While a TFN is often associated with adults, it can also be very beneficial for minors. A TFN provides a range of benefits for minors and ensures their compliance with tax regulations.
If you are not sure whether your child needs a TFN or not, here are some reasons to consider.
- Apply for Employment Opportunities
A minor does not have to wait till they are 18 to be able to work. However, an employer is required by law to withhold tax from the minor’s income. A TFN is required to streamline this process and ensure that the right amount of tax is withheld based on their income.
If a minor does not have a TFN, the employer may withhold tax at the highest rate. It can harm your child’s financial health in the long run.
You can Click Here to apply for your child’s TFN and ensure accurate record-keeping for them and their employer as well. This way, you can be sure that a minor’s income and tax records are correctly matched and reported to the Australian Taxation Office (ATO).
- Open a Bank Account
If you are considering opening a bank account for a minor, a TFN is often required to initiate the process. A TFN becomes even more important if a bank account earns interest as it is subject to tax. Otherwise, finances can become too complicated to handle, especially for a minor.
A TFN not only ensures the best maintenance of financial records but also prevents the bank from withholding tax at the highest rates. In either case, having a TFN can ease stress related to finances for a minor.
- Verify Eligibility for Government Benefits
If a minor is receiving any government benefits or payments such as family tax or youth allowances, a TFN can help them in several ways. A TFN is used by the government for various purposes, such as verifying eligibility and managing payments accurately.
This information helps the government disburse the right amount for minors. In addition, the government can also use this to prevent fraud.
- Earn Investment Income
Minors have the right to invest just like anyone else. If stocks, bonds, and other assets generate income for minors, they must report this income correctly to the ATO. A TFN can help in streamlining this process. A TFN makes it easier for the right amount of tax to be paid from a minor’s investment income.
In addition, TFN also allows minors to maintain accurate records. These records can be crucial for tax returns and financial planning.
- Streamline Tax Returns
Some minors also need to file tax returns when their income crosses a certain threshold. If a minor needs to file tax returns, they surely need a TFN. It ensures that their income is correctly reported and assessed.
A TFN can be especially helpful for minors trying to claim a refund through their tax return. The process of claiming a refund becomes more complicated without a TFN.