What is an ABN, why you might need it, and how to get one (step by step)
In other articles we’ve covered what a TFN is and how to get it. Today we’ll explain why you may need both a TFN and an ABN to work in Australia—especially if you’ll work as a sole trader or contractor.
1) What is an ABN?
An ABN (Australian Business Number) is the identifier that allows you to register in the Australian tax system as a sole trader / freelancer.
You’ll typically need an ABN to work in Australia when the job is done as an independent contractor (not an employee): cleaner, carpenter, construction labourer, photographer, babysitter, etc.
If a workplace asks for your TFN, you’ll usually be hired as an employee. If they ask for an ABN, it usually means you’ll work as a contractor/sole trader and issue invoices. If you don’t have a TFN yet, here’s the guide: What is a TFN and how to get one.
2) When do you need an ABN?
You’ll need an ABN when you work for yourself or as a contractor. It’s common in:
- Private cleaning work
- Construction as a contractor/subcontractor
- Delivery/gig apps (many setups are ABN)
- One-off services (photography, babysitting, removals, etc.)
Practical recommendation: get both. You’ll use a TFN for most employee jobs, but if someone asks you for an ABN you’ll be ready (and applying for an ABN yourself is free).
3) Differences between working with a TFN vs an ABN
If you work with a TFN (employee)
Your employer usually provides payslips showing: hours worked, gross pay, and tax withheld.
If you work with an ABN (sole trader/contractor)
As a contractor, you’re responsible for declaring your income when you lodge your annual tax return.
Because you’re responsible for your activity, you must keep records of jobs, income and work-related expenses. If you don’t organise it from day one, it becomes painful later.
4) Records: invoices and expenses (this impacts your Tax Return)
If you work with an ABN, you should keep a record of every job. In practice, that means keeping invoices for each service where you include:
- Your ABN
- Service date
- Description of the service
- Invoice total
You should also track work-related expenses: phone, internet, vehicle and fuel, work clothing, tools, etc.
Clear record-keeping is the key to getting the best possible outcome when you lodge your tax return as an ABN worker.
See a simple invoice template (copy & use)
INVOICE
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Name: [Your name]
ABN: [Your ABN]
Phone: [Your phone] Email: [Your email]
Client: [Client name]
Address: [Client address]
Service date: [DD/MM/YYYY]
Description: [e.g. House cleaning / Delivery services / Labour services]
Amount: $[XX.XX]
Payment method: [Cash / Bank transfer / etc.]
Notes: [Optional]
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Tip: save each invoice + expense receipts in a folder (Drive) and note dates. It makes tax time much easier.
5) Get your ABN step by step (1–10)
This guidance is for people who want an ABN to work as a sole trader. To start, go to the official ABR page: Applying for an ABN (ABR) and click “Apply or reapply for an ABN”.
Open the ABR/ATO ABN page, click “Apply or reapply for an ABN”, tick the initial confirmation box and click Next.
Select the options as required for a sole trader application and click Next.
Review the summary of the options you selected and click Next. Confirm the relevant options again and continue.
Select “No” if your visa is Work & Holiday. If you have a different visa, select “Yes”. Without filling the extra field, click Next.
Choose your title (Mr./Mrs./Ms.), then enter your name(s), surname(s) and date of birth. Enter your TFN and click Next.
Leave the first date as is. Only fill the next date if your activity will last less than 3 months (otherwise leave it blank/default). Then select the type of activity you’ll do. Choose No if you’re not applying for an ABN for farm work.
If you live in Australia, keep the first option selected and enter your “business” address (often your current address is fine). Indicate whether your postal address is the same (Yes/No). Add your email (personal is fine). If you don’t have other business addresses, select No. Add your Australian mobile number (if you have one) and confirm the email.
Keep the first set of details as displayed. In the second section, add your contact number and email where requested. Click Next.
Select “contractor/sub-contractor”, tick Yes at the bottom and click Next.
Enter your full name, type “Sole Trader”, select today’s date and click Submit. After submitting, you’ll see a confirmation. In many cases the ABN is assigned quickly, but if it’s reviewed it can take longer.
The ABR may ask for evidence that you’ve started (or are genuinely starting) your activity if your application is reviewed. It helps to be clear about what you’ll do and from when.
6) What next?
If you’ve already followed the TFN guide and completed your ABN application, you’re in a great position to start working.
Useful resources (recommended)
- TFN step-by-step: What is a TFN and how to get one
- Tax Return guide: What is the Tax Return? (complete guide)
- Quick job tip: for general job boards, SEEK and Gumtree are commonly used; construction often has additional specialised boards.
Doing your Tax Return with ABN? Do it properly
If you work with an ABN, your tax return is not the same as an employee’s TFN return—your income, invoices and expenses must be reviewed so the result is the best possible within legal limits. If you want us to review it with you and avoid mistakes, contact us.