Some of the terms used on this site are described below. To view a description, select the letter your term begins with and then scroll down.
Acquisition is a very broad term. It includes the things you buy (goods and services) for your business or enterprise. It also includes many other transactions, such as when you obtain advice or information, take out a lease of business premises or hire business equipment.
A super fund you, or your employer, contribute regular payments to. When you retire you receive the total contributions made by your employer, plus any made by you, plus interest (less management fees, taxes and other deductions).
See approved deposit fund.
Ad hoc settlement
Ad hoc settlement is required where a client does not hold a periodic (ie weekly) settlement permission. We are required under the Excise Act to ensure the client has lodged a liability statement and made the appropriate payment prior to entering the goods into home consumption. Ad hoc settlement is also known as 'prepayment'.
Adjusted taxable income (ATI)
Taxable income plus certain other income and losses declared by you. Your ATI and the ATI of your spouse (if you have one) are used to work out your eligibility for and amount of both of the following:
(Before the 2009-10 income year, separate net income - SNI - was used as the income test for tax offsets relating to dependants.)
For more information about income tests, refer to www.ato.gov.au/incometests
After-tax super contributions
Super contributions made with after-tax money, such as your take-home pay. These are either:
These contributions are also called 'non-concessional' as they usually count towards your non-concessional contributions cap.
A limit on the amount of super contributions you could claim as a deduction. The limit was based on your age on the day that the last contribution was made during the income year.
Age-based limits were replaced by contribution caps from 1 July 2007.
Allocated pension/Allocated annuity
The key features of these benefits include:
Allocated surplus contribution amount
An amount that is allocated from a regulated super fund surplus, by a trustee, to meet an employer's liability to make contributions.
To credit an amount from a member's super account to another account in a regulated super fund held by, or created for, a receiving spouse. This is not a transfer or rollover.
Amounts paid by employers to cover anticipated costs or as compensation for conditions of employment.
An annuity is a series of payments purchased with a lump sum, usually from a life insurance company or registered organisation. For reasonable benefit limits, an annuity only includes those purchased wholly or partly with ETPs which have been rolled over.
Annual GST information report
Option 2 for GST reporting (ie pay and claim actual GST amounts and report only GST on sales, GST on purchases and total sales each quarter) means that you do not report all of your GST information each quarter. At the end of the year, you will need to complete an annual GST information report, whereby you report the GST information that was not reported each quarter.
Annual GST return
Option 3 for GST reporting (GST instalments) means that you do not supply any actual GST figures each quarter. At the end of the year, you will need to complete an annual GST return, whereby you report GST information for the entire year. A payment may need to accompany this return (or a refund may be due).
Antecedent benefit ID
Refer to Matching benefit ID.
A person must be registered as an approved SMSF auditor with the Australian Securities and Investment Commission (ASIC) before they can audit a self-managed superannuation fund (SMSF).
Approved deposit fund (ADF)
Are mainly rollover vehicles. They cannot accept contributions directly from contributors in the same way as super funds. They only accept termination payments after you take early retirement, change jobs or are retrenched. They must pay out a member's benefits when they reach 65 years old and they cannot pay a pension.
Approved SMSF auditor
(a) of an assessable amount, means an ascertainment of the assessable amount; and
(b) in relation to a tax-related liability other than an assessable amount, has the meaning given by the taxation law that provides for the assessment of the amount of the liability.
Assessable amount (for indirect tax laws)
An assessable amount includes a net amount, a net fuel amount, an amount of indirect tax and a credit under an indirect tax law.
Assessable amount (for eligible termination payments)
The specified amount of an eligible termination payment that is to be included on your tax return. It is usually a cash payment.
Assessment by the Commissioner
A limited number of taxpayers, such as non-business taxpayers claiming fuel tax credits, are not able to self-assess. Instead the Commissioner must make an assessment from the information provided by the taxpayer and issue the taxpayer with a notice of assessment.
Assessed GST on a taxable importation
Assessed GST on a taxable importation, means the GST assessed on the taxable importation.
Gross income including salary and wages, dividends, interest and rent before any deductions are allowed. Assessable income also includes net capital gains, ETP and other amounts that are not ordinarily classed as income.
Assessed net amount
Assessed net amount for a tax period, means the net amount assessed for the tax period.
Assessed luxury car tax
Assessed luxury car tax, on a taxable importation of a luxury car, means the luxury car tax assessed on the taxable importation.
Assessed net fuel amount
Assessed net fuel amount, for a tax period, or for a fuel tax return period means the fuel amount assessed for the tax period or fuel tax return period.
Assessed wine tax
Assessed wine tax, on a customs dealing, means the wine tax assessed on the customs dealing.
Any form of property.
An employee who has a controlling interest in a company or partnership, or is related to a person who has a controlling interest in a company or partnership.
People and entities closely associated with you, such as relatives, or closely connected companies or trusts. A partner in a partnership is an associate of the partnership.
Australian Taxation Office
Studying of your financial affairs to check that your income tax returns are correct. Audits are done to make sure you pay the right amount of tax, no more no less.
Auditor/actuary contravention report (ACR)
An auditor/actuary contravention report (ACR) is used to report certain contraventions of the Superannuation Industry (Supervision) Act 1993 (SISA) and Superannuation Industry (Supervision) Regulations 1994 (SISR) to the ATO.
Auditor contravention report
Australian business number (ABN)
Your ABN is your identifier for certain dealings with us and other government departments and agencies.
Australian Bureau of Statistics (ABS)
Statistics are supplied to ABS for use by the Government in prediction and trends.
Australian Business Register (ABR)
A public register which contains details of all ABN registrations. In registering an entity under the ABR, the registrar will allocate an ABN to the entity and record the applicant's details on it.
Australian Prudential Regulation Authority (APRA)
One of the Australian Government agencies which regulates super funds and other bodies in the financial sector, making sure they operate within the requirements of retirement income legislation.
The tax rates that apply to your taxable income depend on if you are an Australian resident. A higher rate of tax is applied to a non-resident's taxable income and they are not entitled to a tax free threshold.
Australian Securities and Investment Commission (ASIC)
The Australian Government organisation which collects information on public and private companies and other corporate bodies registered under the Corporations Law in Australia.
To permit some other person or organisation to do something official for you.
Average weekly ordinary times earnings (AWOTE)
A measure of wage and salary levels of employees in Australia, as measured by the Australian Bureau of Statistics and published quarterly. RBL amounts are indexed by AWOTE to take inflation into consideration.
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Money which is owed and is unlikely to be paid back.
A means of checking that your financial records agree with those held by your financial institution. A bank reconciliation also establishes the correct balance in your bank account after adjusting for transactions such as deposits not yet banked and cheques not yet presented.
A registered person for business activity statement (BAS) service purposes, hired to help a person with advice, preparation and/or lodgment of their BAS.
BAS agent portal
The BAS Agent Portal is a secure website that is only available to registered BAS agents and their employees. It provides online communication with us as well as live client account and registration information.
The period prior to the 'declared period' where 'Declared Period Quotas' have been imposed.
Before-tax super contributions
Contributions to super which are made out of your salary before tax is withheld (gross salary), such as salary sacrifice contributions.
Before-tax contributions are also called:
A person entitled to or in receipt of a benefit. For a super fund, this is normally the member and/or their financial dependants.
The term beneficiary could also refer to an employee in the context of employment.
For super, this means the amount you are paid as part of a super income stream, a lump sum amount or combination of the two. It may also refer to an entitlement from your fund to which you, your estate and/or your dependants are entitled.
This term is found on the RBL benefit list and is a unique number we assign to each benefit.
We run free seminars for small business operators. They were formerly called Bizstart, and are now called Tax Basics seminars for small business. They provide a general overview of the various taxes which may affect their business.
Bona fide redundancy
A bona fide redundancy payment has all of the following characteristics:
Bond (or Bond store)
Common term used for a licensed warehouse or other licensed premises where excisable (or customable including excise equivalent) goods may be stored without the payment of duty (also known as establishment).
Automatically triggered when your non-concessional (after-tax) contributions are more than the annual non-concessional contributions cap (currently $150,000) in a particular year.
To be eligible for the bring-forward, you must be less than 65 years old at the time your non-concessional contributions become more than the cap.
Once triggered you will be able to contribute non-concessional contributions totalling $450,000 over three financial years without exceeding your non-concessional contributions cap.
When a bring-forward has been triggered, the cap is fixed and won't be indexed.
Broken periods of service
This occurs where an employee's eligible service period (ESP) is not one continuous period of employment. An employee may have a broken period of service if, for example, they have taken leave without pay or maternity leave. If a benefit is being paid in respect of more than one continuous period of employment, the ESP is the total of each service period.
The government's expected revenue and expenditure for a financial year.
Business activity statement (BAS)
Businesses registered for GST use this single form to report their business tax entitlements and obligations, including GST, PAYG instalments, PAYG withholding and FBT instalments. You can offset tax payable against tax credits to arrive at an assessed net amount. The BAS replaces several business tax forms.
A series of expenses determined by tax law that can be deducted from your income.
Business Entry Point (BEP)
The BEP offers free online transactions and up-to-date, accurate information on tax and a range of other business-related matters.
