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Why you Should Reactivate Your ABN in 2016

Why you Should Reactivate Your ABN in 2016

Registering an ABN not only makes your business official, it also has many tax advantages. Read about them in this article.

14th January 2016
Reading Time: 2 minutes

The new year has struck and it is now 2016 there’s no better time to reinvest your time and effort into that business you were looking to startup. If you have left your business dormant for a period of time the ATO may have cancelled your ABN and it will need to be reactivated. Reactivating your ABN is undoubtedly a useful endeavour so take a look at the benefits that run with reactivation.

How to Reactivate your ABN

Before you look to reactivate your ABN be sure to check whether it is actually cancelled by using the ABN Lookup Tool. If it has been cancelled you simply need to reapply on the ABR website. For more information on this process be sure to check out our guide on How to Reactivate your ABN?

Tax Benefits in Business Dealings

Companies that operate without an ABN do not enjoy the tax benefits that a registered ABN offers. If your business operates without an ABN businesses that deal with you are legally obligated to withhold tax from these dealings at a rate of 47%. Whilst you will be able to reclaim this tax at the end of the financial year, from a cashflow perspective it is certainly not a wise move to miss out on regular cash installments.

Claiming on Business Expenses

If you’ve ever been to your local cafe and wondered why all these suits are asking for an invoice on their regular flat white, the answer is an ABN. Having an ABN allows your business to claim on business expenses. Examples of business expenses include stationary, fuel tax credits and luncheons out with clients.


Businesses that operate with an ABN can register to use the PAYG or the pay as you go withholding system. PAYG allows companies to withhold their employees tax during the financial year. This means that employers who use PAYG can pay off an employee’s end of year tax liability throughout the year rather than facing a hefty tax at the end of the financial year. From an administrative perspective this is a stress-free way to pay your employees.

Fringe Benefits

Having an ABN allows your business to claim on employees fringe benefits. Fringe benefits are those which are not directly associated with employment. So you cannot claim on things such as salary and superannuation. However, you can claim on private benefits such as reimbursing an employee on non-business expenses such as private health insurance or university fees and even claim on providing your employees entertainment such as taking them to a day out at the cricket. That sounds like the best of fringe benefits to me!

Need a New ABN?

If you haven’t registered your company with an ABN and you want to reap all these benefits you can apply for one within 5 minutes using our simple online ABN Registration Tool. We’ll then expedite your application and provide you with a new ABN within 24 hours.

Unsure where to start? Contact a LawPath consultant on 1800LAWPATH to learn more about customising legal documents, obtaining a fixed-fee quote from our network of 600+ expert lawyers or to get answers to your legal questions.

Matthew Jessup
Matthew Jessup

Matthew is paralegal at Lawpath and is completing his final year of a bachelor of Laws combined with Political Science at Macquarie University. With a keen interest in IP law, Matthew helps startups understand the ins and outs of trademark registration, protection and enforcement.