You have started a business. You apply for an ABN. You get the number. Then someone asks: “Are you registered for GST?” You pause.
“Isn’t that what the ABN is for?” This is a very common question.
An ABN and GST registration are not the same thing. They are connected. But they serve very different purposes. So let’s clear up the confusion.
What Is an ABN?
An Australian Business Number (ABN) is a unique 11-digit number used to identify your business when dealing with the government, other businesses and the community. Think of it as your business identification number. You may need an ABN when you are:
- Running a business.
- Involved in an enterprise.
- Dealing with other businesses.
- Issuing invoices.
- Registering for certain taxes.
For example, you start a graphic design business as a sole trader. You apply for an ABN. Your ABN identifies your business. But getting an ABN does not automatically mean you are registered for GST. That’s the important part.
What Is GST Registration?
GST registration is different. GST is a 10% tax on most goods and services sold or consumed in Australia. If your business is registered for GST, you generally need to:
- Charge GST on taxable sales.
- Keep GST records.
- Lodge BASs.
- Account for GST collected.
- Claim eligible GST credits.
So GST registration creates a set of GST responsibilities. An ABN, by itself, does not.
ABN vs GST: The Simple Difference
Think of it this way.
ABN = Identifies your business.
GST registration = Registers your business for GST purposes.
You can have an ABN without being registered for GST. But you generally need an ABN before registering for GST. That is why people often confuse the two.
Let’s Look at a Simple Example
Imagine you start a small photography business. You apply for an ABN. Your annual GST turnover is: $40,000. You are below the general GST registration threshold. You may not be required to register for GST. So you can have: ABN: Yes. GST registration: No.
You can continue operating your business without charging GST, provided you are not otherwise required to register.
What Happens When Your Business Grows?
Now imagine your photography business starts growing. Your GST turnover reaches: $80,000. For most businesses, the general GST registration threshold is $75,000. This is when you need to review whether you are required to register for GST.
Your ABN doesn’t change. You still have the same ABN. What changes is your GST registration status. This is an important distinction.
Does Every Business With an ABN Need GST Registration?
No. This is probably the biggest misconception. You can have an ABN without being registered for GST.
For example, a small sole trader may have: ABN: Registered. GST: Not registered. If the business is below the GST threshold and is not otherwise required to register, GST registration may not be compulsory. But the business can choose to register voluntarily in some circumstances.
Can You Register for GST Without an ABN?
Generally, you need an ABN to register for GST. So the usual process is: First: Get your ABN. Then: Register for GST if required or if you choose to do so. Getting the ABN does not automatically complete the GST registration. You need to make sure the GST registration is actually included.
Can You Charge GST With Just an ABN?
No. This is a very important point. Suppose you have an ABN. You send your customer an invoice for: $1,000. You cannot simply add:GST: $100 and collect $1,100 just because you have an ABN.
If you are not registered for GST, you generally cannot charge GST. So before adding that 10%, check your GST registration status.
What Does Your ABN Have to Do With Your Invoices?
Your ABN is commonly included on business invoices.
For example: Business name: ABC Consulting.
ABN: 12 345 678 901.
Invoice: $1,000
If you are GST registered, the invoice will also need to meet the relevant tax invoice requirements when you are making taxable sales. The ABN identifies the business. The GST details show how GST has been treated. They are doing two different jobs.
What If You Are GST Registered?
Once you register for GST, you generally need to charge GST on your taxable sales.
For example, you provide a service for: $2,000 before GST.
GST: $200.
Total: $2,200.
Your invoice may show: Service: $2,000.
GST: $200.
Total: $2,200.
Your ABN identifies your business. Your GST registration allows you to charge and account for GST.
Can You Claim GST Credits With an ABN?
Not just because you have an ABN. To claim GST credits, you generally need to be registered for GST and satisfy the relevant requirements.
For example, you buy office equipment for: $2,200 including GST.
The GST component is: $200.
If the purchase is eligible and your business is GST registered, you may be
able to claim the $200 as a GST credit.
But if you only have an ABN and are not registered for GST, you generally cannot claim that GST credit.
ABN and GST Registration Are Separate Registrations
This is worth remembering. When you apply for an ABN, you are identifying your business or enterprise. GST registration is a separate tax registration. You may register for other taxes and obligations as well.
For example, depending on your business structure and circumstances, you may also need to consider:
- PAYG withholding.
- Fringe Benefits Tax.
- Fuel Tax Credits.
- Other tax obligations.
So don’t assume: “I have an ABN, therefore everything is registered.” It isn’t.
What About Companies and Partnerships?
The same basic distinction applies.
- A company can have an ABN without being registered for GST.
- A partnership can have an ABN without being registered for GST.
- A trust can have an ABN without being registered for GST. The business structure does not automatically trigger GST registration.
You need to look at the GST rules that apply to the particular business or entity.
What If You Voluntarily Register for GST?
You don’t always have to wait until your turnover reaches $75,000. A business below the threshold can generally choose to register for GST. This may be useful if the business has significant eligible purchases and wants to claim GST credits.
But there is another side to it. Once registered, you generally have GST reporting obligations. You may need to charge GST on taxable sales. You will also need to keep proper records and lodge BASs. So voluntary GST registration should be considered carefully.
A Simple Example
Let’s say you start Bright Star Consulting. You have: ABN: Yes. GST registration: No. Your business turnover is: $45,000. You are below the general GST threshold. You don’t generally charge GST on your invoices.
A year later, your business grows. Your GST turnover reaches: $85,000. Now you need to review your GST registration obligations. Your ABN remains the same. Your GST registration status changes. That’s the easiest way to remember it.
A Quick Comparison
ABN Identifies your business.
Used when dealing with customers, suppliers and government agencies.
Does not automatically mean you are registered for GST.
GST Registration Registers your business for GST.
Generally required once the relevant GST turnover threshold is reached.
Allows you to charge GST on taxable sales.
May allow you to claim eligible GST credits.
Creates additional reporting and record-keeping obligations.
The Bottom Line
An ABN and GST registration are two different things. Your ABN identifies your business. GST registration deals with your GST obligations. You can have an ABN without being registered for GST.
And having an ABN does not give you permission to charge GST. So if you are starting a business, don’t stop at: “I’ve got my ABN.” Check the next question: “Do I need to register for GST?” And if your business is growing towards the $75,000 threshold, don’t wait until the last minute.
Keep an eye on your turnover. Because getting an ABN is only the beginning. GST registration is a separate step — and knowing the difference can save you from a very unnecessary tax headache later.