The Excise Act allows the CEO to make by-laws. An Excise Tariff Item may specify a particular commodity or circumstance as being 'as defined by-law'. A by-law further defines the scope or application of that Excise Tariff Item.
The capital value of the benefit reduced by any excessive amount.
This amount is used to calculate the qualifying portion of the benefit.
Money spent on assets such as:
Capital gains tax
A tax on the profit obtained when selling an asset (most homes and motor vehicles are exempt from this).
The equivalent lump sum value of a pension at the start date. There are different ways to calculate the capital value of each type of pension or annuity. For example, the capital value of:
If you issue (or receive) an invoice but do not account for the sale (or purchase) until the cash is received (or paid), you are using a cash basis of accounting. You can use the cash basis if your annual turnover is $1 million or less. NB 'Account on a cash basis' is a defined term in GST law.
A book that records all of your business transactions - whether by cash, cheque or credit card.
How much money is coming into your business and how much is going out.
CGT exempt component
A benefit may have this component if the member has sold business assets and was entitled to a capital gains tax (CGT) exemption.
A charity that is a fund established under an instrument of trust or a will for a charitable purpose. Charitable funds mainly manage trust property, and/or hold trust property to make distributions to other entities or persons.
An charity that is an institution that is established and run to advance or promote a charitable purpose.
A type of not-for-profit organisation that:
Refer to Legal meaning of charityExternal Link on acnc.gov.au
For tax purposes, a charity may be a fund or an institution.
A child is also taken to be your child in each of the following:
A child-housekeeper is your child, adopted child, stepchild, ex-nuptial child or child of your spouse who kept house for you full-time. A child who is a full-time student or a full-time employee is not considered to keep house full time.
Product or goods that attract an excise. Currently commodities for excise purposes fall into the following main groups:
The process of converting a pension or annuity into a lump sum payment. This payment can be paid to the beneficiary, or rolled over to another product within the same super fund or to another super fund.
A separate legal entity that is taxable on its net taxable income. For tax law purposes, a company includes either:
However, it does not include a partnership or a non-entity joint venture.
Companies need to obtain a tax file number and where appropriate register for an Australian business number. NB 'company' is a defined term in tax law.
Complying pension or annuity
A pension or annuity where all of the following applies:
There are conditions that must be met when the pension is commuted.
Complying superannuation funds
A complying super fund has:
Complying super funds that meet SISA standards qualify for a concessional tax rate of 15%.
Compulsory release authority (CRA)
We send you this release authority if we give you an excess non-concessional contributions tax assessment. You must use the Compulsory release authority for excess contributions tax and statement to withdraw the amount of your excess non-concessional contributions tax assessment from your super within 21 days after the date on the release authority.
A benefit will have a concessional component if it was made before 1 July 1994 and includes an invalidity payment, bona fide redundancy or approved early retirement scheme payment.
It will also apply to a payment made after that date that arose from a roll over to a super fund and the entitlement to those components can be attributed to the period before 1 July 1994.
Generally, these are contributions included in the assessable income of a super fund. They can include employer super guarantee contributions, contributions made under a salary sacrifice arrangement and personal contributions for which a tax deduction has been claimed.
These contributions are taxed at 15% as they enter the fund. Concessional contributions are also called 'before-tax contributions'.
Concessional contributions cap
The limit on the amount of concessional contributions you can make to your super fund each year before you have to pay extra tax.
For those 50 years old or over, transitional arrangements are in place to give a higher concessional contributions cap for the financial years up to and including 2011-12. See Transitional concessional contributions cap.
For the current concessional contributions cap, refer to Key superannuation rates and thresholds.
Concessional spirit approval (concessional permit)
Approvals/permits we issue to clients to use spirit for concessional use (eg as a solvent, hospital use, food flavouring etc). These permits allow the spirit to be delivered with a concessional (free) rate of duty. A separate permit is issued for each type of spirit/use.
For commodities used for approved purposes (for example, spirit used in the manufacture of medicines, ie medical purposes) that attract an amount less than the full rate of excise and are entered under a separate tariff or instrument (eg Item 2M) to indicate concessional use.
Conditions of release
An event which enables you to access some or all of your super benefits.
Common conditions of release include:
Benefits can only be paid if the rules of your super fund allow it.
Constitutionally protected fund
A fund is constitutionally protected if it has been declared as such under the Income Tax Regulations 1936.
Generally, a fund is constitutionally protected if its assets are owned by a state, rather than held in trust. As the constitution limits the Australian Government's taxing power, income derived by these funds is exempt from tax.
Independent contractors or contract workers generally provide for their own income tax liability by paying PAYG instalments. Individual contract workers can, if they meet certain conditions enter into a voluntary agreement to have an amount withheld, with their payers. Payments subject to withholding under a PAYG voluntary agreement are not included in PAYG instalment income for paying PAYG instalments.
Contributions splitting application
An application you make, as a member of a super fund, asking your fund to roll over, transfer or allot an amount of contributions for the benefit of your spouse. The total amount to be split in a financial year cannot be more than the maximum splittable amount of your contributions in the relevant financial year. The application may need to include an eligibility statement by your spouse (the receiving spouse).
The tax payable by your super provider on the assessable income of the fund. The assessable income of the fund includes contributions such as:
The current rate of tax on the assessable income of a complying super fund is 15%.
Your super fund usually reduces your super account balance by the amount of this tax.
A person or business to whom your business owes money.
Customs and importations
For GST, WET and LCT payable on importations, the Commissioner is treated as having made an assessment and to have served a notice of assessment if both of the following apply:
The import declaration and the import declaration advice, together, are treated as being a notice of assessment.
The holder of a Customs Agent's licence who acts on behalf of a client in relation to the importation of goods.
Duty payable on imported (excise equivalent) goods at the rate determined by the Customs Tariff Schedule.
A licence to warehouse imported goods.
A payment made on the death of an employee or super fund member. A death benefit may be paid to a beneficiary as a lump sum or as an income stream (pension or annuity).
Death-benefit termination payment
A lump sum payment made to a beneficiary because of the death of an employee or super fund member that is made within six months of death or three months of probate being granted.
Decline in value
You can deduct an amount for the decline in value of a depreciating asset that you hold in an income year to the extent you use the asset (or have it installed ready for use) for a taxable purpose, such as for producing assessable income. Generally, decline in value is calculated using either the diminishing value method or the prime cost method. Both methods are based on the asset's effective life.
A customer or client who owes your business money.
A period we determine prior to a (probable) change in the rate of excise duty where Declared Period Quotas have been imposed.
Deductible gift recipient (DGR)
An entity that is entitled to receive income tax deductible gifts. All DGRs have to be endorsed by us, unless they are named specifically in the income tax law. There are two types of DGR endorsement. One is for entities that are endorsed as DGRs in their own right. The other is for an entity that is endorsed as a DGR only for a fund, authority or institution that it operates. For the second type, only gifts to the fund, authority or institution are tax deductible.
Money you spend to enable you to earn income - allowable deductions only - such as stationery, equipment, rent, electricity, telephone and tools. The value of the deduction is subtracted from assessable income to calculate your taxable income.
Deemed notices of assessment
In cases where the Commissioner is deemed to have made an assessment, the returns (for self assessment) or the import declaration and advice (for liabilities on importations) are taken to be the notice of assessment.
Where a deemed assessment does not apply, the Commissioner must issue a notice of assessment.
De facto relationship
A relationship between two people (whether of the same or opposite sex) who, although not legally married to each other, live together as a couple on a genuine domestic basis.
An annuity that is not payable on purchase. There are additional terms specified for deferred annuities. For more information about these terms, refer to subregulation 5.01(1) of Superannuation Industry (Supervision) Regulations 1994 (SISRExternal Link).
Defined benefit pension, fund or scheme
Unlike an accumulation plan, a defined benefit plan uses a formula to calculate a member's entitlements.
The formula may use the following information:
Generally a dependant refers to a person who needs your financial or domestic support. These can include a spouse, a de facto, a child, or a person in your care with whom you have an interdependency relationship.
A dependant for a death-benefit termination payment is:
A financially dependent relationship with a deceased person means the deceased contributed necessary financial support to maintain the dependant. Children over 18 years old must be financially dependent on the deceased to qualify as dependants.
An interdependent relationship is generally a close personal relationship between two people who live together, where one or both provides for the financial, domestic and personal support of the other.
An asset that has a limited effective life and can reasonably be expected to decline in value over the time it is used. Items of plant and equipment are, generally, depreciating assets but land, trading stock and most intangible assets are not.
Foreign Embassies and Consulates and individual Foreign Diplomats may receive limited quantities of excisable (and/or excise equivalent) goods without the payment of excise (or Customs) duties.
Disability superannuation pension/disability annuity
A pension/annuity payable to a person where two legally qualified medical practitioners have certified that due to disability the person is unlikely to ever be employed in a capacity for which they are reasonably qualified by education, training or experience.
Generally a distribution from a company to a shareholder out of company profits.
A drawback occurs where excise duty has been paid and the goods have been exported and the client is entitled to a refund of that amount of excise duty paid.
Money a sole trader or partner withdraws from the business.
Duty is deferred when excisable goods are moved or stored under bond.
This is the actual date that a posting will affect an account - for the purposes of determining the daily balance and calculating the general interest charge (GIC). The effective date takes into account any temporary or permanent extension, public holidays and weekends.
