Importance of Having an ABN
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Business Criteria for ABN Requirement:
- Your business has an annual turnover of over $75,000.
- Providing goods or services to other businesses.
- Registered for Goods and Services Tax (GST).
- Optional to register even if not meeting the criteria.
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Benefits of Obtaining an ABN:
- Identifies your business to government, suppliers, and customers.
- Used for GST registration, PAYG withholding, and FBT.
- Necessary for legal operations, tax invoicing, fuel tax credit claims, and business insurance.
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Application and Cost:
- Registering for an ABN is free.
- Tax agents may charge a fee for application assistance.
ABN for Sole Traders
- Registration Requirements for Sole Traders:
- Obtain an ABN.
- Obtain an ASIC business name if not using your personal name.
- Register for GST if over the threshold.
- Acquire relevant licenses for operation.
GST and Sole Traders
- GST Relevance:
- Apply for an ABN and register for GST if expecting a turnover over $75,000.
- Sole traders earning over $75,000 or driving taxis must pay GST.
Taxation for Sole Traders
- Tax Obligations:
- Need a tax number for correct tax processing and to avoid penalties.
- Sole Traders taxed at individual income tax rates.
Additional Information
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ABN Usage:
- Register a .com.au domain name using your ABN.
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Eligibility for ABN:
- Apply for an ABN when starting or conducting business activities in Australia.
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Professionalism and ABN:
- Optional for businesses with turnover under $75,000 but beneficial for professional appearance.
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GST Claiming:
- Claim GST credits for purchased items.
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Invoice Details:
- Add 10% GST to invoices after registering for GST.
- If no GST registration, mention ‘price does not include GST’ on the invoice.
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Tax Exemption for Sole Traders:
- Individuals earn tax-free income up to $18,200 in 2021-22.