You can physically send an invoice without an ABN, but a business paying you is generally required to withhold 47% of the payment and send it to the ATO. That’s the no-ABN withholding rule. There are narrow exceptions (payments of $75 or less, genuine hobby supplies with a written statement), but for anyone actually working, the practical answer is: get the ABN first, it’s usually same-day.
How no-ABN withholding works
When a business pays a supplier for goods or services and the supplier hasn’t quoted an ABN on the invoice (or another approved document), the payer must withhold tax at the top rate, 47%, and remit it to the ATO. It’s not optional for them, and payers who skip it wear penalties themselves, which is why established businesses simply won’t pay a no-ABN invoice in full.
The withheld amount isn’t lost, it’s credited to you when you lodge your tax return, but your cash flow takes a 47% haircut for months. On a $2,000 invoice, that’s $940 you wait the better part of a year to see.
The genuine exceptions
- $75 or less, payments of $75 or less (excluding GST) don’t require withholding
- Private or domestic supplies, selling your own second-hand couch to a business isn’t an enterprise supply
- Hobby supplies, genuinely hobby-level activity can give the payer a completed Statement by a supplier form instead of an ABN, declaring the supply is private or hobby in nature
- Wholly input-taxed supplies and a few other narrow categories
The hobby exception is the one people stretch, and shouldn’t. If you’re invoicing the same client repeatedly, advertising, or trying to make a profit, that’s an enterprise, and a Statement by a supplier won’t protect either side when the ATO looks.
Invoicing while your ABN application is pending
An invoice needs the ABN on it, “it’s coming” doesn’t stop withholding. The good news: a clean ABN application is usually approved the same day, so the right sequence is simply apply first, invoice second. Once you have the number, add it to every invoice, payers check it against ABN Lookup, and a cancelled ABN triggers the same withholding as none at all (fix that on our reactivation guide).
Common questions
How do I get the withheld 47% back?
It’s credited against your tax when you lodge your return, the payer gives you a payment summary showing the withheld amount, and it works like tax you’ve already paid. You’ll typically get the difference back as a refund, but you carry the cash-flow gap until then.
Can I use someone else’s ABN on my invoice?
No, quoting an ABN that isn’t yours (a friend’s, a family member’s, an old employer’s) is misrepresentation, creates tax problems for them, and unwinds badly for everyone. Your own ABN is free-to-cheap and usually issued the same day; there’s no upside to borrowing one.
What is a Statement by a supplier and when can I use one?
It’s an ATO form you give the payer declaring your supply is private, domestic or hobby in nature, letting them pay you without an ABN and without withholding. It’s only legitimate when that declaration is true, regular, profit-seeking work is an enterprise, and the statement doesn’t change that.
Does the 47% rule apply to invoices to individuals?
No, withholding applies when a business pays for supplies in the course of its enterprise. Mowing a neighbour’s lawn for cash isn’t caught. The moment your customer is a business, though, they’re obliged to withhold if there’s no ABN on the invoice.
I invoiced without an ABN and got paid in full: am I in trouble?
The withholding obligation sits with the payer, so the immediate risk is theirs. Your obligations are the underlying ones: if you’re carrying on an enterprise you should hold an ABN and declare the income either way. Get the ABN before the next invoice and the question disappears.
Invoicing this week? Get the ABN today.
5-minute application, reviewed by registered tax agents, usually same day. $99 inc GST, tax deductible.