The TFN declaration¶

A TFN declaration is the set of tax details a new employee gives you when they start. TFN stands for tax file number — a person's own number in the tax system. The declaration tells you the facts you need to work out how much tax to hold back from each pay.

You do not send this to the ATO on a separate paper form any more. The details now go in through your payroll and your report to the ATO.

Why this matters¶

When you pay staff, you hold back some tax and send it to the ATO. This is PAYG withholding (pay as you go withholding). The right amount to hold back depends on the employee's own answers — their tax file number and a few tax questions. The TFN declaration is where you collect those answers.

What you will learn¶

• What a TFN declaration is and what it is for
• How the details help work out the tax to hold back
• How the details now flow through payroll and your ATO report

Understanding the concept¶

A TFN declaration collects an employee's tax details. This usually includes their tax file number and their answers to a few tax questions — for example, whether they are an Australian resident for tax purposes and whether they are claiming the tax-free threshold. You use these answers to work out how much tax to hold back from their pay.

In the past, employers sent the paper declaration to the ATO. Now, if your payroll software supports it, the employee's tax details go to the ATO as part of your regular report. That report is Single Touch Payroll (STP) — the way you tell the ATO about each pay. The ATO says that when you report this information through STP, it replaces sending a separate TFN declaration.

Example¶

Priya starts a new job at a small business. On her first day she gives her employer her tax details — her tax file number and her answers to the tax questions. Her employer uses those answers to work out the tax to hold back each pay. The employer does not post a paper form to the ATO. The tax details go through with the regular pay report instead.

Common mistakes¶

• Thinking you must still post a paper form to the ATO — the details now flow through your payroll and STP report.
• Skipping the record — you still keep the employee's completed declaration for your own records.
• Forgetting to collect the tax details before the first pay — you need them to work out the tax to hold back.

How this works in myaccountant¶

Key points¶

• A TFN declaration is the employee's tax details.
• The details tell you how much tax to hold back from each pay.
• You do not send a separate paper form to the ATO any more.
• The tax details flow through your payroll and STP report.
• You still keep the employee's completed declaration for your records.

Learn next¶

• Tax File Numbers (TFNs)
• Choosing a super fund
• Employee onboarding

General information only — not tax, super or financial advice.