No ABN withholding - questions and answers
No ABN withholding - questions and answers
These questions and answers are for businesses who undertake 'business to business' transactions and the supplier does not quote an Australian business number (ABN).
Ask the other business if they have an ABN.
When the supplier does not have an ABN:
- If the price includes goods and services tax (GST), you cannot claim the GST input tax credit for that supply.
- If the total payment for the goods or services is more than $75 excluding any GST, you will have to withhold 46.5% of the payment and pay it to the Australian Taxation Office (ATO).
If the supplier has an ABN, make sure they quote it on their invoice to you.
If the supplier says they have applied for an ABN but not yet received it from the ATO, you could offer to delay the payment for a few days until the ABN is received.
The amount withheld is the top marginal rate plus Medicare levy, which is currently a total of 46.5%.
When you come to make the payment, if there is no ABN on the supplier's invoice or other document relating to the transaction - such as a quote or order form (see Question 7) - you will have to withhold 46.5% of the payment unless the total payment for the goods or services is $75 or less. If you are not registered for withholding under the PAYG withholding system, you must apply to be registered as soon as you know you need to withhold. Phone us on 13 28 66 between 8.00am and 6.00pm, Monday to Friday.
When you pay the remaining 53.5%, you should give the supplier a payment summary. You can get PAYG payment summary - withholding where ABN not quoted (NAT 3283) forms from us by phoning on 13 28 66. If you want to create your own, it must contain:
- your business name and ABN or withholding number
- the name of the supplier and address (if you have it)
- the total amount invoiced
- the amount you withheld
- the date you paid and withheld, and
- your signature, or that of a person authorised to sign for the business.
Keep a copy of the payment summary to help prepare your annual report for PAYG withholding where no ABN is quoted (see Question 6).
Keep records of transactions in which you withheld 46.5% separate from other payment records, because you cannot claim any GST input tax credits for these payments if GST was included in the price.
You pay the amount you withheld to us with your activity statement payments (see Question 4).
3. How do I send the withheld amount to the ATO?
Once you are registered as a PAYG withholder, we will send you activity statements to complete. If you are also registered for GST you will use a Business activity statement. If you are not registered for GST, you will use an Instalment activity statement.
Activity statements have a section on PAYG withholding. For the period that the statement covers, you add up all the amounts that you have withheld from suppliers that did not quote their ABNs and record the total in the space provided at label W4. Detailed instructions are in our publication PAYG withholding - how to complete your activity statement (NAT 7394). You will receive a copy with your activity statement package.
If you have not withheld any amounts for 'No ABN' suppliers for the period, you should leave W4 blank. When you complete the activity statement, you will have a net amount to pay us or to receive as a refund. 'No ABN' amounts withheld will be included in this net amount.
You can lodge your activity statement by mail or through your tax agent. Business activity statements can also be lodged electronically. You can also pay electronically, by mail or at a post office.
If you cannot pay by the due date, you still need to lodge your activity statement on time to avoid penalty for late lodgment. Please contact us as soon as you are aware that you will not be able to pay.
4. When do I send my activity statement to the ATO?
The timing will be based on your total annual withholding amount, including withholding from employees, under labour hire arrangements, voluntary agreements and where suppliers have not quoted their ABN.
Annual withholding amount
$25,000 or less
More than $25,000 and up to $1,000,000
Special requirements for more frequent payments
The activity statement sent to you will clearly show the lodgment date and when any amounts are to be paid.
5. What do I need to do at the end of the financial year?
You need to complete your annual report for PAYG withholding when you have withheld amounts from 'No ABN' suppliers. The annual report has to be sent to us by 31 October.
The annual report will contain details for the financial year of all the amounts you have withheld where no ABN was quoted and details of all the Payment summaries you have issued. A sample copy of the PAYG withholding where ABN not quoted - annual report (NAT 3448) is available from our website. To order a copy of the report, use our automated ordering service on 13 72 26 (make sure you have your ABN or withholding payer number with you when calling) or contact us on 13 28 66.
You will be able to lodge your annual report by mail, electronically or through your tax agent. The report is separate from your other annual withholding report that is due on 14 August.
If you are a business in the building and construction industry and you paid contractors for building and construction services, you may report the amounts you withheld from payments made to contractors that did not quote an ABN during the financial year in the Taxable payments annual report. Where these payments are reported in the Taxable payments annual report, they must not be included in the PAYG withholding where ABN not quoted - annual report (NAT 3448).
