The tax file number was initially Introduced to facilitate file tracking at the ATO, but the TFN has since been expanded to encompass income and other data matching. The tax file number consists of a 9-digit number. Strict laws require tax file numbers (TFN) to be used only for specifically authorized tax-related purposes.
In this article, we will discuss tax file number, what it is, the requirement to apply for a tax file number, how to apply for a tax file number in Australia, and many more.
What is a tax file number (TFN)?
A TFN (tax file number) is a unique identifier the ATO (Australian Taxation Office) issued to each taxpaying entity — a company, an individual, a partnership, a superannuation fund, or a trust. Not everybody has a TFN, and a business has both an ABN (Australian Business Number) and a TFN.
A tax file number is a unique nine (9)-digit number issued to people and organizations to allow the ATO to identify them and make sure they are paying the proper taxes, PAYG (pay as you go) withholding, and superannuation.
Advantages of having a Tax File Number
Every individual who applies for government benefits or has a job needs a Tax File Number or will have to pay the price. People who don’t provide a Tax File Number to their employer will pay tax at the highest level; investment firms and banking not provided with a Tax File Number from a client are legally obligated to withhold interest, and it is simply not possible to qualify for government benefits without a Tax File Number.
Disadvantages of not having a Tax File Number
While people can certainly live in Australia without a Tax File number, it will stop them from doing much more than just filing their tax returns with the Australian Government, and they will pay more tax!
The following are things that people won’t be able to do when they don’t have a TFN while living, studying, or working in Australia for any length of time:
- They would not be able to apply for an ABN (Australian Business Number) if they wanted to start their own business.
- They will not be able to file a PAYG foreign resident withholding variation application.
- Their tax returns won’t be able to process electronically, making it too complex to meet their tax obligations, and they will miss out on getting money back from the Government – even if it’s owed to them.
- They will pay more tax on their employer’s super contributions, and their super fund won’t be able to accept any voluntary contributions from them.
- They won’t be able to apply for any government benefits.
- It will be too difficult for the tax office to look up their records and be able to discuss them with them.
You can learn more from the video below:
Requirements to apply for a Tax File Number in Australia
How people apply for their TFN will depend on whether they are Australian citizen who is currently presiding in Australia, people who are applying from outside of Australia, or they are in Australia but foreign passport holders.
The process of applying for a Tax File Number differs, the process to follow if people apply for a Tax File Number within Australia and possess a foreign passport. They can get a Tax File Number if they hold any of the following visa types
- If they possess or have an overseas student visa
- If they possess or have a permanent migrant visa
- If they possess or have a visa that gives them the right to work
- If they possess or have a visa that lets them stay in Australia indefinitely
If people who are applying for Tax File Number have any of these visa types, they can apply for their TFN online, and it’ll be delivered to their Australian address within 28 days.
The exact criteria or documents required to support the applicant’s application varies depending on their circumstances but can include the following:
- provision of primary proof of identity, which includes a birth certificate and a passport
- provisions of secondary proof of identity, such as a student ID card, an ATM card, or an Australian driving license
- Additional documents if they wish to change the details of their TFN, such as proof of changing their name or a marriage certificate.
How to apply for a tax file number in Australia
There are a few conditions under which people might need a TFN, even if they don’t live in Australia. These includes:
- If an individual wants to register a business in Australia
- If an individual is married to an Australian citizen who wants to claim family tax relief
- If an individual derives income of certain types from Australia
- If an individual needs to lodge an Australian tax return
If people must apply for a Tax File Number (TFN) from outside of Australia, they can do so online – but they should keep in mind that the forms used are different from those used if applying from within Australia. Everything an individual needs can be found on the ATO website.
Applying for an Australian Tax File Number (TFN) is quite straightforward as long as the applicant has all the right documents or criteria to hand. Everything they need to apply is available or found on the ATO website – and if they don’t have the time to make arrangements themselves, they can also have an intermediary or an agent apply on their behalf for a fee.
Once they have their Tax File Number (TFN), they will pay less tax – so whether they are an ex-pat just staying in Australia for a short time or a resident, they have more money to make the most of their time.
Applying for a TFN as an Australian citizen
If a person is born in Australia or has become an Australian citizen, then they can apply for a TFN in the following ways:
- At a department of Human Services center
- At participating Australia Post branches
- By post
Suppose an individual chooses to apply for their TFN via a branch of the Australia Post center. In that case, they will have to attend an interview and take original copies of their documents. If they can’t make it to an interview, they will have to apply by post and send certified copies of the documents they need.
How much does it cost to get a TFN?
It’s free to obtain and apply for a Tax File Number (TFN).
How long does it take to get a TFN?
Once people have applied for their Tax File Number (TFN), they should receive it within 28 days. Depending on the complexity of their application, it might take more time or come sooner than expected. If people haven’t received their TFN within 28 days, they shouldn’t re-apply; it will only lead to data conflicts and confusion that could take much longer to resolve.
While a tax file number is not compulsory, people need one to avoid paying more tax than necessary. A TFN assist people with lodging tax returns. Without a TFN, the tax will be deducted from their income at the maximum rate.
Can I apply for TFN online?
Permanent migrants, Foreign passport holders, and temporary visitors can apply for a tax file number online using IAR (Individual Auto Registration).
Can I use a school ID to get a tax file number?
People can use student ID, which is considered a secondary document, which can be used to verify them. However, they will still need a primary document. They can find the full outline of the required documents on the above-listed document needed for TFN.
How does a 15-year-old apply for a tax file number
For 15 years old, to apply for a tax file number, they need the signature of their parent or guardian.