Tax Registrations

The registrations required by the ATO for your business will vary depending on your business structure and operations. The four most common registrations required by small businesses are outlined below.

Tax File Number (TFN)

A TFN is a unique number issued to individuals and organisations to help the ATO administer tax. If you operate your business as a sole trader, you will use your individual TFN for all business and personal dealings with the ATO. You will need to apply for a TFN if you don't already have one.

A partnership, company, or trust must apply for a separate TFN in addition to the individual TFNs of the owners of the business. You can register for a business TFN with the ATO

Australian Business Number (ABN)

Your ABN is a unique 11 digit identifier for all business dealings with the ATO, government departments and other businesses.

It is not compulsory to register for an ABN, however, if you are supplying goods or services and do not quote an ABN on your invoice other businesses are required by law to withhold tax at the highest income tax rate plus the Medicare levy (total of 46.5%) when they pay you.

If you are required to register for GST you will need to apply for an ABN as well.

Goods and Services Tax (GST)

The GST is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia .

You must register for GST if:

  • the current or projected turnover of your business is $75,000 or more;
  • you are a taxi driver, provide limousine or hire car services; or
  • you wish to claim fuel tax credits.

You may choose to register for GST even if your turnover has not reached the $75,000 threshold ($6,250 per month). The advantages of being registered for GST are outlined as follows.

  • You can claim GST credits for any GST you have paid on goods and services you have used in your business.
  • Once registered there is no need to continually monitor your turnover. As soon as you reach the threshold, you must register for GST within 21 days otherwise you may be liable for GST on sales even if you did not charge GST on those sales, which means you could possibly lose 1/11th of your sales income.
  • It eliminates the risk of alienating clients with an unexpected price rise. To maintain your net profit margins, you will need to increase your prices by 10% to cover the GST when your turnover reaches the threshold. Some price sensitive clients may react negatively to this price rise.

Pay As You Go (PAYG) withholding

PAYG withholding is the system for withholding amounts from payments you make to employees and businesses so they can meet their end of year tax liabilities, including:

  • payments you make as an employer to employees, company directors and office holders;
    (Note: personal drawings are not considered a wage and sole traders and partnerships are not required to withhold amounts from these drawings. You may make provision for your income tax liability through the PAYG instalments system or consider a separate savings account.)
  • payments under labour hire arrangements;
  • payments under voluntary agreements; and
  • payments to businesses that do not quote their ABN.

You must apply to register for PAYG withholding by the day on which you are first required to withhold an amount from a payment.

How to apply for registration

There is no cost to apply for any registration required by the ATO. However, your accountant or tax agent may charge a fee to assist you with registration.

There are several methods for registering your business for tax purposes including:

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