If you use the Taxable payments annual report, it is due by 21 July after the end of each financial year.
6. Are documents quoting an ABN, other than invoices, acceptable?
Documents quoting an ABN and relating to the supply are acceptable. Some examples are:
- a quotation notice that formed the basis of the supply being accepted
- an invoice you created because the supplier did not give you one
- renewal notices such as for insurance, motor vehicle registration and magazine subscriptions
- an order form
- contracts or lease documents, and
- catalogues, magazines or other promotional material.
7. Do documents quoting an ABN have to be on paper?
The documents may be electronic but must be able to be related to the supply.
Promotional documents quoting an ABN and relating to the supply are acceptable. You must keep a copy of the promotional document. If you receive an invoice that has the supplier's ABN, you do not have to keep a copy of the promotional document.
Before placing the order, ask the supplier for their ABN. Make a record of it and keep it with any other documents that relate to the supply.
If the supplier does not have an ABN, you will need to withhold. Do not authorise the supplier to charge the whole amount to your credit card.
If the supplier is based in Australia, you will need their ABN, otherwise you will have to withhold. If they have displayed their ABN on their website, you can record it and keep it with the record of the transaction.
If the supplier is not carrying on an enterprise in Australia (does not have a permanent establishment in Australia), they will not need to quote an ABN and you will not need to withhold from payments you make to them.
If the supplier has not provided an ABN and the URL does not identify the supplier as having an Australian connection (such as .com.au), and there is no other information reasonably available to the payer to lead them to believe that the supplier may have a permanent establishment in Australia (for example, retail outlets in Australia, or an Australian address, phone number), the payer will not need to withhold and should retain a record of the reason for not withholding.
Non-resident suppliers do not need to provide you with an ABN unless they have a permanent establishment in Australia, which includes an agent or a branch office in Australia.
You order goods for your business from an overseas business. The supplier does not need an ABN and you do not need to withhold. You may need to pay GST and customs duty when the goods are imported into Australia.
You order goods for your business from an overseas business. The goods are delivered and you are invoiced by their agent in Australia. If the agent does not quote their ABN on the invoice or any other document, you will need to withhold.
Regular suppliers can give you a periodic quotation of their ABN that covers all the supplies they make to your business for a specified period, such as a financial year.
You must keep records that can verify the supplier, the supplier's ABN and the payments made in relation to the supplies.
At least once a year, you should check that the ABN quotation is correct and up to date.
As long as every member of the group keeps a register of the ABN of all the other members that supply it and is able to link each transaction to the correct ABN, you do not have to quote the ABN with each transaction.
You do not need to withhold from lease payments if the lease agreement document states the lessor's ABN.
15. Am I responsible for ensuring that a supplier's quoted ABN is correct?
In general, if the ABN quotation looks reasonable, you can accept it.
However, if you have reason to suspect that it might not be genuine or that it does not belong to the supplier who quoted it, you should check it out. Things that may alert you include:
- incorrect number. An ABN has 11 digits. There are no letters and the first digit will never be zero. Branches of entities will have an additional three digit GST or PAYG registration number that is a separate identification number for tax purposes
- sequential numbers, repeating numbers or unusual number patterns - you can check the mathematical validity of the number by referring to the fact sheet Format of the Australian business number (ABN), and
- invoice details do not match the details of the person you believed was supplying you or the type of supplies you are receiving.
You can check an ABN by using the Australian Business Register at www.abr.gov.au The register provides details of the names and addresses of suppliers holding valid ABNs. To use the register, you can also phone 13 72 26.
If the ABN quoted on the invoice is not valid or the details do not match the supplier, you should withhold 46.5% of the payment.
Check with the supplier who may have several different enterprises and has accidentally quoted the wrong ABN. Check the validity of the ABN with the Australian Business Register (see Question 15).
If the ABN does not belong to the supplier, you must withhold 46.5% of the payment.
When the payment for the full supply is $75 or less, exclusive of GST, you do not have to get an invoice with an ABN or withhold. Similarly, tax invoices are not required if the GST-exclusive value of the supply is $75 or less. However, you should have evidence such as cheque butts and purchase orders to support claims for input tax credits relating to these supplies.
You cannot avoid having to withhold by breaking down a larger supply into $75 amounts, but a series of small supplies of under $75 would not require withholding where no ABN was quoted.
