Tax File Number (TFN) & Exemptions (in Xero)

Overview

When setting up an employee's tax details for Xero Payroll AU, you must provide either:

• A valid Tax File Number (TFN)
  OR
• A TFN Exemption

These two fields are mutually exclusive — you cannot provide both.

Xero validation rule:
"Either a tax file number must be entered or an exemption specified (not both)"

How this appears in Xero

In Xero, users are presented with two fields:

• Tax File Number (TFN) (free text)
• TFN Exemption (dropdown)

Only one should be populated at a time.

How this is captured in PICMI

Instead of exposing raw TFN exemption types directly, PICMI captures this through guided questions:

• Do you have a TFN?
  • Yes → enter TFN
  • Not yet → "Awaiting TFN"
  • No → select reason:
    • Under 18
    • Pension / allowance recipient

This simplifies the experience for most users.

Templated question wordings

Option	Description
Yes, I have a TFN	The employee has a valid Tax File Number and will provide it. This includes known constants
Not yet, as I have an application/enquiry in progress	The employee has applied for a TFN or is waiting on it (maps to "Awaiting TFN")
No, I am claiming exemption as I am under 18 and I do not earn enough to pay tax	The employee is under 18 and below the income threshold (maps to "Under 18" exemption)
No, I am claiming exemption as I am a recipient of a pension, benefit or allowance	The employee receives a pension/benefit (maps to "Pensioner" exemption)

Advanced usage (optional)

Users who already understand Xero's TFN constants can still input them directly. The system will correctly interpret and map them.

TFN Exemption Types

The following exemption types are supported:

Exemption	Meaning
Awaiting TFN	Employee has applied for a TFN
Under 18	Employee is under 18 and below income threshold
Pensioner	Employee receives a pension/benefit
TFN not quoted	Employee has not provided a TFN

Internal Handling & Mapping Logic

PICMI ensures that whatever the user provides (answers or raw TFN values), the correct combination is sent to Xero.

Key Rules

1. If an exemption is selected

   • TFN is cleared
   • Exemption is sent to Xero

2. If a special TFN value is entered

   • It is converted into the corresponding exemption

3. If "TFN not quoted"

   • A workaround is used due to a Xero API limitation (see below) to send the constant instead of the exemption

Special TFN Constants (Advanced)

Xero supports special TFN placeholder values for exemptions.

Scenario	TFN Value
No TFN provided	000000000
Awaiting TFN	11111111
Under 18	33333333
Pension / allowance	44444444

These are undocumented Xero API behaviours, but required for correct processing.

Important Edge Cases & Workarounds

1. "TFN Not Quoted" Limitation

Due to a Xero API defect:

• You cannot set:
  • Tax Scale Type = default (REGULAR)
  • AND TFN Exemption = NOT QUOTED

Workaround applied by PICMI:

• The system sets:
  • TFN = 000000000
  • Does not send the exemption field

2. Serialization / Data Consistency

To ensure consistent results:

• If both TFN and exemption are provided → system resolves conflict
• If a known constant TFN is detected → system converts it to the correct exemption
• If exemption is selected → TFN is always cleared

Summary

• Only one of TFN or exemption should be provided
• PICMI abstracts complexity via user-friendly questions
• Advanced users can still input raw TFN constants
• The system automatically:
  • Normalises inputs
  • Handles Xero API quirks
  • Ensures valid payloads

Practical Examples

User Input	Result Sent to Xero
TFN = 123456789	TFN used
"Awaiting TFN" selected	Exemption = PENDING
TFN = 11111111	TFN used
"Pensioner"	Exemption = PENSIONER
"Under 18"	Exemption = UNDER18