ABN vs TFN | Australia Business Number vs Tax File Number
If you are a citizen of Australia, you must be aware of two very important numbers that have significance in your life. One of these is TFN that stands for Tax File Number. It is a number that is unique for every individual and helps him assess and submit his income tax in time every year to ATO. If you are doing a business in Australia, you need a special number called ABN. It stands for Australia Business Number and helps in easy identification of your business as well as easy filing of taxes as a business identity. A person can apply for Australian Business Number, only if, he has a valid TFN. There are other issues pertaining to ABN and TFN also that will be discussed in this article.
Whether you have set up a company or started as an individual, your business requires a unique Australian Business Number (ABN) issued by Australian Business Register (ABR) which is a part of ATO. ABN is a unique 11 digit number with first two numbers being a check sum. It helps in all tax dealings with the ATO. If one operates a company, his ABN is prepared including his ACN (Australian Company Number) in it and by prefixing a two digit checksum to it.
A business in Australia has both ABN as well as TFN. It is a 8 or 9 digit number to be produced only in tax related matters, and its use otherwise is prohibited. It is this TFN that helps individuals file their income tax returns at the end of each financial year. To receive income without tax cuts, an individual needs to quote his tax number (TFN). If he receives incomes where tax has been withheld, he can quote such transactions when filing tax return and ask for refunds if there have been any excess amounts deposited. In fact, a TFN is a must whether a person is doing a business or not. But in case, an individual is conducting a business, he needs to have an ABN, TFN, GST registration, and PYAG (Pay as you Go) registration.
ABN is the unique identification number that distinguishes your business from other businesses having similar name. It is required by all businesses to deal with ATO and other governmental agencies. ABN is granted only to those who are carrying some sort of business activity. If you are doing business as a sole proprietor, you can use your own individual TFN, but when conducting a business as a partnership or company, separate TFN is necessary.
What is the difference between ABN and TFN?
• TFN stands for Tax File Number, and is a must for every individual while filing his tax return annually.
• ABN stands for Australian Business Number, and is essential to start a business.
• ABN is granted by Australian Business Register, which is a part of ATO
• Your personal TFN is enough if you are conducting a business as a sole proprietor, but if it is a company or you have a partnership firm, you need to get a separate TFN for the company allotted.