If you are freelancing, you are a contractor running your own enterprise, and you need an ABN. It does not matter whether it is full-time or a few hours on a Sunday, and there is no minimum income. What does matter is that you are genuinely freelancing rather than being an employee by another name, because you are not entitled to an ABN for work you do as an employee.
Freelancing is an enterprise from the first client
There is no income threshold and no grace period. The test is whether you are carrying on or starting an enterprise, and taking on paid work for clients is exactly that.
The practical trigger is usually your first invoice. A business paying you more than $75 excluding GST without an ABN quoted is required to withhold 47% of it and send it to the ATO. You get it back through your tax return, months later. Most freelancers meet the ABN requirement by discovering that.
The exception that catches people: you might be an employee
The ABR is blunt about this. You are not entitled to an ABN for work you carry out as an employee, including as an apprentice, trade assistant or labourer, even if you or your employer calls it contracting. And it adds the line worth knowing by heart: an employer should not ask you to get an ABN as a condition of employment.
If someone is offering you work on the condition you get an ABN, and the work looks like a job, that is worth pausing on rather than complying with. Signs it is really employment include set hours you do not control, their tools and equipment, no ability to delegate the work to someone else, no real commercial risk on your side, and doing the same work as people on the payroll.
Right, I need one. What now?
The eligibility question is settled by the section above. This is the practical order.
- Apply for the ABN before the first invoice. Not after. Retrofitting is possible but the withholding will already have happened.
- Describe the activity properly on the application. "Freelance graphic design" beats "consulting". Vague descriptions are a common reason an application goes to manual review. See nature of your activity.
- Leave GST off unless you need it. It is compulsory from $75,000 of turnover. Register early and you are lodging activity statements you did not have to lodge.
- Put the ABN on every invoice. That is the whole point of having it. Include your name, the client's, the date, what you did and the amount.
- Open a separate bank account and move a percentage across as you are paid. Nobody is withholding tax for you.
- Start keeping records now. Software, equipment, the work-use share of your phone and internet, professional subscriptions. Deductions you cannot substantiate are deductions you do not get.
Do platforms like Upwork and Fiverr change anything?
Not the ABN question. Being paid through a platform does not make you an employee of the platform, and it does not remove the enterprise. If you are earning from freelance work you are carrying on an enterprise regardless of who processes the payment.
What it changes is visibility. Platform income is reported and data-matched, so a return that omits it is conspicuous. And some Australian clients on those platforms will still ask for an ABN on the invoice, because their side of the withholding rule has not gone anywhere.
Freelancing on the side of a job
Having an employer changes none of it. Your salary is taxed through PAYG withholding, your freelance income is business income, and both go in the same return. The two do not offset each other and you cannot use the tax-free threshold twice.
The practical consequence is the one people are unprepared for: no tax has been taken out of the freelance side, so it lands as a bill at the end of the year. Setting money aside as you earn is the whole trick.
If you are not sure whether what you are doing is freelancing or still a hobby, our guide on hobby or business works through the test.
Common questions
Do I need an ABN for freelance work?
Yes. Freelancing means working as a contractor, which is carrying on an enterprise, and there is no minimum income or hours before it applies. Without an ABN, business clients must withhold 47% of anything over $75 excluding GST.
Do I need an ABN if I freelance alongside a full-time job?
Yes. Having an employer does not change the freelance side. Your salary is taxed through PAYG withholding and your freelance income is business income; both go in the same tax return, and no tax is taken out of the freelance half as you earn it.
A client says I need an ABN to be hired. Is that right?
It depends on whether the work is genuinely contracting. If it is, yes, you need one. If it looks like a job, with set hours, their equipment and no commercial risk on your side, be careful: the ABR says you are not entitled to an ABN for work you do as an employee, and an employer should not ask you to get one as a condition of employment.
Do I need an ABN for Upwork or Fiverr work?
Yes, if you are an Australian resident earning from freelance work. Being paid through a platform does not change that you are carrying on an enterprise, and platform income is data-matched with tax returns.
Do I have to register for GST as a freelancer?
Only once your GST turnover reaches $75,000 in a 12-month period, or when you expect it to. Below that it is optional, and registering means charging GST and lodging activity statements.
How much should I set aside for tax?
Enough to cover the tax on your freelance profit at your marginal rate, which depends on your total income including any salary. A registered tax agent can give you a figure for your situation, which is worth doing before your first big invoice rather than after.
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