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.
A |B |C | D |E | F | G | H | I | J | K | L |M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
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.
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. The ATO is 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’.
Alienated personal services payment
This is a payment, including a non-cash benefit, that a personal services entity receives relating to an amount that:
is attributed to the person who performs the services, or
would have been included in the person’s assessable income had the personal services entity not received the income.
Allocated pension/Allocated annuity
These are the most popular types of income streams due to their flexibility. They do not meet the pension and annuity standards because of the flexible payment amounts and terms. There is no specified term for an allocated pension or allocated annuity but maximum payment restrictions do limit the minimum term available. The key features of these benefits include:
payment must be made at least annually
payment amount for the financial year depends on the account balance and age of the recipient on 1 July each year. Regulations set the minimum and maximum range of pension payments for each year. Although there is some flexibility in the payment amount, there is no protection against the money running out during the person’s lifetime.
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 superannuation fund surplus, by a trustee, to meet an employer’s liability to make contributions.
Allot
To credit an amount from a member’s account to another account in a regulated superannuation fund held by, or created for, a receiving spouse otherwise than by transfer or roll-over.
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)
A fund which can accept rolled over eligible termination payments in order to preserve the benefit, or to defer the tax liability on these payments.
Assessable amount
For ETPs, this is the amount of the ETP cash payment a taxpayer needs to include in their income tax return.
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.
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 the ATO 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 of Excise.
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 Federal Government agencies which regulates superannuation funds, and other bodies in the financial sector, ensuring they operate within the requirements of retirement income legislation.
Australian resident
The tax rates that apply to your taxable income depend on whether or not 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.
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.
Base period
The period prior to the ‘declared period’ where ‘Declared Period Quotas’ have been imposed.
Beneficiary
A person entitled to or in receipt of a benefit. This is normally an employee, a superannuation fund member, a related dependant, or any financial dependants.
Benefit
Benefits for RBL purposes include:
superannuation pensions
eligible termination payments.
purchased pensions and annuities including allocated pensions and annuities.
Benefit ID
This term is found on the RBL benefit list and is a unique number assigned to each benefit by the Tax Office.
Bizstart
The ATO runs 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
Bona fide redundancy has the following characteristics:
the employee must have been dismissed from a job, not have left voluntarily; and
the employee must have been made redundant (their work has ceased or workplace has been relocated); and
the dismissal must have been 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
Non-concessional contributions can be made under a bring forward arrangement after 1 July 2007. This applies for non-concessional contributions for individuals aged less than 65 years. Up to three years worth of non-concessional contributions can be made in one year, enabling a maximum of $450,000 to be contributed over three financial years without exceeding the cap. For example, if you contribute $450,000 of non-concessional contributions in the first year, any non-concessional contributions you make in the following two years contributions will be subject to excess non-concessional contributions tax. The bring forward will trigger automatically when the contributions in excess of the annual non-concessional contributions cap (currently $150,000) are made in a financial year where a bring forward has not already commenced. 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 a net amount. The BAS replaces several business tax forms.
Business deductions
A series of expenses determined by taxation 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.
The capital amount is 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 like:
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 capital value is the equivalent lump sum value of a pension at commencement date. There are different formulae for calculating the capital value of each type of pension or annuity.
Example 1: Allocated pensions
The capital value is based on the amount used to purchase the pension and is calculated as follows:
Capital value = Purchase price – (UC + CC + IC)
Where
UC = undeducted contributions
CC = concessional component
IC = invalidity component
In this case the capital value is also the RBL amount of the pension.
Example 2: Rebatable superannuation pension (lifetime)
The capital value is based on the following formula:
Capital value = Year 1 payments x PVF – UC + RCV
Where
PVF = pension valuation factor
UC = undeducted contributions
RCV = residual capital value
For other types of pensions and how to calculate the capital value, refer to the formulae located in sections 140ZO and 140ZP of ITAA 1936, or the following fact sheets:
RBL - valuation of pensions payable for life, or
RBL - valuation of pensions not payable for life, or
RBL – how much counts
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:
the relief of poverty or sickness or the needs of the aged
the advancement of education
the advancement of religion, and
other purposes beneficial to the community.
Commodity
Product or goods that attract an excise. Currently commodities for excise purposes fall into the following main groups:
alcohol
petroleum
tobacco, and
coal.
Commutation
This is 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 superannuation fund, or to another superannuation fund.
Company
A separate legal entity that is taxable on its net taxable income.
For tax law purposes, a company includes:
a body corporate, or
any other unincorporated association or body of persons
but 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 that meets the pension and annuity standards as specified in the SIS regulations.
Complying superannuation funds
A superannuation fund that has elected to be regulated under the Superannuation Industry (Supervision) Act 1993.
Concessional component
A benefit will have a concessional component if it was made before 1 July 1994 and it 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 superannuation fund and the entitlement to those components can be attributed to the period prior to 1 July 1994. This component is not counted for RBL purposes.
