Australian accounting + tax glossary

ABN

Australian Business Number. An 11-digit identifier issued by the Australian Business Register for an entity carrying on an enterprise.

When it matters: Needed before you can register for GST, PAYG withholding or business names. Without an ABN, customers may have to withhold 47% from payments to you.

ACN

Australian Company Number. A 9-digit identifier issued by ASIC to every registered company. Forms the first 9 digits of a company’s ABN.

When it matters: Shown on company letterheads, contracts and tax invoices. Required by ASIC for all company communications.

AFSL

Australian Financial Services Licence. An ASIC licence required to provide financial services such as financial product advice or dealing in financial products.

When it matters: Your accountant generally cannot give you personal financial product advice (super, investments) unless they hold or are authorised under an AFSL. Tax advice is separately regulated by the TPB.

AAS · Australian Accounting Standards

The financial-reporting standards issued by the AASB. They apply to companies, registered schemes, disclosing entities and others required to prepare general purpose financial reports.

When it matters: Mandatory for companies that lodge audited financial reports with ASIC. Voluntary adoption by SMEs that want bank or investor-ready reports.

AASB · Australian Accounting Standards Board

The independent statutory body responsible for setting accounting standards used in Australia.

When it matters: Sets the rules your audited accounts must comply with. Most AASB standards are aligned with IFRS issued by the IASB.

AHPRA

Australian Health Practitioner Regulation Agency. The national regulator for registered health practitioners.

When it matters: If your accountant works with healthcare professionals (doctors, dentists, psychologists), they should understand AHPRA registration, billing rules and CPD recording.

Accruals basis

A method of accounting that records revenue when earned and expenses when incurred, regardless of when cash changes hands.

When it matters: Mandatory for GST reporting above $10m turnover. Required for AASB-compliant general purpose financial reports. Better matching of revenue to costs in any period.

Adjusted taxable income · ATI

A measure of income used for various government benefits and offsets, broadly: taxable income plus reportable fringe benefits, reportable super contributions, total net investment loss, target foreign income, tax-free pensions.

When it matters: Determines eligibility for Family Tax Benefit, Child Care Subsidy, Senior Australians Tax Offset and other means-tested entitlements.

ASIC

Australian Securities and Investments Commission. The corporate, markets and financial services regulator.

When it matters: Registers companies, polices director duties, regulates financial services and managed investment schemes. Your accountant lodges ASIC annual review forms for any Pty Ltd company.

ATO

Australian Taxation Office. The federal revenue agency administering income tax, GST, PAYG, FBT and most Commonwealth taxes.

When it matters: Your point of contact for tax registrations, lodgements, payment arrangements, audits and rulings.

Audit

Independent examination of financial statements to express an opinion on their fair presentation in accordance with applicable accounting standards.

When it matters: Required for large proprietary companies, public companies, NFPs above certain revenue thresholds, and SMSFs every year.

BAS · Business Activity Statement

The periodic return through which GST-registered entities report GST, PAYG withholding, PAYG instalments, FBT instalments and similar to the ATO.

When it matters: Lodged monthly, quarterly or annually depending on turnover and election. See our GST + BAS guide.

BAS Agent

A TPB-registered practitioner authorised to charge a fee for preparing and lodging BAS, advising on GST, PAYG and similar BAS-related services.

When it matters: A BAS Agent costs less than a Tax Agent and is appropriate when you only need quarterly BAS work, not full income tax services.

Bookkeeping

The recording of day-to-day financial transactions in an accounting system (Xero, MYOB, QuickBooks, etc).

When it matters: A bookkeeper handles data entry, bank reconciliation and basic accounts-payable/receivable. They are not necessarily TPB-registered – if they lodge BAS for a fee, they must be a BAS Agent.

CA ANZ · Chartered Accountants Australia and New Zealand

A professional accounting body with around 136,000 members across Australia, New Zealand and internationally.

When it matters: CA-qualified accountants meet specific education, experience and ongoing professional development requirements. Common in large firms, audit and corporate advisory.

Capital gain

The increase in value of a CGT asset realised on its disposal. Calculated as proceeds minus cost base.

