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No ABN on the invoice: the withholding duty is the payer's

Section 12-190 puts the withholding duty on the person paying, not the person invoicing. Pay a subcontractor who did not quote an ABN and you still owe the withheld amount to the ATO.

Zirko RedaktionPublished: Updated: 7 min read

Contents
  1. The section
  2. The exceptions, in order of usefulness
  3. 1. The ABN was quoted
  4. 2. The payment is small
  5. 3. It is not business at your end
  6. 4. You were given a wrong ABN in good faith
  7. 5. A written statement that it is a hobby or private
  8. 6. Input taxed supplies and local government members
  9. What happens if you pay in full anyway
  10. The fix is upstream, and it takes five minutes per subcontractor

An invoice arrives from a subcontractor. It has a name, a bank account, an amount and no ABN. The temptation is to treat that as the subcontractor's problem, chase them for it later, and pay the invoice now so the crew comes back Monday.

That is the expensive order of operations. The obligation belongs to the payer, and it attaches at the moment of payment.

The section

Schedule 1 to the Taxation Administration Act 1953, s 12-190(1):

"An entity (the payer) must withhold an amount from a payment it makes to another entity if: (a) the payment is for a supply that the other entity has made, or proposes to make, to the payer in the course or furtherance of an enterprise *carried on in Australia by the other entity; and (b) none of the exceptions in this section applies."

Nothing in that sentence depends on the supplier's conduct. The duty is yours, it is triggered by making a payment, and the only way out is one of the exceptions.

The ATO's practical statement of the consequence is short: "If the supplier does not provide an ABN and the total payment for goods and services is more than $75 (excluding GST) you generally withhold the top rate of tax from the payment and pay it to us."

Two things about that figure. The rate is deliberately not quoted here — it is set outside s 12-190 and moves with the income tax rates, so take it from the ATO's current tax tables at the time you pay. The $75 is in the legislation, and we set out where below.

The exceptions, in order of usefulness

1. The ABN was quoted

Section 12-190(2): no withholding if, when the payment is made, "(a) the other entity has given the payer an invoice that relates to the supply and quotes the other entity's ABN; or (b) the payer has some other document relating to the supply on which the other entity's ABN is *quoted."

Paragraph (b) is worth noticing. The ABN does not have to be on this invoice. A signed subcontract, a purchase order, a quote or a supplier set-up form on which the ABN appears is "some other document relating to the supply". This is exactly why capturing the ABN when you first engage a subcontractor, rather than when you first pay one, removes the problem permanently.

Section 12-190(2A) extends the same relief where the supply is made through an agent who has quoted the agent's ABN.

2. The payment is small

Section 12-190(4)(b): no withholding if the payment,

"(disregarding so much of it as relates to GST payable on the supply) or, if the payer has also made, or proposes to make, one or more other payments to the other entity for the supply, the total of all the payments … does not exceed **$50 or such higher amount as is specified in regulations in force for the purposes of subsection 29-80(1) of the GST Act*."

That regulation is s 29-80.01 of the A New Tax System (Goods and Services Tax) Regulations 2019: "For the purposes of subsection 29-80(1) of the Act, the amount of $75 is specified." It is the same $75 line that decides whether you have to issue a tax invoice at all — see the $1,000 line most jobs cross.

Read the aggregation rule in the middle of the paragraph. It is the total of all payments for that supply, not each payment separately. Splitting an invoice does not get you under the line.

3. It is not business at your end

Section 12-190(4)(a): no withholding if "the payment is made otherwise than in the course or furtherance of an enterprise carried on in Australia by the payer."

A homeowner paying a tradesperson is not withholding. A builder paying the same tradesperson is.

4. You were given a wrong ABN in good faith

Section 12-190(3): no withholding if, when the payment is made,

"(a) the other entity has given the payer an invoice that relates to the supply and purports to quote the other entity's ABN … ; and (b) the other entity does not have an ABN, or the invoice or other document does not in fact quote the other entity's ABN; and (c) the payer has no reasonable grounds to believe that the other entity does not have an ABN, or that the invoice or other document does not quote the other entity's ABN."

This is a good-faith defence, not a licence to stop looking. Once something puts you on notice — a lookup that returns nothing, a cancelled ABN, a mismatch between the name and the register — paragraph (c) fails and the obligation returns.

5. A written statement that it is a hobby or private

Section 12-190(6): no withholding if, when the payment is made,

"(a) the other entity is an individual and has given the payer a written statement to the effect that: (i) the *supply is made in the course or furtherance of an activity, or series of activities, done as a private recreational pursuit or hobby; or (ii) the supply is, for the other entity, wholly of a private or domestic nature; and (b) the payer has no reasonable grounds to believe that the statement is false or misleading in a material particular."

"Written" is the operative word. A conversation on site does not satisfy paragraph (a), and the ATO publishes a Statement by a supplier form precisely so that this exception can be documented.

6. Input taxed supplies and local government members

Section 12-190(4)(c) and (d) cover supplies made as a member of a local governing body and supplies that are "wholly *input taxed".

