Why is it advised against using TFN for identification purposes?

Using a Tax File Number (TFN) for identification purposes is discouraged primarily because it can lead to identity theft. A TFN is a unique identifier issued by the tax office for tax purposes, and if it is used inappropriately, it can be exploited by malicious individuals to impersonate someone else. Identity theft often involves accessing personal information in order to commit fraud, such as opening bank accounts or applying for loans in someone else's name.

When a TFN is shared widely or used as a general means of identification, it increases the risk that it will fall into the wrong hands. Given that the TFN is sensitive information tied directly to an individual's financial identity, its misuse can have serious repercussions, not just for the individual involved but for the overall integrity of the tax system. Protective measures around TFN usage are essential to safeguard against such vulnerabilities.

While the other options may also have relevance—such as the fact that a TFN is not formally recognized as a general identification card and confusion in tax records—it is the risk of identity theft that stands out as the most critical reason to avoid using a TFN as a means of identification.