A Free Tax File Number and Two Forms Decide What Your First Pay Looks Like

A person starting a first job in Australia is asked for three things in the opening days: a tax file number, a completed tax file number declaration and a choice of superannuation fund. The first is free and is issued by the Australian Taxation Office (ATO). The other two are forms completed on day one, and between them they decide how much tax is withheld from the first pay and where the super goes. The position of this article is that a new worker should apply for the number personally through the ATO, complete the declaration and make the super choice on the first day, and not begin work on the assumption that the number can wait. Where an employer holds neither a number nor a statement that one has been applied for, then, as this article reads the ATO’s guidance to payers, the top marginal rate applies from the first payslip, and the difference returns only through a tax return. The checklist below sets out the sequence in the order in which it happens.

Apply for the number yourself, and only once

A tax file number (TFN) is a unique number issued by the ATO, and Moneysmart notes that it is quoted to employers, benefit providers, banks and other investment bodies. The myGov guidance states that it is free to apply for if a person has never had one, and that a person needs to apply only once. A person who has applied before already has a number, so the first task in that case is to find it rather than to apply again. For a lost number, myGov describes the route: sign in to myGov, open the ATO service and choose “Find my TFN”, which requires the ATO’s online services to be linked to the account.

The route for a first application depends on the applicant. myGov lists separate paths for citizens with an Australian passport, residents, holders of a foreign passport, permanent migrants, people outside Australia, residents of Norfolk Island, and Aboriginal and Torres Strait Islander people. The correct path is the one that matches the person, and the ATO is the authority on the documents it asks for. The application should be made before the first shift, with allowance for the number to arrive in the myGov inbox or by post.

A school leaver is the reader most likely to be in this position, since the first casual job often arrives in the same weeks as results. The site’s explainer on how ATAR scaling works covers the results side of that period, and this article covers the paperwork side.

One condition applies throughout. A business that charges a fee to apply for a TFN, or to speed an application up, is not the ATO. myGov directs applicants to the ATO and states that the application is free, so there is nothing to purchase.

The tax file number declaration

On starting work, the employer asks the new worker to complete a TFN declaration. The myGov guidance on how tax works describes it as the form that records the TFN, the worker’s residency and other personal information, so that the employer can work out how much tax to withhold. The form also asks for personal details such as a name and address, and whether a study or training loan applies. The current form on the ATO’s website is the authority on its exact questions.

The declaration goes to the employer, which uses it to set the withholding. The worker does not send it to the ATO. For that reason the answers are the worker’s responsibility, and a copy of what was signed is worth keeping, because it is the only record of what the payroll system was told.

The declaration also asks whether the tax-free threshold is to be claimed. myGov states that the threshold is claimed on the declaration when a new job starts and that, with more than one employer, it is generally claimed from one only. For a worker with a single job, that single job is the one. The mechanics of holding two jobs are outside the scope of this article.

If the worker is on a working holiday visa, different rates apply, and the ATO should be checked for them.

What the “28 days” claim does and does not cover

Pages written for new workers commonly say that there are 28 days from the start date in which to provide a number. The wording can be read in two ways, and the difference matters.

The first reading treats the 28 days as a general deadline that every new worker holds, whatever is written on the form. The second reading follows the ATO’s guidance to payers. As this article reads that guidance, any allowance for a number still to arrive belongs to a worker who tells the employer, on the declaration, that an application has been made or that an enquiry has begun. The employer may then withhold on the usual basis while the number is awaited. Where the declaration gives no number and says nothing else, the top marginal rate applies from the first payment.

This article rules for the second reading, for a practical reason. A worker who writes nothing is not covered by a grace period of any length, while a worker who completes the “applied for” entry is the person the guidance contemplates. A third version, that ticking a box buys a month of grace, is at best half right, because the box is the declaration, and the declaration has to be completed accurately.

The ATO sets the exact period and the rate, and both can change. The current wording on the ATO’s page for payers should be read before any of this is relied on. The course that holds under either reading is the same: apply first, make the “applied for” entry if the number has not arrived by the first day, and give the employer the number as soon as it comes.