Concessional contributions
For a financial year concessional contributions include the following:
employer contributions including contributions made under a salary sacrifice arrangement
personal contributions claimed as a deduction eg by a self-employed person
amounts included in the fund’s assessable income from a transfer from a foreign superannuation fund, but not those amounts included because of any choice you made to have them included in the fund’s assessable income. If an individual has overseas superannuation paid directly to an Australian complying super fund, they may be able elect to have all or part of the applicable fund earnings included in the Australian fund’s assessable income.
allocated surplus amounts (allocated surplus amounts will be defined by Regulations that have not yet been made)
notional taxed contributions in respect of defined benefit funds (notional taxed contributions will be defined by Regulations that have not yet been made)
and excludes:
contributions made to a constitutionally protected fund
up to $1 million of directed termination payments specified in employment contracts as at 9 May 2006, provided the payment is made before 1 July 2012.
Concessional contributions cap
A $50,000 per annum per individual cap on concessional contributions applies from 1 July 2007. The concessional contributions cap will be indexed to average weekly ordinary times earnings (AWOTE) and increased in increments of $5,000. Concessional contributions in excess of the cap will be subject to excess concessional contributions tax. A transitional concessional contributions cap applies to some individuals (see definition below).
Approvals/permits issued by the ATO 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 (eg 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
These are restrictions placed on superannuation funds for how and when preserved benefits can be paid. A condition of release must be met before a benefit is paid. The following conditions of release have ‘nil’ cashing restrictions.
retirement
reaching age 65
reaching preservation age and permanently retired
death
permanent Incapacity
termination of employment and the benefit is less than $200
Benefits can only be paid if the rules of the superannuation fund allow it.
For further conditions and their restrictions refer to Superannuation Industry (Superannuation) Regulation 6.01 & Schedule 1.
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 Commonwealth'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 by an splitting applicant to their fund’s trustee/RSA provider, to roll over, transfer or allot an amount of benefits, for the benefit of their spouse. The total amount to be split in a 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. The application may include an eligibility statement by the receiving spouse.
Contributions tax
The tax payable on some amounts paid into a superannuation fund and the earnings on investments held in the fund. These include:
employer contributions
salary sacrifice contributions
rolled over employer ETPs
investment earnings.
The current contribution tax rate is 15%.
Creditor
A person or business to whom your business owes money.
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.
A payment made on the death of an employee or superannuation 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 ETP
A lump sum payment made to a beneficiary because of the death of an employee or superannuation fund member that is made within 6 months of death or 3 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 determined by the ATO 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.
Deferred annuity
An annuity where the payments are delayed by a specified period or to the date of occurrence of a specified event, for example, the taxpayers 65th birthday. It does not have to become an income stream. It can be cashed or withdrawn on or before the date the taxpayer reaches 65 years of age. In subsection 27A (1) of ITAA 1936, a deferred annuity is defined as an annuity other than an immediate annuity. Refer to ‘immediate annuity’.
Defined benefit pension
An income stream where payments are based upon a defined amount and/or reference to the member’s salary.
Dependant
A dependant for a death benefit ETP is:
a surviving spouse or de facto spouse
an ex-spouse
a child of the deceased who is under 18
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 ETP
any person with whom the deceased has an interdependency relationship.
Financially dependent on the deceased means the deceased employee contributed necessary financial support to maintain the dependant. Children over 18 must be financially dependent on the deceased employee to qualify as dependants.
An interdependency 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.
Dependants
People who need your financial support and who you look after such as children.
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
A pension payable to a person where two legally qualified medical practitioners have certified that due to the disability the person is unlikely to ever be employed in a capacity for which they are reasonably qualified.
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.
A notice in writing provided to a superannuation fund, stating the member’s intention to claim a deduction in respect of their personal superannuation contributions.
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)
Taxation payments can be made electronically by Direct Credit, BPAY®, or Direct Debit.
Electronic lodgment system (ELS)
The ELS allows participating tax agents to lodge their clients’ tax returns and other tax forms with the Tax Office 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
Generally, this is the period from the day membership of the fund or employment commenced through to the day membership of the fund or employment ceased.
Eligible termination payment (ETP)
A lump sum benefit made before 1 July 2007 by:
a superannuation fund to a person because they, or another person, were a member of a superannuation fund, approved deposit fund (ADF) or a depositor with a retirement savings account (RSA), or
an employer to an employee, as a result of the termination of employment, or
a Superannuation fund or an employer after the death of the person who was a fund member or an employee.
ETPs can generally be rolled over into a superannuation fund, ADF or RSA if the recipient elects to do so.
An ETP also includes 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.
Employee
A person who receives salary or wages.
Employer
A person (or group) who pays people salary or wages.
Employer contributions in excess of the age based limit
Employer contributions are contributions made on behalf of employees in compliance with superannuation guarantee, award or other obligations and include contributions to a superannuation fund made by an employer under a salary sacrifice arrangement. Employers are generally able to claim an income tax deduction for contributions made on behalf of employees up to age based limits that apply to the employee until the end of the 2006-07 income year. Amounts in excess of the age based limits in the 2006-07 year are transitional non-concessional contributions and count towards the $1 million transitional non-concessional contributions cap.
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:
private recreational pursuits and hobbies
activities carried on as an employee, labour hire worker, director or office holder, or
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.
NB Enterprise is a defined term in GST law.
