• Tax file number (TFN) declarations

    The answers your employees provide on their Tax file number declaration determine the amount you need to withhold from their payments. A Tax file number declaration applies to any payments made after you receive the declaration. If you receive an updated declaration from an employee, it will override the previous one.

    If an employee does not give you a valid Tax file number declaration within 14 days of starting an employer/employee relationship, you must complete a Tax file number declaration with all available details of the employee and send it to us.

    When a TFN has not been provided

    You must withhold 49% from any payment you make to a resident employee and 47% from a foreign resident employee, (ignoring any cents) if all of the following apply:

    • they have not quoted their TFN
    • they have not claimed an exemption from quoting their TFN
    • they have not advised you that they have applied for a TFN or have made an enquiry with us.

    If an employee states at question 1 of the Tax file number declaration they have lodged a Tax file number – application or enquiry for individuals with us, they have 28 days to provide you with their TFN.

    If the employee has not given you their TFN within 28 days, you must withhold 49% from any payment you make to a resident employee and 47% from a foreign resident employee (ignoring any cents) unless we tell you not to.

    Do not allow for any tax offsets or Medicare levy adjustments. Do not withhold any amount for:

    • Higher Education Loan Program (HELP) debts
    • Student Start-up Loan (SSL) debts
    • Trade Support Loan (TSL) debts
    • Financial Supplement debts.

    When your employee is a foreign resident

    If your employee has answered no to the question ‘Are you an Australian resident for tax purposes?’ on their Tax file number declaration, you will need to use the foreign resident tax rates.

    There are two ways you can withhold from a foreign resident’s earnings:

    • If they have given you a valid TFN, use scale 3
    • If they have not given you a valid TFN, use scale 4.

    Foreign residents cannot claim tax offsets to reduce withholding. They may, in limited circumstances, be entitled to claim a zone or overseas forces offset in their income tax return. If your foreign resident employee has claimed a tax offset on the Tax file number declaration, you don’t need to make any adjustments to the amount you withhold.

    Last modified: 16 Sep 2016QC 50006