- An ABN is an Australian Business Number, which businesses use when dealing with the Australian Tax Office and other government departments.
- If your employer is asking you to get an ABN, it is possible that he or she is hiring you as an independent contractor and not as an employee.
- It’s illegal for an employer to pretend you are a contractor when you are clearly an employee. This is called ‘sham contracting’ and your employer could be prosecuted.
- If you are working as an independent contractor, you’ll be responsible for reporting your income and paying tax to the Australian Tax Office. If you are an employee, your employer will usually deduct tax from your income.
- Generally contractors use their own tools, have their own insurance and decide how they want to do the job. They may also be responsible for their own superannuation entitlements and workers compensation.
What you can do
If you’re not sure whether you are an employee or independent contractor, ask your boss. The Fair Work Ombudsman has a fact sheet that helps explain the differences between an employee and an independent contractor.
Read Independent contractors: the essential handbook for information on a wide range of topics affecting independent contractors.
Visit the Australian Tax Office to find out if you are required to have an ABN.
Generally speaking, you’re an independent contractor if you run your own business and provide your labour and skills to produce a particular result for the person who hires you. Your entitlements and obligations are different from those of an employee. Usually, you will be able to negotiate your own fees and working arrangements.
Having an ABN doesn’t automatically make you an independent contractor. The individual circumstances of the working relationship are important in determining whether you are an independent contractor or employee.
Even if you are an independent contractor, some state and federal laws, such as workers compensation and superannuation, may still class you as an employee. So it’s important to get advice if you are thinking of becoming an independent contractor.
If you're under 18 and sign a contract, it must be for your benefit or the contract will become invalid. The rules are different in each state and territory and you should get advice on the issue if it applies to you.