Entity
An individual (for example a sole trader), a body corporate (a company), a corporation sole (an ongoing paid office, for example a bishopric), a body politic, a partnership, an unincorporated association or body of persons, a trust, or a superannuation fund.
E-Record
A base line 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.
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 the ATO. You download e-tax to your personal computer to prepare and then lodge your tax return over the internet to the ATO.
ETP payment summary
The employer or superannuation fund must provide this form to the recipient within 14 days of making the eligible termination payment (ETP). This form shows the ETP component details and tax withheld from an ETP. An individual must use these details or those contained in an Excessive ETP determination notice when completing their income tax return.
ETP pre-payment statement
A form provided by the employer or superannuation fund to advise the eligible termination payment (ETP) recipient of the eligible service period and components details. The recipient then advises the employer/superannuation fund whether they would like the ETP paid as a lump sum or rolled over to a superannuation fund.
Excess concessional contributions
Excess concessional contributions are concessional contributions made to a complying superannuation fund in excess of the concessional contributions cap during a financial year. Excess concessional contributions are subject to excess concessional contributions tax. These contributions are also counted towards an individual’s non-concessional contributions cap.
Excess non-concessional contributions
Excess non-concessional contributions are non-concessional contributions made to a complying superannuation fund in excess of the non-concessional contributions cap during a financial year. Excess non-concessional contributions are subject to excess non concessional contributions tax.
Excess contributions tax assessment
An assessment made by the Commissioner where an individual has exceeded the concessional contributions cap or the non-concessional contributions cap for a financial year. The assessments will be made only if the individual has exceeded either cap. The assessment will be issued to the individual as a separate tax on the income tax notice of assessment.
Excess concessional contributions tax
The tax assessed by the Commissioner of Taxation on the excess concessional contributions for a financial year. The rate of tax is 31.5%. This tax will be imposed on the individual who will be able to choose to withdraw from their superannuation fund an amount equal to their tax liability using a release authority.
Excess non-concessional contributions tax
The tax assessed by the Commissioner of Taxation on the excess non-concessional contributions for a financial year. The rate of tax is 46.5%. This tax will be imposed on the individual who must withdraw an amount from their superannuation fund equal to their tax liability using a release authority.
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, the Tax Office 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).
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, the Tax Office 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).
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 ‘excessive component’ for further information of the tax treatment of excessive ETPs.
Excise collections
The collection of revenue in regard to excise business.
Excise duty or excise
A commodity-based inland tax on petroleum (including oil), tobacco and alcoholic products. It is administered by the ATO. 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 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.
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 will be applied automatically by the Tax Office 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 administered by the ATO. 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, or
the rebatable proportion, in the case of a rebatable pension or annuity, and
the basis on which the determination was made.
This information must be used by the taxpayer to complete their income tax return.
Refer to ‘Excessive amount’, ‘excessive component’ and ‘excessive RBL determination notice’ for the taxation 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:
makes a payment of a PAYG instalment or income tax, or
receives a franked distribution, or
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.
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 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 superannuation interest is said to be in the growth phase if the member has not satisfied a relevant condition of release (i.e. death, permanent incapacity, retirement, attaining age 65 or terminating employment with the contributing employer), or the member has met a relevant condition of release but no benefit has been paid in respect of the superannuation interest.
A superannuation interest will still be in growth phase where a member receives a benefit (other than a pension or annuity) as a result of satisfying a relevant condition of release, but is 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.
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.
An income stream paid by a life insurance company where the first payment must be made in the financial year the annuity commenced.
Imputation credit
See Franking credit
Income
The amount of money earned from personal exertion and investments.
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 has been endorsed by the ATO 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 in financial institutions.
Interest Spit
If there is a payment splitting agreement or court order on marriage breakdown operating on a superannuation interest, it is possible:
for a new interest to be created for the non-member spouse’s superannuation fund
for the non-member spouse entitlement to be transferred into that existing superannuation interest
for the non-member spouse entitlement to be rolled over into a new superannuation interest
If it is possible for a new interest to be created, or the entitlement to be rolled over or transferred, the non-member spouse will be able to request that this be done for them. If the non-member spouse doesn’t make such a request, then the fund will be able to make a decision whether or not to do it anyway. The amount that is credited to the new interest, or transferred or rolled over to another fund, is basically your entitlement under the family law.
Interim determination notice
A notice issued when the employer or superannuation fund did not provide sufficient information to the Commissioner, 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 taxpayer does not supply the missing information, the interim determination notice becomes the taxpayer’s final determination notice.
This information must be used by the taxpayer to complete their income tax return.
Invalidity payment
The amount of an invalidity payment is linked to the employee’s future service period that is lost through early retirement due to their permanent disability.
The rules for invalidity payments vary depending on when the payment was made.
If the payment was prior to 1 July 1994 then:
The payment must be in consequence of termination of employment of the taxpayer, and occurred because of;
the taxpayer’s physical or mental incapacity to engage in that employment and
the termination of employment is before the last retirement date. Refer to ‘last retirement date”
If the payment occurred on or after 1 July 1994 then:
The payment must be in consequence of termination of employment and occurred because;
two legally qualified medical practitioners certify that the employee’s disability is likely to prevent the employee from ever being employed in a capacity for which they are reasonably qualified because of their education, training or experience; and
the termination of employment is before the last retirement date. Refer to ‘last retirement date”
Invest
Apply assets (money) for the purpose of gaining interest, profit or gain.