You have your shop sign painted. The painter invoices you for $150 and does not have an ABN. You cannot turn this into two $75 transactions and avoid withholding.
You have flowers delivered for your public office once a week and you are invoiced $40 each time. As these are separate transactions, you would not need to withhold if the florist does not quote an ABN.
You do not have to withhold where a charity provides some evidence that its income is exempt from tax. This may be in the form of an ABN or a copy of the charity's notice from the Commissioner of Taxation. If the charity provides you with a copy of its notice from the Commissioner of Taxation, you should keep it with your transaction records so that you can show why you did not withhold.
You do not have to withhold if you are an individual and the supply is not for your business purposes. For example, if you buy a bar refrigerator from another business to use at home, you will not need to withhold if the other business does not quote its ABN.
However, if your business is a partnership, company or trust, and you buy the refrigerator through your business, this exception will not apply. You will have to withhold if the supplier does not quote their ABN.
You do not need to withhold when no ABN is quoted if:
- the supplier is an individual (not in business as a partnership, company or trust)
- the supply, for the supplier, is private or domestic, for example, when another business person sells your business a second-hand computer that has only been used at home by the supplier for private purposes and is not part of their trading stock or business equipment, and
- the supply is made as part of a private recreational pursuit or hobby, for example, when you buy a picture to hang in your public business office from an artist who paints as a hobby.
In these cases, the supplier should provide you with a written statement. A form for this is available from our website or suppliers can create their own. It should contain:
- the supplier's name and address
- a statement that the supply is either
- private or domestic
- part of a hobby or private recreational pursuit and, therefore, the supplier doesn't need to quote an ABN and you do not need to withhold from your payment to them, and
- the supplier's signature.
The statement can be on the invoice. If it is separate, you must be able to link it to your transaction records so that you can show why you did not withhold. If you suspect that the statement is false, you must withhold from the payment if the supplier does not quote their ABN.
You do not have to withhold from payments to suppliers whose income is exempt from tax. Common types of income tax exempt bodies include:
- religious institutions
- schools, pre-schools, colleges, universities and other public educational institutions
- community service organisations, such as sports clubs, community centres, youth groups, community arts or theatres and other associations that have community service purposes, and
- public hospitals and non-profit private hospitals.
The supplier should provide you with a statement. A form is available from our website or suppliers can create their own. It should contain:
- the name and address of the organisation
- the type of organisation, such as a school, sports club or religious body
- a statement that its income is exempt from tax under subdivision 50A of the Income Tax Assessment Act 1997 and, therefore, it does not need to quote an ABN and you do not need to withhold from your payment, and
- the signature of an appropriate office holder.
The statement can be on the invoice. If separate, keep the statement with your transaction records so you can show why you did not withhold.
If you suspect the statement is false, you must withhold 46.5% from the payment if the supplier does not quote their ABN.
The supplier does not need to provide proof of the income tax exempt status of the payment. You can accept the statement unless you have reasonable grounds to believe it is false, in which case you must withhold if no ABN is quoted.
There are a few other bodies that are exempt from income tax. These are listed in subdivision 50A of the Income Tax Assessment Act 1997. If you need more information, phone us on 13 28 66.
You do not have to withhold from a supplier who is not carrying on an enterprise. The definition of enterprise is very broad and most activities that are not private or domestic or private recreational pursuits or hobbies would be enterprises. However, some activities may not be considered to be an enterprise and the operator would not be entitled to an ABN. Such activities are usually quite small and may be operated from home.
In these cases, the supplier should provide you with a copy of a notice from the Registrar of the Business Register, currently the Commissioner of Taxation, stating that their activities are not considered to be an enterprise.
You should keep a copy of this notice with your transaction records so you can show why you did not withhold.
Withholding for 'No ABN' still applies. However, instead of withholding 46.5% of the goods and services, you need to pay us an amount equal to 46.5% of the market value of the goods and services supplied. For example, your business agrees to do cleaning worth $1,000 for an advertising business in exchange for $1,000 worth of advertising. If the advertising business does not quote their ABN to you, you must pay $465 to us before you deliver the services or goods (see Question 3 and Question 4).
In this situation, you would become a supplier to the advertising business. Unless you have an ABN and quote it to them, they would also need to pay $465 to us before they supply the advertising to you.
You both would have the obligations described in Questions 3 to 7.
If you are buying goods from a second-hand dealer, they must provide you with an ABN.