The effective life of a depreciating asset is, broadly, the period it can be used by anyone for income-producing purposes assuming reasonable wear and tear, that it will be maintained in reasonably good order and condition and having regard to the period within which it is likely to be scrapped or abandoned.
Electronic funds transfer (EFT)
Payments from the ATO can be made electronically by direct credit to a valid Australian bank, credit union or building society account.
Payments to the ATO can be made electronically by BPAY, credit card, direct credit or direct debit.
Electronic lodgment service (ELS)
The ELS allows participating tax agents to lodge their clients' tax returns and other tax forms with us electronically via modem.
A signed statement from the receiving spouse stating that they are either aged less than their applicable preservation age or are aged between their applicable preservation age and 65 years and have not permanently retired.
Eligible service period
Applies to benefits before July 2007. This is the period from the day your membership of a super fund or employment started through to the day your membership of the fund or employment ceased.
Electronic super audit tool (eSAT)
An electronic tool specifically designed to help approved SMSF auditors of self-managed super funds to fulfill their obligations, carry out the annual compliance audit and lodge an Auditor/actuary contravention report (ACR) when required.
Eligible termination payment (ETP)
An EPT is a lump sum benefit made before 1 July 2007 by one of the following:
Eligible termination payments could also include a lump sum paid when a pension or annuity is converted (commuted) to cash or the residual capital value is paid at the end of a pension or annuity term. They can generally be rolled over into a super fund, approved deposit fund or retirement savings account.
These payments are similar but notably different to payments made after 1 July 2007, called 'employment termination payments' (ETPs).
Eligible termination payment pre-payment statement
A statement that must be given by the payer to the payee (for example, an employee or a super fund member) before an eligible termination payment was made.
The statement contains instructions about how to make the eligible termination payment - for example, the amount to be paid in cash or rolled over to a particular fund.
A pre-payment statement is not required if one of the following applies:
A person who receives salary or wages.
Employee share scheme
Under an employee share scheme (ESS), a company provides its employees with interests in the company (shares, stapled securities, rights to shares or rights to stapled securities), collectively known as ESS interests. Changes to employer and employee reporting and elections on ESS came into effect 1 July 2009. There is also an income test for the ESS $1,000 upfront tax concession.
For more information for employers, see www.ato.gov.au/essemployer
For more information for employees, see www.ato.gov.au/essemployee
Contributions employers make to a super fund for their employees. These are tax deductible (subject to certain rules) for employers and are assessable contributions for the super fund. Employer contributions are not assessable income to the member of the fund (the employee). This means that they are not:
One exception is reportable employer super contributions. Amounts that an employee chooses to salary sacrifice (before-tax contributions) are treated as employer contributions for super guarantee purposes and must be reported.
Employer contributions in excess of the age based limit
Amounts in excess of the age-based limits are unable to be claimed by employers as a deduction.
Age-based limits no longer apply from 1 July 2007.
In the 2006-07 financial year, these amounts are transitional non-concessional contributions and count towards the $1 million transitional non-concessional contributions cap.
Employment termination payment (ETP)
A lump sum paid to you when your employment is terminated after 1 July 2007. These payments must be made within 12 months of termination and usually receive concessional income tax treatment.
The purpose for which the product or good (commodity) will ultimately be used when entered for home consumption, this determines which tariff item will apply and therefore the rate of excise duty (including concessional use).
Endorsement is the process where organisations apply to us for approval to do either of the following:
An enterprise includes a business. It also includes other commercial activities but does not include any of the following:
Note: Enterprise is a defined term in GST law.
An individual (for example, a sole trader), a body corporate (a company), a corporation sole, a body politic, a partnership, an unincorporated association or body of persons, a trust, or a super fund.
A product designed for businesses operating on a cash basis of accounting, which are using paper based records and not already using a commercially available accounting package.
e-Record was withdrawn as an ATO product on 1 July 2010.
Refers to a factory licensed to manufacture excisable goods, or a bonded warehouse or premises licensed to store or produce excisable goods.
E-tax (for individuals only)
Is a free software package developed by us. You download e-tax to your personal computer to prepare and then lodge your tax return over the internet to us.
ETP payment summary
The employer or super fund must provide this form to the recipient within 14 days of making the employment termination payment (ETP). This form shows the ETP component details and tax withheld from an ETP. These details or those contained in an Excessive ETP determination notice must be used when completing a tax return.
Note: These rules also applied to eligible termination payments.
Excess concessional contributions
The amount of your concessional contributions (made by you or on your behalf) to a super fund in a financial year which is more than your concessional contributions cap.
Excess non-concessional contributions
The amount of your non-concessional contributions (made by you, or on your behalf) to a super fund in a financial year which is more than your non-concessional contributions cap. Excess concessional contributions (see above) are also counted towards this limit.
Excess contributions tax assessment
An assessment we make if you have exceeded either (or in some cases, both) your concessional contributions cap or your non-concessional contributions cap for a financial year. The assessment will be issued to you as a separate tax assessment, and is different to the income tax notice of assessment.
Excess concessional contributions tax
A tax of 31.5% on contributions made to your super fund in a financial year, which are more than your concessional contributions cap. You can choose to use the Voluntary release authority we give you to ask your super fund to release the money from your super account to pay it.
Excess non-concessional contributions tax
A tax of 46.5% on your non-concessional contributions made to your super fund in a financial year, which are more than your non-concessional contributions cap.
Excess non-concessional contributions tax must be paid from your super account. We will give you a Compulsory release authority to give to your super fund to enable them to release the relevant amount.
The part of the reasonable benefit limit (RBL) amount of a pension or annuity that exceeds the recipient's RBL. If a rebatable pension or annuity is in excess of your RBL, you are not entitled to the full rebatable proportion of 1.0000 when calculating your 15% pension tax offset in your income tax return. The tax offset you are able to claim is calculated using their rebatable proportion which appears on an excessive determination notice.
If the pension or annuity is within your RBL, the rebatable proportion of the pension or annuity will be 1.0000 and the full rebate is available. If the benefit is found to exceed your RBL, we will send you an excessive RBL determination notice showing what proportion of the pension or annuity is rebatable (a rebatable proportion which will be less than 1.0000 if the pension or annuity is in excess of your RBL).
Refer to 'Excessive RBL determination notice' and 'rebatable proportion'.
The part of an eligible termination payment (ETP) which exceeds the recipient's reasonable benefit limit (RBL). An excessive determination notice is issued to advise the taxpayer that their benefit has an excessive component. This component and the other adjusted components on that notice must be used to complete the taxpayer's income tax return instead of the information contained in their ETP summary.
The taxation of the excessive component of an ETP varies depending on the payer and date of payment.
Excessive RBL determination notice
A notice issued by the Commissioner to advise the taxpayer that a benefit exceeds their reasonable benefit limit (RBL). An excessive determination can be an interim or final determination. This notice provides the following information:
If the pension or annuity is within your RBL, the rebatable proportion of the pension or annuity will be 1.0000 and the full rebate is available. If the benefit is found to exceed your RBL, we will send you an excessive RBL determination notice showing what proportion of the pension or annuity is rebatable (a rebatable proportion, which will be less than 1.0000 if the pension or annuity is in excess of your RBL).
If a rebatable pension or annuity exceeds your RBL, you are not entitled to utilise the full rebatable proportion of 1.0000 when calculating the 15% pension tax offset in your income tax return. Essentially, you will receive a 15% tax offset, however it is applied to a reduced rebatable proportion (less than 1.0000) of your rebatable pension or annuity.
The amount they are able to claim is calculated using their rebatable proportion that appears on an excessive determination notice. Refer 'RBL final determination notice'
For an excessive ETP, the information contained in this determination notice must be used by you to complete your income tax return, instead of the information contained in the ETP payment summary. Refer to the definition 'excessive component' for more information about the tax treatment of excessive ETPs.
The collection of revenue for excise business.
Excise duty or excise
A commodity-based inland tax on petroleum (including oil), tobacco and alcoholic products. It is administered by us. Excise duty is levied on the production of domestic goods, with an equivalent customs duty levied on similar imported goods (customs duty is administered by the Australian Customs and Border Protection Service).
A licence to manufacture, store, produce or deal in excisable goods.
The Excise Tariff Act 1921 is the legislation (rules) that enables goods to be declared as being subject to Excise and determines rates of duty for excisable goods.
Income which is not taxable.
15 August 1989 RBL
If a person was a member of a superannuation fund on 15 August 1989 and receives a pension from that superannuation fund they may be entitled to use the pension capital value of that pension as their reasonable benefit limit (RBL).
This special transitional RBL only applies to that pension and we will apply it automatically based on information supplied by the superannuation fund.
This RBL only applies to pensions that meet the pension RBL standards. Among other things the pension must be payable for life or life expectancy.
The 15 August 1989 RBL will only be applied if it is higher than any other RBL that may apply to the pension.
15 February 1990 Balance RBL
This limit only applies if an individual had amounts in approved deposit funds (ADF), life insurance companies or registered organisations on 15 February 1990. The calculation of the amount of this limit varies depending on the age of the member.