Labour hire arrangements commonly involve at least two contracts. A user of labour (the client) typically contracts with a labour hire firm for the provision of labour of a specified kind. The labour hire firm does not contract to perform the work; it merely contracts with the worker and pays the worker. The worker is not an employee of the client and there is no contract between the worker and the client. The worker may or may not be an employee of the labour hire firm.
Last retirement date
This is the date the employee would have stopped working if the permanent disability had not occurred. This might be a date previously agreed under a contract for employment, or it might be the date when the employee would have retired. If there is no other basis for selecting a date, the date will be the employee’s 65th birthday.
Liability
A debt or financial obligation incurred.
Life expectancy/15 year pension/annuity
These pensions/annuities meet the pension and annuity standards. They are payable for a term equal to life expectancy if less than 15 years, or a term between 15 years and life expectancy. For example, if a beneficiary’s life expectancy is 12 years at the pension commencement date then the pension is paid for 12 years, but if the life expectancy is 22 years the pension can be paid for 15 years or any term up to 22 years.
Lifetime pension/annuity
These are often referred to as superannuation pensions. A lifetime pension/annuity may meet the pension and annuity standards.
The key features of when a benefit 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 cannot be commuted except for limited circumstances (refer to the definition ‘non-commutable’)
Life benefit termination payment
A life benefit termination payment is an employment termination payment made in consequence of a person’s termination of employment other than as a result of death.
Lost member
A ‘lost member’ is a member of a super fund who:
is an inactive member – they are inactive if they joined more than two years ago, and there have been no contributions or rollover amounts in the last five years
transferred from another super provider as a lost member and you haven’t found or been advised of a new address, or
cannot be contacted – the fund may not have been advised of the member’s address or mail sent to the member’s last known address has been returned to the fund unclaimed.
A central register of lost superannuation fund members and RSA holders administered by the ATO.
Low rate threshold (LRT)
The limit for lower taxation treatment of the post-June 1983 component of an eligible termination payment (ETP). The low rate threshold is only applicable for individuals 55 years of age or over at the date of payment. It is a lifetime limit that is indexed each financial year.
Lump sum
A benefit taken as a single payment, for example, an eligible termination payment (ETP). This can be contrasted with 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 applied 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.
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. They are a flexible pension or annuity in terms of how investments are managed. The key features of these income streams are as follows:
term is based on life expectancy
payment must be paid at least annually
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 determining eligibility for the age pension
they can only be commuted in limited circumstances (refer to ‘non-commutable’)
Marriage breakdown
Changes introduced in the Family Law Legislation Amendment (Superannuation) Act 2001 provides that a superannuation interest can be divided by agreement or a court order on marriage breakdown. The Act commenced 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.
Medicare levy surcharge
Liability for Medicare levy surcharge arises where a taxpayer, or any of their dependants, does not have private patient hospital cover and their taxable income exceeds the relevant income tests.
Medicare levy
An amount payable by most taxpayers to cover some of the cost of the public health system.
Member spouse
In relation to splitting a superannuation interest due to marriage breakdown, means the spouse who has the superannuation interest or account.
Metadata
The background information about a web page. It includes information like the author, the title, and the date the document or resource was created.
A unique, four digit ‘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 the ATO which includes your tax payable and your Medicare levy.
Non-commutable
In relation to a pension or annuity, this means it cannot be converted into a lump sum payment.
Exceptions: There are limited circumstances when a commutation is allowed, they include:
commutation within 6 months of commencement – this applies to the original pension or annuity only, or
in certain circumstances, to a reversionary beneficiary, or
to purchase another pension or annuity that meets the pension and annuity standards, or
to pay a superannuation contribution surcharge, and
to allow for a payment in regard to payment split due to marriage breakdown
Non-commutable allocated pension/annuity
These types of pensions or annuities became available on 1 July 2005 and were devised so that a person who has reached their preservation age but has not retired can choose to commence an additional income stream. These types of pensions or annuities do not meet the pension and annuity standards and generally would therefore not be measured against the pension RBL. Refer to ‘Lump sum RBL’.
These benefits have similar key features to an allocated pension/annuity, except additional cashing restrictions apply. If the benefit is commuted, the resulting ETP cannot be cashed unless:
the beneficiary has satisfied a condition of release with a ‘nil’ cashing restriction. Refer to ‘conditions of release’
the purpose of the commutation is to cash an unrestricted non-preserved benefit,
the purpose of the commutation is to pay a superannuation contributions surcharge,
the purpose of the commutation is to allow for a payment split due to marriage breakdown. (pensions only)
the purpose of the commutation is to purchase another non-commutable pension/annuity or non-commutable allocated pension or annuity
However, you are able to return a non-commutable allocated pension/annuity to the accumulation phase.