When it matters: Capital gains form part of your taxable income. Most CGT assets held more than 12 months by an individual qualify for the 50% CGT discount.

Capital loss

The decrease in value of a CGT asset realised on its disposal. Calculated as cost base minus proceeds.

When it matters: Capital losses can only be offset against capital gains (not against ordinary income). Unused capital losses are carried forward indefinitely.

Cash basis

A method of accounting that records revenue when cash is received and expenses when cash is paid.

When it matters: Available for GST reporting under $10m turnover. Better for cash-flow management because GST is only remitted on collected income.

CGT · Capital Gains Tax

The tax payable on a net capital gain realised on disposal of a CGT asset. Not a separate tax – the net gain is added to assessable income.

When it matters: Triggered on sale of shares, investment property, business assets, crypto and most other non-personal-use assets. Main residence exemption may apply to your home.

Company tax rate

For 2025-26: 25% for base rate entities (turnover under $50m with no more than 80% passive income), 30% for all other companies.

When it matters: The lower rate is the default for most Pty Ltd small businesses. Franking credits on dividends paid from base-rate company income are credited at the 25% rate.

Concessional contributions

Super contributions made from pre-tax money, taxed at 15% inside the fund. Includes employer SG, salary sacrifice and personal deductible contributions.

When it matters: The 2025-26 cap is $30,000 per person. Unused cap can be carried forward for up to 5 years if your total super balance is under $500,000.

CPA Australia

A professional accounting body with around 170,000 members. Members hold CPA Australia’s Certified Practising Accountant designation after a postgraduate program and mentored experience.

When it matters: CPA membership signals accounting qualification, professional development, professional indemnity insurance and access to a complaints process.

Depreciation

The allocation of the cost of a depreciating asset over its effective life. Two methods: prime cost (straight-line) and diminishing value.

When it matters: Tools, equipment, vehicles, computers, office furniture and rental-property assets are all depreciable. Items costing $300 or less for work-use are immediately deductible.

Director ID

A unique 15-digit identifier issued by ABRS to all company directors. Mandatory for directors of any Australian company.

When it matters: Apply at abrs.gov.au. Required before becoming a director of a new company. Penalties for failing to obtain a Director ID start at fines and can lead to civil penalties.

Div 7A

Division 7A of the Income Tax Assessment Act 1936. Treats certain loans, payments and forgiven debts from a private company to a shareholder (or associate) as unfranked dividends.

When it matters: Critical if you draw money from your own company beyond salary. Either formalise a Div 7A loan agreement, repay before year-end, or accept the dividend treatment with full PAYG.

DGR · Deductible Gift Recipient

An entity endorsed by the ATO to receive tax-deductible gifts. Donations of $2 or more to a DGR are deductible.

When it matters: Verify DGR status at abr.business.gov.au before claiming a donation. Buying a raffle ticket or charity-dinner ticket is not deductible – you received something of value.

EOFY · End of Financial Year

The end of the Australian financial year, 30 June.

When it matters: Triggers tax-planning decisions: pre-pay deductible expenses, top up concessional super, defer income, crystallise capital losses, motor-vehicle logbook start.

FBT · Fringe Benefits Tax

A federal tax paid by employers on non-cash benefits provided to employees in connection with their employment. FBT year runs 1 April to 31 March.

When it matters: Catches novated leases, employer-provided cars used privately, entertainment, club memberships and similar. Employers also generally need to report reportable fringe benefits on payment summaries.

Franking credit

A tax credit attached to a dividend paid by an Australian company out of profits already taxed at the corporate rate. Allows shareholders to claim a credit for the tax already paid.

When it matters: Shareholders gross up the dividend by the franking credit, then claim the credit against their tax bill. Excess credits are refundable to individuals on low or zero tax.

FBT exempt vehicle

Certain vehicles (e.g. utes, vans, dual-cab utes meeting load capacity rules and eligible electric vehicles under the EV FBT exemption) that don’t attract FBT for limited private use.

