You may have heard of two terms: TFN and ABN. They may sound similar, but they are used for different purposes. Knowing the difference between a TFN and an ABN isn’t just a tax matter, it’s essential for staying on the right side of the ATO and keeping more of your income. Let’s clear things up. We’ll explain it in simple terms so you’ll understand exactly which one you need and when.
What is a Tax File Number (TFN)?
Think of your tax file number (TFN) as your personal reference number in the tax and super systems. Applying for a TFN is free. Here is what you need to know:
- Your TFN is a unique 9-digit number
- It’s a key part of your identity
- You keep your TFN for life, regardless of changes like job, name, or location (even if you move interstate or overseas).
No matter how complex a tax matter is, you can get help from a tax return accountant to deal with tax matters
How to Find Your TFN?
If you already have a Tax File Number (TFN), you can find it in the following places:
- In the ATO app or through your ATO online services via your linked myGov account.
- On your income tax notice of assessment.
- In correspondence sent to you by the ATO.
- On a payment summary or income statement provided by your employer.
- On your superannuation account statement.
If you use a registered tax agent, they can also provide your TFN. Ensure finding a trusted and experienced tax accountant, especially if you are searching for an ‘accountant near me’.
What If You Don’t Have a TFN?
You can apply for a Tax File Number (TFN) at any age. However, to apply online using a Digital ID (such as myID), you must be at least 15 years old and hold an Australian passport.
What will Happen If You Don’t Have a TFN?
Having a TFN is not mandatory, but without one:
- Your employer or financial institution is required to withhold more tax from your income.
- You won’t be able to apply for government payments or allowances like JobSeeker.
- You won’t be able to lodge your tax return online.
- You can’t apply for an Australian Business Number (ABN).
When will You Receive Your TFN?
Once your completed application and identity documents are received, you’ll usually get your TFN within 28 days. It will be sent either to the mailing address you provided or to your myGov inbox, depending on how you applied.
What is an Australian Business Number (ABN)?
The Australian Business Number is a unique 11-digit number and a business identifier, available to state, territory and local government regulatory authorities.
Do You Need An ABN?
If you are starting a new business, you are required to have an Australian Business Number (ABN). Not everyone is liable to apply for an ABN, so during the registration process, you will be asked a few questions to check if you are required to have an ABN. To work as a business, you must have an ABN, which means you:
- Offer services and products directly to your clients, whether that is the public or another type of business.
- Source your clients by advertising your company’s services or products.
- Invoice and quote for work, including negotiating or setting prices.
- Have kept a separate business bank account and your business insurance.
- Report and file all business income, even if your business income is below the tax-free threshold.
An ABN has its own different obligations. You may have to:
- Register for GST
- File activity statement
- Register for PAYG withholding and meet super obligation requirements for employees who qualify
- Meet other state, federal, and territory regulatory obligations, such as workers’ compensation, payroll tax, and operating licences.
When you run a business, you have to meet various tax obligations and to claim potential deductions to save on taxes, you have to keep accurate records. For accurate records, it would be better to get help from a reliable bookkeeper in Melbourne.
Conclusion
You must be aware of both an ABN and a TFN, so you know when and how to apply for both. You can also speak to Reliable Melbourne Accountants to get advice on when to apply for a TFN and ABN.