If you’re an Indian freelancer or exporter dealing with Australian clients, understanding their business identification system is crucial.
Australian businesses use two main identifiers: the Australian Business Number (ABN) and Australian Company Number (ACN). Knowing the difference between ABN and ACN helps verify legitimate businesses, process payments correctly, and maintain compliance when trading internationally.
Read on to explore what ABNs and ACNs actually mean, and more.
Key Takeaways
- ABN and ACN serve different roles ABN is a general business identifier used for tax and government dealings, while ACN uniquely identifies registered companies.
- Every company needs both, but many small businesses like sole traders and partnerships only need an ABN and cannot obtain an ACN.
- Compliance matters Australian businesses must display ABN/ACN on invoices, contracts, receipts and official documents to meet legal obligations.
- For Indian exporters and freelancers, understanding these identifiers helps validate Australian clients, avoid payment issues, and maintain seamless international business operations.
What Is an Australian Business Number?
The Australian Business Number serves as the foundation of business identification across Australia. An ABN is a unique 11-digit identifier issued by the Australian Business Register (ABR) and administered by the Australian Taxation Office (ATO).
The primary purposes of an ABN include:
- Identifying businesses for tax and government interactions
- Confirming business identity for commercial transactions
- Facilitating GST and pay-as-you-go PAYG processes to avoid withholding tax
- Accessing government online services and business portals
Key benefits for businesses holding an ABN:
- Claim GST credits on business purchases
- Avoid PAYG withholding on payments received
- Access to government online services and business portals
- Establish credibility with clients and suppliers
Entities eligible for an ABN include sole traders, partnerships, companies, trusts, and other entities carrying on an enterprise in Australia.
Did You Know?
If your Australian clients pay you without a valid ABN, they must withhold 47% of the payment for tax purposes. This makes ABN verification essential for smooth international transactions.
What Is an Australian Company Number?
An Australian Company Number is a unique nine-digit identifier issued by the Australian Securities & Investments Commission (ASIC) when a company is registered under the Corporations Act 2001.
The ACN serves these primary functions:
- Identifying registered companies uniquely across Australia
- Ensuring legal compliance with corporate regulations
- Establishing the company as a separate legal entity
- Enabling regulatory monitoring by ASIC
Critical benefits of having an ACN include:
- Limited personal liability for company directors and shareholders
- Enhanced business credibility and professional standing
- Ability to raise capital through share offerings
- Clear legal entity status for contracts and litigation
Only registered companies are eligible for an ACN. Sole traders, partnerships, and unincorporated associations cannot obtain an ACN as they aren’t companies under Australian law.
What Is the Difference Between an ABN and an ACN?
The key distinction lies in scope: every Australian company needs both an ACN and ABN, but not every ABN holder needs an ACN.
| Feature | ABN | ACN |
| Issuing Authority | Australian Taxation Office/Australian Business Register | Australian Securities & Investments Commission |
| Number of Digits | 11 digits | 9 digits |
| Who Can Apply | Any business entity (sole traders, partnerships, companies, trusts) | Only registered companies |
| Primary Purpose | Tax and business identification | Corporate legal identification |
| Cost to Obtain | Free | Part of company registration, which costs $660. |
| Legal Requirement | Required for all businesses | Required only for incorporated companies |
| Display on Documents | Required on invoices and business documents | Must appear on company documents (or ABN if it contains the ACN) |
Did You Know?
Most Australian companies’ ABNs contain their 9-digit ACN as digits 3-11 with two additional digits at the beginning. This allows companies to display their ABN instead of ACN on documents where legally permitted.
Who Needs Which Identifier: A Practical Decision Guide
Choosing which identifier is needed depends entirely on the business structure. Let’s examine specific scenarios for more clarity.
Sole Traders and Partnerships:
- Need only an ABN to operate legally
- Cannot obtain an ACN (not companies)
- Must register for GST if turnover exceeds $75,000
- Use ABN for all tax and business interactions
Registered Companies:
- Automatically receive an ACN upon incorporation with ASIC
- Must also apply for an ABN to conduct business
- Require both identifiers for full compliance
- Can display ABN instead of ACN if ABN contains the ACN digits
When Structure Changes Might Require an ACN:
- Sole trader expanding and incorporating for liability protection
- Partnership converting to company structure for growth
- Trust establishing a corporate trustee
- Business seeking external investment requiring company status
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How to Register for ABN and ACN?
