The ATO has made recent changes to the application process for an Australian Business Number (ABN). The changes have been made as a measure to protect the process’ integrity and identify those who are attempting to misuse it.

An ABN is a unique 11 digit number that identifies your business to the government and the wider community. The recent changes focus on:

• Ensuring that those who are entitled to an ABN are the only ones who will receive one.
• Identifying people going through the application process multiple times.
• Confirming entitlement and helping people to understand their obligations.

You are only entitled to an ABN when carrying on or starting an enterprise in Australia. An enterprise includes activities done in the form of a business, including operating a charity, renting or leasing property, or acting as the trustee of a superannuation fund. It is compulsory for businesses with a GST turnover of $75,000 or more to have an ABN and be registered for GST. While businesses with a turnover of less than $75,000 can still apply for an ABN and may choose to register for GST, it is not compulsory.

There is no single test to determine cases where you are carrying on a business. However, features of a functioning business include:

• An intention to make a profit from the activity that is demonstrated by a business plan (unlike a hobby).
• The activity is a significant commercial activity that is a reasonable size and scale, involving the sale of goods or services.
• The activity is organised, systemic and is carried on in a business-like manner with records kept.

For businesses that are not yet underway, you would be expected to undertake a number of commencement activities for a successful ABN application. These activities include advertising and setting up social media or a website for the business, obtaining business licences, or consulting with financial, business or tax advisors.

Other reasons that you may be entitled to an ABN are if making supplies connected with Australia’s indirect tax zone (defined as including Australia but not its external territories or certain offshore areas), or if you are a Corporations Act company.

The ATO’s changes better define who is eligible for an ABN, helping business owners to understand their obligations in cases where there may be doubt. Consider consulting your professional advisor if further help is required.