Family tax assistance
Tax assistance we administer. It increases your tax free threshold. This means that if you have dependant children and earn under the income limit, you will pay less tax. You can choose to have less tax taken out of your pay or to reduce your tax through your tax return at the end of the income year.
Family tax initiative
Financial assistance provided to families with dependant children.
Final RBL determination notice
A Final RBL determination notice issues when a benefit exceeds the recipient's reasonable benefit limit (RBL).
A Final RBL determination notice will also be issued if a benefit was previously considered excessive and is now within your RBL.
A final determination notice provides the:
This information must be used by you to complete your income tax return.
Refer to the definitions on 'Excessive amount', 'excessive component' and 'excessive RBL determination notice' for the tax treatment of excessive benefits.
The period from 1 July to 30 June.
Flat dollar RBL
The flat dollar reasonable benefit limit (RBL) was introduced on 1 July 1994 and is based on flat dollar or fixed amounts. For the 1994-95 financial year the flat dollar amounts were set as $400,000 for the lump sum RBL and $800,000 for the pension RBL. These limits are indexed annually.
These limits are commonly referred to as the lump sum RBL and pension RBL.
Franking credits are income tax credits that a corporate tax entity can pass on to its members. Franking credits are credited in a corporate tax entity's franking account. A franking credit arise when a corporate tax entity does any of the following:
Benefits received by employees from their employer in place of salary or wages such as the use of a car for private purposes.
Fringe benefits tax (FBT)
Tax payable on a non-salary benefit provided to an employee.
Fund-capped contribution limit
The maximum amount of non-concessional contributions a super fund can accept in a single contribution for a member.
Your fund must return the excess amount within 30 days. A fund-capped contribution is different to a contribution cap. Your fund can't return all or part of a contribution simply because you would otherwise have an excess contributions tax assessment.
General interest charge (GIC)
A regime for calculating and imposing penalties including the penalty for late payment of all outstanding ATO related debts. The GIC is a commercially linked interest rate that compounds daily and varies every quarter with changes in the money market.
Gift deductible entity
For GST purposes, an entity is a gift deductible entity if gifts or contributions made to it can be deductible under the income tax law.
A donation is tax deductible to the donor if it is all of the following:
A donation is truly a gift if it has all of the following:
Refer to Gifts and fundraising for more information.
An employment termination payment (ETP) which is a voluntary payment made to an employee on retirement or termination of employment.
Any form of tangible personal property. NB 'goods' is a defined term in GST law.
Goods and services tax (GST)
The GST is a broad-based tax of 10% on most supplies of goods and services consumed in Australia. On 1 July 2000 the GST replaced wholesale sales tax which was applied at varying rates to a range of products.
The value placed on the reputation of an established business.
The total income before business and tax deductions are accounted for.
The amount of money earned before tax is deducted.
The tax on taxable income before tax offsets are taken into account.
A super interest is said to be in the growth phase if you have not met a relevant condition of release (for example, death, permanent incapacity, retirement, reaching 65 years old or terminating employment with the contributing employer), or you have met a relevant condition of release but no benefit has been paid for the super interest.
A super interest will still be in growth phase if you receive a benefit (other than a pension or annuity) as a result of meeting a relevant condition of release, but you are still entitled to receive further benefits from the fund.
You do not charge GST on GST-free supplies, but you are entitled to input tax credits for the GST included in the price you paid for the things you acquired to use in your business.
Grossed-up is a term used in relation to fringe benefits. The taxable value of a fringe benefit is grossed-up to ensure that the amount of tax paid on a fringe benefit is the same as the tax paid if an employee receives cash salary which is taxed at the highest marginal tax rate plus Medicare levy.
See also: Reportable fringe benefits.
Highest average salary
HAS based RBL
This reasonable benefit limit only applies to benefits paid prior to 1 July 1994 and is based on the person's highest average salary. This limit is not indexed.
Health promotion charity
A charity that is an institution whose principal activity is to promote the prevention or control of diseases in human beings.
Highest average salary (HAS)
For RBL purposes, this amount is calculated by averaging the highest annual salary of a person over any three consecutive financial years before the 1994-95 financial year. This is used to calculate the person's HAS based RBL or transitional RBL.
Higher Education Contribution Scheme (HECS)
Higher Education Contribution Scheme (HECS) is a system which was introduced to supplement funding of the Australian education system.
An annuity where a current liability exists for payment.
For GST, WET and LCT payable, the Commissioner is deemed to have made an assessment and to have issued a notice of assessment where an import declaration or a self-assessed clearance declaration has been given to Customs and Customs have issued an import declaration advice or a self-assessed clearance declaration advice.
See Franking credit
The amount of money earned from personal exertion and investments.
Income for surcharge purposes
Taxable income plus certain other income and losses declared by you. Your income for surcharge purposes and the income for surcharge purposes of your spouse (if you have one) are used to work out whether you have to pay the Medicare levy surcharge. Income for surcharge purposes was introduced on 1 July 2009. For more information about income tests, refer to www.ato.gov.au/incometests
Income requirement for non-commercial-loss purposes
From the 2009-10 income year, you must meet the income requirement and then pass one of the four tests before being eligible to deduct your non-commercial loss from your other income.
You meet the income requirement if your income for non-commercial-loss purposes is less than $250,000.
Income for non-commercial-loss purposes is the sum of all of the following:
A series of regular payments over a period of time.
Pensions, benefits and allowances paid by the Commonwealth Government.
The amount of income paid to the Commonwealth Government which is used to meet its expenses.
Income tax exempt charity (ITEC)
A charity that we have endorsed as exempt from income tax.
A process of increasing the value of a benefit previously received in accordance with average weekly ordinary time earnings (AWOTE).
Input tax credit
You are entitled to an input tax credit for the GST included in the price you pay for an acquisition or the GST paid on an importation if it is for use in your business, but not to the extent that you use the acquisition or importation to make input taxed supplies. You will need to have a tax invoice to claim an input tax credit (except for purchases with a GST-exclusive value of $50 or less).
Input taxed supplies
You don't charge GST on input taxed supplies, but neither are you entitled to input tax credits for the GST included in the price you paid for the things you acquired to make the supplies.
Manages the affairs of an individual who is bankrupt or a corporate entity that is insolvent and includes bankruptcy trustees, liquidators, administrators and receivers.
A part or portion of an amount of tax due which is paid at regular intervals.
Instalment activity statement (IAS)
A form similar to the BAS but without GST and some other taxes. Businesses that are not registered for GST, and individuals who are required to pay PAYG instalments or PAYG withholding (such as self-funded retirees), use this form to pay PAYG.
Money earned from investments, or may be accrued or owed as part of a loan, debt or other financial obligation.
If there is a payment splitting agreement or court order following marriage breakdown that affects a super interest, it is possible:
The amount that is credited to the new interest, transferred or rolled over to another fund, reflects the non-member spouse's entitlement under family law.
Interim determination notice
A notice we issue when an employer or super fund does not provide sufficient information to us - for example, the recipient's TFN. An interim determination notice issued as a result of non-provision of a TFN will always be an excessive determination. If the missing information is not provided, the interim determination notice becomes the final determination notice.
This notice must be used to complete their tax return.
A payment made if you enter into early retirement due to a permanent disability. The amount of an invalidity payment is linked to your future service period (that is, the period that you would have worked if not for the permanent disability).
If the payment was made before 1 July 1994 then it must have been as a result of termination of your employment, and occurred because of both:
If the payment occurred on or after 1 July 1994 then it must be as a result of termination of employment and occurred because:
Apply assets (money) for the purpose of gaining interest, profit or gain.
Labour hire arrangements commonly involve at least two contracts. A user of labour (the client) typically contracts with a labour hire firm for the provision of labour of a specified kind. The labour hire firm does not contract to perform the work; it merely contracts with the worker and pays the worker. The worker is not an employee of the client and there is no contract between the worker and the client. The worker may or may not be an employee of the labour hire firm.
Last retirement date
For your employment, this is either:
This term was repealed as of 1 July 2007 but still applies to death or disability benefits and deductions for potential detriment payments.
Refers to a barrister, solicitor or an in-house lawyer.
A debt or financial obligation incurred.
Life-benefit termination payment
An employment termination payment made as a result of termination of a person's employment, other than as a result of their death.
Life expectancy/15 year pension/annuity
These pensions/annuities meet the pension and annuity standards. They are payable for a fixed term equal to life expectancy, or a minimum term of 15 years if life expectancy is more than 15 years.
Benefit payments are made at least annually and the total of those payments in each year is fixed, allowing for variation only in accordance with prescribed indexation limits.
Often called 'super pensions'. A lifetime pension/annuity may meet the pension and annuity standards.
The key features of a benefit that meets the pension and annuity standards are:
Life benefit termination payment
You are a lost member if any of the following applies (subject to certain other conditions):
All super funds must report lost members' details to us, and generally a lost member's super remains with their super fund. Funds must report and pay lost member accounts to us if either:
the account is inactive for a period of five years and the provider is confident that it will never be possible to pay an amount to the member (an insoluble lost-member account), and the account does not support or relate to a defined benefit interest.
Lost Members Register (LMR)
A central register of lost super fund members and retirement savings account holders administered by us.
For more information, refer to Lost members register for super providers.
