👋 Welcome to Clear Tax Accountants!
Let’s get straight to it: Your tax file number (TFN) is one of the most important numbers you’ll ever have in Australia. It’s your personal key to managing tax and superannuation, and without it, you’re going to be paying more tax than you need to. Who wants that?
So, if you’ve just started a new job or are planning on doing so soon, do you have your TFN sorted? Because the consequences of not having one go far beyond just a bit of extra tax. Let’s break it down.
Alright, let’s start with the basics. A tax file number (TFN) is a unique number issued by the Australian Taxation Office (ATO) to identify you in the tax system. Think of it like your personal ID for anything tax-related.
And to top it off, your TFN is yours for life. Whether you change jobs, move across the country, or even head overseas for a bit, this number stays with you.
But why do you even need one?
It’s simple: without it, everything becomes harder. We’re not just talking about a slight inconvenience. We’re talking about paying more taxes, losing access to government benefits, and making your financial life way more complicated than it needs to be.
Let’s imagine you’ve started your first job, fresh out of uni, or maybe it’s a new role you’ve landed after years of hard work. Everything’s going great until payday arrives, and you notice that your pay cheque looks smaller than expected.
Why? Because without a TFN, your employer is required to withhold tax at the highest rate. That’s 47% of your earnings—almost half of your pay gone. And that’s just one of the headaches. Without a TFN, you also:
Now, let’s really talk about the elephant in the room – paying more tax. Imagine earning $1,000 in a week but watching almost $500 of that disappear in tax.
That’s what happens when you don’t have a TFN.
When your employer doesn’t have your TFN, they don’t have a choice. They legally must withhold tax at the highest rate.
And no, it’s not something you can just ‘fix later’.