Tax File Number (TFN)

A Tax File Number, abbreviated TFN, is a unique identifier issued by a national tax authority to individuals and businesses, used to track income, tax filings and other obligations within that country's tax system. The specific meaning and issuing authority differ by country: in Australia, the TFN is issued by the Australian Taxation Office and used across employment, banking and investment income reporting, while in South Africa the equivalent reference used by the South African Revenue Service is generally called a tax reference number rather than a TFN, despite describing a broadly similar underlying concept.

In Australia, providing a TFN to an employer or financial institution is not legally compulsory, but failing to do so typically results in tax being withheld at a much higher default rate on wages, bank interest and investment income, since the absence of a TFN prevents the payer from confirming the correct, lower rate actually applies. A TFN is distinct from the broader concept of a Tax Information Number used in some other countries' systems, even though the two serve a conceptually similar identifying function.

It works like a personal account number with the tax office: giving it to your employer or bank lets them report your income correctly and apply the right tax rate, while not providing it usually means being taxed at the highest possible rate by default until the matter is corrected.

A TFN is used when reporting wages and salary income to the tax authority through an employer, when reporting interest, dividends and other investment income collected from banks and brokers, and when lodging an annual personal or business tax return summarizing the full year's financial activity.

Because a TFN can be used to commit identity-related tax fraud if it falls into the wrong hands, tax authorities generally advise sharing it only with trusted parties such as employers, banks and registered tax agents, treating it with the same level of care as other sensitive personal identifiers. Lost or compromised TFNs can typically be reported to the issuing tax authority, which can apply additional safeguards to the taxpayer's account to limit any resulting damage.

Financial institutions generally request a customer's TFN when opening an interest-bearing account or an investment account specifically so interest and investment income can be reported correctly and taxed at the appropriate rate rather than the higher default withholding rate. Declining to provide a TFN when opening such an account remains a legal option in Australia, but it almost always results in a worse tax outcome for the account holder than simply providing the number at the outset.

Beyond individuals, a TFN is also issued to companies, trusts, partnerships and other entities, used in a similar way to track that entity's own tax obligations separately from those of its individual owners or members. A business generally needs its own TFN even if its owners already have personal TFNs of their own, since the business itself is treated as a distinct taxpayer for most purposes under the relevant tax law.

Individuals generally apply for a TFN once, typically early in life or upon arriving in the country to work, and the same number is intended to remain valid for that person's entire life, unlike some other identifiers that may need periodic renewal or reissue. A person who has lost or forgotten their TFN can generally retrieve it through the tax authority's online services or by providing sufficient proof of identity directly to the authority, rather than needing to apply for an entirely new number.

Foreign residents and temporary visa holders earning income in Australia are also generally required to obtain a TFN to avoid the higher default withholding rate, though the specific rules and reporting obligations that apply to foreign residents can differ in important ways from those applying to permanent residents and citizens. Anyone moving to work in a country that uses a TFN-style system is generally well advised to apply for the number as early as possible, since the cost of delay is typically borne through unnecessarily high tax withholding until the number is on file with employers and financial institutions.