Low income super contribution (LISC)
A government payment designed to increase the super savings of people with low incomes. If you are eligible to receive the low income super contribution and have made concessional (before tax) contributions from 1 July 2012, it will be paid into your super account.
Low rate cap (LRC)
Applies from 1 July 2007. The amount is a life time limit, indexed annually, used to make sure super lump sum payments are taxed correctly when you are aged 55 to 59. The LRC is reduced by any amount previously applied to the low rate threshold.
If you receive one or more super member benefits that are super lump sums in an income year, the LRC amount is reduced for the next income year by the total of the amounts that both:
Low rate threshold (LRT)
The limit for lower tax treatment of components of an eligible termination payment after June 1983. The low rate threshold applies if you are 55 years old or over at the date of payment. It is a lifetime limit that is indexed each financial year.
The LRT has been replaced by the low rate cap (LRC) from 1 July 2007.
A benefit taken as a single payment - for example, an eligible termination payment. This is different to a pension or annuity, which is a series of payments and are in the nature of income rather than capital.
Lump sum RBL
The reasonable benefit limit (RBL) applies when more than 50% of the qualifying portions of total benefits paid do not meet the pension and annuity standards. Benefits that do not meet the pension and annuity standards include:
The lump sum RBL amount is lower than the pension RBL amount and is indexed annually.
Luxury car tax
Luxury car tax is a tax of 33% imposed on luxury cars over the luxury car tax threshold, which is indexed annually. Luxury car tax is generally payable when a car is sold or imported at the retail level. It is in addition to any goods and services tax (GST) payable.
Marginal tax rate
The rate of tax applicable to the income range which the person's taxable income is in.
Market linked income stream
A market-linked pension or market-linked annuity meets the pension and annuity standards. They became available on 20 September 2004 and are a flexible pension or annuity in terms of how investments are managed. The key features of these income streams are:
Changes introduced in the Family Law Legislation Amendment (Superannuation) Act 2001 allow a super interest to be divided by agreement or a court order following marriage breakdown. The Act started on 28 December 2002.
Marriage breakdown reduction
The Reasonable Benefit Limit amount counted from the original superannuation pension or annuity will be adjusted to take the reduction into account under the superannuation splitting laws.
Matching benefit ID
This term is found on the RBL benefit list and is the same as the benefit ID of the previous pension or annuity, a commutation (roll over), or ETP has been paid from. The matching benefit ID will only be present for commutation ETPs, commutation roll overs, divorce reductions and residual pensions.
Maximum contribution base
A limit for the amount of super contributions an employer must provide for their employee for the quarter under the super guarantee scheme. It also applies to place a limit on salary or wages when calculating an employee's super guarantee shortfall in a quarter.
From 1 July 2008, all employers must calculate their minimum super guarantee obligation using an employee's ordinary time earnings. The amount of the employee's ordinary time earnings is limited to the maximum contribution base.
Maximum splittable amount
For super, the maximum splittable amount for the relevant financial year cannot be more than 100% of the untaxed splittable contributions and 85% of the taxed splittable contributions made by, for, or on behalf of the applicant in the relevant financial year.
Medicare levy surcharge
Liability for Medicare levy surcharge arises if a taxpayer, or any of their dependants, does not have an appropriate level of private patient hospital cover and their income for surcharge purposes exceeds the relevant Medicare levy surcharge thresholds.
An amount payable by most taxpayers to cover some of the cost of the public health system.
Contributions to your super fund made by anyone but your employer. They may be personal member contributions (made by you) or non-personal member contributions (made by someone other than you or your employer).
For splitting a super interest due to marriage breakdown, this means the spouse who has the super interest or account.
The background information about a web page. It includes information about the author, title, and the date the resource was created.
A unique 'national number' that is allocated to each ATO form and publication.
Borrowing money to make an investment, where the interest and allowable deductions exceed the investment income and can be claimed as a deduction against other types of income.
Net amount payable
The total amount you should pay us which includes your tax payable and your Medicare levy.
For a pension or annuity, this means it cannot be converted into a lump sum payment.
There are limited circumstances when a commutation is allowed, including:
Non-commutable allocated pension/annuity
These types of pensions or annuities became available on 1 July 2005 so you can start an additional income stream if you have reached your preservation age but not retired (transition to retirement).
These benefits have similar key features to an allocated pension/annuity, except additional cashing restrictions apply, especially for commutation.
You can return a non-commutable allocated pension/annuity to the growth phase.
These benefits have similar key features to a lifetime, life expectancy or market-linked pension or annuity, except additional cashing restrictions apply. A commuted benefit can only be cashed in very limited circumstances.
You can return a non-commutable pension/annuity to the growth phase.
Also called 'after-tax contributions'. These are super contributions that are not included in the assessable income of a complying super fund. These include:
Non-concessional contributions also include any excess concessional contributions received in that year.
For more information about what amounts count towards your non-concessional contributions for super, refer to Excess contributions tax and how funds report your contributions.
Non-concessional contributions cap
The limit on the amount of non-concessional contributions you can make each year before you pay excess non-concessional contributions tax. For the current cap, refer to Key superannuation rates and thresholds.
Non liability statement
There are a number of liabilities and benefits that do not relate to the liability statement, eg miscellaneous voluntary payments, licence fees, cash securities and demands for duty as a result of compliance activity.
For the splitting of a super benefit due to marriage breakdown, this means the spouse who is not the super fund member or account holder of the super benefit. In certain circumstances, a new interest can be created for the non-member spouse who is to receive payments under an agreement or order to split a super interest. In such cases, the non-member spouse is given similar membership rights to those of the member spouse.
An organisation is non-profit/not-for-profit if it is not carried on for the profit or gain of its individual members. This applies for direct and indirect gains, both while the organisation is being carried on and on its winding up. We accept an organisation as non-profit/not-for-profit if its constitution or governing documents prohibit distribution of profits or gains to individual members and its actions are consistent with the prohibition.
A non-profit company for determining rates of income tax and whether to lodge income tax returns is either of the following:
Certain not-for-profit organisations, with independent branches (units), have the option of treating their units as if they were separate entities for GST purposes and not part of the main organisation. For endorsement as a deductible gift recipient (DGR) it is the entity, not the non-profit sub-entity that must apply.
A pension that has not been purchased with an identifiable lump sum - for example, an account balance or employment termination payment.
Very few benefits will have a non-qualifying component. It represents the earnings on any annuities that were purchased with non-super or employment termination payment money.
A pension or annuity for which the recipient cannot claim the pension tax offset. A non-rebatable pension is one paid from an untaxed source. These are usually public sector super funds which do not pay the 15% contribution tax. In some circumstances, part of a pension/annuity will be non-rebatable.
Notice of assessment (NOA)
The notice we send you when we process your tax return, which advises you about the tax you owe or refund you are entitled to.
Generally, the equivalent of tax that would have been payable on your business and investment income, excluding capital gains, for your most recent income year that an assessment has been made.
Notional taxed contributions
As contributions into defined benefit funds are not always linked to individual members, a notional amount of employer contributions is calculated to reflect the increase to your benefit for the year. This is the equivalent of an employer contribution, so this amount counts towards your concessional contributions cap.
Ordinary time earnings (OTE)
What you earn for your ordinary hours of work, including over-award payments, bonuses, commissions, allowances and certain paid leave. As a general rule they are used as the basis for measuring the level of employer super contributions under the Superannuation Guarantee (Administration) Act 1992.
For more information about what is included or excluded from ordinary time earnings, refer to Using ordinary time earnings to calculate the super guarantee.
A 'particular' is a constituent element that affects an increase or decrease in the assessable amount and in the context of GST, could be a single supply or a single acquisition provided it individually results in a change to the assessable amount.
A group of people in business together.
The income that is earned exclusively by the partnership.
Pay as you go (PAYG)
A single, integrated system for reporting and withholding amounts of tax on business and investment income.
The person who receives a payment.
The person who makes a payment - for example, an employer or super fund.
Payment advice(slips) are printed stationery provided to the client to enable them to pay us using EFT, Australia Post Bill Pay or BPAY . We use details on the advice to identify a taxpayer and credit the amount of the payment to their account. Payment advice stationery must be to ATO specification.
An advice given to you at the end of the financial year by your employer showing your earnings during the year.
A super interest is said to be in the payment phase when it is no longer in the growth phase. For example, a super interest will be in the payment phase if you have been paid a benefit as a result of meeting a relevant condition of release, and are not entitled to any other benefits from the fund.
When a payment from a super interest becomes payable to the member spouse - usually because a condition of release has been met - a certain amount will be paid to the non-member spouse and the remainder will be paid to the member spouse.
A payment split following an agreement or court order does not create a new super interest for the non-member spouse.
The amount of money an employer pays in wages to their employees.
Penalties can be imposed by us for offences in relation to taxation and superannuation legislation.
A series of regular payments made as an income stream, this may be provided by a super fund or retirement savings account.
Determines your eligibility for certain government benefits, including the age pension. It is currently 65 years old for men and for women.
Pension and annuity standards
Standards that a pension or annuity must meet to be taxed as a super stream benefit. Among other things, the pension or annuity must:
The reasonable benefit limit (RBL) applicable when at least 50% of the qualifying portions of the benefits received are pensions or annuities that meet the pension and annuity standards. These benefits include:
The pension RBL is greater than the lump sum RBL to encourage retirees to take benefits that provide a lifetime income stream. The pension RBL is indexed annually.