Refer to ‘Transition to retirement’
Non-commutable pension/annuity
These types of pensions or annuities may meet the pension and annuity standards and therefore generally would be measured against the pension RBL (Refer to ‘Pension RBL’). They became available on 1 July 2005 and were devised so that a person who has reached their preservation age but has not retired can choose to commence an additional income stream.
These benefits have similar key features to a lifetime, life expectancy or market linked pension or annuity, except additional cashing restrictions apply. If the benefit is commuted within 6 months of commencement ( this applies to the original pension or annuity only), the resulting ETP cannot be cashed unless:
the beneficiary has satisfied a condition of release with a ‘nil’ cashing restriction. Refer to ‘conditions of release’
the purpose of the commutation is to cash an unrestricted non-preserved benefit,
the purpose of the commutation is to pay a superannuation contributions surcharge,
the purpose of the commutation is to allow for a payment split due to marriage breakdown. (pensions only)
the purpose of the commutation is to purchase another non-commutable pension/annuity or non-commutable allocated pension or annuity
However, you are able to return a non-commutable pension/annuity to the accumulation phase.
Refer to ‘Transition to retirement’
Non-concessional contributions
For a financial year non-concessional contributions include the following:
personal contributions for which the individual does not claim an income tax deduction
contributions a person’s spouse makes to their super fund account
contributions in excess of a person’s capital gains tax (CGT) cap amount
contributions in excess of a person’s concessional contributions cap (excess concessional contributions)
amounts transferred from foreign super funds (excluding amounts included in the fund’s assessable income)
contributions that are made to a constitutionally protected fund that, had the fund been a taxed fund, the contributions would not have been taxed in the fund anyway
for the transitional period from 10 May 2006 to 30 June 2007, employer contributions in excess of an employee’s age based limit
any contributions made to a non-complying fund in previous financial years when the fund becomes complying. This applies to the extent that those contributions were made on or after 10 May 2006 and have not previously been counted as a non-concessional contribution
and excludes:
Super Co-contributions
certain contributions arising from structured settlements or orders for personal injuries
certain contributions relating to some CGT small business concessions that are within the individual’ s CGT cap amount
contributions that are made to a constitutionally protected fund that are not included in the contributions segment of the person’s superannuation interest in the fund, and
rollovers between complying super funds.
Non-concessional contributions cap
A $150,000 per annum per individual cap on non-concessional contributions applies from 1 July 2007. A bring forward of two years of contributions, totalling $450,000 over three years is available for individuals aged less than 65 years in the trigger year. Non-concessional contributions in excess of the cap will be subject to excess non-concessional contributions tax.
The non-concessional contribution cap is three times the concessional contribution cap and will increase as the concessional contribution cap is indexed. The bring forward is equal to three times the non-concessional contribution cap but is not indexed once the bring forward is triggered.
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
In relation to the splitting of a superannuation benefit due to marriage breakdown, means the spouse who is not the superannuation fund member or account holder of the superannuation benefit that is being split.
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. The ATO accepts 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:
a company that is not carried on 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, or
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 DGR endorsement it is the entity, and not the non-profit sub-entity, that must apply.
Non-purchased pension
A pension that has not been purchased with an identifiable lump sum, eg an account balance or ETP.
Non-qualifying component
Very few benefits will have a non-qualifying component. It represents the earnings on any annuities that were purchased with non-superannuation or termination of employment money. These amounts do not qualify for RBL concessional tax rates and are taxed as ordinary income.
Non-rebatable pension/annuity
A pension or annuity where the recipient is not able to claim the pension tax offset. A non-rebatable pension is one paid from an untaxed source. These are usually public sector superannuation funds which do not pay the 15% contribution tax. In some circumstances, a portion of a pension/annuity will be non-rebatable.
Notice of assessment
The notice that is sent to you on receipt of your tax return advising you of the tax you owe or of your refund entitlement.
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 for which an assessment has been made.
The earnings before tax on an employee's ordinary hours of work. As a general rule it is used as the basis for measuring the level of employer superannuation contributions under the Superannuation Guarantee (Administration) Act 1992.
The income that is earned exclusively by the partnership.
Pay as you go (PAYG)
A single, integrated system for reporting and withholding amounts and tax on business and investment income.
Payee
The person who receives a payment.
Payer
The person who makes a payment – whether it be an employer or superannuation fund.
Payment advice
Payment advice (slips) are pre-printed stationery provided to the client to enable them to make a payment to the ATO using EFT, Australia Post Bill Pay or Bpay. Details on the advice are also used internally by the ATO to identify a client and credit the amount of the payment onto the clients account. Payment advice stationary must be to ATO specification.
Payment summary
Is received at the end of the financial year from your employer showing your earnings during the year.
Payment phase
A superannuation interest is said to be in the payment phase when it is no longer in the growth phase. For example, a superannuation interest will be in the payment phase where the member has been paid a benefit as a result of satisfying a relevant condition of release, and is not entitled to any other benefits from the fund.
Payment split
When a payment from a superannuation 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 done pursuant to an agreement or court order does NOT create a new superannuation 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 the ATO on offences in relation to the Income Tax Assessment Act.
Pension
A series of regular payments made as an income stream, this may be provided by a superannuation fund or retirement savings account (RSA) For RBL purposes this excludes the government ‘age pension’..
