Completing the Tax File Declaration as part of your employee self setup is an essential step so that your employer can determine how much tax to withhold from your wages.
You need to complete all the questions on this form. Providing incorrect information may lead to incorrect amounts of tax being withheld from your wages - meaning you may be overpaying or underpaying tax.
This article aims to provide general information on each question set out in the form, as follows:
Question 1 - What is your tax file number (TFN)?
Your employer and the Australian Taxation Office (ATO) are authorised by the Taxation Administration Act 1953 to request your TFN. It’s not an offence not to quote your TFN. However, quoting your TFN reduces the risk of administrative errors and having extra tax withheld. Your employer is required to withhold the top rate of tax from all payments made to you if you do not provide your TFN or claim an exemption from quoting your TFN.
You can find your TFN on any of the following:
- your income tax notice of assessment
- correspondence we send you
- a payment summary your payer issues to you.
If you have a tax agent, they may also be able to tell you your TFN.
If you still can't find your TFN, you can contact the ATO on 13 28 61 between 8am and 6pm, Monday to Friday.
If you cannot enter your TFN for whatever reason you will need to click on the drop won list and select the appropriate situation that applies to you:
- I don't have it yet - if you don’t have a TFN and want to provide a TFN to your employer, you will need to apply for one. Refer here on how to apply for a TFN. You will then have 28 days to provide your TFN to your employer, who must withhold at the standard rate during this time. After 28 days, if you have not given your TFN to your employer, they will withhold the top rate of tax from future payments.
- I am under 18 and earn less than the current limit - you can select this if you are under 18 years of age and do not earn enough to pay tax.
- I have an exemption from quoting my TFN - you can select this if you are an applicant or recipient of certain pensions, benefits or allowances from the:
- Department of Human Services – however, you will need to quote your TFN if you receive a Newstart, Youth or sickness allowance, or an Austudy or parenting payment
- Department of Veterans’ Affairs – a service pension under the Veterans’ Entitlement Act 1986
- Military Rehabilitation and Compensation Commission.
Question 3 - Are you an Australian resident for tax purposes?
Generally, you are considered to be an Australian resident for tax purposes if you:
- have always lived in Australia or you have come to Australia and now live here permanently
- are an overseas student doing a course that takes more than six months to complete
- migrate to Australia and intend to reside here permanently.
If you go overseas temporarily and do not set up a permanent home in another country, you may continue to be treated as an Australian resident for tax purposes.
A higher rate of tax applies to a foreign resident's taxable income and foreign residents are not entitled to a tax-free threshold nor can they claim tax offsets to reduce withholding, unless you are in receipt of an Australian Government pension or allowance.
As such, answer no to this question if you are not an Australian resident for tax purposes unless you are in receipt of an Australian Government pension or allowance. If you answer no, you must also answer no for questions 4-6.
Refer here for more information on how to work out your residency status for tax purposes.
Question 4 - Do you want to claim the tax-free threshold from this payer?
The tax-free threshold is the amount of income you can earn each financial year that is not taxed. By claiming the threshold, you reduce the amount of tax that is withheld from your pay during the year.
Answer yes if you want to claim the tax-free threshold, you are an Australian resident for tax purposes, and one of the following applies:
- you are not currently claiming the tax-free threshold from another payer
- you are currently claiming the tax-free threshold from another payer and your total income from all sources will be less than the tax-free threshold.
Question 5 - Do you want to claim the seniors and pensioners tax offset?
You are not entitled to reduce your withholding amounts, or claim the seniors and pensioners tax offset (SAPTO) with more than one employer at the same time. If you receive income from more than one source and need help with this question, phone the ATO on 1300 360 221 between 8am and 6pm, Monday to Friday.
You must meet the eligibility conditions to receive SAPTO. Your rebate income, not your taxable income, determines the amount of SAPTO, if any, you will receive.
Answer yes if you are eligible and choose to claim SAPTO with this employer. To reduce the amount withheld from payments you receive during the year from this payer, you will also need to complete a Withholding Declaration that can be downloaded here.
Answer no if one of the following applies:
- you are not eligible for SAPTO
- you are already claiming SAPTO from another employer
- you are eligible but want to claim your entitlement to the tax offset as a lump sum in your end-of-year income tax assessment.
Question 6 - Do you want to claim a zone, overseas forces or invalid and invalid carer tax offset?
You are not entitled to claim tax offsets with more than one employer at the same time.
You may be eligible for one or more of the following:
- a zone tax offset if you live or work in certain remote or isolated areas of Australia
- an overseas forces tax offset if you serve overseas as a member of Australia’s Defence Force or a United Nations armed force
- an invalid and invalid carer tax offset.
Answer yes to this question if you are eligible and choose to receive tax offsets by reducing the amount withheld from payments made to you from this payer. You will also need to complete a Withholding Declaration that can be downloaded here.
Answer no to this question if you are either:
- not eligible for the tax offsets
- a foreign resident
- choose to receive any of these tax offsets as an end-of-year lump sum through the tax system
- are already claiming the offset from another payer.
Question 7(a) - Do you have a Higher Education Loan Program (HELP), Student start-up Loan (SSL) or Trade Support Loan (TSL) debt?
Answer yes if you have a HELP, SSL or TSL debt.
Answer no if you do not have a HELP, SSL or TSL debt, or you have repaid your debt in full.
You have a HELP debt if either:
- the Australian Government lends you money under HECS-HELP, FEE-HELP, OS-HELP, VET FEE-HELP, SA-HELP
- you have a debt from the previous Higher Education Contribution Scheme (HECS).
Question 7(b) - Do you have a Financial Supplement debt?
Answer yes if you have a Financial Supplement debt.
Answer no if you do not have a Financial Supplement debt or you have repaid your debt in full.
Question 8 - Are you a working holiday maker on a 417 (Working Holiday) or a 462 (Work and Holiday) visa?
You are a working holiday maker if you have a visa subclass:
- 417 (Working Holiday)
- 462 (Work and Holiday).
You can check your visa status using the Visa Entitlement Verification Online service.
If your employer is registered with the ATO as an employer of working holiday makers, they will withhold tax from your pay at 15% on the first $37,000 of income.
If your employer is not registered with the ATO, they must withhold tax from your pay using foreign resident tax rates.