Pension valuation factor (PVF)
Used to convert a pension to an equivalent lump sum for calculating the capital value. It is based on the age of the recipient at commencement of the pension, the level of reversion and the level of indexation. The pension valuation factors can be found in the Superannuation Industry (Supervision) Regulations (SISR) Schedule 1B.
Period of review
For indirect tax laws, once an assessment has been made, a four year period of review applies. During this time, the Commissioner may amend a taxpayer's assessment either at the request of a taxpayer or at the Commissioners discretion.
Established liabilities and entitlements remain payable or refundable after the period of review ends.
The period of review commences on the day the taxpayer is issued with a notice of the assessment (in most cases, this will be the same day the taxpayer lodges his or her return) and ends four years after the day after lodgement.
The period of review may be extended in certain circumstances to allow the Commissioner to establish a liability that has not yet been assessed.
An arrangement where the client has approval to deliver goods into home consumption prior to entry and must:
Also called 'permanent disability'. This is when an individual is deemed to be unlikely to be gainfully employed in a job they are currently qualified, due to ill-health.
Our approval to receive excisable spirit, either undenatured or specially methylated at a concessional rate of excise duty.
Super contributions an individual pays into their super fund from their after-tax (net) income.
Personal deductible super contributions
Personal super contributions you claim as an income tax deduction on your tax return if you meet certain eligibility criteria. As a general rule, you can't claim an income tax deduction for personal super contributions in an income year where more than 10% of your income is from activities as an employee.
Personal services entity
A company, partnership or trust through which a contractor operates to earn personal services income.
Personal services income
If a client is mainly paying for your personal skills or effort it is regarded as personal services income. Common examples of a person who earns this kind of income are any of the following:
If a company, partnership or trust (personal services entity), obtains the income rather than you directly, it is still your personal services income.
Money used for small irregular cash expenditure, eg stamps, milk, small amounts of petrol, used in your business.
Post-June 1983 component
The part of your eligible service period that occurred after 30 June 1983. Most benefits will have this component. The component is made up of a taxed element or an untaxed element or a combination of both:
The tax treatment of this component depends on your age, whether the amount is below your low rate threshold and whether it is a taxed or untaxed element.
Post-June 1994 invalidity component
The part of an invalidity payment made on or after 1 July 1994. This component represents a payment for the time between the date employment stopped, due to injury or permanent disability and the date of normal retirement.
Pre-July 1983 component
A benefit may have a pre-July 1983 component if your eligible service period started before 1 July 1983. It is calculated using a formula that determines the amount of the benefit that applies to the period of service before 1 July 1983. Five per cent of this component was taxed at marginal tax rates.
The minimum age a super fund member may be able to access their preserved benefits. A benefit may be paid earlier if you have met a condition of release. The preservation age varies depending on when you were born:
Date of birth
Before 1 July 1960
1 July 1960 - 30 June 1961
1 July 1961 - 30 June 1962
1 July 1962 - 30 June 1963
1 July 1963 - 30 June 1964
After 30 June 1964
Generally, preserved benefits must be kept in a super fund, approved deposit fund or retirement savings account until the member has met a condition of release under the Superannuation Industry (Supervision) Act 1993.
Preserved benefits are most commonly paid when you have reached your preservation age and retired. Legislation introduced on 1 July 2005 allows a member who has reached their preservation age to access their preserved benefits while they continue working. You are restricted to taking a non-commutable pension/annuity or non-commutable allocated pension/annuity.
If you have not reached your preservation age, but have permanently retired, a benefit can only be paid as a result of permanent disablement, severe financial hardship, because of compassionate reasons or on death.
When you are 65 years old, there are no restrictions on preserved benefits being paid.
An Act of Parliament which among other things protects tax file numbers against misuse.
Private ancillary fund (PAF)
A trust that meets all of the following:
Proof of identity
A significant document like a passport or birth certificate which proves you are who you say you are.
Public ancillary fund
Public benevolent institution (PBI)
A pension purchased from a super fund with the balance a member's account or an employment termination payment. For example, the purchased price of an allocated pension or market-linked pension is the account balance at the start of the pension.
The indexed capital amounts of benefits previously received, that are used to determine whether the current benefit is to be assessed against the lump sum RBL or pension RBL.
Quick code (QC)
The unique identifiers at the bottom of each ato.gov.au web page. If you know the quick code, you can search using 'QC' and the number to access specific pieces of content.
Quota (commodity quota)
Quotas can be applied to a particular good/commodity to limit the quantity of goods a client can enter into home consumption at a particular rate of duty during a declared period.
See reasonable benefit limit.
The amount of the benefit that counts for reasonable benefit limit (RBL) purposes.
RBL determination notice
A notice issued by the Commissioner to advise the:
There are two types of RBL determination notices - interim or final and each of these may be excessive or reasonable.
The information provided in the RBL determination notice must be used by the taxpayer to complete their income tax return.
Reasonable benefit limits (RBL)
RBL is the maximum amount of retirement and termination of employment benefits that a person can receive over their lifetime at concessional (reduced) tax rates.
Due to a number of legislative changes in relation to RBL, there are different types of RBLs that may apply including:
Refer to each particular RBL definition for more information.
For each type of RBL there is a Lump Sum limit and a Pension limit and these limits are indexed annually (with the exception of 15 February 1990 and 15 August 1989 RBLs).
Refer to the definition 'Excessive RBL determination notice' for details about the taxation of benefits that exceed the taxpayer's RBL.
Reasonable determination notice
A notice issued by the Commissioner to advise the taxpayer that a benefit is no longer in excess of their reasonable benefit limit. This notice provides the following information:
This information must be used by the taxpayer to complete their income tax return.
An organisation that qualifies for a fringe benefits tax (FBT) rebate that is subject to a capping threshold. Refer to Capping of concessional FBT treatment for certain employers.
A super pension or annuity where the recipient may be entitled to claim the pension tax offset. Your super fund can advise if your pension is rebatable. For a pension or annuity to be rebatable, the super fund must be a taxed fund - the fund must have paid the 15% contribution tax on contributions and earnings after June 1983.
Rebatable proportion (RP)
The proportion of rebatable pension or annuity income which is eligible for the pension tax offset each year.
If a rebatable pension or annuity is in excess of your reasonable benefit limit (RBL) RBL, you are not entitled to the full rebatable proportion of 1.0000 when calculating your 15% pension tax offset in your income tax return. The tax offset you are able to claim is calculated using your rebatable proportion which appears on an excessive determination notice.
Taxable income plus certain other income and losses declared by you. Your rebate income and the rebate income of your spouse (if you have one) are used to work out your eligibility for and amount of the senior and pensioner tax offset.
Before the 2009-10 income year, taxable income was used as the income test for senior Australians and pensioner tax offset. For more information about income tests, refer to www.ato.gov.au/incometests
A document that confirms that you have made a payment.
The spouse of the applicant is the receiving spouse (the person who will receive the transferred, rolled over or allotted benefits) if the super fund's trustee/ retirement savings account provider accepts the contributions splitting application.
Taxpayers are required to keep records to support their claims in their income tax returns. These records may include receipts, invoices and bank statements.
Records must be kept in English (or in a form that can be translated into English) for five years after they are prepared, obtained or the transactions completed.
An amount we pay to a taxpayer when the taxpayer has paid more tax than needed (often confused with a tax offset).
Refreshed period of review
For indirect tax laws, an amended assessment creates a refreshed period of review for four years from the day after notice of the amended assessment is provided or is taken to have been provided. The refreshed period of review only applies to the information amended and is subject to restrictions.
An association registered under a law of a State or Territory as a trade union, or a society registered under a law of a State or Territory providing for a registration of friendly or benefit societies, or an association of employees that is an organisation within the meaning of the Industrial Relations Act 1988.
This type of entity was repealed from RBL definitions effective 1 July 2000. They are no longer able to pay ETPs.
Registered software facility (RSF)
Our registered software facility (RSF) provides:
Reimbursements are generally amounts received by an employee from their employer for actual expenses incurred. This does not include reimbursements of car expenses calculated on a cents per kilometre basis, which remain assessable income of the employee.
Occurs when a person who has been living with another person (of the same or opposite sex) in a relationship as a couple on a genuine domestic basis stops doing so.
To set free from an obligation. For super, it can refer to when you are able to access your super benefits (when you have met a condition of release).
A form you use to authorise a super fund to release an amount from your super account to pay your excess contributions tax assessment. We must give you a release authority for the amount of your excess concessional or non-concessional contributions tax. Release authorities can be either voluntary or compulsory. Using the release authority is compulsory if the assessment is for excess non-concessional contributions tax.
Release authority statement
A statement from a super fund which documents a benefit payment paid because the fund received a release authority from either you or us. The fund must give the release authority statement to us and a copy to you within 30 days of paying the benefit specified on the completed release authority.
Relevant financial year
For super, the relevant financial year is the financial year in which the splittable contributions were made. Therefore, the relevant financial year for a contributions splitting application means either the:
An authority to waive a duty liability on dutiable goods (either excisable or customable). This usually occurs because the goods have been destroyed or no longer exist. After approval of the remission the goods are written out of the client's bond store register.
