TFN Special Practice Exam

When an employer does not receive your Tax File Number (TFN), they may withhold additional tax from your pay. This is a precautionary measure to ensure that tax obligations are met, as the employer is legally required to report your earnings and withhold the correct amount of tax. Without a TFN, the employer will typically apply the highest withholding tax rate on your earnings, which is generally higher than the standard tax rate. This helps avoid penalties for the employer due to underpayment of taxes on your behalf.

While there are other implications related to not providing a TFN, such as potential delays in starting your employment, or the employer possibly seeking to obtain the TFN from the Australian Taxation Office (ATO), the most immediate and impactful result is the withholding of additional tax. This is designed to protect both the employee and the employer legally until the proper tax documentation is received.