Registering an ABN is the first step in progressing your business. Now when it comes to the need for expansion and growth, shareholders are critical. When this happens a business may find that it needs to add the foreign shareholder as an associate to an ABN. What is required will vary based on your business structure.

ABN

To briefly summarise an ABN is a unique code of 11 numbers associated with your business. As a sole trader or partnership structure, you would only need an ABN. However, if you are going to create a company, you would then use an ACN as well as an ABN. The other step required for an ABN although not mandatory is a tax file number. If you are using a structure that isn’t a sole trader then you would use a new tax file number.

Example
Josie is starting a partnership with Travis. When they go to register for their ABN they decide to supply a TFN. As they are a partnership they can register for new a joint TFN in their application instead of using their individual TFN.

Foreign shareholder as associate

A foreign shareholder is generally going to be someone located outside your country. In this case, it would be a shareholder not located in Australia. The requirements for an associate are the name, date of birth, position and their TFN or address. This last requirement is what makes a foreign associate application more involved.

Proof of Identity

TFN

As a foreign shareholder, the member needs to provide their proof of identity. There are two ways and both are probably going to require proof of identity documents. The first way is to use your TFN. However, it’s unlikely the foreign shareholder already has an Australian tax file number. If they did have the TFN, then they would not need to submit the proof of identity documents. Although, if they don’t have a TFN but they want to apply for one they can, however, they will still need to supply proof of identity documents. If you are still unsure you can check with a business lawyer.

Proof of identity documents

The other way to become an associate to an ABN is by providing two certified copies which are also two current documents. Of these two documents, one has to be a primary document. These are split up into foreign or Australian documents e.g if the foreign shareholder used to live in Australia. The documents are either an Australian or Foreign birth certificate or an Australian or Foreign passport. The other document is a secondary one. This includes foreign government ID, driver license, national photo ID or a marriage certificate. The government can delay or refuse an application for adding an associate to an ABN  if you provide incorrect or inadequate information.

Conclusion

Adding a foreign shareholder as an associate is not as complex if the member used to live in Australia. Then they can submit their already existing tax file number. However, for those shareholders outside Australia who don’t have a TFN, they will need to supply proof of identity documents.

Still Unsure? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace.

Justin Pasqualino

Justin is a legal intern at LawPath as part of the content team. He is currently studying a Bachelor of Laws and a Bachelor of Economics at UTS.