How to Apply for an ABN as an Independent Contractor in Australia

19 March, 2025 · 8 min read

Author

Learn how to apply for an ABN as an independent contractor with this step-by-step guide, covering eligibility, requirements, and application tips.

Independent Contracting vs. Employment
Why Independent Contractors Need an ABN
Checking Your Contractor Obligations
5 Steps of Applying for an ABN
What Comes Next? Obligations After Receiving Your ABN
Handling Changes in Your Work Arrangement
Final Thoughts

Working as an independent contractor in Australia gives you the freedom to be your own boss, set your own hours, and often choose which projects you take on.

But with that independence comes a responsibility to handle key administrative obligations, including applying for an Australian Business Number (ABN).

Sorting out whether you’re truly an independent contractor – and if so, how to register – can sometimes feel like wading through a maze of government guidelines.

This blog post aims to simplify that process so you can launch (or continue) your self-employed journey with confidence.

Independent Contracting vs. Employment

Before diving into how to apply for an ABN, it’s critical to confirm you’re an independent contractor, not an employee.

The terms “contractor,” “subbie,” or “freelancer” are often used casually, but your actual work arrangement determines your status in the eyes of the law.

If you’re mistakenly treated as an independent contractor when you’re really an employee, you and the business that pays you could face penalties.

Key Differences Between Contractors and Employees

Control Over Work: Employees typically follow detailed instructions from a supervisor about how, when, and where tasks should be done. Independent contractors have more autonomy; they decide how to carry out the work, as long as they meet contract terms or project standards.
Tools and Equipment: An employee usually uses the employer’s tools. An independent contractor brings or pays for their own equipment and materials. For example, a freelance graphic designer invests in their own design software and hardware rather than relying on an employer to provide it.
Basis of Payment: An employee often gets paid by the hour, shift, or as a salary. A contractor is usually paid for a specific job or project, issuing invoices to receive payments.
Commercial Risk: Mistakes made by employees are normally covered by the employer. Contractors, on the other hand, bear the cost of fixing errors or paying for damages. If a self-employed electrician damages a fixture during an installation, they (and not the client) may be responsible for the repair costs.
Delegation: An employee is expected to personally perform the work and can’t hire someone else to do it in their place. A contractor may delegate or subcontract tasks to another person, and then pay that person directly.
Leave Entitlements: Employees receive paid sick leave, annual leave, and possibly other benefits. Contractors do not receive paid leave from the hiring business; if they can’t work for any reason, they simply don’t earn income during that period.

If you realise your arrangement doesn’t match the features of a contractor’s role – perhaps your employer sets strict hours or you regularly use their equipment – then you might be classified as an employee after all.

It’s important to get this right from the start, so check your work arrangement carefully or use official government resources (like the Australian Taxation Office’s contractor vs. employee guide) to confirm your status.

Why Independent Contractors Need an ABN

Even if you’re a sole trader (meaning you operate under your own name without forming a company), you need an ABN to:

Legally Issue Invoices: In Australia, businesses must include their ABN on invoices. If you don’t have an ABN on your invoice, clients might be required to withhold up to 47% of the payment as tax.
Register for GST: If you anticipate earning $75,000 or more a year from your contracting, you need to register for the Goods and Services Tax (GST). You can’t do that without an ABN.
Claim Tax Deductions: Operating as a self-employed contractor typically allows you to deduct business expenses from your taxable income. While you can claim some deductions as an employee, being a registered business often expands what you can legally claim, such as specialised software subscriptions or certain home-office costs.
Appear More Professional: Many clients prefer to work with contractors who demonstrate that they run a legitimate business. An ABN on official documents signals that you’ve done the groundwork to comply with Australian law.

Checking Your Contractor Obligations

Before you apply for your ABN, let’s talk about a few more responsibilities you might have if you’re genuinely an independent contractor:

Business Structure: You can operate as a sole trader, or you can set up a company, partnership, or trust. A sole trader structure is simple (just you, the business owner), but it also means you’re personally responsible for all debts or legal actions. Other structures can provide more legal separation but come with extra administrative requirements.
Personal Services Income (PSI): If you’re paid mostly for your personal skills or labour (rather than, say, providing substantial materials or equipment), your income might be classified as PSI. The Australian Taxation Office has specific rules about claiming deductions if your earnings fall under PSI regulations. Make sure you know whether PSI rules apply to you.
Taxable Payments Annual Report (TPAR): Contractors in industries like building and construction must lodge a TPAR. This report tells the ATO about payments you make to subcontractors for building and construction services.
Superannuation: As a self-employed individual, you need to plan your own retirement contributions. You’re not automatically covered under an employer’s super plan, though certain contracting situations may require the business hiring you to pay super (for instance, if your contract is deemed “wholly or principally for labour”). Check your arrangement carefully.
Insurance and Liability: While employees can sometimes rely on an employer’s insurance policies, contractors typically purchase their own coverage. This may include public liability insurance, professional indemnity, or product liability, depending on the kind of work you do.

5 Steps of Applying for an ABN

The good news is that obtaining an ABN online can be a straightforward process when you have the right information at hand. Below is a general outline of the steps:

1. Gather Essential Information

Proof of Identity: You’ll likely need personal identification such as a driver’s license or passport.
Business Details: If you’re registering as a sole trader, you’ll use your legal name. If you’ve chosen another structure (like a company), you’ll need that entity’s details.
Tax File Number (TFN): While not strictly required to get an ABN, providing your TFN can help speed up the application and avoid identity verification delays.