If you are buying goods from a garage sale and it is obvious that the sellers are not carrying on an enterprise, you are not required to get a statement from them but you should note the circumstances of the purchase in your records.
A payer is required to withhold an amount from a payment it makes to another entity where:
- the payment is for a supply that the other entity has made, or proposes to make, to the payer in the course or furtherance of an enterprise carried on in Australia by the other entity, and
- none of the exceptions to withholding applies.
The principal exception to withholding is where the other entity quotes their ABN to the payer on an invoice or some other document relating to the supply (for more exceptions, refer to Statement by a supplier (reason for not quoting an ABN to an enterprise) (NAT 3346)). The amount to withhold is 46.5% of the payment. This withholding event is commonly referred to as 'No ABN Withholding'.
Services supplied in the course of an enterprise by the owner
Generally, the body corporate is required to withhold 46.5% of the payment where an owner:
- makes a supply of services to the body corporate as part of an enterprise they carry on
- does not quote their ABN to the body corporate, and
- the payment exceeds $75 (excluding GST).
Patrick carries on a gardening business. He is asked by the body corporate to perform garden maintenance services for the body corporate, of which he is a member. Patrick invoices the body corporate for $250 but does not quote his ABN. The body corporate would be required to withhold 46.5% of the payment to Patrick.
If the body corporate pays the owner in a form other than money (for example a gift or discount on levies), and the body corporate is required to withhold from the payment in the circumstances outlined above, the body corporate must pay an amount equivalent to 46.5% of the market value of the gift or discount to us.
Services not supplied in the course of an enterprise carried on by the owner
However if the owner does not perform the services for the body corporate in the course of an enterprise (for example, the services are performed as part of a hobby or private recreational pursuit, or are wholly of a private or domestic nature for the owner), the body corporate is not required to withhold an amount from the payment. The owner may wish to provide the body corporate with a written statement to this effect (or they could use the Statement by a supplier (reason for not quoting an ABN to an enterprise) form (NAT 3346) if the body corporate is not satisfied that they have no obligation to withhold).
Daphne is a pensioner. Once a month she tends the front garden of the unit complex in which she owns a unit. For this work, the body corporate gives Daphne a $100 discount off her levies. Daphne does not have an ABN. She would be considered to be making the supplies of her services in the course of a hobby or private recreational pursuit. The body corporate would, therefore, not be required to withhold from the discount given to Daphne.
If the body corporate is required to withhold an amount for the owner's failure to quote their ABN, they need to:
- register as a PAYG withholder (phone us on 13 28 66)
- send the withheld amounts to us and report those amounts on their activity statement
- issue the owner with a Payment summary that includes details of how much has been withheld from the payment (the payee would then lodge the Payment summary with their income tax return and claim a credit for amounts withheld), and
- complete a PAYG withholding where ABN not quoted - annual report (NAT 3448) and send it to us by 31 October after the end of the financial year.
An agent is not required to withhold an amount from the rent it passes onto the owner as the amount is not a payment for a supply made by the owner to the agent. The agent is merely paying the amount received from the tenant to the owner in their capacity as the owner's agent.
However, the tenant is required to withhold 46.5% from the rent made to the agent (on behalf of the owner) for a commercial property where:
- the payment exceeds $75 (excluding GST), and
- neither the owner nor the agent has quoted their ABN to the tenant.
The owner is required to withhold 46.5% from the commission payments made to the agent where:
- the commission payment exceeds $75 (excluding GST), and
- the agent's ABN has not been quoted to the owner.
For information in relation to the leasing of residential premises and ABN requirements, refer to GST determination GSTD 2000/9 and Miscellaneous Taxation Ruling MT 2000/2.
An agent (on behalf of the owner), or the owner, making a payment to another entity for a supply of goods or services relating to the owner's property, is required to withhold 46.5% of the payment where:
- the supply is made in the course or furtherance of an enterprise carried on by the other entity (the supplier of services), and
- none of the exceptions to withholding apply.
This withholding event is commonly referred to as 'No ABN withholding'.
Exceptions to withholding include where:
- the entity making the supply has quoted their ABN on an invoice or some other document relating to the supply, and
- the payment does not exceed $75 (excluding GST).
For more exceptions to withholding, see the fact sheet Statement by a supplier (reason for not quoting an ABN to an enterprise) (NAT 3346).
If you need more information about withholding, you can:
Last Modified: Wednesday, 30 January 2013