholesale suppliers, you will need an ABN as many wholesalers will only supply to a registered business.
In Australia, the line between a hobby and a business can be very daunting to define. Howbeit, the ATO provides easy to understand information on the definition of a business. If you are treating an operation as a business and managing it in a businesslike manner with the intent of generating income, you are in business.
Over time, it has been proven that dollar threshold is not an ideal test for analysing if an activity is a business in Australia. Some hobbies, such as buying and selling muscle cars, are very expensive. However, what tends to be relevant is whether you are aiming to make a profit out of the activity.
Once an ABN is issued to an entity, it will always remain the same. Although an ABN can be deactivated if the entity stops trading, but it can always be reactivated in future. Registering for an ABN is not hard at all and only takes a few minutes of your time. All that is required is to answer a series of questions about your business and the individuals who are responsible for the business.
Once this is complete, the ATO will send you out a confirmation via the post with your 11 digit ABN; this can take up to 28 days. Once you’ve got an ABN, it falls on you to steadily make sure your details are up to date. You should update your ABN details within 28 days if any of your key business details change, although it’s important to note that if you change your business structure (i.e. go from a sole trader to a partnership), you’ll need to apply for a new ABN.
Also note that Australian Business Numbers are publicly available on the Australian Business Register. You can check an entity’s ABN by going to ABN Lookup, which is a website that gives the public access to information on the ABR. You can search by business name or by ABN, and you will be able to see current and historical details about the entity – including its business structure, whether it is registered for GST, where it is located, and how long it’s been active.
The Benefits of Having an Australian Business Number
One of the major benefits of having an ABN is that you’ll save time and money. That’s because other businesses are legally expected to withhold tax from payments to you if your business doesn’t quote an ABN on invoices. So, they are expected to withhold it at a rate of 46.5 percent. So even though your business can claim back any excess tax paid in the tax return at the end of the year, it’s not ideal for your cash flow. Having an Australian Business Number also means your business can:
- Claim GST credits (when registered for GST)
- Claim fuel tax or energy grants credits (if you qualify)
- Stay compliant and be able to lodge activity statements (BAS/IAS) with the ATO
- Confirm your business identity to others when ordering and invoicing
- Avoid pay-as-you-go (PAYG) tax on payments you receive (see below)
- Obtain an Australian domain name (for your .au website)
- Deal with other businesses more seamlessly.
How to Apply for an ABN in Australia
- The first thing you will have to understand is that there is no cost associated with registering an ABN. To apply for an ABN, fill out the online ABN application. The ABN registration process involves a series of questions that determine ABN eligibility. Coupled with answering eligibility questions, you’ll also need to provide identity information. To complete your ABN application – depending on your circumstances – you will need your:
- Tax file number (TFN) and the TFNs of any associates – e.g. partners, directors and trustees.
- Tax agent registration number
- Professional advisor number – if you’re using the services of a professional advisor, you can provide their licence number e.g. Australian Financial Services licence (AFS licence)
- Previously held ABN
- Australian company number (CAN) or Australian registered body number (ARBN). Companies and registrable organisations can register for an CAN or ARBN through the Australian Securities and Investments Commission (ASIC)
- Date your ABN is required. This should be the date that you expect to start any business activities – e.g. buying stock. This date can’t be more than six months in the future when you apply
- Entity legal name – appears on all official documents or legal papers
- Authorised contacts – e.g. the applicant or tax agent. They must be authorised to make changes or update information on behalf of the entity
- Associates’ details – associate requirements are different for each entity type
- Business contact details including an address, postal address, and email address and telephone number. Your email address must meet requirements such as; being between 5 – 200 characters, contain no spaces and not start with “support@”, “Sales@” or “info@”
- Business activity – usually the main source of income for your enterprise e.g. agriculture, construction, investment and manufacturing. Self-managed super funds may not be carrying on a business and therefore might not have a main business activity
- Business locations – provide business locations for all premises operated by your enterprise, unless there is a risk to safety of individuals as a result of the disclose e.g. a women’s refuge.
The Australian Business Number (ABN) is a unique 11 digit identifier issued to all entities registered in the Australian Business Register (ABR). The 11 digit ABN is structured as a 9 digit identifier with two leading check digits. The process to undergo when you apply for an ABN is quick and convenient.
To avoid unnecessary delays, you must ensure all your entries in the ABN form are correct and truthful. Even though it might not be a requirement when you are selling in the market, but it might offer you a lot of benefits, especially if you are looking to run a business and not a hobby.