Yes, you can legally start work in Australia without a TFN. There is no law that prevents you from being employed before you have one. However, there is a significant financial consequence that most working holiday makers do not fully appreciate until they see their first payslip.
What happens to your tax without a TFN
When you do not have a TFN on file with your employer, Australian law requires them to withhold tax at the top marginal rate of 47%. This is not something your employer chooses to do. It is a legal requirement they must follow to remain compliant with the ATO. It applies from your very first shift until the day you provide them with your TFN and a completed Tax File Number Declaration form.
For a working holiday maker who would otherwise pay 15% tax on their earnings, this means an extra 32 cents is withheld from every dollar you earn during that period.
Does the overpaid tax come back to you
Yes, it can. Any tax that was overpaid during the period before your TFN was registered with your employer can be reclaimed when you lodge your tax return at the end of the Australian financial year. The ATO reconciles what you actually owed against what was withheld and refunds the difference.
This means you do not permanently lose the money, but you do lose access to it for potentially several months while you wait for tax time. For backpackers working on tight budgets, that is a real inconvenience.
The practical advice
Apply for your TFN as early as possible, ideally before you start your first job. If you are already working without one, apply immediately and inform your employer that your application is in progress. Show them the confirmation email from the ATO as evidence. Processing typically takes up to 28 days, so the sooner you apply, the less time you spend losing that extra 32%.
Once your TFN arrives, give it to your employer immediately along with a Tax File Number Declaration form. From that point forward, the correct 15% rate will apply to your wages.
What about cash in hand work
If you are being paid cash in hand, the TFN question is handled differently. For more on how that works and the tax implications, see our guide on cash in hand work in Australia.
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What to do if your TFN application is delayed
If your TFN has not arrived after 28 days, here is what to check and how to follow up with the ATO.