XBert Type: Standard
Accounting Software: Xero, MYOB, QuickBooks Online
Country Restriction: Australia only
Risk Type: Payroll Risk
Business Function: Payroll
Overview
This XBert checks whether an employee has been on the payroll past the ATO's 28-day window without a Tax File Number recorded. When a new employee starts, they have 28 days to give you a completed Tax File Number declaration. Once that window passes, the ATO requires you to withhold PAYG from their pay at the top marginal rate of 47% until a valid TFN is provided. Catching a missing TFN early means you can apply the correct withholding and chase the declaration before the corrections start to multiply.
What it does
This XBert reviews your active, adult, Australian-resident employees and checks how long each has been employed against their recorded start date. If an employee has now been employed for more than the ATO's 28-day window with no Tax File Number recorded against their tax details, XBert raises the alert. It deliberately excludes the legitimate no-TFN cases, so a flag points to an employee who simply has not handed in their declaration yet.
How it works
The XBert raises an alert when an employee has been employed for more than the ATO's 28-day window and still has no Tax File Number recorded. To keep the alert accurate and avoid false alarms, XBert only reviews and flags employees who are:
active on the payroll;
adult, so minors are excluded; and
Australian residents, so foreign residents are excluded.
It also excludes employees who have a valid ATO exemption code on file, so a genuine no-TFN case is not flagged. These are the employees who have:
applied for a TFN;
an under-18 exemption; or
a pensioner exemption from quoting one.
Leaving a missing TFN unresolved creates a chain of problems. Until a TFN declaration is lodged, the ATO requires PAYG to be withheld at the top rate of 47%. If the correct (lower) rate has been applied instead, your client is under-withholding and may owe the shortfall to the ATO. If 47% has been withheld correctly, the employee is being short-paid each pay run and will likely query it or seek the over-withheld amount back, creating rework. A TFN declaration also cannot be lodged with the ATO without the employee's TFN, leaving a gap in your Single Touch Payroll and payroll compliance. The longer it remains unresolved, the more pay runs are processed on the wrong basis, multiplying the corrections needed later.
Example/Use Case
Mei runs payroll for Harbour Cafe and hires Tom as a casual in March. Tom is keen to start, so Mei sets him up in the payroll system the same week, meaning to chase his Tax File Number declaration once things settle down. Tom works steadily over the next two months, but the declaration never gets handed in and Mei forgets to follow up. Because his pay was set up on the standard tax scale rather than the no-TFN rate, Tom has been under-withheld the whole time. When the bookkeeper reviews the file at quarter end, she finds the missing declaration and has to recalculate every one of Tom's pay runs at 47%, adjust the withholding, and explain the difference to both Tom and the cafe owner. XBert would have flagged the missing TFN once Tom passed the 28-day window, well before the corrections piled up.
Accounting software
This XBert runs on the major Australian-compatible accounting platforms, including Xero, MYOB and QuickBooks Online.
Which countries it supports
Australia only.
Processes
This alert sits within your Payroll process and helps ensure the correct PAYG withholding is applied while a Tax File Number is outstanding. To resolve it:
Select RESOLVE NOW to open the employee in Xero Payroll.
Ask the employee to complete a Tax File Number declaration and record their TFN against their tax details.
If they have genuinely applied for a TFN, are under 18, or are a pensioner exempt from quoting one, record the relevant ATO exemption code so the correct withholding applies.
Until a valid TFN is recorded, withhold PAYG at the 47% top rate.
Once a valid TFN or the correct exemption code has been recorded, mark the XBert as resolved.