Pension and annuity standards
These are the standards that a pension or annuity must meet in order to be counted towards the pension RBL. Among other things, the pension or annuity must:
be payable for life or life expectancy (if life expectancy is 15 years or greater, it must be payable for a term between 15 years and life expectancy)
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)
Is used to convert a pension to an equivalent lump sum for calculating the capital value. It is based upon 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.
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) and make payment for their excise liability at the end of the agreed period (weekly).
Permanent Incapacity
Also referred to as 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. Also refer to the definitions:
Disability superannuation benefit, and
Invalidity payment.
Permit
An approval given by the ATO to receive excisable spirit, either undenatured or specially methylated at a concessional rate of excise duty.
Personal contributions
Personal contributions are contributions made by the individual and can count toward the concessional or non-concessional contributions cap. Any personal contributions claimed as a tax deduction by the individual will count towards the individual’s concessional contribution cap. Any personal contributions not claimed as a tax deduction by the individual will count towards the individual’s non-concessional contributions cap.
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 this is regarded as personal services income. Common examples of a person who earns this kind of income are:
a medical or legal practitioner in a sole practice
a professional sports person or entertainer
a consulting engineer, computer consultant or other expert consultant, or
someone 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 post-June 1983 component represents that part of the member’s eligible service period that occurred after 30 June 1983. Most benefits will have this component. The component is calculated using a formula. The component is made up of a taxed element or an untaxed element or both elements. The taxed and untaxed elements generally reflect whether the employer/superannuation fund is paying tax on contributions or not.
Taxed element – The taxed element occurs where the superannuation fund has paid tax on contributions. An employer ETP cannot have a post-June 1983 taxed element.
Untaxed element – A benefit that has an untaxed element will generally be paid from a superannuation fund that does not pay tax on contributions or an employer.
The tax treatment of this component depends on the age of the recipient, whether the amount is below their low rate threshold and whether it is a taxed or untaxed element. This component counts for RBL purposes but the percentage that counts varies depending on whether it is an untaxed or taxed 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. This component is tax free and does not count for RBL purposes.
Pre-July 1983 component
A benefit may have a pre-July 1983 component if the recipient’s 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. This component counts for RBL purposes except in the case of an employer ETP paid to a non-associate. 5% of this component is taxed at marginal tax rates.
Preservation age
The minimum age a member may be able access their preserved benefits. A benefit may be paid earlier if the member has met a condition of release. The preservation age varies depending on when the member was 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 retained in a superannuation fund, ADF or RSA until the member has met a condition of release under the Superannuation Industry (Supervision) Act 1993. Refer to the definition ‘conditions of release’.
Preserved benefits are most commonly paid when a member has reached their preservation age and retired. New legislation introduced on 1 July 2005 allows a member who has reached their preservation age to access their preserved benefits while they continue working. The member is restricted to taking a non-commutable pension/annuity or non-commutable allocated pension/annuity.
If a member has not reached their preservation age, but has permanently retired, a benefit can only be paid as a result of the member’s permanent disablement, severe financial hardship, because of compassionate reasons or on death of the member.
When a member has reached 65 years of age, 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, and
its dominant purpose is providing benevolent relief.
Purchased pension
A pension purchased from a superannuation fund with the balance a member’s account or an ETP. For example, the purchased price of an allocated pension or market linked pension is the account balance on the commencement day of the pension.
The indexed capital amounts of benefits previously received, that are used to determine whether the current benefit is to be assessed against the lump sum RBL or pension RBL.
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.
The amount of the benefit that counts for RBL purposes. For further details refer to the fact sheet, RBL – how much counts.
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, or
the rebatable proportion, in the case of a rebatable pension or annuity and
the 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
(please 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 superannuation pension or annuity where the recipient may be entitled to claim the pension tax offset. The superannuation fund can advise the recipient if their pension is rebatable. For a pension or annuity to be rebatable, the superannuation fund must be a taxed fund - the fund must have paid the 15% contribution tax on post-June 1983 contributions received and earnings.
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, the Tax Office 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).
Refer’ Excessive RBL Determination notice’
Receipt
A document which confirms that you have made a payment.
Receiving Spouse
The spouse of the applicant is the receiving spouse (and hence the person who will receive the transferred, rolled over or allotted benefits) if the fund’s trustee/RSA provider accepts the contributions-splitting application.
Record keeping
Taxpayers are required to keep records to support their claims made in their income tax returns. These records could 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 paid by the ATO to a taxpayer when the taxpayer has paid more tax than needed. (Often confused with a tax offset).
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)
The ATO’s registered software facility (RSF) provides:
software developers with information to build and test their products, and
businesses and tax agents with details of accounting software products which meet ATO 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.
Release
To set free from an obligation.
Release authority
Currently referred to as ‘May Be Delivered’ that is, provided to clients who enter goods on an ad hoc basis (ie do not have a periodic settlement permission) and gives them authority to deliver the excise (or customable) duty paid goods into home consumption.
Release authority
A Release authority is a TaxOffice document that authorises one or more of an individual's super funds to release an amount from the individual’s superannuation account. An individual will receive a release authority with each excess concessional contributions tax and excess non-concessional contributions tax assessment. The individual can give a release authority to a fund for an excess concessional contributions tax liability. The individual must give a release authority to a fund for an excess non-concessional contributions tax liability.
