The ABC of Tax Terminology for New Businesses

9 Important Tax Terms

Activity statements
Activity statement allows to report your GST, PAYG instalments, PAYG withholding and FBT instalments. You can offset tax payable against tax credits to arrive at a net amount.

Australian business number
Your Australian business number (ABN) is your identifier for the dealings with the Tax Office and other government departments and agencies.

Business Entity - Examples
A body corporate, a partnership, an unincorporated association or body of persons, a trust or a superannuation fund.

Enterprise
An enterprise includes business and other commercial activities except:
  • private recreational pursuits and hobbies
  • activities carried on as an employee, labour hire worker, director or office holder
  • activities carried on by individuals (other than trustees of charitable funds) or partnerships without a reasonable expectation of profit
GST-free sales
You do not include GST in the price of GST-free sales that you make, but you are entitled to GST credits for things you have purchased or imported for use in your business. Some examples of GST-free sales include basic food, exports, sewerage and water services, the sale of a business as a going concern, non-commercial activities of charities, and most education and health services.

GST input tax credit
You are entitled to a GST credit for the GST included in the price of purchases or importations you make for use in your business. But you are not entitled to a credit to the extent you use the purchase or importation for private purposes or, in many cases, to make input taxed sales.

You must have a tax invoice to claim a GST credit (except for purchases with a GST-exclusive value of $82.50 or less, although you should have some documentary evidence to support these claims).

Input taxed sales
You do not include GST in the price of input taxed sales you make, but neither are you entitled to GST credits for things you have purchased or imported that relate to making those input taxed sales. In some cases, you may be entitled to claim reduced GST credits. Input taxed sales include most financial supplies and supplies of residential rent and residential premises (other than new residential premises).

Tax invoice
A tax invoice is a document generally issued by the seller. It shows the price of a sale, indicating whether it includes GST, and may show the amount of GST. It must show the Australian business number of the seller. You must have a tax invoice before you can claim a GST credit on your activity statement for purchases of more than $82.50 (excluding GST).

Tax period
A tax period is the length of time for accounting for GST on your GST return – which is usually your activity statement. There are quarterly, monthly and annual tax periods.

Quarterly tax periods are periods of three months ending on 30 September, 31 December, 31 March and 30 June. Monthly tax periods end on the last day of each calendar month. An annual tax period is the financial year or that part of the financial year for which the entity is a GST instalment payer.

An activity statement must be lodged for each quarterly or monthly tax period. An annual GST return is lodged by GST instalment payers or by entities that are voluntarily registered for GST.



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Accounting and tax terms explained. Learn about GST, PAYG instalments, PAYG withholding, FBT instalments, Australian business number, Business Entity, GST-free sales, GST input tax credit, Input taxed sales, Tax invoices and more .