TFN: What is a Tax File Number and why do I need one?

Anyone who has ever started a new job, applied for government benefits, or filed a personal income tax return will, at some stage, have been asked to supply a Tax File Number (TFN).

For those of us who have been working forever, you probably don’t remember when or how you got your TFN, just that you have one and what it is. In fact, you probably rarely give your TFN a second thought.

Yet, for business owners that do not have a Tax File Number, or businesses employing staff who don’t have a TFN, the financial and logistical consequences can be immense.

Here’s what you need to know about Tax File Numbers, how to apply for one, and how they impact both businesses and the people they employ.

What is a Tax File Number (TFN)?

A Tax File Number is a nine-digit personal reference number that identifies people within the Australian taxation and superannuation system.

Once you have a TFN, it stays with you for life, even if you change your name or marital status, or even move overseas.

Why do I need to get a TFN?

Every person who has a job or applies for government benefits needs a Tax File Number – or pay the price.

People who don’t provide a TFN to their employer will pay tax at the highest level; banking and investment firms not provided with a TFN from a client are legally obligated to withhold interest and, in most cases, it is simply not possible to qualify for government benefits without a TFN.

Importantly for businesses, a TFN is required when applying for an Australian Business Number (ABN).

Without an ABN, interacting with taxation and government agencies becomes extremely problematic, and can also be costly. For example, an ABN is required to claim GST tax credits on business operation costs.

How do I apply for a TFN?

Anyone of any age can apply for a Tax File Number, and the process is quick, easy and can be done online.

Be aware, however, that how you apply for a Tax File Number will depend on your particular circumstances. Different application processes apply for:

• Australian citizens with an Australian passport
• Australian citizens and residents without an Australian passport
• Foreign passport holders, permanent migrants, and temporary visitors
• Australians living overseas.

Apply for a Tax File Number online here.

How much does it cost to get a TFN?

It’s absolutely free to apply for and obtain a Tax File Number.

How long does it take to get a TFN?

Once you’ve applied for your Tax File Number, you should receive it within 28 days.

Depending on the complexity of your application, though, in some instances it may be sooner or take a little more time.

If you haven’t received your TFN within 28 days, don’t re-apply. This will only lead to confusion and data conflicts that could take much longer to resolve.

Get advice from the tax experts at LDB Group

Having a Tax File Number is imperative to setting up a business and the effectiveness and financial health of that business going forward, as well as financially onboarding staff.

LDB Group provides advice and assistance in all areas of tax, including TFNs. Whether you’re starting out in business, or need help with a tax issue, get in touch for expert financial advice.

Simply call (03) 9875 2900 or send us a note via the contact form below.