Tax Return:: How to Prepare the Tax File Number (TFN) Declaration Form

Hello, this is P&C Tax Professionals!

Today we will discuss about how to prepare the TFN Declaration form which you must have in order to begin your work in Australia.

After being employed in Australia, employees must complete a form known as the TFN Declaration form. The TFN Declaration form is a document that determines the tax rate to be applied to your income in the future.

When filling out the paperwork, the employer must also fill in his/her details on the form and the paperwork must be signed by both parties before sending it to the Australian Taxation Office (ATO). If you do not fill out the TFN Declaration form, you may be charged a tax rate of up to 50.5%, so in order to avoid this, make sure to fill it out so that it can be sent to the ATO prior to commencing your work in Australia.

Most companies would process this via their own Payroll system but many small businesses also process such forms by physically sending it via postal mail.

From now on, we will run through the step by step process of how the employer needs to fill out the Tax Declaration form and where the completed form must be delivered to.

Step 1: First of all, you will need to go to ATO's official site (refer to the link below) and download the relevant PDF file. It is ultimately

the employee's responsibility and duty to fully complete and provide the completed form to their employer.

Link to declaration form: https://www.ato.gov.au/Forms/TFN-declaration/

Step 2: Once you have downloaded the TFN Declaration form, you must fill out the details on the form.

Employees may refer to the photo below to assist them in filling out their own details. Please note the form below is simply an example

to guide you through all the details that needs to be provided, therefore you must complete sections 1, 2, 3, 4, 5, 6, 7

in accordance to your own personal details and circumstances.

Sections 8-10 may cause some confusion amongst people so we will explain it in further detail.

Section 8:

This section is asking you whether you are an Australian resident for tax purposes and there are a total of three options from which can choose from based on your situation: (1) Australian resident for tax purposes, (2) Foreign resident for tax purposes and (3) A working holiday maker (WHM).

This is how it basically works:

If you have a working holiday visa, you can simply tick the box corresponding to the WHM. For the rest of us, if you plan to reside in Australia for more than 6 months, according to the Australian Taxation Laws, you can tick the box corresponding to the Australian resident for tax purposes.

If for whatever reason the working holiday maker box is missing, for the time being, tick the foreign resident for tax purposes box and make sure to to advise your employer afterwards that you in fact hold a working holiday visa (WHV) and therefore should only be subject to the 15% tax rate.

In order for the employers to charge the 15% tax rate, they must first register with the ATO that they are employing a working holiday maker.

Section 9:

If you plan to work in Australia at a single place, you can tick 'YES' for this section.

If your gross income is less than $18,200 (i.e. the tax-free threshold) during the financial year (1 July 2020 to 30 June 2021) --> tick 'YES' regardless of how many places you work at.

If you have an income of $18,200 or more and you work for 2 or more companies --> tick 'YES' for the company where you earned the most income and tick 'NO' for the company where you earned less income.

Section 10:

Answer 'YES' if you have any of the following: HELP, VSL, FS, SSL or TSL debt.

Answer 'NO' if you do not have the above items or if you have repaid your debt in full.

You would have a HELP debt if any of the following circumstances applies to you:

--> The Australian Government lent you money under the HECS-HELP, FEE-HELP, OS-HELP, VET FEE-HELP, VET Student loans prior to 1 July 2019 or SA-HELP.

--> You have a debt from the previous Higher Education Contribution Scheme (HECS).

You would have a SSL debt if you have an ASTUDY SSL debt.

You would have a separate VSL debt that does not form a part of your HELP debt if you incurred it from 1 July 2019.

If you have fully repaid your HELP, VSL, FS, SSL or TSL debt, you would need to complete another form known as the 'Withholding declaration (NAT 3093)' notifying your employer/payer of the changes in your circumstances.

Once all the sections (1-10) are successfully completed, the final step is to sign and date the declaration towards the bottom of the page (see the red text in the image). This form would then have to be given to your employer to fill out the payer section.

Step 3 (final step): Complete Section B of the TFN Declaration form which is to be completed by the employer/payer.

The last step of declaring your TFN involves the employer writing up their details as requested under section B of the document.

When the employer/payer receives the above document from the employee, he/she must fill out the details of their business, sign and date the declaration before finally mailing it out to the address highlighted by the red box in the image above.

Address: Australia Taxation Office, PO BOX 9004, PENRITH NSW 2740.

As the employer, if a staff member has not not yet provided the form to you, you must request your employees to complete it so that you can send it to the ATO address.

After you send your documents by mail, there is nothing else you need to do.

Once you have sent all the required documents to the ATO, you must then process your employees' salaries and documents electronically.

This is known as the 'Single Touch Payroll'.

I hope this blog has given you some useful insights for you to complete your TFN declaration forms.

As always, if you have any further questions or enquiries please do not hesitate to contact us through our Official Facebook Page (P&C Tax Professionals - Australia) or simply send us your questions to our email address at: pnctax@naver.com.

Thank you and bye for now!