Relevant financial year
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 the:
last financial year that ended before the application, or
the financial year in which the contributions-splitting application is made, where 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 are required to keep records of the fringe benefits provided to each employee.
Where an employee receives fringe benefits with a total taxable value of more than $1000 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
A Request fortransitional release authority is a form an individual completes and gives to the Tax Office requesting the Tax Office issue a Transitional release authority which will authorise one or more of their super funds to release excess non-concessional contributions made during the period 10 May 2006 to 6 December 2006 directly to them. The Request for transitional release authority must be lodged with the Tax Office no later than 30 June 2007.
Residual capital value
The capital amount remaining at the end of the term of a pension or annuity. The amount of the RCV is generally specified in the fund deed or contract when the benefit is commenced
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
These are superannuation benefits which can be paid on termination of employment. They can also be paid under the same conditions that preserved benefits are paid.
Retirement savings accounts (RSA)
An account that provides low cost and low risk savings strategy. It is offered by banks, building societies, credit unions, life insurance companies and prescribed financial institutions (RSA providers). An RSA provider is not a superannuation fund.
Reversionary beneficiary
The person nominated by the member to automatically receive an income stream (pension/annuity) on the member’s death.
Reversionary pension/annuity
A pension or annuity which has reverted to a beneficiary, usually a spouse, on the death of the member.
Roll over
A roll over is
the transfer of all or part of an employer ETP into a superannuation fund or
a transfer of a member’s capital value from one superannuation fund to another or to a new product within the same fund.
For superannuation funds, RBL reporting for roll overs is only required if an ETP arising from the commutation or payment of residual capital value of a pension or annuity is rolled over. The payer that was paying the pension or annuity will report the roll over to the Tax Office.
RSA
See Retirement savings account
RSA provider
Provider of a retirement savings account (RSA), these can be banks, building societies, credit unions or life insurance companies.
The ATO issues 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 self managed superannuation fund (SMSF) is a complying superannuation fund under the Superannuation Industry (Supervision) Act 1993 which has:
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, and
if the trustee of the fund is a body corporate each director of the body corporate is a member of the fund.
There are also conditions for single member SMSFs and funds in which a member is unable to act as trustee because of death, disability etc.
Seminars
The ATO runs free seminars for small business operators. They provide a general overview of the various taxes which may affect their business.
Separate net income (SNI)
All the income a dependent received while you maintained them. This is necessary for claiming a tax offset.
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 carries on a business with an aggregated turnover of less than $2 million.
Sole trader
A person wholly owns and who operates a business.
Source documents
The original documents that record your business transactions.
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 fund/RSA holder who makes a contributions-splitting application to their fund’s trustee/RSA provider to split splittable contributions to their spouse’s superannuation account.
Spouse
For the purposes of a contribution-splitting application, a spouse, in relation to a person, includes another person who, although not legally married to the person, lives with the person on a genuine domestic basis as the husband or wife of the person.
Spouse contributions
Individuals can make contributions on behalf of a spouse. The contributing spouse may be entitled to a tax offset. Spouse contributions count as non-concessional contributions of the spouse to whose superannuation account the contributions are made.
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 the Tax Office 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
A 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.
Superannuation Annuity and Pension Tax Offset
Recipients of rebatable pensions and annuities may be eligible to claim all or part of the pension tax offset. 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.
Refer to ’excessive amount’, ‘excessive RBL determination notice’ and ‘final RBL determination notice’.
Also refer to question T4 of the 2005 Tax Pack.
Superannuation fund
We use this term to include:
a complying superannuation fund
a public sector superannuation scheme (regulated or exempt public sector superannuation scheme)
a complying approved deposit fund, and
a retirement savings account.
Superannuation guarantee (SG)
A prescribed minimum level of superannuation required under the Superannuation Guarantee (Administration) Act 1992 that an employer must contribute for employees. The employer can avoid paying the Superannuation Guarantee Charge if sufficient superannuation contributions are made to a complying superannuation fund or RSA.
Superannuation guarantee charge (SGC)
A charge imposed under the Superannuation Guarantee Charge Act 1992 on employers who do not meet the minimum superannuation guarantee requirements on behalf of employees.
Superannuation holding accounts (SHA) special account
The SHA special account (previously known as the Superannuation Holdings Accounts Reserve) is administered by the ATO. A small number of employers have used the SHA special account to deposit superannuation guarantee contributions for their employees. The SHA special account will be closed to employer deposits from 30 June 2006.
Superannuation Industry (Supervision) Act 1993
The legislation providing prudential standards for superannuation funds. The legislation is administered by three regulators, the ATO, Australian Securities Investment Commission (ASIC) and APRA. The ATO is responsible solely for the administration of SMSFs.
Superannuation provider
We use this term to include:
the trustee of a *superannuation fund
the trustee of an *approved deposit fund, and
the retirement savings account provider.
Superannuation surcharge
A surcharge (tax) of up to 15% is imposed on certain superannuation contributions, specified rollover amounts, and termination payments.
