• Definitions

    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

    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.

    Accumulation fund

    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).

    ADF

    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:

    • tax offsets for dependants
    • other government benefits.

    (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:

    • personal - as most after-tax contributions are made by the member (you)
    • spouse contributions - contributions to your spouse's super fund.

    These contributions are also called 'non-concessional' as they usually count towards your non-concessional contributions cap.

    Age-based limit

    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:

    • there is no specified term
    • payment must be made at least annually
    • maximum and minimum payment restrictions apply
    • the payment amount each year depends on the account balance and your age on 1 July each year
    • there is no protection against the money running out during your lifetime
    • the pension can be commuted at any time
    • on death, the balance may be paid as a lump sum to a designated beneficiary, used to buy a further pension for a surviving spouse or may continue as a reversionary pension.
     

    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.

    Allot

    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.

    Allowances

    Amounts paid by employers to cover anticipated costs or as compensation for conditions of employment.

    Annuity

    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.

    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.

    Assessment

    Assessment:

    (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.

    Assessable income

    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.

    Asset

    Any form of property.

    Associated employee

    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.

    ATO

    Australian Taxation Office

    Audit

    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.

    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.

    Australian resident

    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.

    Authorise

    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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    Bad debt

    Money which is owed and is unlikely to be paid back.

    Bank reconciliation

    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.

    BAS agent

    A registered person for business activity statement (BAS) service purposes, hired to help a person with advice, preparation and/or lodgment of their BAS.

    Base period

    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:

    • 'concessional' - as they are included in the member's concessional contributions
    • 'taxable' - as the super fund must include them in its assessable income and pay tax on them
    • 'deducted' - because the contributor may claim an income tax deduction.
     

    Beneficiary

    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.

    Benefit

    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.

    Benefit ID

    This term is found on the RBL benefit list and is a unique number we assign to each benefit.

    Bizstart

    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:

    • the employee was dismissed from a job, and did not leave voluntarily
    • the employee was made redundant (their work has ceased or workplace has been relocated)
    • the dismissal was made before the employee had to retire.
     

    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).

    Bring forward

    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.

    Budget

    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.

    Business deductions

    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.

    By-law

    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.

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    Capital amount

    The capital value of the benefit reduced by any excessive amount.

    This amount is used to calculate the qualifying portion of the benefit.

    Capital expenditure

    Money spent on assets such as:

    • plant and equipment
    • goodwill
    • buildings
    • business names
    • patents, and
    • copyrights.
     

    Capital gains tax

    A tax on the profit obtained when selling an asset (most homes and motor vehicles are exempt from this).

    Capital value

    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:

    • an allocated pension is based on the amount used to purchase the pension
    • a rebateable (lifetime) super pension is based on the payments made in the first year (the pension valuation factor) and the level of undeducted contributions and residual capital value.
     

    Cash accounting

    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.

    Cash book

    A book that records all of your business transactions - whether by cash, cheque or credit card.

    Cash flow

    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.

    Charitable fund

    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.

    Charitable institution

    An institution that is established and run to advance or promote a charitable purpose.

    Charity

    An institution or fund established for a charitable purpose. Charitable purposes are those which the law regards as charitable. The term 'charitable' has a technical legal meaning which is different from its everyday meaning. Charitable purposes are any of the following:

    • the relief of poverty or sickness or the needs of the aged
    • the advancement of education
    • the advancement of religion
    • other purposes beneficial to the community.
     

    Child

    A child is also taken to be your child in each of the following:

    • your adopted child, stepchild or ex-nuptial child
    • your spouse's child
    • someone who is your child within the meaning of the Family Law Act 1975.
     

    Child-housekeeper

    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.

    Commodity

    Product or goods that attract an excise. Currently commodities for excise purposes fall into the following main groups:

    • alcohol
    • petroleum
    • tobacco
    • coal.
     

    Commutation

    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.

