Businesses in West Australia may primarily see accounting as mathematical, but there is more to it. This is because owners must make sense of all the vocabulary that comes with bookkeeping and accounting. As such, a business entrepreneur must understand tax terms such as capital gains and accounting vocabulary like accruals. In fact, accounting seems to have its own language, and this guide will help you understand various terminologies.
Related Post: What taxes do you need to pay as a small business?
Basic Glossary of Tax Terms Related to Small Business
This term refers to the purchase of goods or services in a business. It is a broad term that may be used to refer to information sought or even hire of business premises. The term may also refer to something else “acquired” such as the purchase of Assets.
It refers to gross income on which tax calculations are based. This may be income generated from salary or wages. Additionally, it may refer to income from dividends, interest, and rent before making deductions. Assessable income also includes capital gains and any other types that are not considered ordinary income.
This is a common term used when dealing with Income tax or GST in Australia. It stands for the Australian Tax Office.
“Audit” is a general term in accounting. This is because there are many types of Audits. However, a tax audit refers to a financial review by the ATO aiming at ascertaining the accuracy of income declared and expenses claimed in tax returns.
ABN – Australian Business Number
This is a type of identification that is used by government agencies such as the Australian Tax Office to identify Business taxpayers. It is also readily available to the general public under the Australian Business Register also known as ABR.
This is a very important term because, in Australia, we have a tier of progressive tax rates applicable to Australian Residents. Australian residents also receive various tax-free thresholds that non-residents do not. Basically, an Australian resident refers to anyone who resides in Australia, and they are generally either an Australian Citizen or allowed to reside here permanently through a residency visa.
Capital Gains Tax
This is the tax charged on capital assets that are sold for a gain (profit). Such items include shares and other investment properties. However, it does not include personal or private use assets such as residential homes, cars used for private purposes, or other assets meant for personal use.
If an asset is held for 12 months, then there may be a 50% discount applied to the Capital Gain
Fringe Benefits Tax
It is the tax paid by employers for paying employees benefits beyond their salary. Such benefits include the provision of a motor vehicle, childcare fees benefits, private health insurance or gym subscriptions.
This refers to expenses that can be claimed to reduce an Individual’s Income tax liability. Tax deductions can be claimed if they are incurred in order to derive income such as Salary and Wages, Rental Income, Business Income etc.
Related: What You Can Claim on a Tax Return?
At the end of every financial year, which ends on June 30, the Australian government expects individuals and businesses to lodge returns. This is an extensive report, in paper or digital format detailing all incomes and expenses for that period. In Australia, the financial year begins on 1st July and ends on 30th June.
Also read: Tips for Getting Ready for Your Tax Return
Contact Perth Mobile Tax Today
There are so many tax and accounting terms that it is impossible to discuss them all at once. However, Perth Mobile Tax is available to offer explanations on any accounting and tax terminology. We are at your service 24/7 for this and all other small business accounting services in Perth. Contact us today for expertise.