TFN vs ABN in Australia — What Is the Difference and Do You Need Both?

If you have recently arrived in Australia — or started doing freelance work — you have probably heard about both a TFN and an ABN and wondered whether you need one or both. This is one of the most common questions among Indian migrants, particularly those who work in IT, consulting, healthcare or as contractors.

The short answer: everyone needs a TFN. You only need an ABN if you are running your own business or working as a contractor or freelancer.

What Is a TFN?

A Tax File Number (TFN) is your personal 9-digit tax identifier issued by the Australian Taxation Office (ATO). It is used to:

• Tell your employer how much tax to withhold from your pay
• Lodge your annual tax return
• Access government services through myGov
• Open certain investment accounts
• Apply for government benefits

Every person who earns income in Australia needs a TFN — whether you are a permanent employee, casual worker, contractor, student, or self-employed business owner.

Your TFN is personal and confidential. It stays the same for your entire life, even if you leave Australia and return years later.

What Is an ABN?

An Australian Business Number (ABN) is an 11-digit number that identifies your business to the Australian government, other businesses, and the public. It is used to:

• Invoice clients for goods or services
• Register for GST (Goods and Services Tax)
• Claim business tax deductions
• Register a business name
• Deal with the ATO as a business entity

Unlike a TFN, an ABN is linked to a business activity — not to you as an individual. If you are employed by someone else and receive a salary or wages, you do not need an ABN.

Running an Indian business in Australia? AustraliaWasi lists Indian accountants who can help you set up your business correctly, choose the right structure, and handle your tax obligations → Find Indian Accountants

TFN vs ABN — Key Differences

Feature	TFN	ABN
What it is	Personal tax identifier	Business identifier
Who issues it	ATO	Australian Business Register
Who needs it	Everyone earning income	Businesses and contractors
How many digits	9 digits	11 digits
Is it public?	No — confidential	Yes — publicly searchable
Cost	Free	Free
How long to get	7–28 days by post	Usually instant online
Can you have both?	Yes — most contractors do	Yes

Do You Need a TFN, ABN, or Both?

You need ONLY a TFN if:

• You work as a permanent or casual employee on a company payroll
• You receive a salary or wages from an employer
• You earn investment income (shares, bank interest, rental property)
• You are a student earning part-time wages

Example: Ravi works full-time as a software engineer at an Australian tech company. He receives a salary paid fortnightly. He needs a TFN only — his employer handles tax withholding on his behalf.

You need BOTH a TFN and an ABN if:

• You work as a contractor or freelancer invoicing multiple clients
• You run your own business (even part-time)
• You drive for Uber, DoorDash or other gig platforms
• You sell products online (eBay, Etsy, Facebook Marketplace regularly)
• You provide consulting, tutoring, cleaning, trades or other services independently
• You have a side business alongside your main employment

Example: Priya is employed full-time as a nurse but also does freelance tutoring on weekends, invoicing students directly. She needs both a TFN (for her nursing salary) and an ABN (for her tutoring business income).

Important: You need a TFN before you can apply for an ABN. Think of it like needing your licence before you can register a vehicle.

The "Am I an Employee or Contractor?" Question

This is where many Indian migrants get confused — particularly in the IT sector.

Many Australian companies engage Indian IT professionals as contractors rather than employees. Your company might say "we'll need you to get an ABN before we can pay you."

Before you rush to get an ABN, understand the difference:

You are an employee if:

• You work set hours dictated by the company
• You use the company's equipment and tools
• You cannot send someone else to do the work
• The company tells you how to do the work
• You are paid regularly (weekly, fortnightly)
• The company pays your superannuation

You are a contractor if:

• You set your own hours
• You use your own equipment
• You can subcontract the work
• You are paid per project or invoice
• You are responsible for your own superannuation
• You bear commercial risk if the work goes wrong

The "sham contracting" problem: Some Australian employers ask workers to get an ABN when the working relationship is actually employment. This is illegal. If you are effectively working as an employee but are forced to get an ABN, you may be entitled to employee entitlements like superannuation, leave and workers compensation. Seek advice from an Indian accountant or the Fair Work Ombudsman.

What Happens Without an ABN?

If you invoice a client without including your ABN, that client is legally required to withhold 47% tax from your payment and send it to the ATO. This is called "no ABN withholding."

