Key Business & Tax Terms You Definitely Should Know
Having a business accountant means it's their job to deal with all the technical jargon – not yours! But it's always beneficial to have an idea of the key terms being thrown around so you can communicate better with your tax advisor and better understand the processes in place.
Here are some of the key tax and business terms you definitely should know:
APRA – Australian Prudential Regulatory Authority
The Australian Prudential Regulation Authority (APRA) is a statutory authority of the Australian Government and the prudential regulator of the Australian financial services industry.
PAYGW – Pay As You Go Tax Withholding
Employers collect pay as you go (PAYG) withholding amounts from payments made to employees and contractors, to help payees meet their end-of-year tax liabilities.
PAYGI – Pay As You Go Income Tax Instalments
Pay as you go (PAYG) instalments is a system for making regular payments towards your expected annual income tax liability. It only applies to you if you earn business and/or investment income over a certain amount.
IAS – Instalment Activity Statement
An Instalment Activity Statement, or IAS, is a form used by taxpayers who are not registered for the GST. The IAS is also the form required to be lodged by entities that prepare a quarterly BAS but are required to remit their PAYG withholding tax monthly because they are a medium withholder (greater than $25,000 PAYGW per annum).
WorkCover (or workers' compensation) is a compulsory insurance imposed upon employers who engage employees and common law employees.
RCTI – Recipient Created Tax Invoices
An RCTI is an invoice issued by the recipient of the supply “on behalf' of the supplier.
The Appointor is the person or persons with the power to remove and appoint the Trustee of a trust. It is common for the Appointor of a discretionary family trust to be one or both parents.
A natural or legal person to whom property is legally committed to be administered for the benefit of a beneficiary (such as a person or a charitable organisation).
Binding Death Nomination (BDN)
Binding death benefit nomination is a legally binding nomination that allows you to advise the trustee of your superannuation fund who is to receive your superannuation benefit in the event of your death.
A person or institution appointed by a testator to carry out the terms of their will.
A franking account records the amount of tax paid that a franking entity can pass on to its members as a franking credit via dividend.
SMSF – Self Managed Super Fund
A self-managed super fund (SMSF) is a superannuation trust structure that provides financial remuneration to its members in retirement. The main difference between SMSFs and other super funds is that SMSF members are also the trustees of the fund. SMSF’s can also provide greater investment choices for members such as investing in direct property.
Concessional contributions are contributions made into your superannuation fund that are included in the funds assessable income. These contributions are taxed in your fund at a ‘concessional’ rate of 15%, which is often referred to as ‘contributions tax’.
Non-concessional contributions are contributions made into your superannuation fund that are not included in the funds assessable income. The most common type is personal contributions made by the member for which no income tax deduction is claimed.
Division 293 Tax
Division 293 tax reduces the tax concession on superannuation concessional contributions for individuals with income greater than $250,000 a year. Division 293 tax is charged at 15%.
Need to get in touch with us?
03 9851 7999