No ABN Withholding: When Australian Businesses Must Withhold 47%

Published November 20th, 2023 | Updated July 10th, 2026 | Team Gimbla

In Australia, a business generally must withhold 47% from a payment for a supply when the supplier does not quote an Australian Business Number (ABN) by payment time and no exception applies. This is the no-ABN part of PAYG withholding. It is not a flat tax on every contractor, and it is separate from employee, dividend, interest, royalty and other foreign-resident withholding rules.

Before paying, ask the supplier to quote its ABN on an invoice or another document connected with the supply. If the supplier is not required to quote one, keep evidence of the relevant exception. If the rule applies, withhold from the total payment, pay the balance to the supplier and send the withheld amount to the Australian Taxation Office (ATO).

A missing ABN is a payment-control issue. Pause the supplier payment, confirm whether an exception applies, then either keep the evidence or apply the no-ABN rate.

Quick Answer

As at 10 July 2026, the no-ABN withholding rate has not changed. The rule generally applies when a payment is for a supply made through an enterprise carried on in Australia, the supplier has not quoted its ABN by the time you pay, and no statutory exception applies.

The ATO’s PAYG withholding guidance says amounts withheld because a supplier did not quote an ABN are reported at W4 on the Business Activity Statement (BAS). The supplier should receive a payment summary or equivalent payment record showing the gross payment and amount withheld.

Key Points

The rule concerns payments for supplies where an ABN should have been quoted. It is not a general contractor or non-resident tax.
An ABN can be quoted on an invoice or another document that relates to the supply, but it needs to be available by payment time.
The exceptions are specific. Being registered for GST, being a non-employee or simply saying “I do not need an ABN” is not enough on its own.
If withholding applies, record the supplier bill at its full amount, pay the supplier the balance and keep the withheld amount as a liability to the ATO.
Report no-ABN withholding at BAS label W4 and keep the supporting records with the payment trail.

When The No-ABN Rule Applies

Use the following checks before releasing a supplier payment.

Check	What You Need To Confirm	Why It Matters
The payment	Your business or organisation is making the payment in the course of carrying on an enterprise in Australia.	The no-ABN rule is tied to enterprise payments, not every private payment.
The supply	The supplier made, or proposes to make, the supply through an enterprise carried on in Australia.	A private hobby or domestic supply may fall within an exception instead.
The ABN	The supplier has not quoted an ABN on an invoice or another document relating to the supply by payment time.	Receiving an ABN after payment does not undo a withholding obligation that already arose.
The exception	No small-payment, input-taxed, under-18, private-capacity or other recognised exception applies.	A valid exception changes the result, so document the reason before paying.
The result	All conditions are met and no exception applies.	Withhold at the no-ABN rate and pay the remaining amount to the supplier.

An invoice is the usual place to find the supplier’s ABN - Australian Business Number, but it is not the only option. A quote, contract or other document can work when it relates to the supply and clearly quotes the supplier’s ABN. Check that the number matches the supplier in ABN Lookup rather than accepting an unrelated or cancelled number.

When You Should Not Withhold Under The No-ABN Rule

The ATO lists several exceptions. These are narrower than the old version of this article suggested.

Possible Exception	Practical Test	Evidence To Keep
Small payment	The total payment for the complete supply is $75 or less, excluding GST.	The invoice, receipt or other evidence showing what was supplied and paid.
Supplier under 18	The supplier is an individual under 18, is not your employee, and your payments to that person do not exceed $350 a week.	Age and payment records supporting every part of the exception.
Wholly input-taxed supply	The whole supply is input taxed under GST rules, such as some financial supplies or residential rent.	The contract, invoice and tax basis for treating the supply as wholly input taxed.
Private, hobby or non-enterprise supply	The supply is private or domestic, part of a hobby, or made without a reasonable expectation of profit or gain.	A credible written statement from the supplier and records supporting the circumstances.
Other excluded circumstances	The payment is exempt income for the supplier, or the supplier is a non-resident not carrying on an enterprise in Australia or through an Australian agent.	A written statement and enough supporting detail to show why the exception is reasonable.

An exception to no-ABN withholding does not cancel every other tax rule. For example, a payment to a foreign resident may still need separate foreign-resident or investment-income withholding. If several regimes could apply, ask a registered tax agent or BAS agent to confirm the correct treatment before payment.

A Statement By A Supplier Is Evidence, Not A Shortcut

When a supplier is genuinely not required to quote an ABN, the ATO’s Statement by a supplier form can record the reason. The form covers circumstances such as a private or hobby supply, a wholly input-taxed supply, an exempt payment or a supplier that is not carrying on an enterprise in Australia.