    Company

    A separate legal entity that is taxable on its net taxable income.
    For tax law purposes, a company includes either:

    • a body corporate
    • any other unincorporated association or body of persons.

    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:

    • provided under rules of a super fund
    • payment started before 20 September 2007
    • that meets the standards of Superannuation Industry (Supervision) Regulations 1994 subregulation 1.06(2), 1.06(7) or 1.06(8).

    There are conditions that must be met when the pension is commuted.

    Complying superannuation funds

    A complying super fund has:

    • elected to be regulated
    • complied with the regulatory provisions as defined in the Superannuation Industry (Supervision ) Act 1993 (SISA)
    • not received a notice of non-compliance.

    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.

    Concessional component

    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.

    Concessional contributions

    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.

    Concessional 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:

    • retirement
    • reaching 65 years old
    • reaching preservation age and retiring
    • death
    • permanent incapacity
    • termination of employment if your benefit is less than $200.

    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.

    Contract workers

    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).

    Contributions tax

    The tax payable by your super provider on the assessable income of the fund. The assessable income of the fund includes contributions such as:

    • super guarantee and employer contributions
    • salary sacrifice contributions
    • investment earnings
    • personal contributions for which you have been notified that they are claiming a deduction.

    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.

    Creditor

    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:

    • an import declaration has been received by Customs
    • Customs has provided an import declaration advice.

    The import declaration and the import declaration advice, together, are treated as being a notice of assessment.

    Customs broker

    The holder of a Customs Agent's licence who acts on behalf of a client in relation to the importation of goods.

    Customs duty

    Duty payable on imported (excise equivalent) goods at the rate determined by the Customs Tariff Schedule.

    Customs licence

    A licence to warehouse imported goods.

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    Death benefit

    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.

    Debtor

    A customer or client who owes your business money.

    Declared period

    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, unless they are named specifically in the income tax law. There are two types of DGR endorsement. One is for entities that are DGRs in their own right. The other is for an entity that is a DGR only in relation to a fund, authority or institution that it operates. For the second type, only gifts to the fund, authority or institution are tax deductible.

    Deductions

    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.

    Deferred annuity

    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 SISR.

    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:

    • a member's salary, or allowance in the nature of salary, at a particular date or averaged over a period
    • a specified amount
    • specified conversion factors.
     

    Dependant

    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 surviving spouse or de facto spouse
    • an ex-spouse
    • a child of the deceased who is under 18 years old
    • any person who is financially dependent on the deceased person at the time of death, or at the time of the payment of the death-benefit termination payment
    • any person the deceased had an interdependent relationship with.

    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.

    Depreciating asset

    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.

    Diplomatic concession

    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.

    Dividend

    Generally a distribution from a company to a shareholder out of company profits.

    Drawback

    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.

    Drawings

    Money a sole trader or partner withdraws from the business.

    Duty deferment

    Duty is deferred when excisable goods are moved or stored under bond.

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    Effective date

    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.

    Effective life

    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 system (ELS)

    The ELS allows participating tax agents to lodge their clients' tax returns and other tax forms with us electronically via modem.

    Eligibility statement

    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.

    Eligible termination payment (ETP)

    An EPT is a lump sum benefit made before 1 July 2007 by one of the following:

    • an employer to an employee, as a result of the termination of employment
    • a super fund or an employer after the death of the person who was a fund member or an employee
    • a super fund to a person because they, or another person, were a member of a super fund, approved deposit fund or a depositor with a retirement savings account.

    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:

    • the payer was an employer and the eligible termination payment amount was either:
      • $5,000 or less
      • wholly a capital gains tax (CGT) exempt component
       
    • the eligible termination payment was a death-benefit ETP
    • the payer had received the payee's authority and sufficient instructions on the payment or rollover of the eligible termination payment.
     

    Employee

    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

    Employer contributions

    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:

    • included in the gross payments on an employee's payment summary
    • subject to pay as you go (PAYG) withholding tax.

    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.