When it matters: Heavily used in salary packaging. The EV FBT exemption applies to BEVs and certain PHEVs under the luxury car threshold for fuel-efficient vehicles, subject to ongoing legislation.

GST · Goods and Services Tax

A 10% broad-based consumption tax on most goods, services and other items sold or consumed in Australia.

When it matters: Registration is mandatory at $75k annual turnover ($150k NFP, $1 for taxis/rideshare). See our GST + BAS guide.

HECS-HELP

The Higher Education Loan Program. A loan from the government for university tuition, with compulsory repayments via the tax system once your repayment income exceeds the minimum threshold.

When it matters: Repayments are 1–10% of repayment income depending on the band. Indexed annually to inflation. Not deductible. Voluntary repayments no longer attract the bonus discount.

IPA · Institute of Public Accountants

A professional accounting body with around 35,000 members. IPA members hold the MIPA, AIPA, FIPA or PNA designations.

When it matters: IPA is focused on the SME practice community. Member firms commonly serve sole traders, contractors and family businesses.

Income protection insurance

Insurance that pays a benefit when you cannot work due to illness or injury, typically up to 75% of pre-disability income.

When it matters: Premiums for stand-alone (outside super) policies are deductible. Premiums paid through super are not deductible to the individual.

Input-taxed sale

A sale on which GST is not charged but the seller cannot claim GST credits on related inputs. Includes residential rent and most financial supplies.

When it matters: If you provide residential rental accommodation or financial supplies, you cannot claim GST on the costs of providing them.

Instant asset write-off

A small-business concession that allows immediate deduction of the cost of eligible depreciating assets up to a threshold. Threshold has varied – $20,000 for 2024-25 (extended by Treasury Laws Amendment), check current law.

When it matters: Available to businesses with aggregated turnover under $10 million. Applies per asset, per year. Verify the current threshold before relying on it.

LITO · Low Income Tax Offset

A non-refundable tax offset that reduces tax payable for low-income earners. Maximum $700 for taxable income up to $37,500, tapering to $0 at $66,667.

When it matters: Automatic – calculated by the ATO at assessment. Cannot reduce tax below zero (non-refundable).

Margin scheme

A GST method for property developers where GST is calculated on the margin (sale price minus cost) rather than on the full sale price.

When it matters: Reduces GST on new residential property sales where the property was acquired without GST. Election must be in writing before settlement.

Marginal tax rate

The rate of income tax payable on the next dollar you earn. For 2025-26 individual residents: 0%, 16%, 30%, 37%, 45%.

When it matters: The rate at which tax-deductible expenses reduce your tax bill. A $1,000 deduction at the 30% rate saves $300. Use our tax bracket calculator.

Medicare levy

A 2% levy on most taxable income above the threshold, funding the public healthcare system.

When it matters: Phased in between $27,222 and $34,027 (single 2024-25 figures, indexed). Higher thresholds apply for families and seniors.

Medicare Levy Surcharge

An additional 1–1.5% levy on higher-income individuals and families who do not hold an appropriate level of private hospital cover.

When it matters: Applies above $97,000 (single) or $194,000 (family) for 2025-26 (subject to indexation). Avoidable by holding compliant private hospital insurance.

Negative gearing

When the costs of holding an investment (loan interest, expenses, depreciation) exceed the income it produces, creating a tax-deductible loss.

When it matters: The loss is offset against your other assessable income at your marginal rate. Most often applied to investment property. Capital gain on eventual sale recoups some or all of the deferred tax via the 50% CGT discount.

Non-concessional contributions

Super contributions made from after-tax money. Not taxed inside the fund on entry.

When it matters: The 2025-26 cap is $120,000 per person ($360,000 over three years with bring-forward), subject to total super balance limits.

PAYG instalment · Pay As You Go instalment

Prepayments of your own income tax for business and investment income, made through your BAS or IAS.

When it matters: The ATO calculates instalments based on your prior year tax. Adjust if your circumstances have changed materially. Different from PAYG withholding.

PAYG withholding · Pay As You Go withholding

Tax withheld by an employer from employee wages and remitted to the ATO.

When it matters: Employers must register, withhold and lodge through their BAS. Failing to remit collected PAYG can create director penalty notice exposure.