You can claim a deduction for some of the expenses you incur for the period your property is rented or is available for rent. However you cannot claim expenses of a capital or a private nature.
Rental and other related income is the full amount of rent and associated payments that you receive, or become entitled to, when you rent out your property. You must include the full amount you earn (gross rent) in your tax return.
Reportable fringe benefits (RFB)
From 1 April 1999, employers must keep records of the fringe benefits provided to each employee.
Where an employee receives fringe benefits with a total taxable value of more than $1,000 in a fringe benefits tax year, employers must record the grossed-up taxable value of those benefits on the employee's payment summary (group certificate). These are known as reportable fringe benefits.
See also, 'Reportable fringe benefit amounts'.
Reportable fringe benefit amounts
The amount reported on the employee's payment summary will not be included in an employee's taxable or assessable income. However, the reportable fringe benefits amount will be used to work out an employee's:
Request for transitional release authority
A form you could previously complete to request us to issue a Transitional release authority to authorise one or more of your super funds to release excess non-concessional contributions made during the period 10 May 2006 to 6 December 2006 directly to them. The form had to be lodged with us no later than 30 June 2007.
Residual capital value
The capital amount remaining at the end of the term of a pension or annuity. This amount is generally specified in the super fund deed or contract when the benefit started.
Responsibilities of each taxpayer
Even if someone else - a family member, friend or tax agent - helps you prepare your tax return, you are still legally responsible for the accuracy of the information.
Restricted non-preserved benefits
Super benefits which can be paid on termination of employment. They can also be paid under the same conditions that preserved benefits are paid.
The Commissioner may retain your refund in order to verify it.
If your refund is retained, the Commissioner will notify you by the RBA interest day or within 30 days of lodgement of the return.
The decision to retain your refund is a reviewable decision that you can object to under Part IVC of the TAA.
Retirement savings accounts (RSA)
An account that provides a low cost and low risk savings strategy for retirement. It is offered by banks, building societies, credit unions, life insurance companies and prescribed financial institutions (RSA providers). An RSA provider is not a super fund.
The person nominated by a super fund member to automatically receive an income stream (pension/annuity) on the death of the member.
An income stream which has reverted to a nominated beneficiary, usually a spouse, on the death of the member.
A role is an obligation or an entitlement recorded in our processing systems. A role can be financial, that is, monetary or non-financial, for example, a reporting obligation. You may have multiple roles recorded in your account. For example, your income tax account includes a main income tax role under which your annual assessments are recorded. Some of the other roles taxpayers may have in their income tax account are the general interest charge role, the trust role and the income tax 'former account' role. The 'former account' role records the balance of transactions processed before 1 July 2000 and details of transactions that could not be assigned to a financial year.
Rollover super benefit
Generally a payment of your super benefits from one complying super fund to another complying super fund of your choice, but other transfers between funds may also qualify.
Certain payments are specifically excluded from the definition of rollover super benefits, including benefits from the commutation of a super income stream paid to you because of the death of a person who is not your spouse.
A payment can only be a rollover super benefit if it first qualifies as both a super lump sum and super member benefit.
See Retirement savings account
Providers of a retirement savings account (RSA), these can be banks, building societies, credit unions or life insurance companies.
Salary sacrifice contributions
When you arrange for your employer to pay part of your before-tax salary into your super account for you. These contributions are treated employer contributions for super guarantee purposes and count toward your concessional contributions cap.
Super contributions your employer makes for you under a salary sacrifice arrangement are reportable employer super contributions.
The assessment system for indirect taxes allows the majority of taxpayers to self-assess their tax-related liabilities and tax-related entitlements through the lodgement of the relevant return for a tax period.
On lodgment, the Commissioner is treated as having made an assessment for the reported tax period and the return is deemed to be a notice of assessment for that tax period. The assessment is worked out in accordance with the information set out in the return.
For income tax, we issue a notice of assessment based on the information provided in your income tax return. You have an obligation under the law to make sure you have shown all your income and only claimed legal deductions and tax offsets.
Self-managed superannuation funds (SMSFs)
A superannuation fund which has all of the following:
There are additional conditions for single member SMSFs and funds in which a member is unable to act as trustee because of death or disability.
Self-managed superannuation fund (SMSF) independent auditor's report
A report used by an approved SMSF auditor who has been appointed by a trustee of an SMSF to give a report on the operation of that fund for each income year.
We run free seminars for small business operators. They provide a general overview of the various taxes which may affect their business.
Separate net income (SNI)
Separate net income (SNI) is all the income your dependant received while you maintained them. Before the 2009-10 income year, SNI was used as the income test for tax offsets relating to dependants. From the 2009-10 income year, adjusted taxable income (ATI) is used for this purpose.
When a person is having difficulty in meeting their basic living costs.
An additional payment made by the client to cover an underpayment relating to the previous excise liability period.
The payment of a refund made by reducing a payment relating to a future excise liability.
The process of lodging a liability statement and making a payment for excise duty.
The nominated time period (currently weekly) allowed for clients with a settlement permission to enter goods for home consumption prior to lodging a liability statement and making the corresponding payment of excise duty.
An approval granted to clients to deliver product into home consumption throughout a nominated time period (settlement period) and pay excise duty the first working day after the end of that settlement period.
A right of ownership in a company.
Someone who owns shares.
Simplified tax system (STS)
An alternative method of determining taxable income for eligible small businesses with straightforward financial affairs. It began on 1 July 2001. From the 2007-08 income year, the STS ceased to exist. It was replaced with the small business entity provisions. The concessions previously contained in the STS are still available to businesses that meet the small business entity test.
Small business entity
An entity that operates a business with an aggregated turnover of less than $2 million.
Small lost-member account
A super account that is both of the following:
In most cases, funds must report and pay these accounts to us as unclaimed super.
You can generally have the benefit paid out to you tax-free or transfer it to another super account you hold.
For more information, refer to Superannuation and unclaimed super.
A person wholly owns and who operates a business.
The original documents that record your business transactions.
Spouse splittable contribution
A contribution to a regulated superannuation fund on or after 1 January 2006, or an allocated surplus contribution amount that is allocated on or after 1 January 2006.
A member of a super fund or retirement savings account (RSA) holder who makes a contributions splitting application to their fund's trustee / RSA provider to split their splittable contributions into their spouse's super account.
Your spouse includes another person (whether of the same or opposite sex) who:
Contributions you make to a super fund/retirement savings account holder on behalf of your spouse. You may be entitled to a tax offset if you make contributions on behalf of your spouse. Spouse contributions count as non-concessional contributions of the receiving spouse.
Standard Business Reporting (SBR)
SBR is an Australian government initiative designed to simplify business-to-government reporting.
Statement of account (SOA)
A statement of account (SOA):
The SOA is also used to deliver a cheque, payment slip or advice of EFT payment made by us.
Statement of release authority
After a superannuation provider has released an amount in accordance with a release authority or a transitional release authority, the entity must report details of the payment of the amount to us and the individual within 30 days of making the payment.
Items which a business produces, manufactures, acquires or purchases for manufacture, sale or exchange.
The process of working out the value of stock currently on hand. A stocktake is often used to help calculate taxable income.
Student financial supplement scheme (SFSS)
A voluntary loan scheme giving some tertiary students the option of borrowing money to help cover their expenses while they study. Students do not have to start repaying a Financial Supplement loan until 1 June in the fifth year of the loan when it is due to be repaid through the tax system. Loan schemes are available to tertiary students who are eligible for either Austudy or ABSTUDY.
Substantiate a claim
Producing records such as receipts to support your claim.
A system where money is placed in a fund to provide for a person's retirement. Often shortened to 'super'.
Superannuation pension or annuity tax offset
If you are receiving a rebatable pension or annuity, you may be eligible to claim all or part of the pension tax offset.
A government measure to increase super savings. If you are eligible, and make personal (after-tax) contributions to your super, the super co-contribution is paid into your super account.
For more information, refer to Super co-contribution.
We use this term to refer to a:
Super guarantee charge (SGC)
A charge imposed under the Superannuation Guarantee Charge Act 1992 on employers who do not make the minimum super guarantee contributions required on behalf of their eligible employees.
Super guarantee contributions (SG)
The amount an employer must contribute to super on behalf of their eligible employees. The rate is currently equal to 9.5% of an employee's ordinary time earnings. The rate will remain at 9.5% until 30 June 2021 and then increase by 0.5 percentage points each year until it reaches 12%.
Super Income Stream
An income stream supported by superannuation savings that provides for retirement.
Most people have a choice of taking their super as an income stream or as a lump sum
Superannuation holding accounts (SHA) special account
Before 30 June 2006, employers used the SHA special account to deposit super guarantee contributions for their employees.
The SHA special account (previously known as the 'superannuation holdings accounts reserve') is administered by us.
Superannuation Industry (Supervision) Act 1993
This legislation provides prudential standards for super funds. The legislation is administered by three regulators: the ATO, Australian Securities & Investments Commission (ASIC) and Australian Prudential Regulation Authority (APRA). We are solely responsible for the administration of self-managed super funds (SMSFs).
We use this term to include all of the following:
A surcharge (tax) of up to 15% was imposed on certain super contributions, specified rollover amounts, and termination payments which were made after 20 August 1996 and before 1 July 2005.