2. Access the Australian Business Register (ABR) Website

The easiest way to apply is through the official ABR website (abr.gov.au) or the Business Registration Service (BRS).
Be sure you use legitimate government sites; they will not charge a fee for issuing an ABN.

3. Complete the Online Application

Reason for Application: Specify that you’re applying as an individual (sole trader) or a different structure if that’s the case.
Business Activities: Provide a brief description of the kind of services you plan to offer.
Business Location: You’ll likely need to include an address where your business is based (often your home if you’re a sole operator).
Anticipated Turnover: Mention whether you expect to earn $75,000 or more in a financial year, as that triggers GST registration requirements.

4. Review and Submit

Double-check all details, because mistakes can delay approval.
Submit your application. In many cases, you’ll receive an ABN immediately if everything checks out.

5. Additional Registrations

Business Name Registration: If you plan to operate under a name other than your own, you’ll need to register this name (for a small fee) with ASIC through the Business Registration Service.
GST: If your turnover is likely to be $75,000 or more – or if you drive a taxi or rideshare service – you must register for GST within 21 days of starting your business.

Most people find that the ABN application takes only a short time to complete, and approval can be very quick if your information is in order.

However, some applications may be flagged for further review, meaning you might need to supply additional documentation.

What Comes Next? Obligations After Receiving Your ABN

Applying for and receiving your ABN is a major milestone. However, there’s a bit more to do to keep your contractor business running smoothly:

⚡Keep Your Details Current

If you change addresses, phone numbers, or business activities, update your ABN details within 28 days. This keeps government records accurate and helps prevent complications with tax filings.

⚡Stay on Top of Taxes

Income Tax: As a contractor, you pay your own tax to the ATO. Most sole traders do this when lodging their individual tax returns.
GST: Once registered, you’ll need to charge GST on your invoices for most goods and services, and lodge Business Activity Statements (BAS) regularly (often quarterly).

⚡Superannuation

Set aside super contributions for yourself. Unlike an employee arrangement, no one else is doing it on your behalf. You can either contribute to a personal super fund or ask your accountant about self-managed super if your situation is more complex.

⚡Insurance and Liability

Consider whether you need public liability insurance, professional indemnity, or other coverage. If you’re in construction, for instance, an on-site accident might lead to steep costs if you lack adequate insurance.

⚡Reporting and Record-Keeping

Keep accurate records of income, expenses, and receipts. If you’re in the building and construction industry, remember to submit a Taxable Payments Annual Report (TPAR) about the contractors you hire, if any.

Handling Changes in Your Work Arrangement

Eventually, you might outgrow your sole trader status. Perhaps you decide to partner with someone else or form a company for better liability protection. In these cases:

Form a New Entity: Partnerships, companies, and trusts each need their own ABN.
Transfer or Cancel Existing Registrations: If you already have a business name registered, you may need to transfer it from yourself to the new entity. You might also have to cancel your sole trader ABN once the new one is in place.
Review Tax and Super Obligations: Different structures have distinct responsibilities. For instance, as a company director, you’d have responsibilities to ASIC and might need to pay employees (including yourself) through a formal payroll system.

Final Thoughts

Operating as an independent contractor in Australia is a popular choice for those seeking flexibility and control over their working lives.

However, it comes with a set of administrative tasks, the chief of which is registering for an Australian Business Number.

This process ensures you can invoice clients legitimately, manage taxes and superannuation properly, and protect yourself from misclassification risks.

Ready to transform your entrepreneurial dream into a reality without drowning in paperwork? ANNA takes the hassle out of ABN registration so you can start doing business right away. Whether you’re a sole trader or setting up a formal company, we’ll guide you through a fast, streamlined process, no sweat required.

Why Your ABN Matters

Secure Your Full Payment. Without a valid ABN, clients might have to hold back up to 47% of your invoices for tax. Registering with ANNA ensures you keep more of what you earn.
Make It Official. An ABN doesn’t just add credibility – it's your ticket to issuing legitimate invoices, claiming GST credits, and separating your personal affairs from your business activities.
Avoid Complications. Having an ABN from day one helps you dodge last-minute scrambles, letting you focus on delivering value to your customers instead of wading through red tape.

How the Process Works

1. Complete a Quick Online Form: Provide basic details about yourself and your business, like your official name and contact information, right inside the ANNA platform.

2. Verify and Submit: ANNA walks you through each step, double-checking everything so you won’t lose time correcting errors. Click “Submit,” and we will handle the rest.

3. Instant ABN Notification: Once approved, we’ll notify you immediately. You can then start invoicing, lining up clients, and trading with zero downtime.

Extra Perks of Registering with ANNA

Centralised Document Hub. Store all your invoices, receipts, and official files in a secure digital archive. Never sift through piles of paper again.
Virtual Address. Keep your personal address private. ANNA offers a virtual business address in Australia, giving you a polished, professional front.
Automated Bookkeeping. Enjoy features like automated expense categorisation and receipt matching, so you’re always tax-ready without the manual grind.
Tax and Compliance Reminders. From GST obligations to your annual return statement, ANNA keeps you on track with important deadlines through a personalised tax calendar.