Who Needs an ABN in Australia? 5 Common Situations in 2025

Key Takeaways

• The Core Rule: If you are earning money by providing goods or services independently and are not an employee receiving a payslip with tax withheld, you are running a business and must have an ABN.

• Gig Economy & Freelancers: This applies directly to ride-share drivers, food delivery couriers, freelancers, and independent contractors.

• Sole Trader ABN: For individuals running a business by themselves, the most common structure is a “sole trader,” and you will apply for a sole trader ABN.

• It’s Free and Essential: Applying for an ABN is a free and crucial first step to operating legitimately in Australia. Not having one can result in other businesses withholding almost half of your payment for tax.

Introduction

For many people starting a new venture in Australia—whether it’s driving for Uber, delivering for DoorDash, or launching a freelance career—the world of tax and business registration can seem confusing. A question we see constantly is, “Do I actually need an ABN for this?”

Many people, especially those new to Australia or from different work cultures, may not realise that what feels like a side job is, in the eyes of the law, a business enterprise. The Australian Taxation Office (ATO) is very clear: if you are working for yourself, you are running a business, and you need an Australian Business Number (ABN).

This guide will break down five common, real-world scenarios to help you understand if you need an ABN.

Learn more about business registration at Business.gov.au.

This is the fundamental question you need to ask.

• An employee works for someone else’s business. They receive a wage or salary, tax is withheld by their employer (PAYG), and they get a payslip. They do not need an ABN for this work.

• A business operator (even a one-person business) works for themselves. They provide a service, set their own hours, pay their own tax, and issue invoices for their work. They must have an ABN.

Most of the situations below fall into the second category.

If you find yourself in any of these situations, you are considered to be running a business and need to apply for a sole trader ABN.

1. Ride-Share and Food Delivery Drivers (Uber, Uber Eats, DoorDash, etc.)

This is one of the most common examples. When you sign up to be a driver or rider for a platform like Uber, DoorDash, Menulog, or DiDi, you are not their employee. You are an independent contractor.

• Why you need an ABN: You are providing a service (transport or delivery) and the platform is your client. You manage your own hours, vehicle, and tax. This is the definition of running a business.

• Special GST Rule: It’s important to note that the ATO has a specific rule for ride-share drivers (like UberX). You must register for GST regardless of how much you earn.

2. Freelancers and Independent Contractors

This applies to a huge range of professions. If you are a graphic designer, programmer, writer, translator, consultant, or any other professional providing your services directly to clients on a project basis, you are a freelancer.

• Why you need an ABN: You are not an employee of your clients. You invoice them for your work, and they pay you as a business. Your ABN must be on your invoices.

3. Small-Scale Importers and Online Sellers (e.g., ‘Daigou’, eBay, Etsy)

The practice of buying goods to resell them for a profit—whether it’s sourcing products from overseas for a local community (“Daigou”) or selling handmade crafts on Etsy—is a business activity.

• Why you need an ABN: Your intention is to make a profit through trade. This is distinct from a hobby, where your primary intention is recreation. If you are operating with a profit motive, you are running a business.

4. Service Providers (Cleaners, Movers, Handypeople)

If you offer services like cleaning, moving, gardening, or handyman work directly to the public or as a subcontractor for a larger company, you need an ABN.

• Why you need an ABN: You are operating under your own name and are responsible for finding your own work, setting your prices, and managing your own insurance and tax. This is a classic sole trader business model.

5. Anyone with a “Side Hustle” Intending to Make a Profit

This is a broad category that captures the modern economy. It could include:

• A personal trainer with private clients.

• A musician who gets paid for gigs.

• A tutor who teaches students on weekends.

• Someone who runs a market stall.

The key is the intention to make a profit and the business-like way you conduct the activity. If it looks and acts like a business, the ATO considers it a business.

If you are running a business and issue an invoice to another business without an ABN on it, that business is legally required to withhold tax from your payment at the highest marginal rate, which is 47%. This is known as “No ABN Withholding.” Getting an ABN ensures you receive your full payment and can manage your own tax obligations.

Learn more about ABN withholding rules at ATO.

Conclusion

In Australia’s modern economy, more people than ever are earning income outside of traditional employment. The rule is simple: if you are working for yourself in any capacity, you are running a business and you need an ABN.

Fortunately, applying for an ABN as a sole trader is a simple, fast, and free process on the official Australian Business Register website. It is the essential first step to legitimising your hustle, ensuring you get paid correctly, and starting your business journey on the right side of the law.

LawDocs: Your Partner in Business Compliance

Need expert support to determine if you need an ABN or to apply for one? At LawDocs Australia, our experienced team provides tailored guidance to ensure your business complies with Australian regulations.

Learn more about ABN requirements at ATO.