When you export to Australia, your Australian client may need to share their ABN or ACN with you for invoices, agreements, or compliance paperwork. These numbers help confirm that their business is officially registered in Australia.
Registering an ABN
The ABN application process is entirely online via the ABR website. The application requires:
- Tax File Number (TFN) for individuals or existing business tax details
- Business structure information (sole trader, partnership, company, trust)
- Identity verification details
- Business activity description and start date
- Contact information and business address
Upon successful electronic application, ABN issuance is immediate. However, if additional review is required, processing can take up to 20 business days.
Obtaining an ACN
The ACN is automatically issued upon company registration with ASIC. The process involves:
- Completing registration via ASIC’s Business Registration Service (BRS)
- Choosing a unique company name (or registering without a name)
- Appointing at least one director and secretary (for proprietary companies)
- Obtaining director consent and Director ID numbers
- Paying ASIC fees (part of company registration, which typically costs around $660)
- Defining share structure and registered office address
Every company director must hold a Director ID before appointment, adding another compliance layer to the process.
Compliance: Display Requirements and Ongoing Obligations
Obtaining an ABN or ACN is just the starting point for Australian businesses. As an Indian freelancer or exporter, these display requirements don’t apply to you directly. However, being aware of them helps you interpret Australian documents, understand why certain identifiers appear, and navigate conversations with clients more confidently.
Where Must ABN and ACN Appear?
Mandatory display locations include:
- Every document lodged with ASIC
- Account statements and invoices
- Receipts (except machine-generated ones)
- Purchase orders for goods or services
- Business letterheads and branded stationery
- Official company notices and correspondence
- Letters of credit
- Cheques, promissory notes and bills of exchange
The format requires the full company name followed immediately by either “ACN [number]” or “ABN [number]” if substitution rules apply.
Understanding GST Registration with ABN
GST registration becomes mandatory when:
- Business turnover reaches or exceeds $75,000 (most businesses)
- Non-profit organisation turnover reaches $150,000
- Provide taxi or ride-sourcing services (regardless of turnover)
- Choose voluntary registration for GST credit claims
Benefits of GST registration include claiming input tax credits, issuing tax invoices, and avoiding GST-inclusive pricing disadvantages when dealing with GST-registered customers.
Consequences of Non-Compliance
Non-compliance carries serious penalties:
ATO Penalties:
- 47% withholding tax on payments received without valid ABN
- Loss of GST credit claims
- Penalties for failing to update ABN details within 28 days
- Interest charges on tax shortfalls
ASIC Penalties:
- Fines for companies failing to display ACN correctly
- Personal liability for directors in extreme cases
- Deregistration for persistent non-compliance
- Late fees for delayed annual reviews
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Conclusion
Understanding ABN and ACN proves essential for anyone engaging with Australian businesses. The relationship between these identifiers, with ABNs often containing ACNs, simplifies compliance when properly understood.
For Indian exporters and freelancers, verifying these identifiers ensures legitimate business dealings and smooth payment processing. Keep this guide handy when reviewing Australian client documentation, and remember that proper identification today prevents payment delays tomorrow.
FAQs
1. Do I need an ABN or ACN for my Australian business?
All businesses operating in Australia need an ABN or ACN. However, this does not apply to you if you are an exporter or freelancer based in India — you are not considered an Australian business, so you do not need an ABN or ACN to sell to Australian clients.
2. How many digits are in an ACN and an ABN?
An ABN is an 11-digit identifier. An ACN is a 9-digit identifier issued to companies. For companies, their ABN typically incorporates their 9-digit ACN with a two-digit prefix.
3. What is the cost to register for an ABN and an ACN?
Registering for an ABN through the Australian Business Register is free. Registering a company, which includes obtaining an ACN, involves a fee charged by ASIC, approximately $660.
4. What happens if I operate a business without an ABN or ACN?
If you’re an Indian exporter dealing with Australian clients, operating without an ABN or ACN isn’t your concern — these identifiers apply only to businesses registered in Australia.
5. Can a sole trader get an ACN?
No, a sole trader cannot get an ACN. An ACN is exclusively for businesses that have registered as a company with ASIC.
6. Do I need to register for GST if I have an ABN?
Not automatically. If your business is registered and operating in Australia, you must register for GST only when your GST turnover reaches $75,000 or more (or $150,000 for non-profit organisations).
