Essay about The Tax File Number Declaration
3.1 Tax File Number Declaration
New employees are required by law to complete a Tax File Declaration Form before they can receive any payments, which must be lodged electronically to with the Australian Tax Office within 14 days of employment. This is so the ATO can match up information provided by other sources, and to detect nondisclosure and prevent tax fraud. If a TFN is not provided, the employee can be taxed up to 49% of their income. If an employee has submitted a form for a TFN and is waiting to receive it, then the employer should deduct normal income tax for up to 28 days, after which they resume taxing at the maximum rate.
There are two sections to a TFN Declaration Form, for the employer and the employee. The employee must provide details such as their full name, address, date of birth, residency status and other details, such as HELP debt or the tax-free threshold, that determine the tax rate. The employer’s section provides the details of the business such as contact details, registered business name and the Australian Business Number.
For instructions and links on how to declare a TFN, see the ATO website or the link above.
3.2 Pay As You Go Withholding
While you are responsible for paying income tax on your business, you are also responsible for reporting and withholding the income tax your employees earn as well. First of all, you will need to register for PAYG Withholding, you can do this as you would for GST, through the ATO’s…