So you have started earning a bit on the side — maybe freelance design work, selling handmade goods, or driving for a delivery app — and now someone has asked for your ABN. Or you have heard that you might need one and you are not sure where you stand. Here is the plain answer.
The Quick Answer
If your side hustle is a real business — you sell goods or services regularly and you intend to make a profit — then yes, you should get an ABN. It is free, and you can apply through the Australian Business Register at abr.gov.au. If what you do is genuinely a hobby, with no profit motive and only the odd one-off sale, you do not need one.
The tricky part is that the line between a hobby and a business is not about how much you enjoy the work, or how small you are. It is about how you operate. That is what this guide walks through, including the one mistake that can cost you 47% of a payment.
What Is an ABN, Exactly?
An Australian Business Number is an 11-digit number that identifies your business to the government and to other businesses. It is not the same as your Tax File Number. Your TFN identifies you as an individual for tax; your ABN identifies the business activity.
You use it on invoices, to register for GST if you ever need to, and to show clients that you are operating as a business. Applying is free, there is no ongoing fee for holding one, and you can cancel it later if you stop the activity.
Hobby or Business? The Test That Actually Matters
There is no single factor that decides this. The tax office looks at the whole picture, but these four signs point most clearly to a business:
- Profit intention. You are doing it to make money, even if you have not made much yet. A business does not have to be profitable to count as a business.
- Regularity. You sell repeatedly, not once in a blue moon. Selling a few old items from your garage is very different from listing new products every week.
- Business-like setup. You keep records, advertise, have a separate bank account, use invoices, or have a plan for growing it.
- Scale and organisation. The bigger and more organised the activity, the more it looks like a business — even if it started as a hobby.
Here is a simple way to think about it. Knitting a scarf for a friend as a one-off favour is a hobby. Knitting scarves to sell, posting them online, and taking regular orders is a business, even if you love every minute of it. Enjoyment does not make something a hobby.
If you are still working out whether your idea counts, our step-by-step guide to how to start a side hustle covers the early setup decisions, and our list of best side hustle ideas may help you see where your activity fits.
When You Definitely Need an ABN
You should get one if any of these apply:
- You run your side hustle as a business, as described above.
- You invoice other businesses for your work. Without an ABN on the invoice, they may have to withhold tax from your payment — more on that below.
- Your GST turnover reaches $75,000 in a 12-month period. You cannot register for GST without an ABN first.
- You drive for a rideshare service. Ride-sourcing counts as taxi travel for GST purposes, so you must have an ABN and be registered for GST before your first trip — the $75,000 threshold does not apply to fares.
- You want to register a business name. You cannot register a trading name with ASIC unless you have an ABN, and you only need a business name if you trade under a name other than your own.
When You Probably Do Not Need One
You do not need an ABN if your activity is genuinely a hobby or a private, one-off arrangement. Examples include making something for friends without charging, selling a few personal belongings, or doing an occasional favour with no expectation of ongoing profit.
In those cases, if a business ever pays you and asks why you have no ABN, the tax office has a form called a Statement by a Supplier. It lets you state in writing that the supply was a hobby or private activity. But — and this is important — you cannot use that form if you are actually carrying on a business or you are entitled to an ABN. Using it to dodge registration when you are really running a business will not hold up.
The 47% Withholding Trap
This is the part most side hustlers only learn about after it hurts. If a business pays you for goods or services and you have not quoted an ABN, and no valid exception applies, that business is required to withhold 47% of the payment and send it to the tax office.
So a $1,000 invoice could arrive as $530 in your account. You can claim the withheld amount back as a credit when you lodge your tax return, so it is not lost forever — but it is a serious cash-flow hit in the meantime, and it is completely avoidable by having an ABN in place before you invoice.
There are narrow exceptions, such as payments of $75 or less excluding GST, but they do not help a regular freelancer or contractor. If you invoice businesses, get the ABN first.
What About Platform Work Like Uber, DoorDash and Etsy?
Platform work confuses people because you often do not invoice anyone directly — the platform pays you. That does not remove the ABN question, it just changes it:
- Rideshare drivers need an ABN and GST registration from the first dollar of fares, as above.
- Delivery-only drivers are treated differently. The normal $75,000 GST threshold applies, so GST registration is not mandatory below that level — but you may still need an ABN as a contractor, and you must still declare the income.
- Marketplace sellers who sell regularly with the intention to profit are running a business, even if the platform handles payments. The same hobby-versus-business test applies.
One more thing worth knowing: platform income is not invisible. Digital platforms report seller and transaction data to the tax office, so keeping records from day one is far easier than reconstructing a year of earnings at tax time.
ABN, GST and Business Name: Not the Same Thing
These three get mixed up constantly, so here is the short version:
- ABN — free, identifies your business. Get this first.
- GST registration — a separate step. Required once your GST turnover hits $75,000, or from day one for rideshare. You must register within 21 days of crossing the threshold, and once registered you charge GST, lodge activity statements, and can claim GST credits on business expenses.
- Business name — only needed if you trade under a name that is not your own legal name. If you freelance under your own name, you do not need one.
You can hold an ABN without being registered for GST. Most side hustlers earning under $75,000 are in exactly that position.
How to Apply for an ABN
The process is straightforward, and most applications are approved within minutes, although some need manual review and take longer:
- Go to abr.gov.au and choose to apply for an ABN.
- Pick your structure. Most side hustlers start as a sole trader, which is the simplest option — you and the business are the same legal entity.
- Describe what your business does, clearly and specifically, for example freelance graphic design or handmade jewellery sales.
- Provide your Tax File Number so the ABN can be linked to your tax records.
- Submit the application and keep a note of your new 11-digit number.
After that, keep your ABN details up to date if anything changes, and cancel the ABN if you close the business. If your side hustle grows into something bigger, talk to a registered tax agent about whether your structure still suits you — this guide is general information, not personal tax advice.
Frequently Asked Questions
Do I need an ABN if I only earn a small amount?
There is no minimum income amount for needing an ABN. What matters is whether you are carrying on a business. A small but regular, profit-seeking activity can still need one, while a larger one-off private sale may not.
Can I get an ABN and cancel it later?
Yes. There is no penalty for cancelling an ABN when you stop the activity. That is one reason the downside of applying is so low compared with the 47% withholding risk of invoicing without one.
Does having an ABN mean I have to register for GST?
No. An ABN and GST registration are separate. You only register for GST when the threshold or the rideshare rule requires it, or if you choose to register voluntarily.
The Bottom Line
If you sell regularly and intend to make a profit, get an ABN — it is free, it takes only a short time, and it protects you from the 47% withholding trap. If your activity is truly a hobby with no profit motive, you do not need one, and a Statement by a Supplier can explain that to a payer. When in doubt, the safest move is to check the hobby-versus-business signs honestly, get the ABN if you land on the business side, and keep good records either way.
