Financial Glossary

Tax on the profit when you sell an asset for more than you paid. CGT is not a separate tax — the gain is added to your assessable income and taxed at your marginal rate. Assets held over 12 months qualify for a 50% discount for individuals.

Australian resident individuals who hold an asset for at least 12 months before selling can reduce their capital gain by 50% before it is added to assessable income. Companies receive no discount; super funds receive a one-third discount.

Earning returns on previous returns, not just on the original amount. Over time, compounding creates exponential growth — interest earns interest, which earns more interest. The longer the timeframe, the more powerful the effect.

The maximum amount of pre-tax (concessional) contributions that can be made to super each financial year before additional tax applies. Includes employer SGC contributions and salary sacrifice. The cap is $30,000 for FY2025–26.

Australia's primary measure of consumer price inflation, published quarterly by the Australian Bureau of Statistics. Tracks price changes across a representative basket of goods and services. Used to index HECS/HELP debt, adjust tax thresholds, and measure purchasing power erosion.

The actual percentage of your total income paid in tax, after accounting for the tax-free threshold and progressive brackets. Always lower than your marginal rate because only the top slice of income is taxed at the highest rate.

Tax credits attached to dividends paid by Australian companies that have already paid the 30% company tax rate on their profits. You include the grossed-up dividend as income, then claim the credits as a tax offset. If your marginal rate is below 30%, the ATO refunds the excess.

A 10% consumption tax applied to most goods and services sold in Australia. Some items are GST-free (fresh food, medical services, education) or input-taxed (residential rent, financial services). The GST component of an inclusive price is always 1/11th of the total.

Australia's income-contingent student loan scheme. Repayments are a percentage of your total income (not just the amount above the threshold), withheld by your employer and reconciled at tax time. The debt is indexed to CPI each 1 June. No interest is charged, but indexation can significantly grow the balance.

Insurance that protects the lender (not the borrower) when a home loan exceeds 80% of the property's value (LVR above 80%). Paid by the borrower as a one-off premium, typically added to the loan. Can cost $8,000–$35,000+ depending on loan size and LVR.

A tax offset that reduces income tax for lower-income earners. Worth up to $700 for incomes up to $37,500, phasing out completely at $66,667. Applied automatically — you do not need to claim it. Reduces your tax payable, not your taxable income.

The loan amount as a percentage of the property's value. An LVR above 80% typically triggers Lenders Mortgage Insurance (LMI). A 20% deposit = 80% LVR. Lower LVR generally means better interest rates and no LMI requirement.

The tax rate applied to your last dollar of income — the rate for the bracket your income falls into. Not the rate on your entire income. In FY2025–26: 0% up to $18,200, 16% to $45,000, 30% to $135,000, 37% to $190,000, 45% above.

A 2% tax on taxable income that funds Australia's public health system. Applies to most Australian residents. A shade-in applies for low incomes: no levy below $26,000, phasing in between $26,000 and $32,500. Separate from the Medicare Levy Surcharge.

An additional 1–1.5% tax for singles earning above $93,000 (or families above $186,000) who do not hold private hospital cover. Designed to encourage private health insurance. Separate from the base 2% Medicare Levy, which applies regardless.

A transaction account linked to your home loan where the balance reduces the principal on which interest is calculated. A $50,000 offset on a $500,000 mortgage means you only pay interest on $450,000. Your money stays accessible — you're not repaying the loan, just reducing the interest.

The system where your employer withholds income tax from each pay and remits it to the ATO on your behalf. The amount withheld is based on your income, residency, and tax file number declaration. It's reconciled when you lodge your tax return — if too much was withheld, you get a refund.

The age at which you can access your superannuation. For anyone born after 1 July 1964, preservation age is 60. You can access super earlier only in limited circumstances (severe financial hardship, terminal illness, or specific compassionate grounds).

Redirecting part of your pre-tax salary into superannuation. The sacrificed amount is taxed at 15% (concessional rate) inside the fund rather than your marginal rate, saving the difference. Reduces your take-home pay but boosts retirement savings tax-efficiently.

The minimum superannuation contribution your employer must pay on your behalf, currently 12% of ordinary time earnings for FY2025–26. Paid on top of your salary, not deducted from it. Also called the Super Guarantee or SG.

A state government tax paid when purchasing property, calculated as a percentage of the purchase price using progressive brackets. Rates vary significantly between states. First home buyers may qualify for concessions or exemptions below certain price thresholds.