ABN vs ACN
The two terms ABN (Australian Business Number) and ACN (Australian Company Number) are related with doing business in Australia. These are two business identification numbers that sound very similar. As such, naturally someone who wants to start a new business in Australia can get confused whether he/she has to get both numbers or one, if one number which one he/she has to get. ABN and ACN are two different numbers issued by different Australian Authorities and entirely for different purposes.
The Australian Business Number (ABN) is a unique number used in Australia issues by Australian Tax Office for businesses to use when dealing with government, its agencies and other businesses. The ABN registration details become part of the Australian Business Register (ABR) maintained by ATO. It’s recommended by ATO to use ABN number in the invoices or other sales documents to avoid withheld amount from payments made for a business. ABN is a unique 11 digit number.
Uses of ABN:
(1) Helps to claim GST (Goods and Services Tax) credits
(2) Helps to claim fuel tax credits
(3) facilitates a single business activity statement
(4) If ABN is not quoted PAYG withholding is possible
(5) Allow others to easily confirms your details for ordering and invoicing
Entitlement to an ABN
To be entitled to an ABN you must be:
• a company registered under corporations law in Australia
• a government entity, or
• an entity that is carrying on an enterprise in Australia.
A non-resident entity may be entitled to an ABN where:
• it is carrying on an enterprise in Australia, or
• in the course of carrying on an enterprise, it makes supplies that are connected with Australia.
While it is not a must to get an ABN number, it is needed for certain purposes such as GST registration.
If your business has an annual turnover of $75,000 or more, or if you are a non-profit organizations with an annual turnover of $150,000 or more then you must register for GST and to do this you’ll need an ABN.
Anyhow, businesses that need to be endorsed as a gift deductible recipient or an income tax exempt charity or both, require an ABN.
Every company in Australia will be issued with a unique nine digit number to identify and qualify to do business in Australia or Overseas under the Corporation Act 2001.The Australian Securities & Investment Commission (ASIC) only issues the Australian Company Number (ACN) to companies upon registration verifying identifications and other documentation.
Mostly ACN number will be printed on all documents lodged in ASIC: statement of accounting, receipts, invoices, purchase orders, business letter heads, official company notices, cheques, bill of exchange ,bonds, agreements and some kind of advertisements.
How to check whether ACN number is correct?
ACN number is a nine digit number in total but actual ACN is 8 digits and the last digit is a check digit to check whether ACN number is correct. (Material Courtesy: ASIC website)
Consider an ACN number: 009 249 969
|Digit X Weight||0||0||54||10||16||27||18||6|
Digit X Weight = Digit x Weight (i.e 6×1=6, 9×2=18)
Sum of the Products of Digit X Weight = 0+0+54+10+16+27+18+6 = 131
Remainder of 131 when divide by 10 = 131/10 = 1
Complement of the remainder to 10 = 10 -1 = 9
So ACN:- 009 249 96 9
ABNs and ACNs are both business identification numbers issued by Australian government authorities, but for different purposes and by different departments.
While it is not a must for businesses to get an ABN number, it is needed for GST registration.
ACN is issued to companies automatically and must be displayed on certain documents.
ABN and ACN have some common identification; ABN is ACN plus a two-digit prefix.