What is the Difference Between ABN and TFN?

The main difference between an ABN (Australian Business Number) and a TFN (Tax File Number) lies in their purposes and the way they are used for employment and taxation in Australia.

ABN

• An ABN is an 11-digit number that identifies a business, organization, or sole trader operating in Australia.
• It is required for operating a business or working as a sole trader.
• With an ABN, you work as a contractor, invoicing clients for the services you provide.
• Taxes are not automatically deducted, and you are responsible for managing your own tax affairs.

TFN

• A TFN is a 9-digit number that identifies you as an employee and a taxpayer in Australia.
• It is required for anyone who wants to work in Australia.
• When working with a TFN, you are an employee, and your employer is responsible for deducting taxes and paying your salary.
• You are entitled to annual and sick leave, depending on your work status (casual, part-time, or full-time).

Working with ABN and TFN simultaneously

International students can work with both an ABN and a TFN at the same time, but they must comply with work limitation rules during their studies. The type of work and level of income can affect the tax rate withheld from your pay. If you work through both an ABN and a TFN, you may need professional assistance when lodging a tax return, as the process can be complicated.

Comparative Table: ABN vs TFN

The main difference between an ABN (Australian Business Number) and a TFN (Tax File Number) lies in their purpose and the entities they are assigned to. Here is a table summarizing the differences:

An ABN is required if you are operating a business or working as a sole trader in Australia. In contrast, a TFN is necessary for any person working in Australia, and it stays with the individual for life.