    End use

    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).

    Enterprise

    An enterprise includes a business. It also includes other commercial activities but does not include any of the following:

    • private recreational pursuits and hobbies
    • activities carried on as an employee, labour hire worker, director or office holder
    • activities carried on by individuals (other than the trustees of charitable funds) or partnerships (in which all or most of the partners are individuals) without a reasonable expectation of profit or gain.

    Note: Enterprise is a defined term in GST law.

    Entity

    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.

    e-Record

    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.

    Establishment

    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.

    Excessive amount

    The part of the RBL amount of a pension or annuity that exceeds the recipient's RBL. If a rebatable pension or annuity is in excess of the taxpayer's RBL, they are not entitled to the full rebatable proportion of 1.0000 when calculating their 15% pension tax offset in their income tax return. The tax offset a taxpayer is able to claim is calculated using their rebatable proportion which appears on an excessive determination notice.

    If the pension or annuity is within the taxpayers 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 the taxpayers RBL, we will send the taxpayer 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 the taxpayers RBL).

    Refer to 'Excessive RBL determination notice' and 'rebatable proportion'.

    Excessive component

    The part of an eligible termination payment (ETP) which exceeds the recipient's 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.

    • Superannuation fund - ETP paid before 1 July 2002 - excessive component is taxed at 45% plus Medicare levy.
    • Superannuation fund - ETP paid after 30 June 2002 - the post June 83 taxed portion of the excessive component is taxed at 38% plus Medicare levy and the balance of the excessive component is taxed at 45% plus Medicare levy
    • Employer - all excessive components are taxed at 45% plus Medicare levy.
     

    Excessive RBL determination notice

    A notice issued by the Commissioner to advise the taxpayer that a benefit exceeds their reasonable benefit limit. An excessive determination can be an interim or final determination. This notice provides the following information:

    • for an eligible termination payment (ETP) - the excessive component and the adjusted components of the ETP
    • for a rebatable pension or annuity - the rebatable proportion
    • the basis on which the determination was made.

    If the pension or annuity is within the taxpayers 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 the taxpayers RBL, we will send the taxpayer 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 the taxpayers RBL).

    If a rebatable pension or annuity exceeds the taxpayers RBL, the taxpayer is not entitled to utilise the full rebatable proportion of 1.0000 when calculating the 15% pension tax offset in their income tax return. Essentially, the taxpayer will receive a 15% tax offset, however it is applied to a reduced rebatable proportion (less than 1.0000) of their 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 the taxpayer to complete their 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.

    Excise collections

    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).

    Excise licence

    A licence to manufacture, store, produce or deal in excisable goods.

    Excise tariff

    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.

    Exempt income

    Income which is not taxable.

    Expense

    Money spent

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    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 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 their RBL.

    A final determination notice provides the:

    • amount (if any) that an eligible termination payment exceeds the taxpayer's reasonable benefit limit and the adjusted ETP component,
    • rebatable proportion, in the case of a rebatable pension or annuity
    • basis on which the determination was made.

    This information must be used by the taxpayer to complete their income tax return.

    Refer to the definitions on 'Excessive amount', 'excessive component' and 'excessive RBL determination notice' for the tax treatment of excessive benefits.

    Financial year

    The period from 1 July to 30 June.

    Flat dollar RBL

    The flat dollar 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 credit

    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:

    • makes a payment of a PAYG instalment or income tax
    • receives a franked distribution
    • incurs a liability for franking deficit tax.
     

    Fringe benefits

    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.

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    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.

    Gifts/donations

    A donation to a recognised organisation or charity.

    Golden handshake

    An employment termination payment (ETP) which is a voluntary payment made to an employee on retirement or termination of employment.

    Goods

    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.

    Goodwill

    The value placed on the reputation of an established business.

    Gross income

    The total income before business and tax deductions are accounted for.

    Gross salary

    The amount of money earned before tax is deducted.

