Tax file numbers are issued by the ATO. We use your tax file number (TFN) to identify your tax records.
Everyone has a different TFN. Your TFN is yours for life, even if you change jobs, move interstate or change your name. If you leave the country and later come back to Australia, you will still use the same TFN.
When you make enquiries about your tax records, we will ask you for your TFN - we will also ask for other information to check that you are who you say you are.
When you complete your tax return you are advising us of your annual income so we can work out how much tax is payable.
On the tax return you tell us your assessable income and whether you:
- have any deductions to claim against that income
- are entitled to any tax offsets
- have any special circumstances - for example, you were under 18 years of age at the end of the financial year (30 June).
1. Apply for a tax file number
Partnerships, companies and trusts will generally need their own tax file number (TFN). A TFN can be obtained at the same time as the Australian business number (ABN), using the same application form.
Sole traders use their individual tax file numbers in their dealings with the ATO.
Non-residents should consider obtaining a TFN if they:
- are authorised to work in Australia by the Department of Immigration and Citizenship
- temporarily work in Australia
- receive rental income from an Australian property
- make a capital gain on the sale of an Australian asset (including real estate and shares) that is taxable Australian property
- receive income from Australian business interests
- are a beneficiary of an Australian trust
- expect to receive payments from an Australian superannuation fund
- wish to apply for an Australian business number or other business accounts, such as goods and services tax, or
- have an Australian resident spouse who is claiming a Family Assistance Office payment.
You do not need a TFN if you are a non-resident and receive only:
- interest from an Australian bank account
- dividends from Australian shares, or
- royalty payments.
These payments are subject to PAYG withholding from interest, dividends and royalties paid to non-residents.
2. Lodge an income tax return
You must lodge an income tax return for any year in which you carry on a business, even if you expect to have no income tax liability. Remember, activity statements are different from income tax returns. Even if you report your pay as you go (PAYG) instalments and other obligations on activity statements, you must still lodge an income tax return.
Not all individuals and entities have to lodge an income tax return. For more information, see Do you need to lodge a tax return?
Where a business has ceased, gone into liquidation, had their registration cancelled and are otherwise not required to lodge in the future, they must lodge a final income tax return. In these circumstances, you advise the ATO by entering 'final' in the final tax return box on the last income tax return to be lodged.
3. Receiving your income tax notice of assessment from the ATO
We use the information you provide on your tax return to work out how much tax is payable on your income and whether you have paid more or less tax than required either through your employer's pay as you go withholding payments or your pay as you go instalments during the year.
If you have paid too much tax through the year you are entitled to a refund. If you have not paid enough tax through the year you will be required to pay when you receive your notice of assessment.
Pay as you go (PAYG) instalments is a system for tax payers to pay instalments of their expected tax liability on their business and investment income for the current income year.
Generally, the Commissioner will notify you if you are required to report and pay under the PAYG instalment system for the next income year. You may also enter the PAYG instalment system voluntarily by contacting the ATO.
Your liability for PAYG income tax instalments is based on your latest assessed income tax return for your most recent income year.
When the latest income tax return is assessed:
- If you satisfy the criteria for PAYG instalments, you will enter the PAYG instalments system automatically.
- If you no longer satisfy the criteria for PAYG instalments, you will exit the PAYG instalments system automatically.
If you are liable for PAYG instalments, you must pay your estimated tax liability for an income year in a number of instalments during the year. Some clients are able to pay one single annual instalment.
If your income tax return notice of assessment shows that no tax is payable, you may still be liable for PAYG instalments.
If you want more information on the PAYG instalments system, select the appropriate link below:
Last Modified: Thursday, 15 July 2010