The ATO assigns a unique nine-digit number to each taxpayer, to identify people with the same or similar names and to make tax evasion more difficult.

To get a tax file number a person must prove who they are by producing at least two original identification documents at a tax office or post office. Various combinations, such as a current Australian passport and an Australian birth certificate, are accepted.

If a tax file number is not produced to employers, investment institutions or social security officers among others, they must withhold tax at the maximum rate (48.5% for resident individuals, including Medicare) on any income due. Once it has been withheld there seems to be no way of getting it back except by lodging a return at the end of the tax year.

The system is also used to locate people liable to pay the higher education contribution, who must produce a tax file number when they enrol for study.