    Gross tax

    The tax on taxable income before tax offsets are taken into account.

    Growth phase

    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.

    GST-free supplies

    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

    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.

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    HAS

    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.

    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.

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    Immediate annuity

    An annuity where a current liability exists for payment.

    Importations

    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.

    Imputation credit

    See Franking credit

    Income

    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:

    • your taxable income (ignoring any business losses)
    • your total reportable fringe benefits
    • your reportable super contributions
    • your total net investment loss.
     

    Income stream

    A series of regular payments over a period of time.

    Income support

    Pensions, benefits and allowances paid by the Commonwealth Government.

    Income tax

    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.

    Indexation

    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.

    Instalment

    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.

    Interest

    Money earned from investments, or may be accrued or owed as part of a loan, debt or other financial obligation.

    Interest split

    If there is a payment splitting agreement or court order following marriage breakdown that affects a super interest, it is possible:

    • for a new interest to be created for the non-member spouse's super fund
    • for the non-member spouse entitlement to be transferred into that existing super interest
    • for the non-member spouse entitlement to be rolled over into a new super interest.

    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.

    Invalidity payment

    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:

    • your physical or mental incapacity to engage in that employment
    • your termination of employment being before the last retirement date.

    If the payment occurred on or after 1 July 1994 then it must be as a result of termination of employment and occurred because:

    • two legally qualified medical practitioners certify that your disability is likely to prevent you from ever being employed in a capacity for which you are reasonably qualified because of your education, training or experience; and
    • the termination of employment is before the last retirement date.
     

    Invest

    Apply assets (money) for the purpose of gaining interest, profit or gain.

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    Labour hire

    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:

    • the date on which your employment stops because you have reached a particular age or completed a particular period of service
    • if there is no such date, the date of your 65th birthday.

    This term was repealed as of 1 July 2007 but still applies to death or disability benefits and deductions for potential detriment payments.

    Liability

    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.

    Lifetime pension/annuity

    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:

    • they are payable for the life of the member, or for the reversionary beneficiary's life on the death of the member
    • payments must be made at least annually, they are a fixed amount and generally only varied by indexation
    • they are non-commutable, except in limited circumstances.
     

    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.

    Lost member

    You are a lost member if any of the following applies (subject to certain other conditions):

    • a super fund can't contact you
    • a contribution has not been received on behalf of you for the last five years
    • you transferred from another super fund as a lost member.

    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 balance is less than $200 (a small lost-member account)

    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:

    • are included in your assessable income for the first year for those lump sums
    • are counted towards your entitlement to a tax offset.
     

    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.

    Lump sum

    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 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:

    • ETPs
    • allocated pensions and annuities
    • non-commutable allocated pensions/annuities.

    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.

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    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:

    • the term is based on life expectancy
    • the payment must be paid at least annually
    • the payment amount is based on the remaining term of the pension and the account balance on 1 July each year
    • they are subject to concessional social security treatment for working out eligibility for the age pension
    • they are non-commutable, except in limited circumstances.
     

    Marriage breakdown

    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.

    Medicare levy

    An amount payable by most taxpayers to cover some of the cost of the public health system.

    Member contributions

    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).

    Member spouse

    For splitting a super interest due to marriage breakdown, this means the spouse who has the super interest or account.

    Metadata

    The background information about a web page. It includes information about the author, title, and the date the resource was created.

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    NAT Number

    A unique 'national number' that is allocated to each ATO form and publication.

    Negative gearing

    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.

    Non-commutable

    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:

    • commutation within six months of the start of the pension or annuity - this applies to the original pension or annuity only
    • in certain circumstances, to a reversionary beneficiary
    • to purchase another pension or annuity that meets the pension and annuity standards
    • to pay a super contribution surcharge
    • to allow a payment for a payment split due to marriage breakdown.
     

    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.

    Non-commutable 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 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.

