In use in Australia for more than 80 years, a TFN is assigned by the Taxation Commissioner.
It serves a purpose similar to the American Social Security number, but the use of a TFN is strictly limited by law.
A TFN is an important piece of personal identification which should not be lost and never revealed to anyone unless they are authorised to ask for it.
Gunnar Kaebisch, a manager at one of Australia’s largest accounting and taxation firms, BDO, says the Tax File Number is a key tool for the government to collect a fair share of revenue from everybody’s income.
It’s not difficult to get a Tax File Number.
Foreign passport holders, permanent residents and temporary visitors can all apply for a TFN online.
Australian residents can apply for a TFN at participating Australia Post retail outlets and attend an interview.
There is no fee for lodging a TFN application.
Once the application process has been completed, then a TFN will be mailed to the Australian address provided by the applicant within 28 days.
New arrivals who want to start their own business also need a Tax File Number.
Stephanie Ceredes from the Tax Institiute says not providing a Tax File Number to an employer is not an offence but there is a penalty to pay.
Gunnar Kaebisch agrees.
He says not supplying a Tax File Number is not a small matter and could mean losing almost half your earnings.
“…and if you don’t supply one to your employer, for example, they would legally be required to withhold tax on the payment to be made to you at the highest tax rate which is 47 per cent. You probably don’t want that so you’d be well advised to have a Tax File Number.”
Having several jobs at the same time and changing jobs frequently is no problem.
There is no need to apply for a new Tax File Number with every new employer.
As the Tax File Number is every person’s unique reference number in the tax and super systems, it’s important to stick to the name used on the original application, says Laurie Nowell from settlement agency, AMES Australia.
Laurie Nowell points out that the Tax Office is not really concerned if the family name is placed first or last on a Tax File application. Whatever the order, he says, it should be used consistently.
More information about the Tax File Number is available on the Australian Taxation Office website, www.ato.gov.au.
READ MORE
Settlement Guide: Tax File Number