For example:

• You invoice a client $1,000 for consulting work
• You forget to include your ABN on the invoice
• The client withholds $470 and pays you only $530

You can claim back the withheld tax in your annual tax return, but it is a significant cash flow problem. Always include your ABN on every invoice.

How to Apply for an ABN

Applying for an ABN is free and usually instant online. You need your TFN ready before you start.

Step 1: Go to the Australian Business Register

Visit abr.gov.au and click "Apply for an ABN." You can also access this through the ATO's business portal.

Step 2: Choose Your Business Structure

• Sole trader — simplest structure. You trade in your own name. Use your personal TFN. No separate tax return needed — business income declared in your personal return.
• Partnership — two or more people in business together
• Company — separate legal entity (requires ASIC registration, more complex)
• Trust — advanced structure, seek professional advice

For most Indian freelancers and contractors starting out, sole trader is the correct choice.

Step 3: Complete the Online Application

You will need:

• Your TFN
• Your date of birth and address
• Description of your business activity (e.g., "IT consulting services," "tutoring," "cleaning services")
• Your business start date

Step 4: Receive Your ABN

For most applicants, your ABN is issued immediately after submitting the online form. You can start using it right away.

In some cases (usually if the ATO needs to verify your identity), it may take up to 28 days.

Find an Indian accountant to help you set up correctly: Choosing the wrong business structure in Australia can cost you significantly in tax. Indian accountants in Sydney, Melbourne and Brisbane who specialise in contractor and sole trader tax → Find Indian Accountants

GST — Do You Need to Register?

Once you have an ABN, you may also need to register for GST (Goods and Services Tax) — Australia's 10% consumption tax.

You must register for GST if your annual business turnover is $75,000 or more.

If your turnover is below $75,000, you do not have to register for GST — but you can choose to voluntarily register.

If you are registered for GST:

• Add 10% GST to your invoices (e.g., $1,000 fee → $1,100 GST inclusive)
• Lodge quarterly BAS (Business Activity Statement)
• Claim GST credits on business expenses
• Pay the net GST collected to the ATO quarterly

Most contractors and freelancers starting out do not immediately hit the $75,000 threshold and can operate GST-free initially.

Superannuation for ABN Holders

If you work on an ABN (as a contractor or sole trader), your clients do not pay superannuation for you. You are responsible for your own retirement savings.

The Superannuation Guarantee rate in 2026 is 11.5%. Consider setting aside 11.5% of everything you earn to a superannuation fund voluntarily.

Note: There is an exception — if you work under a contract that is wholly or principally for your labour (not a specific result), your client may still be required to pay superannuation for you even on an ABN. This is complex — seek advice from an accountant.

Sole Trader Tax — What You Need to Know

As a sole trader with an ABN:

• No tax is withheld from what clients pay you — you receive the full invoice amount
• You must set aside money throughout the year to pay income tax
• Consider setting aside 30–35% of every payment for tax
• You lodge a single personal tax return each year that includes both your employment income (if any) and business income
• You can claim business expenses as tax deductions (laptop, internet, professional memberships, work-related travel, home office)
• Deadline to lodge: 31 October 2026 (or 15 May 2027 through a registered tax agent)

Frequently Asked Questions

I have been asked to get an ABN for a job — do I have to?

Not necessarily. If the working arrangement looks like employment (set hours, company equipment, no control over how you do the work), you may be entitled to be an employee instead. Get advice from an Indian accountant or call the Fair Work Ombudsman on 13 13 94.

Can I cancel my ABN if I stop doing contracting work?

Yes. Cancel your ABN through abr.gov.au if you stop operating as a business. Your TFN remains active.

Is my ABN the same as my business name?

No. Your ABN identifies your business entity. A business name (e.g., "Ravi's IT Consulting") is registered separately through ASIC. Sole traders can operate under their own personal name without registering a separate business name.

Do I need an ABN to drive for Uber or do food delivery?

Yes. Uber, DoorDash, Menulog and similar gig platforms require you to have an ABN to receive payments. They treat you as an independent contractor, not an employee.

Can I have multiple businesses on one ABN?

As a sole trader, yes — your single ABN covers all business activities you operate under your own name. If you change business structure (e.g., form a company), you need a new ABN for the company.