Provisional company

Informal term – not a legal entity type. Sometimes used for a recently incorporated Pty Ltd that has yet to file its first annual review.

When it matters: Confirm the formal entity type (Pty Ltd, public company, association) on the ASIC register before assuming structure.

R&D Tax Incentive

A tax incentive providing offsets for eligible research and development activities. Refundable or non-refundable depending on the entity’s turnover.

When it matters: Available through AusIndustry registration. Eligibility is narrow – core experimental activities only. Many claims are reviewed by AusIndustry and the ATO.

Reportable fringe benefits

The grossed-up taxable value of certain fringe benefits an employee received above $2,000 in the FBT year.

When it matters: Reported on your income statement / payment summary. Affects Medicare Levy Surcharge, HECS-HELP, Division 293 and various income-tested benefits.

SBE · Small Business Entity

An entity with aggregated turnover under $10 million carrying on business.

When it matters: Eligible for concessions including simplified depreciation, simplified trading stock rules and the small business income tax offset (sole traders).

SG · Superannuation Guarantee

The compulsory super contribution rate employers must pay on behalf of employees. 11.5% for 2024-25, 12% from 1 July 2025.

When it matters: Calculated on ordinary times earnings. Late payment triggers the SG Charge, which is not deductible and includes interest plus admin fees.

SMSF · Self-Managed Super Fund

A super fund with up to 6 members who are also trustees, regulated by the ATO. Members make their own investment decisions within super law.

When it matters: Suits members with substantial balances ($200k+ rule of thumb) and an appetite for direct control. Mandatory annual audit by an approved SMSF auditor.

Sole trader

An individual carrying on business in their own name and ABN. Not a separate legal entity – the individual is personally liable.

When it matters: Simple structure for solo operators. Income is taxed at individual marginal rates. Doesn’t allow income splitting and offers no asset protection.

Sub-trust

A trust created within an existing trust structure, often to deal with unpaid present entitlements (UPEs) under Div 7A guidance.

When it matters: A common structure when a private company is owed money by a related trust. Tightly regulated by ATO tax determinations.

Tax Agent

A TPB-registered practitioner authorised to charge a fee for preparing and lodging income tax returns and providing tax advice.

When it matters: Tax Agents have broader scope than BAS Agents. Verify registration at tpb.gov.au/public-register.

TFN · Tax File Number

A 9-digit identifier issued by the ATO to individuals and entities for tax purposes.

When it matters: Provide to your employer, bank and any income source. Withholding rates jump to 47% if a TFN isn’t provided to a payer.

TPB · Tax Practitioners Board

The independent statutory authority responsible for the registration and regulation of tax agents, BAS agents and tax (financial) advisers under the Tax Agent Services Act 2009.

When it matters: Sets entry standards, runs the public register, investigates complaints, can suspend or terminate registrations. See our TPB register check guide.

Trust

A legal relationship where a trustee holds property for the benefit of beneficiaries. Common types: discretionary (family) trust, unit trust, hybrid trust.

When it matters: Used for income splitting, asset protection, estate planning and small business structures. All trust income must be distributed or taxed at the top marginal rate inside the trust.

TFE · Temporary Full Expensing

A COVID-era concession allowing immediate deduction of the cost of eligible depreciating assets. Ended for assets acquired after 30 June 2023.

When it matters: Historical for new acquisitions. May still be relevant if you’re analysing earlier-year tax positions or carried-forward loss balances.

Vacancy levy

A state-based tax on residential land that is vacant for more than a defined period (e.g. Victoria’s Vacant Residential Land Tax).

When it matters: Property investors and owners of holiday homes should check state-specific rules. Vic, NSW, ACT all have variants in different forms.

Withholding tax

Tax that a payer must withhold and remit to the ATO before paying certain types of income (e.g. payments without an ABN, interest and dividends to non-residents).

When it matters: If a supplier doesn’t quote an ABN, you must withhold 47% from payment. Non-resident interest withholding tax is generally 10%; non-resident unfranked dividends 30% (or treaty rate).