ABN vs GST: they're not the same thing

Everyone mixes these up, so here's the plain version. An ABN is your business ID number. GST is a tax. Having the ID does not mean you charge the tax.

ABN: who you are

An ABN is 11 digits that identify your business to the ATO and to everyone who pays you. It's free from the government's register, and pretty much every sole trader needs one from day one. Not for tax reasons - because without an ABN on your invoice, a business paying you has to withhold about 47% of the money and send it to the ATO.

The ABN doesn't change your prices, doesn't add anything to your invoices except the number itself, and costs nothing to keep.

GST: 10% you collect for the ATO

GST is a 10% tax added to what you sell. Here's the part that matters: you only charge it once you're registered for GST, and that's a separate step from getting an ABN. Registration only becomes compulsory when your turnover passes $75,000 over a rolling 12 months. Below that it's voluntary.

And the 10% isn't yours. You collect it on the ATO's behalf and pass it on through your BAS. Think of yourself as the courier, not the recipient.

The three setups

• ABN, no GST. The normal state for a new tradie. Your invoices say "Invoice", show your ABN, and have no GST line.
• ABN and GST. You've passed $75k or registered by choice. Invoices become "Tax invoice" with the GST shown.
• No ABN. Don't invoice anyone yet. Sort the ABN first, it takes one sitting and it's free.

Why the mix-up costs money

Blur these two and it goes wrong in both directions. Some new tradies add 10% "GST" without being registered, which is charging customers a tax that doesn't exist. Others get registered and keep sending plain invoices with no GST line, then owe the ATO a chunk of every sale out of their own margin. Know which setup you're in, and make the invoice match it.

General information only - check the ATO or your accountant for your own situation.