Tax and accounting come with a lot of acronyms and jargon. People rarely explain these in plain language, which can make even a simple conversation with your accountant feel confusing. However, once you have a quick reference for the most common terms, everything from your tax return to a BAS conversation becomes far easier to follow.
ABN (Australian Business Number). An identifier the ATO uses to recognise your business for tax and invoicing purposes.
TFN (Tax File Number). Your personal identifier the ATO uses to track your income and tax obligations.
PAYG (Pay As You Go). A system for paying tax progressively throughout the year, either through employer withholding or instalments for business and investment income.
Deduction. An expense that reduces your taxable income, lowering the amount of tax you owe.
Offset. An amount that directly reduces your tax payable, applied after the ATO has already calculated your tax.
Assessable income. Income you need to declare and that’s subject to tax, including wages, business income, and investment earnings.
Notice of assessment. The official summary from the ATO confirming your tax outcome after it processes your return.
GST (Goods and Services Tax). A broad-based tax on most goods and services sold in Australia. Registered businesses currently report it through BAS.
BAS (Business Activity Statement). A regular statement GST-registered businesses use to report and pay GST, PAYG withholding, and PAYG instalments.
IAS (Instalment Activity Statement). Similar to a BAS, but businesses not registered for GST use it if they still have PAYG obligations.
ABN vs ACN. An ABN identifies a business for tax purposes; ASIC issues an ACN specifically to companies as a separate legal entity identifier.
Sole trader. A business structure where an individual operates the business personally, with no legal distinction between the person and the business.
Trust. A legal structure where a trustee manages assets or income on behalf of beneficiaries. The ATO taxes trusts differently to individuals or companies.
CGT (Capital Gains Tax). Tax on the profit you make from selling an asset such as property or shares. This profit adds to your assessable income.
Negative gearing. A situation where the costs of holding an investment exceed the income it generates, creating a deductible loss.
Depreciation. The gradual decline in value of an asset over time. You can claim this as a tax deduction across the asset’s effective life.
Superannuation guarantee (SG). The minimum percentage of an employee’s earnings that employers must legally contribute to superannuation.
FBT (Fringe Benefits Tax). A tax employers pay on certain non-cash benefits they provide to employees, such as private use of a work vehicle.
STP (Single Touch Payroll). The system requiring employers to report payroll information to the ATO in real time with each pay run.
Salary sacrifice. An arrangement where an employee redirects part of their pre-tax salary toward a benefit, commonly additional superannuation.
Division 7A. Rules stopping companies from distributing profits to shareholders tax-free, disguised as informal loans.
PSI (Personal Services Income). Rules affecting contractors who mainly earn income from their personal skills and effort, which can limit certain deductions.
Registered tax agent. A professional the Tax Practitioners Board registers, who can legally prepare and lodge tax returns for a fee.
A clearer grasp of these terms doesn’t just make conversations with your accountant easier. It also helps you understand your own notices, statements, and obligations, without needing to ask what something means every time it comes up.
EBATS explains your tax and business obligations in plain English, without unnecessary jargon, so you always understand exactly where you stand.
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