Tax file number

A tax file number (TFN) is a unique identifier issued by the Australian Taxation Office (ATO) to each taxpaying entity—an individual, company, superannuation fund, partnership, or trust.

The TFN was introduced initially to facilitate file tracking at the ATO, but has since been expanded to encompass income and other data matching.

Strict laws require that TFNs may be recorded or used only for specifically authorised tax-related purposes.

[3][4] The TFN serves a purpose similar to the American Social Security number, but its use is strictly limited by law to avoid the functionality creep which has affected the US counterpart.

In view of the new legislation, the ATO offered an amnesty from these penalties as incentive for affected persons to amend their returns for preceding years – by including previously undeclared interest income – pay their outstanding tax – without the available penalties being imposed on the increased tax liabilities.

In 2014 the ATO conducted a second amnesty, known as Project DOIT (Disclose Offshore Income Today).

The primary purpose of the enhanced TFN system is to allow the ATO to collect income and other information for taxpayers (officially known as "data matching").

The types of income payments covered by the TFN data matching rules include: Other information provided to the ATO using the TFN includes health insurance information, as well as the purchase and sale of property, such as real estate and shares.

Because of the community backlash against the aborted Australia Card scheme, the expanded TFN rules are technically optional.

Institutions usually help by reminding or inviting clients to do so on any new source of income (e.g., new accounts, new debentures, new shareholdings).

For some forms of income, small earnings are exempt from TFN withholding for any account holder.

A new taxpayer receives a tax file number within about a month of making an application and providing proof of identity.