Australian Tax Glossary

Reading the ATO in plain English

Tax correspondence assumes you already know the vocabulary. Most owners don't — they know their accountant handles "the BAS" without being sure what's on it. This glossary defines the tax terms an Australian small business meets most often. One rule throughout: definitions here are stable, but every rate, threshold and due date belongs to the ATO — check their current figures before acting, and treat anything involving your own affairs as a question for a registered tax agent.

Identifiers

ABN (Australian Business Number)

Your business's public identifier, used on invoices and in dealings with government. Without a valid ABN on an invoice, the payer may be required to withhold tax from the payment under ATO rules.

TFN (Tax File Number)

The private tax identifier for a person or entity. Unlike the ABN, it should never appear on invoices or be shared beyond payroll and tax contexts.

The taxes themselves

GST (Goods and Services Tax)

The broad-based tax added to most sales in Australia. Registration is compulsory once turnover passes the ATO's current threshold. Registered businesses collect GST on sales, claim credits for GST paid on purchases, and remit the difference. The key mindset shift: GST you collect is never your money — it's the ATO's, passing through your account.

CGT (Capital Gains Tax)

Tax on the profit from selling an asset — shares, property, or the business itself. It's part of income tax, not a separate tax. Small business CGT concessions can dramatically reduce the tax on selling a business, but the eligibility conditions are intricate and absolutely worth professional advice well before any sale.

FBT (Fringe Benefits Tax)

Tax paid by employers on non-cash benefits to employees — vehicles, entertainment, some loans and expenses. It has its own tax year and its own return, which is why your accountant asks about work cars at what feels like a random time of year.

Medicare levy

A levy on individual taxable income that part-funds the health system, collected alongside income tax. Relevant to business owners personally rather than to the business entity.

Paying and reporting

PAYG withholding

Tax you deduct from employees' wages (and certain other payments) and remit to the ATO on their behalf, using the ATO's current tax tables.

PAYG instalments

Different beast, same acronym: prepayments of your own expected income tax, typically triggered by the ATO after a year with tax payable. Withholding is other people's tax you hold; instalments are your own tax paid early.

BAS (Business Activity Statement)

The consolidated form reporting GST, PAYG withholding and PAYG instalments. Lodged on the cycle the ATO assigns your business — commonly quarterly, sometimes monthly. The ATO publishes the current due dates, including the extensions available when you lodge through an agent.

IAS (Instalment Activity Statement)

A slimmer version of the BAS used when you have withholding or instalment obligations but no GST to report in that period — for example, monthly withholding between quarterly BAS lodgements.

Lodgement

The formal act of submitting a return or statement to the ATO. Lodging and paying are separate obligations — you can lodge on time and still incur interest for paying late, and vice versa. Late lodgement can attract penalties even when no tax is owed.

Withholding

The umbrella term for any amount you're required to hold back from a payment and send to the ATO — from wages, from payments to suppliers without an ABN, and in certain other prescribed situations.

Concessions and special cases

R&D Tax Incentive

A federal program providing tax offsets for eligible research and development activities, jointly administered by AusIndustry and the ATO. Registration deadlines and eligibility criteria are strict and current details sit with AusIndustry.

DGR (Deductible Gift Recipient)

An organisation endorsed so that donations to it are tax deductible for the giver. Relevant when your business donates — only gifts to endorsed DGRs are deductible, and you can check endorsement on the Australian Business Register.

Beyond definitions

Tax compliance isn't hard because the concepts are hard — it's hard because there are many small obligations on different cycles, and missing any of them costs money. The fix is a calendar and an owner for every obligation, which is a coordination problem before it's a tax problem. We've written about that cost as the coordination tax, and taking it off your desk is core to what we do in finance.