Definition
No ABN withholding is an Australian rule requiring a business to withhold 47 percent of a payment to a supplier that does not quote an Australian Business Number on its invoice or other documents. The withheld amount is sent to the Australian Taxation Office. The supplier can claim it back when lodging their tax return.
Also called: Withholding for no ABN, 47 percent withholding, Statement by a supplier
No ABN withholding in practice
The 47 percent rate equals the top marginal tax rate plus the Medicare levy. The business must report the amount to the ATO and give the supplier a payment summary showing what was withheld.
Withholding does not apply if the payment is $75 or less excluding GST, if the supplier is not carrying on a business in Australia, if the purchase is private or domestic, or if the supplier gives a signed statement that the work is a hobby.
The simplest fix is to show your ABN on every invoice. Businesses paying you can confirm it on ABN Lookup.
Example
A Perth cafe receives a $1,000 invoice from a new cleaner with no ABN. It pays $530, sends $470 to the ATO, and gives the cleaner a payment summary.
Frequently Asked Questions
Can I get the withheld amount back?
Yes. The amount is a credit against your income tax for the year. Include the payment summary when you lodge your tax return and the ATO offsets or refunds it.
Does a sole trader need an ABN to avoid withholding?
Yes, if they are carrying on a business. Applying for an ABN is free through the Australian Business Register, and it removes the need for clients to withhold.
Related terms
- ABN An ABN, or Australian Business Number, is an 11-digit number that identifies a business to the Australian government and other businesses.
- Withholding tax Withholding tax is an amount a client deducts from an invoice payment and pays directly to the tax authority on the supplier's behalf.
- Tax ID A tax ID is the number a tax authority assigns to a business for reporting and collecting taxes.
- TPAR A TPAR (Taxable Payments Annual Report) is an annual report certain Australian businesses must lodge with the Australian Taxation Office listing payments made to contractors for services.
- BAS A BAS (Business Activity Statement) is the form Australian businesses registered for GST lodge with the Australian Taxation Office to report and pay GST, PAYG withholding, PAYG instalments, and other taxes.
This page is for general information only and is not legal, tax, or financial advice. Rules change and vary by location, so consult a qualified lawyer or accountant about your situation.