Supplies and services from a business that does not quote an ABN
If I buy supplies or services from a business that does not quote an ABN, what do I have to do?
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 Do documents quoting an ABN have to be on paper? – you must withhold 49% of the payment unless the total payment for the goods or services is $75 or less. If you are not registered for withholding, you must register for PAYG withholding as soon as you know you need to withhold.
When you pay the remaining net amount you should give the supplier a payment summary. You can get PAYG payment summary – withholding where ABN not quoted forms from our online ordering service, or 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
- 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 Are documents quoting an ABN, other than invoices, acceptable?
Keep records of transactions in which you withheld 49% 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 When do I send my activity statement to the ATO?
If I order supplies for my business from overseas suppliers, do they need to quote their ABN?
Foreign resident suppliers generally do not need to provide you with an ABN unless they are carrying on an enterprise in Australia, for example they have a permanent establishment in Australia, which includes an agent or a branch office in Australia.
John orders goods for his business from an overseas business. The supplier does not need an ABN and John does not need to withhold. John may need to pay GST and customs duty when the goods are imported into Australia.
John also orders goods for his business from a different overseas business. The goods are delivered and John is invoiced by their agent in Australia. If the agent does not quote their ABN on the invoice or any other document, John will need to withhold.
End of example
- TR2002/9 Income tax: withholding from payments where recipient does not quote ABN
Do I have to get an ABN or withhold for small amounts?
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 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.
Ana has her shop sign painted. The painter invoices her for $150 and does not have an ABN. Ana cannot turn this into two $75 transactions and avoid withholding.
Ana has flowers delivered for the counter once a week and she is invoiced $40 each time. As these are separate transactions, Ana would not need to withhold if the florist does not quote an ABN.
End of example
If a supply is for personal (not business) use, do I have to withhold if the supplier doesn't quote their ABN?
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.
Instead of paying money for a supply, I agree to provide the supplier with goods or services, does withholding for 'No ABN' still apply?
Withholding for 'No ABN' still applies. However, instead of withholding 49% of the goods and services, you need to pay us an amount equal to 49% 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 $490 to us before you deliver the services or goods.
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 $490 to us before they supply the advertising to you.
You both would have the obligations described in the answers to the questions above.
My supplier claims a supply is not a business transaction for them, do I need to withhold if they do not quote an 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 statement by a supplier not quoting an ABN 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
- made in the course or furtherance of an activity done as a private recreational pursuit or hobby
- wholly of a private or domestic nature
- 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.
My supplier claims that payment for a supply is exempt from income tax, do I need to withhold if they do not quote an 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
- public hospitals and non-profit private hospitals.
The supplier should provide you with a statement. A statement by a supplier not quoting an ABN 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 49% 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.
My supplier claims that they are not carrying on an enterprise and do not need an ABN, do I have to withhold from payments to them?
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.
Is a body corporate required to withhold an amount from a payment (in the form of cash or discount on levies) to an owner for providing them services (for example, gardening services)?
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. You must withhold 49% 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 must withhold 49% 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 must withhold 49% 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 49% of the market value of the gift or discount to the ATO.
End of example
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 form 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:
End of example
I am a real estate agent and I pass on rent from the tenant to the owner, am I required to withhold an amount if the owner has not quoted their ABN?
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 must withhold 49% 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 must withhold 49% 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.
- GSTD 2000/9 Goods and services tax: if you let out residential premises do you need to get an ABN for PAYG purposes or register for GST?
- MT 2000/2 The New Tax System: the requirement to get an ABN for PAYG purposes if you let out a residence
Do I have to withhold when the supplier is a charity?
You do not have to withhold where a charity provides some evidence that its income is exempt from tax, for example 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.
Is an agent or the owner required to withhold an amount from a payment to another entity for the provision of services in connection with the owner's property, if the other entity has not quoted their ABN?
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, must withhold 49% 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).