TFN vs ABN - tax numbers in Australia
What's a Tax File Number? What's an Australian Business Number?
To answer what a TFN is or how to go about getting an ABN, we must first answer the most common question among international students:
Can I work in Australia?
The simple answer is: Yes!
The Student 500 visa allows international students to work up to 40 hours per fortnight during term time (a fortnight is a 2 weeks period).
During school breaks though, students have no restriction on working hours. HUZZAH!
In order to work in Australia, you must also pay Australian taxes.
To pay taxes, you need to have a personal reference number, so that all your payments and superannuation contributions can be linked to you.
This specific number is called a Tax File Number (TFN).
Working with a TFN is the most common way to get paid in Australia. Usually when you are paid via TFN, your tax is deducted before you receive your salary in your account. This makes things easier when tax time comes around.
It sometimes even means that you will receive a tax rebate around that time of year, a cheeky little bonus which is always welcome 🤗
The alternative way to get paid is to list yourself as a ‘sole trader’ if you offer professional or technical services and get paid via an ABN (Australian Business Number).
In this instance, you will usually be paid the gross figure (i.e. no tax is deducted before you receive payment), and must report your earnings at tax time, paying your annual tax figure once each year.
Remember to set aside some of your earnings to be able to meet your tax obligations if you choose this method of payment.
Working on TFN or ABN? Which should you choose?
This depends on what job your are doing. Are you working for a company that pays you a salary? Or are you working for yourself, freelancing your services?
An ABN is necessary for operating a business, while a TFN is required for any person working in Australia.
If you provide services to a client (professional or technical), you generate an invoice which contains your ABN. This is how your client pays you for your services. Unlike the TFN, with the ABN you must deduct taxes and declare them in the period indicated by the Australian tax office.
While the rules are pretty straight-forward if you’re working on either an ABN or TFN, things can get a little trickier if you’re working on both.
*Remember that international students still need to comply with the work limitation during the schooling season to work up to 40 hours per fortnight, whether you’re working via ABN, TFN or both.
Lodging a tax return while working on both may be a bit complicated and professional assistance could be required.
Contact us if you need a recommendation! 📩
TAX NUMBERS – Where do I start?
The first thing you need to do is request a Tax File Number!
A TFN is free and is yours for life. You keep the same TFN even if you change your name, change jobs, move interstate or go overseas.
It’s easy to apply for a TFN, and you can apply online but you can only apply once you are already in Australia. You should receive your TFN within 28 days by post to your home address after the ATO (Australian Taxation Office) receives your completed application and required documents.
You can apply for your TFN here
ABN – Tell me more!
The ABN is a unique 11 digit number that identifies your business or organisation to the government and community. An ABN is for those who wish to start a business in Australia or work as a sole trader.
You can check to see if you are entitled to an ABN here
If you already have a TFN and you filled out the ABN form correctly you should receive your number at the end of your application. If you receive a reference number it may mean that the ATO needs to check a few details in your application or more information is needed.
You can apply for your ABN here
Did you know that we can assist you with TFN and ABN applications? Don’t hesitate to reach out to us if you need some help! 🤗