A first fortnight, with and without the number

Take a hypothetical student paid $620 gross for a fortnight. The hours, the pay and the employer are invented for illustration, and the table is a worked example, not a payslip.

The first row can be checked by any reader. The check is to take the top marginal rate shown in the ATO’s tax tables for payers and apply it to the $620. If the same fortnight were repeated six times, the amount withheld would be six times the first, and it would return only when the worker lodges a tax return after the financial year ends on 30 June.

The second row rests on one calculation. A pay of $620 a fortnight, over the 26 fortnights of a year, comes to $16,120, and that sum is under the threshold. A payroll system that annualises the pay in this way therefore withholds little or nothing. This article gives no dollar figure for that row, because the withholding tables are the ATO’s, and they should be read directly.

The example has limits. It excludes study loan repayments, bonuses, any second job and part-year effects. It assumes a worker who has no other income for the year. It describes no real person, and a real payslip may differ.

Super choice on day one

The employer will also ask which fund the super is to be paid into. myGov states that a worker can usually choose the fund. Where no choice is made, the employer still pays, either to the worker’s existing (stapled) fund or to the employer’s default fund. A worker who has held an earlier job may therefore already have a fund that follows them to the new employer. myGov also states that the fund can be changed at any time.

That last statement answers a common view among new workers online, which is that the decision is not worth agonising over. The first half of the view is fair, since a choice made in the first week can be revised. The second half needs a condition. Super is invested over decades, and small differences between funds compound, so the choice deserves a proper look once the first few weeks have passed and there is time to compare. The myGov page on choosing a fund is the place to begin.

On the day itself, the practical steps are short. Bring the name of any existing fund, tell the employer which fund is wanted or ask which fund will be used if no choice is made, and note the answer. This article does not name or rank any fund, and the choice remains the worker’s own.

Bank details and the first payslip

The employer also needs the worker’s bank details, which should be entered carefully and checked twice, because a mistyped account number delays the pay. A copy of what was signed is worth keeping with the declaration.

A payslip should arrive promptly after each payday, and the first one deserves a careful read. The items to check are the worker’s name, the pay period, the hours and the rate, the tax withheld, and the super amount with the name of the fund. Where the tax looks high, the first step is to ask payroll which declaration answers it holds on file, before concluding that anything is wrong. A missing number or an unanswered threshold question is a common explanation, and each is a quick fix when raised early.

The first pay is also a convenient point to start a saving habit. Setting aside a small fixed portion towards an emergency fund worked out from your own bills is easier than starting after months of spending the whole amount.

Three claims that need correcting

A common view among new workers online is that a refund is free savings. A refund is the worker’s own money returned without interest, having been lent to the ATO in the meantime. The fair point in the view is that a lump sum does feel like saving. A regular transfer to a savings account gives the same discipline without the loan.

A second claim is that ticking a box gives a month of grace. The section above explains why that reading is unsafe: the box is the declaration, and a blank declaration carries no allowance.

A third claim is that a website that charges a fee can obtain a number faster. It cannot. The application is made to the ATO, and the ATO charges nothing.

What to have sorted before the first payday

The sequence is short. Apply for the number through the ATO, or find the existing one through myGov. Complete the declaration on the first day, with the number or the “applied for” entry. Make the super choice, or ask which fund will be used. Give accurate bank details, keep a copy of what was signed, and read the first payslip against that copy.

Entitlements such as long service leave, which follows different state rules, accumulate over years, and they rely on the same records kept from the first week.

This article is general information only and does not take account of any individual’s circumstances. For anything specific, check with the ATO or a registered tax agent.

Sources: Get or find your tax file number, myGov (https://my.gov.au/en/services/work/currently-employed/tax-when-you-work/getting-a-tax-file-number); How tax works and how much you pay, myGov (https://my.gov.au/en/services/work/currently-employed/tax-when-you-work/paying-tax/how-tax-works-and-how-much-you-pay); How super works and choosing a fund, myGov (https://my.gov.au/en/services/work/currently-employed/superannuation/how-super-works-and-choosing-a-fund); Tax file number (TFN) glossary definition, Moneysmart (https://moneysmart.gov.au/glossary/tax-file-number-tfn); Payer information and obligations for the tax file number declaration, Australian Taxation Office