So, you want to get a job, but you’ve been told you need a Tax File Number. What is that you ask? A Tax File Number (TFN) is a number which the Australian Tax Office uses to uniquely identify you so you can work, earn money and pay taxes. Your personal information (name, date of birth etc) is recorded with this number, along with all of your income & tax info.
Applying for a Tax File Number
If you’re going to get a job and work, but you don’t have a TFN, you’ll need to apply for one from the Australian Tax Office (ATO). There are multiple ways to apply depending on you circumstances, and it’s totally free! Once you’ve completed the application & provided the required documents, you should receive your TFN within 28 days (sometimes a lot quicker).
Tax File Number Declaration Form
Your employer will give you a tax file number declaration form when you start working, or just before. This is how you tell them what your TFN is and whether you have any student loans or another job. You also advise your employer whether you are claiming the tax free threshold from another employer. (You can only claim the tax free threshold from one employer at a time).
How your employer uses your TFN
Once you’ve got your TFN & you’ve started working, your employer is required to deduct tax from your earnings. They then send that tax to the ATO. Your employer reports to the ATO each time you get paid, how much tax they have withheld from your pay checks. Then after 30th June each year, they send in a summary to the ATO, which they hold electronically. This is called a Payment Summary or Group Certificate (A Payment Summary used to be called a Group Certificate, so if you’re talking to your parents you might hear it’s old name!).
You don’t need your own copy of this Payment Summary or Group Certificate to do your Tax Return as it is stored at the ATO. You can view it on MyGov or in your Tax Return on a good online tax provider like One Click Life.
After the 30th June each year you just need to jump online and complete your Tax Return. Completing your Tax Return is a simple process that can be done in a matter of minutes.
Tax Refund or Tax Debt?
If you’ve paid more tax than you needed to, you receive a tax refund. Your employer withholds your tax from each payment they make to you and depending on the stability of your earnings and the timing of starting a job and your tax deductions, your employer may have withheld more tax than you needed to pay.
If you haven’t paid enough tax, then you need to pay the difference to the ATO (Tax Debt). This can occur for a few different reasons:
- you have had multiple jobs and claimed the tax free threshold more than once
- have received income over and above your wages
- had a capital gain during the year
- received government benefits as well as a wage or;
- were self-employed