What happens if you pay in full anyway

Three consequences stack.

You still owe the amount. The obligation was to withhold from the payment. Paying the supplier the gross amount does not extinguish it; it simply means the money comes out of your pocket rather than theirs.

You cannot claim the GST credit on the withheld portion. The ATO puts it directly: "As you can't claim the GST input tax credit for payments you have withheld from, you should keep records of these transactions separate from other payment records."

The reporting still has to happen, and only once. If you withhold, "you must complete a payment summary and give it to them at the same time you pay them the net amount or as soon as possible after." The annual reporting then goes either into your TPAR or onto the PAYG payment summary — withholding where ABN not quoted (NAT 3448) form. The ATO's TPAR guidance is explicit: "Only report this information in one of these annual reports, not both."

The ATO also names a practice that does not work: "If a supplier has applied for an ABN you can offer to hold payment until they have obtained and quoted their ABN. This is a matter for you and your supplier to work out. However, you must not make full payment to the supplier on the understanding that an ABN will be quoted later."

The fix is upstream, and it takes five minutes per subcontractor

Everything above disappears if the ABN is on file before the first payment.

  1. Capture the ABN when you engage the subcontractor, in the same step as the bank details and the insurance certificate. Section 12-190(2)(b) accepts any document relating to the supply — a subcontract or a supplier form is enough.
  2. Check it against the Australian Business Register at engagement, and again if anything changes. A cancelled ABN is one of the "reasonable grounds" that removes your good-faith protection.
  3. Keep the ABN with the supplier record, not with the invoice. It is the same number on every invoice, and looking it up per invoice is how it ends up missing on one of them.
  4. Where an exception applies, keep the paper. The hobby exception is written by definition; the small-payment exception should be evidenced by the aggregated total for the supply, not by a single invoice line.

There is a second payoff. The same subcontractor record — name, ABN, address, what you paid them and when — is exactly what a Taxable payments annual report needs each August. Collected once, it serves both duties.

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Checked on 29 August 2026 against compilation 225 of the Taxation Administration Act 1953, the GST Regulations 2019 as at 1 November 2025, and the ATO guidance linked above (last updated 11 June 2025). This describes the legislation and is not tax advice. The withholding rate is not quoted here on purpose: take it from the ATO's current tax tables on the day you pay.

What Zirko does: it keeps customers and their tax identifiers as records rather than as text on a document, and it keeps invoices and payments attached to the project. What Zirko does not do: it does not calculate PAYG withholding, does not validate an ABN against the Australian Business Register, and does not produce payment summaries.

The incoming invoices area with the email address suppliers send to, and below it a table of received invoices showing supplier, invoice number, date, amount, cost allocation and a status that runs from new through to review, approved and paid — the review step is the last point at which an invoice can be checked before anyone pays it.
The incoming invoices area with the email address suppliers send to, and below it a table of received invoices showing supplier, invoice number, date, amount, cost allocation and a status that runs from new through to review, approved and paid — the review step is the last point at which an invoice can be checked before anyone pays it.

Frequently asked questions

Who has to withhold when no ABN is quoted?

The payer. Section 12-190(1) of Schedule 1 to the Taxation Administration Act 1953 provides that an entity — the payer — must withhold an amount from a payment it makes to another entity if the payment is for a supply the other entity has made or proposes to make in the course or furtherance of an enterprise carried on in Australia, and none of the exceptions in the section applies.

How much do I withhold?

The ATO's instruction is to withhold the top rate of tax from the payment and pay it to them. The section itself creates the obligation; the rate is set outside it. Because the exact figure changes with the income tax rates, take it from the ATO's current tax tables rather than from an article.

Is there a small-payment exception?

Yes. Section 12-190(4)(b): no withholding where the payment, disregarding GST, does not exceed $50 or such higher amount as is specified in regulations for the purposes of s 29-80(1) of the GST Act. Section 29-80.01 of the GST Regulations 2019 specifies $75, which is why the ATO frames its guidance around payments over $75 excluding GST.

What if the ABN on the invoice turns out to be wrong?

Section 12-190(3) protects a payer who acted in good faith: no withholding is required if the invoice purports to quote an ABN, the ABN is in fact wrong or the supplier has none, and the payer has no reasonable grounds to believe either of those things. The protection disappears once you have grounds for doubt.

The supplier says it was a hobby. Is that enough?

Only in writing. Section 12-190(6) removes the obligation where the other entity is an individual who has given the payer a written statement that the supply is made in the course of a private recreational pursuit or hobby, or is wholly of a private or domestic nature — and the payer has no reasonable grounds to believe the statement is false or misleading in a material particular.

Where does the withheld amount get reported?

In your TPAR or on a PAYG payment summary — withholding where ABN not quoted (NAT 3448) — but not both. The ATO is explicit: only report this information in one of these annual reports, not both. You must also give the supplier a payment summary at the time you pay the net amount or as soon as possible after.

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