Editing Tax file number (section)

== Data matching ==
The primary purpose of the enhanced TFN system is to allow the ATO to collect income and other information for taxpayers (officially known as "data matching"). This is done by the ATO requiring paying entities (e.g., banks, employers, public companies, superannuation funds, [[Centrelink]] and others) to electronically provide the ATO with information of certain types of payments made by them, together with the associated TFN of the recipient. When taxpayers file their [[Tax return (Australia)|income tax return]]s at the end of the financial year, the ATO can electronically match the income reported by the taxpayer against the payments reported by the paying entities.

The types of income payments covered by the TFN data matching rules include:

* Wages and salaries from employers (see [[Pay-as-you-go tax|PAYG]]), including [[Fringe benefits tax (Australia)|fringe benefit]] and superannuation information
* [[Interest]] from [[bank]]s and similar institutions, from all account types, including term deposits
* [[Interest]] from bonds and debentures
* [[Dividend]]s from public companies
* Distributions from [[unit trust]]s, including cash management trusts
* Superannuation payments (amounts paid out to a beneficiary)
* Some government benefits, in particular unemployment benefits.

Other information provided to the ATO using the TFN includes health insurance information, as well as the purchase and sale of property, such as real estate and shares.

Because of the community backlash against the aborted [[Australia Card]] scheme, the expanded TFN rules are technically optional. The taxpayer entitled to such income payments has a choice between quoting the TFN, or not doing so. As a general rule taxpayers quote their TFN. Institutions usually help by reminding or inviting clients to do so on any new source of income (e.g., new accounts, new debentures, new shareholdings). Forms for quoting include a reminder of the key provisions of the system, for example from [[Computershare]]:

: ''It is not an offence to withhold your TFN or, where the securities are held for a business purpose, your ABN.  However, if you do not provide your TFN or ABN, tax may be deducted from payments of interest and the unfranked portion of dividends and distributions at the highest marginal rate.''

If an account is held in the names of multiple investors, each may choose whether to quote or not, but tax is withheld unless at least two have done so.