    Non-concessional contributions

    Also called 'after-tax contributions'. These are super contributions that are not included in the assessable income of a complying super fund. These include:

    • personal contributions that you are not allowed, and have not claimed a personal super deduction for
    • contributions made by your spouse to your super account on your behalf.

    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.

    Non-member spouse

    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.

    Non-profit

    An organisation is non-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 if its constitution or governing documents prohibit distribution of profits or gains to individual members and its actions are consistent with the prohibition.

    Non-profit company

    A non-profit company for determining rates of income tax and whether to lodge income tax returns is either of the following:

    • a company that is run for the purposes of profit or gain to its individual members and is, by the terms of the company's constituent documents, prohibited from making any distribution, whether in money, property or otherwise, to its members
    • a friendly society dispensary.
     

    Non-profit sub-entity

    Certain non-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.

    Non-purchased pension

    A pension that has not been purchased with an identifiable lump sum - for example, an account balance or employment termination payment.

    Non-qualifying component

    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.

    Non-rebatable pension/annuity

    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.

    Notional tax

    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.

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    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.

    Outgoings

    Expenses.

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    Particular

    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.

    Partnership

    A group of people in business together.

    Partnership income

    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.

    Payee

    The person who receives a payment.

    Payer

    The person who makes a payment - for example, an employer or super fund.

    Payment advice

    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.

    Payment summary

    An advice given to you at the end of the financial year by your employer showing your earnings during the year.

    Payment phase

    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.

    Payment split

    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.

    Payroll

    The amount of money an employer pays in wages to their employees.

    Penalties

    Penalties can be imposed by us for offences in relation to taxation and superannuation legislation.

    Pension

    A series of regular payments made as an income stream, this may be provided by a super fund or retirement savings account.

    Pension age

    Determines your eligibility for certain government benefits, including the age pension. It is currently 65 years old for men and 63 years and six months old for women. It will gradually rise to 65 years old for women by 2014.

    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:

    • be payable for life or life expectancy (if life expectancy is 15 years or more, it must be payable for a term between 15 years and life expectancy)
    • be paid at least annually
    • only be commuted in limited circumstances
    • have no residual capital value
    • not be used as security for a borrowing.
     

    Pension RBL

    The 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:

    • lifetime pensions and annuities
    • life expectancy/15 year pensions/annuities
    • market linked income streams
    • non-commutable pensions/annuities.

    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.

    Periodic settlement

    An arrangement where the client has approval to deliver goods into home consumption prior to entry and must:

    • lodge a Customs Nature 40 entry form (N40)
    • make payment for their excise liability at the end of the agreed period (weekly).
     

    Permanent incapacity

    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.

    See also:

     

    Permit

    Our approval to receive excisable spirit, either undenatured or specially methylated at a concessional rate of excise duty.

    Personal contributions

    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:

    • a medical or legal practitioner in a sole practice
    • a professional sports person or entertainer
    • a consulting engineer, computer consultant or other expert consultant
    • a person working under a contract wholly or principally for labour or services.

    If a company, partnership or trust (personal services entity), obtains the income rather than you directly, it is still your personal services income.

    Petty cash

    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:

    • Taxed element - occurs if the super fund has paid tax on contributions. An employer employment termination payment (ETP) cannot have a taxed element after June 1983.
    • Untaxed element - will generally be paid from a super fund that does not pay tax on contributions or an employer.

    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.

    Preservation age

    The minimum age a super fund member may be able 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 

    Preservation age

    55

    56

    57

    58

    59

    60

    Preserved benefits

    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.

    Privacy Act

    An Act of Parliament which among other things protects tax file numbers against misuse.

    Proof of identity

    A significant document like a passport or birth certificate which proves you are who you say you are.

    Public benevolent institution (PBI)

    An institution organised for the direct relief of poverty, sickness, suffering, distress, misfortune, disability or helplessness. The characteristics of a PBI are:

    • it is set up for needs that require benevolent relief
    • it relieves those needs by directly providing services to people suffering them
    • it is carried on for the public benefit
    • it is non-profit
    • it is an institution
    • its dominant purpose is providing benevolent relief.
     

