ABNs & Contracting in Australia: When You're Not an Employee

At some point on your working holiday someone will say, "You'll need an ABN for this." Food delivery, ride-share, some trade and labouring gigs, market stalls, freelance work — they all tend to run on ABNs. It sounds official and a bit scary, but it's actually straightforward. What matters is understanding that an ABN turns you from an employee into a business, and that changes how you get paid, who handles your tax, and what you owe at the end of the year.

Employee vs contractor — the crucial difference

This is the whole ballgame. The two setups are worlds apart:

As an employee (the most common backpacker setup):

• Your employer takes tax out of your pay (PAYG withholding)
• They pay your superannuation on top
• You get the protection of the minimum wage, awards, breaks and entitlements
• You just need a Tax File Number (TFN), not an ABN

As a contractor / sole trader (using an ABN):

• You're running your own little business
• No tax is withheld — you get paid the full amount and must set money aside for tax yourself
• No super is paid for you in most cases
• No award rates, no paid breaks, no leave — you're not covered the same way
• You're responsible for your own insurance and expenses

If a "job" offers you an hourly wage, sets your shifts, supervises you and provides the equipment, you're almost certainly an employee — and being forced onto an ABN to dodge their obligations is called sham contracting, and it's illegal. Real contracting means you genuinely run your own show.

When do you actually need an ABN?

You need an ABN (Australian Business Number) when you're carrying on a business as a sole trader. Typical backpacker examples:

• Food delivery and ride-share — almost always contractor work
• Freelance gigs — photography, web work, content, tutoring
• Some trades and odd-jobs where you invoice clients directly
• Market stalls or selling your own products

You don't need an ABN for a normal casual or part-time job at a cafe, farm, warehouse or building site — that's employment, and you use your TFN instead.

Getting one

Applying for an ABN is free through the official government channel — never pay a third party who charges a "fee" to register a free ABN. You'll need your TFN, your passport and your visa details. Approval is often instant or within a few days.

Tax when you're on an ABN

Here's the part that catches people out. As a sole trader, nobody takes tax out for you. You receive 100% of what you earn — then you owe tax on the profit when you lodge your return.

Key points:

• Backpackers are taxed under the working holiday maker rates. In 2026, earnings are taxed from the first dollar at 15% up to $45,000 — there's no tax-free threshold for WHV holders. Higher rates apply above that.
• That 15% applies whether you're an employee or a contractor — but as a contractor, you have to save it yourself.
• A sensible habit: set aside at least 15–20% of every payment into a separate account the moment it lands, so you're not blindsided at tax time.
• You can deduct genuine business expenses — fuel, phone, bag and equipment for delivery riders, for example — which lowers the profit you're taxed on. Keep every receipt.

Because the maths gets fiddly fast, plenty of backpackers use a tax service to lodge correctly and make sure they claim everything they're entitled to. Taxback.com specialises in working-holiday tax returns and can sort both employee and ABN income — handy if you've had a mix of both during your trip.

What about GST?

Good news for most: you generally only have to register for GST once your business turns over $75,000 a year. The vast majority of backpackers never get near that, so you can usually ignore GST entirely.

The big exception: ride-share and taxi-style driving, where you must register for GST from the very first dollar regardless of turnover. If you go down that road, factor it in.

Getting paid (and keeping more of it)

As a contractor you'll often be paid into your bank account directly, sometimes by overseas-based platforms. A few money tips:

• Use a separate account for business income so you can see what's tax money and what's yours
• Watch out for fees and bad exchange rates when money comes from international platforms or when you send earnings home. A multi-currency account like Wise (multi-currency account) gives you the real exchange rate and low transfer fees, which adds up over a season of gig work.
• Keep a simple spreadsheet of income and expenses — it makes tax time painless

ABN checklist for backpackers

• Only get an ABN if you're genuinely contracting, not being pushed off employee status
• Applying is free — use the official site
• No tax is withheld — save 15–20% yourself from day one
• Track and keep receipts for deductible expenses
• GST only matters above $75k turnover (except ride-share, where it's from dollar one)
• Lodge a tax return at the end of the financial year

The bottom line

An ABN opens up flexible, sometimes very well-paid gig work, and there's nothing wrong with contracting if it's the real deal. Just go in clear-eyed: you're trading the safety net of employment for flexibility and taking on your own tax. Set money aside, keep good records, and don't let anyone bully you onto an ABN to dodge paying you properly.