Common Tax Terms

The Following are brief explanations of common tax terms:
  • Financial years - what are they? The Australian financial year begins on 1 July and ends on 30 June next.
  • Medicare levy - what is it? Medicare is the scheme which gives Australian residents access to health care. To help fund the scheme, resident taxpayers pay a Medicare levy.
  • Tax returns - what are they? Your tax return is the annual declaration you make which allows the Tax Office to assess how much tax you should pay.
  • Notices of assessment - what are they? Your notice of assessment explains how we have arrived at the amount of your tax refund or debt.
  • Tax refunds - what are they? If you paid more tax during the year than you needed to, the extra is returned to you as a refund.
  • Tax audits - what are they? A tax enquiry or audit is an examination of your tax affairs by the Tax Office.
  • What are deductions? Some expenses, called deductions, can be used to reduce your taxable income.
  • Tax offsets - what are they? Tax offsets directly reduce the amount of tax you have to pay. Most tax offsets are non-refundable, meaning any unused tax offsets are disregarded.
  • Family tax benefit (FTB) - what is it? A government benefit for people with children in their family.
  • Baby bonus - what is it? If you had a baby after 30 June 2001 you may be eligible for the baby bonus.
  • Pay as you go (PAYG) - what is it? The pay as you go system means that you pay your tax as you earn income during the year, rather than having a bill at the end of the year. PAYG can be either "withheld" by an employer or paid as an "installment" for self employed.
  • PAYG Payers - what are they? Your payer may be your employer, Centrelink or an institution.
  • PAYG Payment summaries - what are they? Your payment summary shows how much you earned and how much tax you paid during the year.
  • Goods and services tax (GST) - what is it? The goods and services tax (GST) is a tax charged on the sale of most goods and services in Australia.

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