    Purchased pension

    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.

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    Qualifying portion

    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.

    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.

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    RBL

    See reasonable benefit limit.

    RBL amount

    The amount of the benefit that counts for RBL purposes.

    RBL determination notice

    A notice issued by the Commissioner to advise the:

    • amount (if any) that an eligible termination payment exceeds the taxpayer's reasonable benefit limit
    • rebatable proportion, in the case of a rebatable pension or annuity
    • basis on which the determination was made.

    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:

    • Flat dollar RBL
    • Transitional RBL,
    • HAS based RBL
    • 15 Feb 90 balance RBL
    • 15 Aug 1989 RBL

    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:

    • for an eligible termination payment (ETP) - a zero amount for the excessive component and the revised adjusted components (original ETP components reported by the payer)
    • for a rebatable pension or annuity - rebatable proportion of 1.0000 (the taxpayer is now entitled to utilise the full rebatable proportion of 1.0000 when calculating the 15% pension and annuity tax offset in their income tax return, meaning they will receive their full entitlement to the tax offset)
    • the basis on which the determination was made.

    This information must be used by the taxpayer to complete their income tax return.

    Rebatable pension/annuity

    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 the taxpayer's RBL, they are not entitled to the full rebatable proportion of 1.0000 when calculating their 15% pension tax offset in their income tax return. The tax offset a taxpayer is able to claim is calculated using their rebatable proportion which appears on an excessive determination notice.

    If the pension or annuity is within the taxpayers 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 the taxpayers RBL, we will send to the taxpayer 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 the taxpayers RBL).

    Rebate income

    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

    Receipt

    A document that confirms that you have made a payment.

    Receiving spouse

    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.

    Record keeping

    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

    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.

    Refund

    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.

    Registered organisation

    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:

    • software developers with information to build and test their products
    • businesses and tax agents with details of accounting software products which meet our requirements.
     

    Reimbursements

    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.

    Relationship breakdown

    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.

    Release

    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).

    Release authority

    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:

    • last financial year that ended before the application
    • the financial year in which the contributions splitting application is made, if the entire benefit is to be rolled over or transferred in that financial year.
     

    Remission

    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.

    Rental expenses

    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 income

    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:

    • eligibility to claim superannuation rebates and deductions
    • liability for the superannuation surcharge, termination payments surcharge and Medicare levy surcharge
    • entitlements to certain income-tested government benefits
    • child support obligations
    • Higher Education Contributions Scheme (HECS) repayments.
     

    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.

    Retaining refunds

    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.

    Reversionary beneficiary

    The person nominated by a super fund member to automatically receive an income stream (pension/annuity) on the death of the member.

    Reversionary pension/annuity

    An income stream which has reverted to a nominated beneficiary, usually a spouse, on the death of the member.

    Role

    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.

    RSA

    See Retirement savings account

    RSA provider

    Providers of a retirement savings account (RSA), these can be banks, building societies, credit unions or life insurance companies.

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    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.

    Self-assessment

    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 complying super fund which has all of the following:

    • fewer than five members
    • each individual trustee of the fund is a fund member
    • each member of the fund is a trustee
    • no member of the fund is an employee of another member of a fund, unless those members are related
    • if the trustee of the fund is a body corporate, each director of the body corporate is a member of the fund.

    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.

    Seminars

    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.

    Serious hardship

    When a person is having difficulty in meeting their basic living costs.

    Set-on

    An additional payment made by the client to cover an underpayment relating to the previous excise liability period.

    Set-off

    The payment of a refund made by reducing a payment relating to a future excise liability.

    Settlement

    The process of lodging a liability statement and making a payment for excise duty.

    Settlement period

    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.

    Settlement permission

    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.

    Share

    A right of ownership in a company.

