Before you head to your accountant with a pile of paperwork, here’s our guide to some of the technical jargon you might come across during your appointment.

ATO

Australian Tax Office

The Australian financial year

The Australian financial year starts on 1 July and finishes on 30 June in the following year.

Individual tax returns are due for submission by 31 October and business tax returns by 15 January.

The Goods and Services Tax

The GST is a tax of 10% charged on the supply of goods and services in Australia and on any goods imported into Australia.

A business has to register for GST when it earns more than $75,000 per annum. Then it must start charging a 10% tax on all sales – with a Tax Invoice showing the amount of GST paid by the customer.

Australians and Australian businesses who pay GST on goods and services that are used to earn income – such as a computer for a freelancer, or tools for a tradesman, the amount of GST paid can be used as a rebate against the tax collected.

If the amount of GST collected exceeds GST paid, the difference is remitted to the ATO with a completed Business Activity Statement (BAS). But if the GST paid is more than the GST you’ve collected, you may be eligible for a tax refund.

Types of industries

• Primary – includes mining, farming, fishing
• Secondary – manufacturing, e.g. motor vehicles, engineering, shipbuilding
• Tertiary (trading) – wholesale and retail traders
• Tertiary (service) – accounting, banking, architecture, insurance, health care

Types of business ownership

• A Sole Trader is a business managed and owned by a single person. The owner is entitled to all profits but bears all losses;
• A Partnership is managed and owned by two or more persons. Profits and losses are shared between partners. If one partner resigns, the partnership must be dissolved;
• A Corporation is a separate legal entity. Shareholders have limited liability for the debts of the company, and can sell or pass on their interest in the company to a third party;
• A Co-operative is a type of company formed for the mutual benefit of members. They hold shares and are entitled to cheaper goods or services.

Financial statements

Income Statement or Profit and Loss Report

A detailed analysis of the financial performance of a business.  Expenses are offset against income to arrive at a net profit or loss for the period.

Balance Sheet

A statement of a business’s financial position at a specific point in time. For example, the assets, liabilities and owner’s equity of a business at 30^th June 2015

Asset

Something of value belonging to the business that provides a future benefit. This includes the premises, a motor vehicle, machinery, furniture, office equipment, stock, cash at bank, or accounts receivable.

Liability

The amount owed by the business which will need to be paid in the future. This includes borrowed funds, and goods bought on credit.

Current Liability

A short-term debt which is normally repaid within the year. It includes items bought on credit (accounts payable), bank overdrafts and credit card balances.

Non-Current Liability

Includes debts which are not expected to be repaid within a year, such as leases, mortgages and long-term loans.

Owner’s Equity

Also known as capital, this is the value of the owner’s interest in the business.

Still confused? You can find an accountant to sift through the paperwork here.