Finance Glossary

Capital Gains Tax (CGT) applies when you sell an asset for more than you paid for it. The gain is added to your taxable income.

Compound interest is interest calculated on both your initial amount and the accumulated interest from previous periods.

Division 293 is an extra 15% tax on super contributions for high-income earners with income plus super above $250,000.

Fringe benefits tax (FBT) is a tax employers pay on non-cash benefits given to employees, like cars or gym memberships.

Franking credits represent company tax already paid on dividends, reducing or eliminating your personal tax on that income.

GST (Goods and Services Tax) is a 10% tax on most goods, services, and other items sold or consumed in Australia.

HECS-HELP is the government loan scheme for university tuition. Repayments are based on your income and collected through tax.

LMI (Lenders Mortgage Insurance) is a one-off premium that protects the lender — not you — when you borrow more than 80% of a property's value.

LVR (Loan-to-Value Ratio) is the percentage of a property's value that you borrow. A higher LVR means more risk and possibly LMI.

The Medicare levy is a 2% tax on your taxable income that helps fund Australia's public healthcare system.

Negative gearing is when the costs of owning an investment property are more than the income it generates, creating a tax loss.

An offset account is a transaction account linked to your home loan. Your balance reduces the loan amount you pay interest on.

Salary sacrifice is an arrangement where part of your pre-tax salary goes to super or benefits instead of your bank account.

Stamp duty is a state government tax you pay when you buy property in Australia. The amount varies by state and property value.

The super guarantee is the minimum percentage of your earnings your employer must pay into your super fund — currently 12%.