122 terms explained
Finance Glossary
Reference library
All finance terms
122 terms
A8 terms
ABNAn 11-digit identifier for businesses, required to invoice, register for GST, and avoid top-rate withholding.→Account-based pensionA super account converted into a regular income stream, with earnings tax-free in retirement phase.→Age PensionA government income support payment for older Australians, subject to age, residency, income and assets tests.→Aged care costsThe fees for residential aged care, combining a daily care fee with an accommodation payment.→AnnuityA product paying guaranteed income for a fixed term or for life, in exchange for a lump sum.→Asset allocationHow your money is divided between growth assets like shares and defensive assets like cash and bonds.→Assets testThe Age Pension test that reduces your payment as your assessable assets rise above a threshold.→Auction vs private treatyThe two main ways Australian property is sold — competitive bidding on the day, or negotiated offers over time.→
B6 terms
BASThe form GST-registered businesses lodge to report GST, PAYG withholding and instalments.→Borrowing capacityThe maximum a lender will advance you, based on income, expenses, debts and a stressed interest rate.→BrokerageThe fee a broker charges each time you buy or sell shares or ETFs.→BudgetingDeciding in advance where your income goes, rather than discovering afterwards where it went.→Building and pest inspectionA professional assessment of a property's condition and pest damage before you commit to buying.→Buy now pay laterShort-term instalment credit at the checkout, interest-free but carrying late fees and affecting borrowing capacity.→
C19 terms
Capital gains taxTax on the profit you make when you sell an asset, added to your income rather than charged at its own rate.→Capital growthThe increase in an asset's value over time, which becomes a taxable gain only when you sell.→Capital lossThe shortfall when you sell an asset for less than its cost base, usable only against capital gains.→Capital vs incomeThe distinction deciding whether a profit is taxed as ordinary income or as a discountable capital gain.→Carry-forward contributionsUnused concessional cap from the past five years, usable in a single later year to make a larger contribution.→Cash rateThe Reserve Bank's official interest rate, which influences what banks charge on loans and pay on savings.→Cents per kilometre methodA simplified way to claim work car costs at a set rate per kilometre, capped at 5,000 km a year.→CGT discountA 50% reduction in the capital gain you declare, available to individuals who held the asset for more than 12 months.→Commonwealth Seniors Health CardA concession card for self-funded retirees who miss out on the Age Pension, subject only to an income test.→Company structureA separate legal entity that owns the business, taxed at a flat company rate with limited liability for owners.→Comparison rateA rate that bundles a loan's interest and standard fees into one figure so products can be compared fairly.→Compound interestEarning returns on your returns, so growth accelerates the longer money is left alone.→Concessional contributionsBefore-tax money going into your super — employer contributions and salary sacrifice — taxed at just 15% inside the fund.→Condition of releaseThe event that legally unlocks your super, such as retiring after preservation age or turning 65.→ConveyancingThe legal work of transferring property ownership, including contract review and settlement.→Cooling-off periodA short window after signing a private-treaty contract when a buyer can withdraw, usually for a penalty.→Cost baseThe total you count as having paid for an asset, used to work out your capital gain when you sell.→Credit scoreA number summarising your credit history, used by lenders to judge how reliably you repay.→Crypto taxCryptocurrency is treated as a CGT asset in Australia, so disposing of it triggers a taxable event.→
D9 terms
DepositThe cash you contribute towards a purchase, with 20% being the level that avoids mortgage insurance.→DepreciationA deduction for the ageing of a building and its fittings, claimable without spending any cash that year.→Depreciation scheduleA report from a quantity surveyor listing every depreciable item in your property and what you can claim each year.→DiversificationSpreading money across different investments so no single failure can seriously damage you.→DividendA share of company profits paid to shareholders, usually twice a year and often carrying franking credits.→Dividend reinvestment planAn arrangement where dividends automatically buy more shares instead of being paid as cash.→Division 293 taxAn extra 15% tax on concessional super contributions for people whose combined income exceeds the threshold.→Dollar-cost averagingInvesting a fixed amount at regular intervals, so you buy more units when prices are low.→Downsizer contributionA one-off super contribution of up to $300,000 from selling a home you have owned for ten years or more.→
E4 terms
Effective tax rateThe share of your total income that actually goes to tax, once every bracket has been applied.→Emergency fundMoney set aside in accessible form to cover unexpected costs without resorting to debt.→EquityThe share of your property you actually own — its market value minus what you still owe on it.→ETFA fund holding a basket of assets that trades on the sharemarket like a single share.→
F6 terms
Family trustA structure where a trustee holds assets and distributes income among family members at their discretion.→First Home Owner GrantA state payment to eligible first home buyers, generally limited to new or substantially renovated homes.→First Home Super Saver schemeA scheme letting first home buyers save a deposit inside super, taxed at 15% instead of their marginal rate.→Fixed vs variable rateWhether your interest rate is locked for a set period or moves with the market.→Franking creditsA credit attached to an Australian dividend for the company tax already paid on that profit.→Fringe benefits taxA tax paid by employers on non-cash benefits given to staff, such as a car, parking or entertainment.→
G4 terms
Good debt vs bad debtDebt used to acquire income-producing assets, where interest is deductible, versus debt funding consumption.→Government co-contributionA government top-up to your super when a lower income earner makes an after-tax contribution.→GSTA 10% tax on most goods and services, collected by registered businesses and remitted to the ATO.→Guarantor loanA loan where a family member offers equity in their own property as additional security.→
H2 terms
I6 terms
