This post is also available in: Español
When it comes to working in Australia as an international student, many students wonder how to apply for an ABN for international students.
Therefore, we create this informative and step-by-step guide so any international student in Australia can understand the Australian Business Number and can learn how to get one.
What is an ABN?
ABN is the acronym of Australian Business Number and according to the Australian Taxation Office (ATO), it is a unique 11-digit identifier that makes it easier for businesses to interact. In other words, is your business ID.
It is important to mention that not everyone is entitled to an ABN, but if you are looking to work with your own company you probably will be entitled to.
However, when you do the process through the ATO’s website it automatically shows you if you are entitled to an ABN.
Can international students apply for an ABN?
Yes, they can. So if you are an international student, by getting an ABN, your chances to get a job will be multiplied.
A lot of companies in Australia are looking for contractors or sole traders and, by getting it, will open you the doors to many more suitable jobs for you.
Why do I need an ABN as an international student?
So as mentioned before, to work as a business you’ll need an ABN. But you might be wondering, why would I want to work as a business as an international student?
Sometimes companies ask students to invoice them. This can be for plenty of reasons but most of the time is because they don’t want to employ you directly and they prefer to receive your services as an independent company or also known as a contractor.
That means, you won’t be an employee of them and you will be charging as if you were with your own company (self-employed). In other words, you are considered a sole trader and your employer becomes a “customer” of your services.
In this situation your employer does not need to withhold tax or pay superannuation when paying you which of course, reduces their costs so bear in mind to negotiate the best rate you can in order to get the payment you were expecting to receive.
How much does it cost to get an ABN?
Getting an ABN through the Australian Business Register (ABR), is completely FREE. However, if you contact a tax agent to do this for you, this person might charge you a fee for its service.
Is important to mention that getting an ABN online is incredibly easy and as an international student, you will be able to.
Benefits of having an ABN
So working with an ABN, might offer you several advantages but also disadvantages. In summary, these will be the following:
Advantages of an ABN
- Form your own company and own a business name
- Register for Goods and Services Tax (GST) with the ATO
- Claim GST credits if you have registered for GST
- Deduct taxes only after the end of the first financial year
- Register for a .com.au Australian domain name for your company
- Claim fuel tax credits
- Claim energy grant credits
Disadvantages of an ABN
- You are not covered by workers’ compensation insurance.
- You will need to keep the records of every payment you make that is related to your business and services.
- Another disadvantage that might be worth mentioning is that you are legally and financially responsible for all aspects of the business, so your personal assets are at risk if there is any debt or liability.
Why would you need to keep records?
Because at the end of the financial year (June 30), you will need to make your Tax Declaration and you will need to deduct costs. If you don’t have an accurate list of records, then you will have to spend significant time organising your accounting.
How to get an ABN as an international student?
To get an ABN number you will need to apply for an ABN through the Australian Business Register (ABR), or through a Tax Agent.
How long does it take to get an ABN?
If you provide all the information required and you are entitled to an ABN, you will receive your ABN immediately after your finish filling the form, which can take you around 10 minutes.
However, if you omit information or the information cannot be verified, it might require to be processed manually which will take the time to get an ABN to up to 28 days.
Can I have more than one ABN?
Yes and no.
As an entity, you can only have one ABN. But under that ABN, you can conduct multiple enterprises or business activities.
Now, if you are looking for a partnership or a different business structure than your current ABN then you will need to apply for another ABN.
How much tax do I pay on ABN?
In the ATO’s website, you will find the individual income tax rates for each year.
In summary for 2020, you will have to pay as an international student, the following:
|Taxable income (If you earned from – to)||Tax on this income|
|0 – $18,200||Nil|
|$18,201 – $37,000||19c for each $1 over $18,200|
|$37,001 – $90,000||$3,572 plus 32.5c for each $1 over $37,000|
|$90,001 – $180,000||$20,797 plus 37c for each $1 over $90,000|
|$180,001 and over||$54,097 plus 45c for each $1 over $180,000|
How long does an ABN last?
ABNs do not have an expiry date.
However, bear in mind that it can be cancelled if it comes under review and you cannot longer justify that you are running your services or you were not entitled to it from the beginning.
Difference between ABN and TFN
If you work with a Tax File Number (TFN), it means that your employer will withhold tax from you on each payment and you will receive payments to your superannuation whereas, in the case of working through ABN, the employer does not need to withhold tax for you and is not obliged to pay the superannuation.
You will still have to pay taxes at the end of the financial year.
It is important to mention that through ABN you won’t be covered by Worker’s Compensation Insurance in case of a workplace injury.
In this example, we will guide you on submitting the application as a sole trader or self-employed, which for most international students will apply.
Read every information on the ATO’s website carefully to ensure you are submitting the correct details.
Questions? Send us your comments below.