If a company’s annual turnover exceeds $75,000 it will need to be registered for GST - and this only possible through applying with an ABN. A company below this threshold does not necessarily need to apply for an ABN, but it may still be in their best interests to do so.
Some advantages of registering an ABN include:
- Assisting with the claiming of GST credits
- Limits the amount withheld from payments under PAYG withholding
- Ease in confirming details when completing business orders and invoicing
- Ease in communications and detail confirmations with the Australian government
During the start-up phase where expenses exceed income, voluntarily registering for GST and an ABN will allow you to receive GST refunds/credits for the set-up costs.
When a business does not quote an ABN on their invoice, the payer must deduct 46.5% PAYG withholding tax from the amount payable. Quoting an ABN on invoices saves a company the time and hassle of re-claiming these withheld amounts from the ATO.