Why do you need an Australian TFN?
A tax file number in Australia is necessary for the lodgement of an income tax return. If you are lodging your first tax return in Australia, it is best to get a file number before doing so.
Whilst it’s not compulsory to have a tax file number in a general sense, increasingly it is not possible to transact with government without one.
It is likewise not compulsory to provide your tax file number to anyone, and the privacy laws limit the use of file numbers primarily to tax-related matters, and not to be used as an identification tool. Nevertheless government agencies have access to your file number for official purposes.
The Consequences of Not Supplying A File Number (When Legally Asked)
There can be significant consequences for not providing your file number.
- an employer is required to deduct tax from wages at the top marginal tax rate (47% plus medicare to residents)
- financial institutions must deduct tax from dividends and interest at the top marginal rate (47% plus medicare to residents). (Distributions from closely held trusts have been included since 2010).
- family tax benefits can’t be processed
- certain other government entitlements are denied – Social Security payments, Military Rehabilitation and Compensation payments and Veterans Affairs pensions
- superannuation funds can’t accept personal superannuation contributions or may be more highly taxed, and eligibility for the government co-contribution may be foregone
- practical difficulties for office-holders (e.g. director) of entities which have dealings with the Tax Office
Supplying Your File Number For Employment
An employee is allowed a period of 28 days to give a file number to their employer, and is shielded from the penalty withholding rate for that period.
Employers have 14 days (with fines for failure) to lodge TFN declarations with the ATO.
Credits For Tax Deducted When No TFN is Quoted
Tax which has been deducted at the top rate because a tax file number hasn’t been provided to an employer or payer, is credited or refunded when the payee’s tax return is lodged and assessed. The tax credit is applied towards any tax payable, and the balance (if any) refunded. If a refund is due, there could be a long delay until after the end of the financial year before the excess tax is paid back.
Broadly, non-resident investors are excluded from the penalty withholding tax requirement on investment income which is caught under the separate withholding tax regime. [This routinely applies to dividends, interest and royalty payments, but will depend on the circumstances – professional advice recommended.]
Entities with an ABN can validly quote their ABN instead of a TFN in specific circumstances.
Tax File Number Applications
Subject to tax residence status, individual taxpayers of any age and entities can apply for a tax file number. Tax file numbers are only ever issued once in a taxpayers’s lifetime, and are unique to the taxpayer.
The tax file number will normally be quoted on official correspondence and notices from the Tax Office. If the TFN becomes lost, a TFN enquiry is necessary to obtain the number from the Tax Office. Most TFN application forms include an “enquiry” process within the application format.
Most TFN applications can be started online although paper forms are still in use as an alternative. Online applications will normally be faster.
Proof of Identity
Proof of identity documents are required supplied as part of the verification process for a TFN application. For residents, original documents can be produced at interview, or for mail applications, certified copies are provided.
Certification of true and correct photocopies within Australia are only accepted from the following:
- Justice of the Peace
- minister of religion (who is authorised to celebrate marriage)
- police officer
- bank, building society or credit union officer with at least five years service
- sheriff’s officer
- Commissioner of Declarations (in Queensland only)
For migrants and temporary visitors in Australia, documents do not normally need to be supplied as the proof of identity process is conducted by the Tax Office obtaining access to Department of Immigration and Border Protection records.
For applications overseas, copy documents can be certified true and correct by an Australian embassy, high commission, or consulate. Where such access is not reasonably convenient, certification by a Hague Apostille Convention country authority may be accepted. See TFN instructions outside Australia and Hague Apostille contracting states.
Documents not in English must be provided as an authorised translation. In Australia the accepted translation authority id NAATI. Outside Australia, approved translation services can be found on the advice of the nearest the nearest Australian embassy, high commission or consulate.
This page was last edited on 12 August 2015