When a business doesn't quote an ABN
If a business supplies you with goods or services, that business should quote their ABN. If they don't, generally you must withhold at the top marginal rate plus Medicare levy from the payment you make to them and send the withheld amount to us.
You do not have to withhold from payments if any of the following apply:
- the total payment you make to the supplier is $75 or less, excluding goods and services tax (GST)
- the supplier is an individual under 18 years of age and your payments to that person are $350 or less each week
- the goods or services are supplied through an agent who has quoted their ABN on an invoice or some other document relating to the supply
- the goods or services supplied are wholly input taxed under GST
- the entire payment you make is exempt income for the supplier
- the supplier is not entitled to an ABN as they are not carrying on an enterprise in Australia.
Also, you should not withhold from the payment you make if the supplier states in writing that the supply is either of the following:
- made in the course or furtherance of an activity done as a private recreational pursuit or hobby
- wholly of a private or domestic nature.
If you are aware that any one of the above conditions applies, you do not have to withhold, even where they have not quoted an ABN. However, you must have sufficient records to show the reason for not withholding.
If you are unsure, ask the supplier to give you a written statement that states the supply of goods or services is excluded for one of these reasons. The supplier may use the Statement by a supplier (NAT 3346), or create their own statement containing the same information. You must keep their statement for five years.
If you have reason to believe the statement is false or misleading, you must withhold at the top marginal rate plus Medicare levy from the total payment.
If a supplier has applied for an ABN, you can offer to hold payment until the supplier has obtained and quoted their ABN. This is a matter for you and your supplier to work out. However, you must not make full payment to the supplier on the understanding that an ABN will be quoted later. If you do, you may be subject to penalties for the amount you did not withhold.
If you withhold from the payment, you must complete a payment summary and give it to the supplier at the same time you pay them the net amount or as soon as practicable thereafter.
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If you need more information, refer to Statement by a supplier (NAT 3346). This includes a guide for businesses called 'Should your suppliers quote their ABN?'
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Be sure to include your ABN on your business stationery, especially on your invoices, as other businesses will need this information so they don't have to withhold from payments for goods and services you supply to them.
If you are registered for GST, other businesses will also need your ABN on your tax invoices to claim GST credits for GST they pay in the price of goods and services you supply to them. Remember, invoices you provide are not tax invoices for GST purposes unless they include your ABN.
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Sections within The amount to withhold
Last Modified: Tuesday, 21 August 2012