SuperStream is a government reform to improve the efficiency of the superannuation system. Under SuperStream, all superannuation transactions are electronic.
Supplement loan scheme
Loan provided to tertiary students who are eligible for either Austudy or ABSTUDY.
Supplies include the goods and services sold in your enterprise. They also include many other transactions such as when you provide advice or information, lease out commercial premises or provide hire equipment. Not all supplies are taxable supplies.
Generally refers to either the Excise Tariff or Customs Tariff. Tariff may also be referred to in terms of a tax, duty, excise, levy or toll.
Numeric/alpha codes listed in the schedule to the Excise Tariff Act. Each code refers to a specific type of goods or a specific end use circumstance and specifies the rate of excise duty applicable to those goods at that circumstance.
The rate of duty that applies to the tariff item. It is used to determine the liability at a particular point in time.
A registered person for tax purposes, hired to help a person with their tax affairs.
Tax Agent Portal
The Tax Agent Portal is a secure website that is only available to registered tax agents and their employees. It provides online communication with us as well as live client account and registration information.
Taking full advantage of the law to minimise tax liability.
We run free seminars for small business operators, providing a general overview of the various taxes that apply to business.
Tax concession charity (TCC)
A charity that we have endorsed to access one or more of the following tax concessions:
A contribution is tax deductible to the contributor if it meets all of the following requirements:
Understatement of income/overstatement of deductions.
Tax file number (TFN)
A unique number we issue to individuals and organisations to increase the efficiency in administering tax and other Commonwealth Government systems such as Income Support payments.
Tax file number declaration
This form helps an employer work out how much tax to withhold from payments made to employees. It replaces the Employment Declaration.
Tax-free portion of transfers from foreign superannuation funds
If you have overseas super paid directly to an Australian complying super fund, you can choose to have the taxable part of the payment treated as assessable income of your Australian super fund. The amount transferred will count towards either your concessional or non-concessional contributions cap depending on how it is treated.
If the employee is an Australian resident for taxation purposes, $18,200 of their yearly income is not taxed. This is called the tax-free threshold. If they are certain their total income from all sources will be more than the tax-free threshold they can only claim the tax-free threshold from one payer at a time. If they are certain that their total income from all sources for the year will be less than the tax-free threshold, they can claim the tax free threshold from all of their payers. Foreign residents cannot claim the tax-free threshold.
A document generally issued by the supplier. It shows the price of a supply, states if it includes GST, and may show the amount of GST. It must show other information, including the ABN of the supplier. You must have a tax invoice before you can claim an input tax credit on your activity statement (except for small amounts).
An entitlement which reduces the amount of income tax to be paid.
The amount of income tax required to be paid.
Tax periods are for GST purposes and are the quarters in the calendar year. If your annual turnover exceeds $20 million your tax periods are each calendar month. If your annual turnover is less than this amount, you can choose to use monthly tax periods. NB 'tax period' is a defined term in GST law.
Tax Relief Board
Considers whether a person should be granted a release from their obligation to pay their income tax debt.
A form containing a person's income tax details which taxpayers - or their legal representatives - must complete and lodge with us.
Taxed splittable contribution
A contribution that has been taxed in the member's super fund. It can be one of the following:
allocated surplus contribution amounts - for example, an amount that is allocated on or after 1 January 2006 from a regulated super fund surplus by a trustee to meet an employer's liability to make contributions.
Goods imported into Australia are taxable importations, unless the goods are duty free, or would have been GST-free or input-taxed if they had been supplied. NB 'Taxable importation' is a defined term in GST law.
Gross income minus business deductions.
The term is widely defined to include most supplies (goods, services and anything else) you make. A supply is not a taxable supply if it is GST-free or input taxed.
Our internet-based training package. It contains interactive modules on the ABN, the BAS, cash flow, and record keeping, also a tax timetable, business navigator and a pocket guide.
TAXinteractive is no longer available.
The guide containing the tax return forms and information on how to complete the tax return.
From the 2011-12 financial year, TaxPack has been replaced by the Individual tax return instructions.
Any Australian who should pay tax.
Outlines taxpayers' rights and obligations and our obligations and service standards.
Also referred to as temporary disability. This is when an individual has ceased to be gainfully employed due to ill-health (physical or mental) but the illness does not constitute a permanent incapacity.
Termination of employment
Can occur due to an employee retiring, voluntarily ceasing employment with an employer, an employer dismissing an employee or by mutual agreement.
Time limits on credit entitlements
Time limits apply for claiming credits under GST and Fuel Tax laws. This means, you must claim the credit within a four-year period.
This means, you must claim the:
(a) GST credit within 4 years after the due date for lodging the activity statement to which the credit would first be attributable, and
(b) fuel tax credit within 4 years after the due date for lodging the fuel tax return to which the GST credit would first be attributable; or, if you are not registered or required to be registered, within 4 years after the acquisition, manufacture or importation occurred.
Anything produced, manufactured, acquired or purchased for the purpose of manufacture, sale or exchange (including livestock).
Transition to retirement income stream (TRIS)
If you have reached your preservation age, you can withdraw part of your super benefits as an income stream while you are still working. This income stream can be no more than 10% of your super account balance per year.
It is not compulsory for a super fund to provide these income streams.
Transitional concessional contributions cap
For the period 1 July 2007 to 30 June 2012, if you were 50 years old or over in a financial year you were entitled to a transitional concessional contributions cap for that year.
For more information, refer to Key superannuation rates and thresholds.
Transitional non-concessional contributions
Between 10 May 2006 and 30 June 2007, you could make up to $1 million in non-concessional contributions to your super without being liable for excess non-concessional contributions tax. Employer contributions above your age-based deduction limit for each employer were also included.
Transitional reasonable benefit limit (TRBL)
The TRBL was developed for individuals who may have been disadvantaged by the introduction of flat dollar reasonable benefit limit on 1 July 1994. If applicable, this limit is greater than the flat dollar reasonable benefit limit. An individual must apply to us for a TRBL. Each individual has a different TRBL based on their individual circumstances. This limit is indexed annually.
Transitional release authority
If you made non-concessional contributions to your super in excess of the $1 million transitional non-concessional contributions cap between 10 May and 6 December 2006 inclusive, you could request a transitional release authority from us to withdraw the amount of the excess non-concessional contributions made in this period so you did not have to pay excess contributions tax on that amount. You had to request the transitional release authority before 1 July 2007.
A trust exists when a person holds property for others who are intended to benefit from the property or income of that property.
The amount of money that passes through a business entity in a financial year.
There are five types of unclaimed super - unclaimed super for a:
Depending on the type of fund, funds must report and pay unclaimed super to us or to the relevant state or territory authority. Unclaimed super should not remain in the fund.
For more information, refer to:
Contributions paid into a super fund by the member (or by a person other than an employer of the member) where no deduction has been allowed for the contributions - for example, after-tax income.
Undeducted Purchase Price
The amount contributed towards the purchase of a pension or annuity that was not eligible for a tax deduction - for example, undeducted contributions.
Unfunded defined benefit fund
A super fund where your member benefits are not financed until just before they become payable to you. At this time, the benefits are generally sourced from your employer. These funds mostly apply to government employees.
Uniform capital allowance system
A set of general rules for calculating deductions for the decline in value of most depreciating assets and for certain capital expenditure. The system applies from July 2001.
Unrestricted non-preserved benefits
Generally, benefits which a member has previously met a condition of release for and was entitled to be paid but they have voluntarily decided to keep the benefits within the super system. There are no restrictions for paying these super benefits out to a member at any time on demand (regardless of their age, employment situation or financial position) providing the super fund rules allow the payment.
Untaxed splittable contribution
An undeducted contribution made by a super fund member, or by another person, to a regulated super fund where that contribution is not a taxable contribution under income tax legislation.
Non-concessional (undeducted) contributions made after 5 April 2007 cannot be split with a spouse.
A written agreement between a business (the payer) and a worker (the payee) to bring work payments into the PAYG withholding system.
Voluntary release authority (VRA)
We send you this release authority if we give you an excess contributions tax assessment. The VRA allows you to withdraw from your super fund (other than a defined benefit interest fund) the amount to pay the assessment.
You can choose if you want to give the VRA to your super fund. You may choose to pay your excess concessional contributions tax without using money from your super. A VRA for excess concessional contributions tax must be given to your super fund within 90 days after the date of the VRA. The form is called Voluntary release authority for excess contributions tax and statement.
Wine equalisation tax (WET)
The WET is a value based tax levied on wine at a rate of 29% on the last wholesale sale (for example. sale to a reseller). If wine is not sold by wholesale, alternative values are used to calculate the tax. For the purposes of the WET, wine includes grape wine, grape wine products (such as marsala and vermouth), fruit or vegetable wine, cider, perry, mead and sake.
This document helps an employee calculate an entitlement to a family benefit or tax offset and to authorise their employer to reduce the amount of tax withheld from payments.
If the recipient has not provided their tax file number, withholding tax is deducted at the source on:
If you have reached age 65 but not age 75, you must have worked at least 40 hours within 30 consecutive days in a financial year before your super fund can accept any contributions for you (including employer contributions, personal contributions, spouse contributions and government co-contributions).
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