A Tax File Number and an Australian Business Number are two entirely different things that serve different purposes in the Australian tax system. Many working holiday makers confuse them or assume they need one when they actually need the other. The simplest way to understand the difference is to think about how you are being paid and what kind of work you are doing.
What a TFN is for
A Tax File Number is your personal tax identifier. Every individual in Australia who earns income needs one, regardless of whether they are employed or self-employed. It is the number that links your income to you in the ATO's system and determines how much tax is withheld from your wages.
If you are working as an employee, meaning your employer pays you a regular wage, deducts tax before paying you, and pays superannuation on your behalf, then a TFN is what you need. This covers the vast majority of working holiday makers working in hospitality, retail, farm work as employees, warehouses, and similar roles.
What an ABN is for
An Australian Business Number 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. If you are invoicing clients for your work, setting your own hours, using your own equipment, and taking on financial risk, you are likely operating as a contractor and you will need an ABN to do that correctly.
ABNs are common among working holiday makers doing gig economy work, freelance work, piece-rate farm work under a labour hire arrangement, or any work where the business paying you asks you to invoice them rather than putting you on the payroll.
Can you have both at the same time
Yes. Many working holiday makers hold both a TFN and an ABN simultaneously. Your TFN is always required because it is your personal tax identifier. You then use your ABN when invoicing for contractor work. The two numbers are used in different contexts and having both is entirely normal if your situation involves both employment and contracting.
How to 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. If they are putting you on their payroll, deducting PAYG tax from your wages, and paying superannuation on top of your wage, you are an employee and your TFN is the relevant number. If they are asking you to invoice them and you are responsible for setting aside your own tax, you need an ABN.
If you are unsure which situation you are in, our guide on the difference between employees and contractors in Australia goes into more detail.
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We help working holiday makers work out exactly what they need based on their situation, whether that is a TFN, an ABN, or both. Get in touch and we will point you in the right direction.
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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.