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A Tax File Number (TFN) is your personal tax identifier used when you are employed and earning wages. An Australian Business Number (ABN) is a business identifier used when you operate as a sole trader or independent contractor and invoice clients for your work.
What is a TFN used for?
A TFN is your personal tax identifier. Every individual in Australia who earns income needs one, regardless of whether they are employed or self-employed. The ATO uses your TFN to link your income to you and determine the correct tax rate.
You need a TFN when:
- You are working as an employee on a payroll
- Your employer is deducting PAYG tax from your wages
- Your employer is paying superannuation contributions on your behalf
- You are lodging a tax return at the end of the financial year
This covers the vast majority of working holiday makers in hospitality, retail, farm work as an employee, warehouses, and similar roles.
What is an ABN used for?
An ABN is an 11-digit number issued to businesses and sole traders. It is used when you are operating as an independent contractor rather than an employee.
You need an ABN when:
- You are invoicing clients for your services
- You set your own hours and methods of work
- You use your own equipment and tools
- You take on financial risk for the work
- You are responsible for setting aside your own tax and super
ABNs are common among working holiday makers doing gig economy work, freelance work, certain piece-rate farm arrangements, and any work where the business asks you to invoice them rather than putting you on the payroll.
Can you have a TFN and an ABN at the same time?
Yes. Many working holiday makers hold both simultaneously. Your TFN is always required because it is your personal tax identifier. You use your ABN only when invoicing for contractor work. The two numbers serve different purposes, and holding both is normal if your situation involves both employment and contracting.
How do you work out which one applies to you?
The key question is whether the business paying you is treating you as an employee or a contractor:
- Employee: They put you on the payroll, deduct PAYG tax, pay super on top of your wages, and direct how you work. You need a TFN.
- Contractor: They ask you to invoice them, you set aside your own tax and super, and you control how the work is done. You need an ABN.
If you are unsure which situation applies, our article on the difference between employees and contractors in Australia goes into the legal tests in more detail.