The ABN is a unique number given to all business entities that are carrying on an enterprise in Australia. Any artist or person who is working in the creative sphere and selling their art as a business transaction needs to apply for an ABN. The ABN system penalises people who are carrying on an enterprise and do not have an ABN by withholding the highest rate of tax (currently 47%) from any payment due to them.
If you are not carrying on an enterprise and one of the following exemptions apply, then you do not require an ABN, but will be required to provide a statement in your profile to that extent:
- Artwork creation is done in a capacity as an individual, made in the course of an activity that is a private recreational pursuit or hobby; wholly of a private or domestic nature;
- There is no reasonable expectation of profit or gain, and I do not consider that I meet the definition of an enterprise for taxation purposes;
- I am a tax-exempt entity and my entire income is exempt from tax, for example; religious institutions; educational institutions; community service organisations, such as sports clubs, community centres, youth groups, community arts or theatres and other associations that have community service purposes;
- I am a public hospital, non-profit private hospital; or charity, whose income is exempt;
- I am a non-resident who is not carrying on an enterprise in Australia.
If neither an ABN or an appropriate exemption statement is provided to Bluethumb, we will be required to withhold 47% from any payment made to you. Eventually you may be able to claim this back through the tax system but it may be quite a while until this happens.
It is advised that you check your eligibility for an ABN to see if you are indeed carrying on an enterprise prior to listing your art for sale.