Small Business Tax Glossary

You didn't get into business to become a tax expert. So use our helpful guide to understand all the terminology instead.

This glossary covers key tax concepts relevant to small businesses operating in Australia, New Zealand, and the United Kingdom — from everyday compliance terms to more specific concepts around home office deductions and payroll.

General tax concepts

• Tax Liability — The total amount of tax owed to tax authorities for a specific period
• Tax Deduction — An expense that reduces your taxable income
• Tax Credit — A direct reduction in the amount of tax you owe
• Tax Return — The official document filed with tax authorities reporting income, deductions, and taxes owed
• Tax Year — The 12-month period for which taxes are calculated and reported
• Record Keeping — The systematic recording and maintaining of financial documents
• Depreciation — The gradual reduction in value of business assets over time

Home office deductions

• Home Office Deduction — Claiming a portion of home costs as a business expense
• Exclusive Use Area — A part of your home dedicated entirely to business
• Apportionment — Dividing mixed expenses between personal and business use
• Occupancy Expenses — Costs of owning or renting your home, partially deductible
• Running Expenses — Day-to-day costs of operating your home office
• Deductible Portion — The percentage of home costs claimable as business expenses

Australia

• GST — Australia — 10% goods and services tax
• PAYG (Pay As You Go) — Prepaying income tax throughout the year
• Superannuation — Mandatory retirement savings contributions
• Fringe Benefits Tax (FBT) — Tax on non-cash employee benefits
• Running Expenses — Home office operating costs (also Australian-specific rules)

New Zealand

• GST — NZ — 15% goods and services tax
• PAYE — NZ — Tax withheld from employee wages
• KiwiSaver — Voluntary retirement savings scheme
• Fringe Benefit Tax — NZ — Tax on non-cash employee benefits in NZ
• Square Meter Rate Rule — IRD's simplified home office calculation method
• Deductible Portion — NZ-specific home office deduction rules

United Kingdom

• VAT (Value Added Tax) — 20% consumption tax on goods and services
• PAYE — UK — Income tax and NI deducted from employee wages
• Corporation Tax — Tax on profits of limited companies
• National Insurance — Contributions towards state benefits and pension
• Simplified Expenses — Flat rate expense calculations for the self-employed