TFN’s & ABN’s

Tax File Numbers (TFN’s) A TFN is a unique number issued by the taxation office for each taxpayer. Individuals. Partnerships. Companies. Superannuation Funds. Trusts.

Purpose of TFN’s To identify each taxpayer to whom it is issued It allows the taxation office to: Match information supplied by the taxpayer. Detect non-disclosure of income In general a taxpayer is issued with only one tax file number. Exception : partnerships

Applying for a TFN Use TFN Application form and: Individual taxpayers must provide documentary evidence of their identity using category A and category B documents: If over 16 must provide1 category A + 2 category B If under 16 must provide 1 category A + 1 category B Upon application and providing the correct documentation the ATO provides a TFN within 28 days.

Category A documents Australian Full Birth certificate with official documentary evidence if name has changed Australian citizenship certificate Overseas passport with evidence of Australian immigration status

Category B documents Include (but not limited to) Australian Passport. Australian drivers licence with photo and signature Medicare card Australian bank account statement Tertiary student id card with photo and signature Secondary student id card

Employees and the Tax File Number Employees beginning a new job have the option of completing a TFN Declaration form to be lodged with their employer. It is not compulsory to quote a Tax File Number. (However there are consequences if not quoted)

Employers and the Tax File Number Obligations Employers are required to complete and sign the employer section of the TFN declaration form and lodge the original with the taxation office. The employer should keep a duplicate copy of the declaration. The employer is required to abide by the privacy guidelines.

Employers and the Tax File Number Obligations If the employee states that they have made an application for a tax file number, the employer should: Deduct tax for 28 days as if the employee has quoted the tax file number. If the employee does not supply the tax file number within the 28 days tax should be withheld at the top marginal rate plus the medicare levy (49%).

Tax File Number Declarations A TFN declaration is a form you use to ‘declare’ your TFN Financial institutions, such as banks, also ask you for a TFN Employees will be asked to complete a TFN declaration form when they: start work for the first time or with a new employer apply for certain benefits or allowances from Centrelink. Payers (ie employers) should provide employees with a declaration form

Investments and quotation of TFN’s As a general rule TFN’s need to be quoted for investments. Some examples of investments include: Interest bearing accounts or deposits with financial institutions. Money invested with a government or companies. Money deposited in a solicitor’s trust account. Units in a cash management or property trust.

Reporting Obligations for Investment Bodies If a non-exempt investor has not supplied the investment body with a tax file number or Australian Business Number then: The investment body must deduct tax at the maximum marginal rate plus Medicare Levy at the time of crediting the investor with income earned

Australian Business Number (ABN) The ABN is a unique identification number quoted by businesses dealing with the ATO and other government agencies. The ABN is the public registration number for the GST. An entity quotes its ABN when dealing with the ATO, other businesses and the public, on matters regarding the GST.

Who is entitled to an ABN? All companies registered under the Corporations Law in Australia. Government departments and agencies. Business entities

T The ABN and GST It is not mandatory for a business entity to have an ABN. However, an entity must have an ABN to register for GST purposes If a business does not have an ABN, other businesses may have to withhold tax from payments to them. The withholding is sent to the ATO. The amount withheld is 46.5% of the invoice amount payable. The withheld amount will be claimed as a tax credit at the end of the financial year.

Ineligibility to receive an ABN An employee. Conducting a hobby. An individual or partnership who is not conducting commercial activities with an expectation of profit

ABN and GST Enterprises with a yearly turnover (sales) of $75,000 or more, must register for GST and therefore an ABN. Non-profit organisations with a yearly turnover of $150,000 or more, must register for GST as well. Enterprises may choose to register for GST if they're below these thresholds. taxi-drivers must register.