    Shareholder

    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:

    • a lost member account with a balance less than $200
    • not a defined benefit fund.

    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.

    Sole trader

    A person wholly owns and who operates a business.

    Source documents

    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.

    Splitting Applicant

    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.

    Spouse

    Your spouse includes another person (whether of the same or opposite sex) who:

    • you are in a relationship with that is registered under a prescribed state or territory law (including marriage and civil union), or
    • another individual who, although not legally married to you, lives with you on a genuine domestic basis in a relationship as a couple.
     

    Spouse contributions

    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.

    Statement of account (SOA)

    A statement of account (SOA):

    • provides a list of payments and transactions processed on your account during the statement period
    • shows the current account balance and any amounts that are overdue.

    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.

    Stock

    Items which a business produces, manufactures, acquires or purchases for manufacture, sale or exchange.

    Stocktake

    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.

    Superannuation

    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.

    Super co-contribution

    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.

    Super fund

    We use this term to refer to a:

    • complying super fund
    • public sector super scheme (regulated or exempt public sector super scheme)
    • complying approved deposit fund
    • retirement savings account.
     

    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% of an employee's ordinary time earnings and will be gradually increased to 12% by 30 June 2020.

    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).

    Superannuation provider

    We use this term to include all of the following:

    • trustee of a *superannuation fund
    • trustee of an *approved deposit fund
    • retirement savings account provider.
     

    Superannuation surcharge

    A surcharge (tax) of up to 15% was imposed on certain super contributions, specified rollover amounts, and termination payments which were made before 1 July 2005.

    Supplement loan scheme

    Loan provided to tertiary students who are eligible for either Austudy or ABSTUDY.

    Supplies

    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.

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    Tariff

    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.

    Tariff item

    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.

    Tariff rate

    The rate of duty that applies to the tariff item. It is used to determine the liability at a particular point in time.

    Tax agent

    A registered person for tax purposes, hired to help a person with their tax affairs.

    Tax avoidance

    Taking full advantage of the law to minimise tax liability.

    Tax basics

    We run free seminars for small business operators, providing a general overview of the various taxes that apply to business.

    Tax evasion

    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.

    Tax-free threshold

    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.

    Tax invoice

    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).

    Tax offset

    An entitlement which reduces the amount of income tax to be paid.

    Tax payable

    The amount of income tax required to be paid.

    Tax periods

    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.

    Tax return

    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:

    • employer contributions, including contributions resulting from the employee sacrificing salary into super
    • personal contributions for which an income tax deduction is claimed
    • super guarantee entitlements transferred to a taxpayer's super account

    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.

    Taxable importations

    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.

    Taxable income

    Gross income minus business deductions.

    Taxable supplies

    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.

    TAXinteractive (TAXi)

    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.

    TaxPack

    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.

    Taxpayer

    Any Australian who should pay tax.

    Taxpayers' Charter

    Outlines taxpayers' rights and obligations and our obligations and service standards.

    Temporary incapacity

    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.

    Trading stock

    Anything produced, manufactured, acquired or purchased for the purpose of manufacture, sale or exchange (including livestock).

    Transition to retirement

    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.

    Trust

    A trust exists when a person holds property for others who are intended to benefit from the property or income of that property.

    Turnover

    The amount of money that passes through a business entity in a financial year.

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    Unclaimed super

    There are five types of unclaimed super - unclaimed super for a:

    • member 65 years old or older
    • non-member spouse
    • deceased member
    • former temporary resident
    • member with a small or insoluble lost-member account.

    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:

     

    Undeducted contributions

    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.

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    Voluntary agreement

    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.

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    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.

    Withholding declaration

    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.

    Withholding tax

    If the recipient has not provided their tax file number, withholding tax is deducted at the source on:

    • interest, dividend and royalty payments made to non-residents
    • certain investments or payments to residents.
     

    Work test

    Applicable once you turn 65 years old, 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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    Last modified: 01 Jun 2014QC 16174