What to tell your employer before your TFN arrives, withholding tax, and ATO myTax.
When you start a new job in Australia, your employer will ask for your Tax File Number (TFN). Working without quoting a TFN is legal, but your employer must withhold tax at the top rate of 47% until you provide one. This guide explains exactly what to tell your employer, how the withholding tax process works, and how to reclaim any excess tax when you lodge your return.
If you have applied for a TFN but not yet received it, inform your employer in writing on or before your first day of work. A simple email or signed note stating 'I have applied for a TFN and it is currently being processed' is sufficient. Your employer must accept this — they cannot refuse to hire you because your TFN hasn't arrived yet.
If you do not provide a TFN within 28 days of starting a job, your employer is legally required to withhold income tax at 47% of your gross earnings. At a gross wage of $25/hour, this means you take home about $13.25/hour. This is not a fine — it is the top marginal tax rate applied as a withholding. When you lodge your annual tax return, any tax withheld beyond what you actually owe will be refunded to you. The sooner you provide your TFN, the sooner your withholding drops to your correct marginal rate.
When your TFN arrives in the post, complete an ATO Tax file number declaration form immediately. Download it from ato.gov.au or ask your employer for a copy. Fill in your name, address, TFN, and answer the questions about your residency status and financial year earnings. Give the completed form to your employer — from that point forward they will withhold tax at your correct marginal rate.
Go to my.gov.au and create a myGov account using your TFN. Link the ATO service. This lets you view your income statements from all employers, see PAYG withholding reported by employers, check your super account balance, and lodge your tax return. Do this as soon as your TFN arrives.
Never invent a TFN, use someone else's, or make up numbers. Providing a false TFN to your employer is an offence under the Income Tax Assessment Act 1997 and can result in a penalty of up to $4,200. The ATO cross-checks TFNs against its register — false numbers are detected.
If your employer withholds tax at 47% because you did not provide your TFN in time, you are owed a refund for the difference between 47% and your actual marginal rate. But this refund only comes when you lodge your annual tax return. If you do not lodge, you lose the money. Make sure you lodge by 31 October for the relevant financial year.