What happens if I invoice without an ABN in Australia?

If you invoice a business without an ABN on it, the business can be required to withhold 47% of your payment and send it to the ATO. You get that money back as a credit when you lodge your tax return, but you wait for it and your cash flow takes the hit. Put your ABN on every invoice and quote and the problem goes away.

What happens if I invoice without an ABN?

The business paying you must generally withhold 47% of the total payment unless you quote an ABN or an exception applies. The ATO sets the rate at 47% (the top marginal rate plus the Medicare levy) and it has applied since 1 July 2017.

For example, you finish a $2,000 job for a builder and your invoice has no ABN. The builder is meant to pay you $1,060 and send $940 to the ATO. You still did the full job, but you only see about half the money.

Can I give my ABN after the invoice is sent?

Yes, if it reaches the payer by the time they pay you. The ATO accepts an ABN on an invoice, quote, order form or email, and even over the phone. If the ABN arrives before payment, no withholding is needed.

If the payer has already paid and withheld, the withheld amount has gone to the ATO, so it comes back through your tax return instead.

How do I get the withheld money back?

The payer reports the amount to the ATO and gives you a payment summary. You then claim it as a credit in your income tax return. So it isn't lost, but you wait until you lodge. Keep the payment summary with your records.

Do I need an ABN to work as a tradie?

If you are running a business, you should have one. Operating as a sole trader doing regular paid work means you are generally carrying on an enterprise, and clients expect an ABN. It is free to apply through the Australian Business Register. See our guide to when to register for GST for the next step once you have an ABN.

An ABN is not the same as GST registration. You can have an ABN and not be registered for GST while you are under the threshold. Your invoice then shows the ABN but no GST.

When don't businesses have to withhold?

The ATO says no withholding is required when the payment for the whole supply is $75 or less excluding GST. Other exceptions exist, for example where a supplier signs the ATO's "Statement by a supplier not quoting an ABN" because they are not entitled to an ABN (such as a private or hobby activity). Tradies running a real business don't fit that category, so assume you need an ABN on every job.

Situation	Withholding?
ABN on the invoice, quote or email before payment	No
No ABN, job over $75 excl. GST	Yes, 47%
No ABN, whole supply $75 or less excl. GST	No
Supplier not entitled to an ABN and gives the ATO statement	No

What should an invoice show to avoid this?

Show your ABN, business name, the date, what you did, and the price. If the total is $1,000 or more, it must also meet the rules in our tax invoice requirements guide. Invogo puts your verified ABN on every invoice and quote automatically, so you can't forget it. The free plan covers 5 invoices or quotes a month. You can sign up here.

What if a client pays me before I give them my ABN?

If they pay first and withhold, you don't lose the money, but you have to wait for it. Ask the client for the payment summary, keep it, and claim the credit in your next income tax return. Tell them your ABN now so the next job is paid in full.

A worked example: same job, with and without an ABN

Say you quote $1,500 for a deck repair and your client is a property manager.

	ABN on invoice	No ABN on invoice
Invoice total	$1,500	$1,500
Withheld for the ATO (47%)	$0	$705
Paid to you	$1,500	$795
When you get the $705	n/a	At tax time, as a credit

The job and the price are identical. Only the missing ABN changes what lands in your bank account this week.

A quick ABN checklist for every job

• Put your ABN on every quote, so the client has it from day one.
• Put it on every invoice, in the same spot each time.
• Reply with it by text or email if a client asks, and keep that message.
• Use your own ABN. Never use a mate's or an old one that has been cancelled.
• Keep your ABN details (business name, address) up to date on the Australian Business Register.

Why do some clients still ask for a tax invoice?

Because an ABN and a tax invoice do different jobs. The ABN lets the client skip withholding. A tax invoice lets a GST-registered client claim the GST back. If you are registered for GST, read how to calculate GST in Australia so the 10% is right every time. If you are not registered, you still show your ABN, but you don't add GST.

What does the payer risk if they skip it?

Payers can be penalised if they fail to withhold when they should. That is why many builders and head contractors will not pay a subbie without an ABN. If a client asks for your ABN, they are protecting themselves. Send it early and you also get paid faster; see payment terms for tradies.

This is general information, not advice. Check with your accountant or the ATO for your situation.