The statement does not create an exception by itself. You need to be satisfied that the reason is credible. If the work looks like an ongoing commercial activity, a statement describing it as a hobby should prompt more questions. Do not use the form to let a supplier who is carrying on an enterprise simply avoid obtaining or quoting an ABN.

Keep the statement with the supplier document and payment records for five years. Do not send the statement to the ATO unless it is requested.

What The No-ABN Rule Does Not Cover

Several different withholding rules use similar language. Keeping them separate prevents the wrong rate or BAS label from reaching the books.

Situation	Correct Starting Point	Not The Same As
An employee has not quoted a TFN	Employee PAYG withholding and TFN rules	No-ABN supplier withholding
A supplier has quoted a valid ABN	Pay the supplier normally unless another withholding rule applies	Automatic no-ABN withholding
Dividends, interest or royalties are paid to a non-resident	Separate non-resident withholding rules and any treaty rate	The no-ABN rate
The supplier is registered for GST	Ask for the supplier’s ABN and a valid tax invoice where required	A no-ABN exception based on GST registration

If a supplier claims GST but does not quote an ABN, pause before claiming a GST credit. The tax invoice, ABN and GST evidence need to agree.

What To Do Before Paying A Supplier Without An ABN

Ask the supplier to quote its ABN on the invoice or another document connected with the supply.
Check the ABN in ABN Lookup and make sure the entity name and status fit the supplier you are paying.
If the supplier says no ABN is required, identify the exact exception and collect a Statement by a supplier or equivalent evidence where appropriate.
If no exception applies, calculate the required withholding from the total payment and tell the supplier how much will be held back.
Record the full supplier bill, the net payment and the amount owed to the ATO as separate parts of the transaction.
Give the supplier the required PAYG payment summary or a compliant receipt or remittance record.
Report and pay the withheld amount through the correct BAS cycle, using W4 for no-ABN withholding.
Complete the applicable annual reporting without duplicating an amount already reported through a Taxable Payments Annual Report.

The ATO’s PAYG payment summary guidance explains the information a no-ABN payment summary or equivalent document needs to contain. Keep a copy with the supplier bill, bank payment and BAS working papers.

How To Record No-ABN Withholding In Your Books

No-ABN withholding is not a supplier discount and should not reduce the underlying expense or asset cost. The supplier’s gross bill still describes what the business bought. The withheld portion becomes an amount the business owes to the ATO, while the rest is paid to the supplier.

Your records should let a reviewer trace:

the supplier bill and what was supplied
the missing ABN or the document on which it was later quoted
the exception review or withholding calculation
the net amount paid to the supplier
the amount reported at BAS W4 and paid to the ATO
the payment summary or equivalent record given to the supplier

Gimbla can help keep the supplier bill, attachment, bank payment and reconciliation trail together. The accounts payable record should stay at the gross amount, with the withheld portion posted to an appropriate PAYG withholding liability. Confirm the exact account and BAS workflow with your accountant or BAS agent, especially when the transaction also involves GST, foreign residents or TPAR reporting.

Common Mistakes To Avoid

Applying no-ABN withholding to every contractor who does not look like an employee.
Treating GST registration as an exception when the supplier has not quoted an ABN.
Accepting an ABN that belongs to a different entity or has been cancelled.
Relying on a hobby statement when the facts show regular commercial work.
Paying the full supplier amount first and trying to fix the withholding afterwards.
Posting the withheld amount as a discount instead of an ATO liability.
Reporting the amount at the wrong BAS label or duplicating it across annual reports.
Mixing no-ABN withholding with employee, foreign-resident or investment-income rules.

Frequently Asked Questions

What is the no-ABN withholding rate in Australia?

The rate is 47% of the total payment when a supplier must quote an ABN for a business supply, does not quote it by payment time, and no exception applies.

Does no-ABN withholding always apply when a supplier is under 18?

No. A narrow exception can apply when the supplier is an individual under 18, is not your employee, and your payments to that person do not exceed $350 a week. All three conditions matter.

Does GST registration remove the no-ABN withholding rule?

No. GST registration is not a no-ABN withholding exception. Ask the supplier to quote its ABN and check the details before payment. If the supplier claims GST, also check that the document supports the GST treatment.

Where do I report tax withheld because no ABN was quoted?

Report the amount withheld at W4 on the BAS, pay it to the ATO, give the supplier the required payment record, and complete any annual reporting that applies. Keep the full payment trail with your tax records.

In Short

The no-ABN rule is a specific PAYG withholding control for supplier payments, not a general tax on contractors or non-residents. Ask for the ABN before payment, document any genuine exception, and if withholding applies, keep the gross bill, net supplier payment and ATO liability clearly separated. When the facts are uncertain, check the treatment with a registered tax agent or BAS agent before money leaves the bank.