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.
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 taxation purposes, hired to help a person with their taxation affairs.
Tax avoidance
Taking full advantage of the law to minimise tax liability.
Tax basics
The ATO runs free seminars for small business operators. They provide a general overview of the various taxes which may affect their business.
Tax evasion
Understatement of income/overstatement of deductions.
Tax file number (TFN)
A unique number issued by the Tax Office 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 an individual has overseas superannuation paid directly to an Australian complying super fund, they can elect to have the taxable part of the payment treated as assessable income of the Australian fund. The part of the payment not covered by the election notice will, in most cases, be tax free to the fund as it is not assessable income of the Australian complying superannuation fund. The taxable part of the transfer (not including that part covered by the election) will count toward the individual’s concessional contributions cap. The tax-free part of the transfer will count towards the individual’s non-concessional contributions cap.
Tax free threshold
If the employee is an Australian resident for taxation purposes $6,000 of their yearly income is not taxed. This is called the tax-free threshold. They may claim the tax-free threshold from one employer only. Non-residents cannot claim the tax-free threshold.
Tax invoice
A document generally issued by the supplier. It shows the price of a supply, indicating whether 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 GSTpurposes and are the quarters in the calendar year. If your annual turnoverexceeds $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 the ATO.
Taxed splittable contribution
A contribution that is a taxable contribution for section 274 of the Income Tax Assessment Act 1936 (ITAA 1936) or a contribution that, but for the Commonwealth’s inability to tax the property of a State, would be a taxable contribution for section 274 of the ITAA 1936 or an allocated surplus contribution amount.
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
Is 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)
The ATO’s 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.
TaxPack
The guide containing the tax return forms and information on how to complete the tax return.
Taxpayer
Any Australian who should pay tax.
Taxpayer Charter
Outlines rights, obligations and standards of service for the taxpayer.
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.
Trading stock
Anything produced, manufactured, acquired or purchased for the purpose of manufacture, sale or exchange. Includes livestock.
Transition to retirement
Legislation applicable from 1 July 2005 which permits a person who has reached their preservation age but is still working, to convert part or all of their accumulated benefits to a:
non-commutable allocated pension, or
non-commutable allocated annuity, or
non-commutable pension, or
non-commutable annuity.
It is not compulsory for a superannuation fund to provide these income streams.
Transitional concessional contributions cap
A transitional cap of $100,000 per annum on concessional contributions applies from 1 July 2007 to 30 June 2012. The transitional concessional contribution cap is available to individuals aged 50 years or over on the last day of the financial year. The cap is not indexed. The $100,000 cap also applies to individuals who turn 50 in the transitional period.
Transitional non-concessional contributions
The following amounts contributed between 10 May 2006 and 30 June 2007 will be included in the transitional non-concessional contributions cap:
personal contributions for which the individual does not claim or intend to claim an income tax deduction
contributions a person’s spouse makes to their super fund account
contributions in excess of the capital gains tax (CGT) cap amount
amounts transferred from foreign super funds (excluding amounts included in the fund’s assessable income)
employer contributions in excess of the employee’s age based limit
and excludes:
Super Co-contributions
certain contributions arising from structured settlements or orders for personal injuries
certain contributions relating to some CGT small business concessions that are within the individual’ s CGT cap amount
contributions that are made to a constitutionally protected fund that are not included in the contributions segment of the person’s superannuation interest in the fund, and
rollovers or transfers between complying super funds.
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 the Tax Office for a TRBL. Each individual has a different TRBL based on their individual circumstances. This limit is indexed annually.
Transitional release authority
The Transitional release authority is a TaxOffice document that authorises one or more of an individual's super funds to release an amount equal to the excess non-concessional contributions made during the period 10 May 2006 and 6 December 2006 directly to them. A Transitional release authority will only be issued when the individual has lodged a Request for transitional release authority with the Tax Office by 30 June 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 throughout a financial year.
Unclaimed super is super that’s ready to be paid out to the member now, generally because the member has reached eligibility age – currently 65 years – and can’t be contacted or they are deceased (other conditions also apply).
Depending on the type of fund, funds must report and pay unclaimed super to us or the relevant state or territory authority – unclaimed super should not remain in the fund.
Contributions paid into a superannuation 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. These contributions must have been paid on or after 1 July 1983. These contributions are often referred to as personal contributions. This component is not counted for RBL purposes and no further tax is payable.
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.
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
These are generally benefits which the member has previously met a condition of release and was entitled to be paid but has voluntarily decided to keep within the superannuation system. There are no restrictions for paying these superannuation benefits out to a member at any time on demand, irrespective of age, employment situation or financial position, providing the superannuation fund rules allow the payment.
Untaxed splittable contribution
A contribution made by a fund member or by another person to a regulated superannuation fund where that contribution is not a taxable contribution under section 274 of the ITAA 1936.
The WET is a value based tax levied on wine at a rate of 29% on the last wholesale sale (ie 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 the employer to reduce the amount of tax withheld from payments.
Withholding tax
Tax that is deducted at the source: on interest, dividend and royalty payments made to non-residents, and certain investments or payments to residents where the recipient has not provided their tax file number.
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