Income protection insuranceInsurance replacing part of your income if illness or injury stops you working.→Income testThe Age Pension test that reduces payments based on your assessed income, including deemed returns on investments.→Index fundA fund that simply mirrors a market index rather than trying to pick winners.→InflationThe rate at which prices rise, quietly reducing what each dollar of your money can buy.→Instant asset write-offA concession letting eligible small businesses deduct an asset's full cost immediately rather than depreciating it.→Insurance in superLife, disability and income protection cover held inside your super fund, paid for from your balance.→
L6 terms
Land taxAn annual state tax on the value of land you own above a threshold, excluding your main residence.→Landlord insuranceCover designed for rental properties, protecting against tenant-related losses that home insurance excludes.→Lenders Mortgage InsuranceA one-off premium that protects the lender — not you — when you borrow more than 80% of a property's value.→Loan-to-value ratioThe size of your loan expressed as a percentage of the property's value.→Logbook methodClaiming the business percentage of all your actual car costs, based on a twelve-week logbook.→Longevity riskThe risk of living longer than your retirement savings were planned to last.→
M7 terms
Main residence exemptionThe rule that generally frees your family home from capital gains tax when you sell it.→Managed fundA pooled investment run by a professional manager, bought in units directly from the fund rather than on an exchange.→Management expense ratioThe annual percentage a fund charges to manage your money, deducted before returns reach you.→Marginal tax rateThe rate of tax you pay on your next dollar of income — not the rate you pay on all of it.→Medicare levyA 2% charge on your taxable income that helps fund Australia's public health system.→Minimum drawdownThe percentage of your pension balance you must withdraw each year to keep its tax-free status.→Mortgage brokerAn intermediary who compares loans across multiple lenders and manages your application, usually paid by the lender.→
N5 terms
Negative gearingOwning an investment that costs more to hold than it earns, so the shortfall reduces your taxable income.→Net worthEverything you own minus everything you owe — the single clearest measure of financial position.→Non-concessional contributionsAfter-tax money you put into super yourself, with no contributions tax charged on the way in.→Notice of assessmentThe ATO's official statement of your tax position for a year, issued after your return is processed.→Novated leaseA three-way car lease where your employer makes payments from your pre-tax salary.→
O1 term
P8 terms
PAYG instalmentsPrepayments of tax on income that has nothing withheld, usually paid quarterly by investors and the self-employed.→PAYG withholdingThe tax your employer takes out of each pay and sends to the ATO on your behalf during the year.→Personal services incomeIncome earned mainly from your own skills and effort, subject to rules limiting deductions and income splitting.→Positive gearingOwning an investment that earns more than it costs to hold, producing surplus cash you pay tax on.→Pre-approvalA lender's conditional indication of how much it would lend you, subject to a property and final checks.→Preservation ageThe earliest age you can access your super, now 60 for everyone born after June 1964.→Private health insurance rebateA government contribution towards your private health premiums, delivered as a discount or a tax offset.→Property management feesWhat a managing agent charges to run your rental — usually a percentage of rent plus assorted extras.→
R5 terms
Redraw facilityThe ability to take back extra repayments you have already made on your loan.→Rental incomeMoney you receive from letting a property, assessable in full and declared in your tax return.→Rental yieldThe rent a property earns each year expressed as a percentage of what it is worth.→RentvestingRenting where you want to live while owning an investment property somewhere more affordable.→Repairs vs improvementsThe distinction that decides whether work on a rental is deducted immediately or claimed slowly over decades.→
S14 terms
Salary sacrificeAn arrangement where you swap part of your pre-tax salary for a benefit such as extra super, lowering your taxable income.→Self-managed super fundA private super fund with up to six members who act as trustees and control the investments themselves.→Sequencing riskThe danger of poor investment returns arriving early in retirement, while you are also drawing income.→SettlementThe day ownership legally transfers, the balance is paid and you receive the keys.→Six-year ruleA concession letting you rent out your former home for up to six years while keeping it CGT-free.→Small business CGT concessionsFour concessions that can dramatically reduce or eliminate capital gains tax when selling a business.→Sole traderThe simplest business structure, where you and the business are legally the same person.→Spouse contributionMoney you put into your partner's super, potentially earning you a tax offset of up to $540.→Stamp dutyA state tax on property purchases, usually the largest single upfront cost after the deposit.→Strata feesRegular levies paid by apartment and townhouse owners to maintain shared property and build a sinking fund.→Super guaranteeThe minimum percentage of your earnings your employer must pay into your super fund by law.→Super investment optionHow your super is invested across shares, property, bonds and cash — usually a default you can change.→SuperannuationAustralia's compulsory retirement savings system, where money is locked away and taxed at concessional rates.→Superannuation death benefits taxTax payable when super passes to non-dependants such as adult children, charged on the taxable component.→
T9 terms
Tax deductionAn expense you can subtract from your income before tax is calculated, reducing what you are taxed on.→Tax file numberYour unique identifier in the Australian tax system, used by the ATO, employers, banks and super funds.→Tax offsetA reduction applied directly to your tax bill, worth the same dollar amount regardless of your income.→Tax residencyWhether Australia taxes you on worldwide income or only Australian income — decided by your circumstances, not your visa.→Tax-free thresholdThe first $18,200 of income each year that Australian residents pay no income tax on at all.→Taxable incomeYour total assessable income minus your allowable deductions — the figure your tax is actually calculated on.→Total returnThe complete return from an investment — income plus capital growth — rather than price movement alone.→Transfer balance capA lifetime limit on how much super you can move into a tax-free retirement pension account.→Transition to retirementA pension available from preservation age that lets you draw super income while still working.→
V2 terms
W1 term