Finance & tax glossary
The terms you actually run into as a sole trader, freelancer or small business — explained simply, with no jargon. Fin keeps each one short and useful.
Commonly confused
GST-Free vs BAS Excluded vs Input Taxed
Three ways a line can carry no GST — and three different BAS labels.
Read →Sole trader tax rate
There isn’t one — you’re taxed at personal marginal rates.
Read →Tax deduction vs tax offset
A deduction lowers income taxed; an offset lowers tax owed.
Read →PAYG withholding vs PAYG instalments
One is tax you hold back for others; one is prepaying your own.
Read →ABN vs TFN vs ACN
Business identifier, personal tax number, company number.
Read →Personal services income (PSI)
Income that’s mainly from your skills, not a real business.
Read →GST & BAS
GST (Goods and Services Tax)
Australia’s flat 10% tax on most goods and services.
Read →BAS (Business Activity Statement)
The form GST-registered businesses use to report GST and PAYG.
Read →PAYG (Pay As You Go)
Paying tax through the year rather than in one lump.
Read →GST turnover ($75,000 threshold)
The gross income figure that triggers GST registration.
Read →Tax invoice
The GST-compliant invoice that lets a buyer claim the GST back.
Read →Tax treatment (GST treatment)
The code that decides which activity-statement label a transaction feeds.
Read →Input taxed
Sales with no GST that also deny credits on related purchases.
Read →GST-free
Sales with no GST where you still claim credits on your purchases.
Read →BAS Excluded (out of scope)
Money that is not a supply and does not appear on the activity statement.
Read →Capital purchase (GST on Capital)
An asset you buy to use over years — G10 on the BAS, then depreciated.
Read →Income tax
Marginal tax rate
The tax rate on your next dollar of income.
Read →Tax-free threshold
The first $18,200 of income you can earn tax-free.
Read →Medicare levy
A 2% levy on most taxable income that funds public health.
Read →CGT discount (50%)
Hold an asset over 12 months and only half the gain is taxed.
Read →Franking credits
A credit for company tax already paid on your dividends.
Read →Taxable income
Assessable income minus deductions — what tax is actually on.
Read →Rental schedule (rental property schedule)
Where each rental’s income and expenses are reported.
Read →Deductions
Depreciation (decline in value)
Claiming the cost of a big asset gradually over its life.
Read →Instant asset write-off
Immediately deduct an eligible asset instead of depreciating it.
Read →Logbook method (car expenses)
Claim your car’s real business-use share of running costs.
Read →Cents per kilometre method
A simpler car claim — a set rate per business km, capped.
Read →Substantiation (proving a deduction)
The records that turn a claim into a defensible deduction.
Read →Effective life
How many years an asset is expected to be used — the base of every depreciation rate.
Read →Prime cost method
Straight-line depreciation — the same deduction each year of the effective life.
Read →Diminishing value method
Front-loaded depreciation — a bigger claim early, shrinking each year.
Read →Balancing adjustment
What happens to the leftover value when you sell or scrap a depreciating asset.
Read →Negative gearing
A rental whose deductible costs are more than its rent.
Read →Apportionment
Dividing a shared cost so only the income-earning share is claimed.
Read →Initial repairs
Fixing problems that came with a rental when you bought it.
Read →Capital works (Division 43)
Writing off the cost of building a rental over 40 years.
Read →Super & study
Superannuation guarantee (SG)
The compulsory super employers pay on top of wages.
Read →Salary sacrifice
Redirecting pre-tax salary into super or a benefit.
Read →Division 293 tax
An extra 15% super-contributions tax for high earners.
Read →HECS-HELP (student loan)
A government study loan you repay through the tax system.
Read →Business basics
ABN (Australian Business Number)
The 11-digit number that identifies your business.
Read →TFN (Tax File Number)
Your personal reference number in the tax system.
Read →Sole trader
The simplest business structure — you and the business are one.
Read →Cost of goods sold (COGS)
What the things you actually sold cost you to make or buy.
Read →Trading stock (and the $5,000 stocktake shortcut)
The goods you hold to sell — and when you can skip the stocktake.
Read →TPAR (Taxable Payments Annual Report)
The annual report of what you paid contractors in certain industries.
Read →Budgeting & cashflow
Zero-based budgeting
Assigning every dollar of income a job until nothing is left unassigned.
Read →Envelope budgeting
Setting aside a fixed amount per category, where what is left carries forward.
Read →Sinking fund
Saving a little each period for a known expense that is not due yet.
Read →Burn rate
How much money you are spending per day or per month, on average.
Read →Clubs & charities
Restricted fund
Money given for a stated purpose, to be spent only on that purpose.
Read →Unrestricted fund
Money the trustees or committee can spend on anything within the organisation’s purposes.
Read →Designated fund
Unrestricted money the trustees have earmarked — and can release again.
Read →Receipts and payments account
A small charity’s or club’s cash-based accounts: money in, money out, and the balance.
Read →Independent examination
The lighter check of a smaller charity’s accounts, instead of an audit.
Read →Gift Aid
The UK scheme that adds 25p to every £1 a taxpayer gives a charity or CASC.
Read →Gift Aid declaration
The donor’s permission for a charity or CASC to claim Gift Aid on their gifts.
Read →CASC (community amateur sports club)
A UK sports club registered with HMRC for Gift Aid and rates relief.
Read →CIO (charitable incorporated organisation)
A charity with its own legal identity, registered only with the Charity Commission.
Read →Bank data & standards
ISO 20022
The international standard for financial messages — payments, statements and more.
Read →camt.053 (ISO 20022 bank statement)
The end-of-day bank statement in ISO 20022 XML.
Read →camt.054 (debit and credit notification)
The ISO 20022 notice that details a debit or credit — often the payments inside a batch.
Read →MT940 (SWIFT customer statement)
The SWIFT end-of-day statement, in tagged plain text.
Read →OFX (Open Financial Exchange)
The open bank-download format behind Quicken and Money files.
Read →Open banking connector
Software that moves bank transaction data between systems on published standards.
Read →Banking-as-a-Service (BaaS)
A licensed bank offering accounts, cards and payments to other companies through APIs.
Read →FAPI 2.0
The OpenID Foundation’s high-security OAuth profile for financial APIs.
Read →DPoP (Demonstrating Proof of Possession)
An OAuth method that binds a token to a key the client holds.
Read →Pushed authorization request (PAR)
Sending OAuth request parameters to the server directly, not through the browser.
Read →SimpleFIN
An open protocol for read-only bank data, through a server you choose.
Read →Transaction categorisation API
An API that sorts raw bank transactions into categories.
Read →Want to run the numbers? Try the free tax calculators, or read the plain-English guides.
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