The No-Jargon Financial Glossary

A regular income stream bought with super money, usually at retirement. You draw down the balance within limits set by law until the money runs out. For most people aged 60 and over these payments are tax-free.

A super fund where your final balance depends on the contributions made by you and your employer plus investment earnings, less fees and taxes.

A regular payment from the government for eligible people who have reached pension age. Eligibility depends on age, residence, and income and assets tests.

An investment bought with a lump sum that pays a set income for an agreed number of years or for life. The money is generally locked away for the chosen period.

Your gross income before deductions, including salary and wages, dividends, interest and rent. It also includes net capital gains and some other amounts.

Something you own that has value. It can be a financial item such as cash, shares or a bank account, or a physical item such as a house, land or a car.

How your money is divided across asset classes such as shares, property, fixed interest and cash.

A group of investments that behave in similar ways. The main asset classes are cash, fixed interest, property and shares.

Australia's main exchange, where shares in public companies, along with options, warrants, bonds and other securities, are bought and sold.

An instruction that requires your super fund to pay your benefit to the beneficiary you have named when you die, provided it is lawful to do so.

A share in a large, well-established company with a long record of steady earnings, often a leader in its sector.

A charge that may apply if you end a fixed rate home loan early. It can be large, and it is usually higher when interest rates have fallen since the loan was fixed.

Short-term finance that covers the gap between buying a new property and selling an existing one.

The fee a broker charges to buy or sell shares on your behalf.

Also called a buyer's agent. A person paid a fee to search for, assess and negotiate a property purchase on behalf of the buyer.

The difference between what you paid for an asset, including buying costs, and what you received when you sold it, less selling costs, when the result is a profit.

The tax on a profit made when you sell or dispose of certain assets. The gain is included in your income for the year. Many main residences and personal cars are exempt.

The rise in the value of an asset over time, separate from any income it produces.

The interest rate on overnight loans between banks. The Reserve Bank of Australia sets a target cash rate as part of monetary policy, and it influences the rates banks charge and pay.

Under current rules, a resident individual who has held an asset for at least 12 months generally has only half of the net capital gain taxed. From 1 July 2027 a reform changes how gains are taxed under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026.

A single percentage that shows the true cost of a loan by combining the interest rate with most fees and charges. It helps you compare loans on a like-for-like basis.

A rate that folds most loan fees and charges into the interest rate to give one figure, so the real cost of a home loan is easier to compare between lenders.

Interest calculated on both the original amount and on the interest already added. Over time this causes a balance to grow faster than simple interest, which is charged only on the starting amount.

Before-tax contributions to super, such as employer super guarantee, salary sacrifice and personal contributions you claim as a deduction. They are taxed at 15% inside the fund and count towards the concessional cap.

An event that lets you access your super, such as retiring after reaching preservation age, turning 65, or permanent incapacity.

A measure of how prices change over time. It tracks the weighted average price of a basket of household goods and services, such as food, transport and medical care, in Australian cities.

The limit on how much you can put into super each year in a given category before extra tax applies. There are separate caps for concessional and non-concessional contributions.

A professional who handles the legal steps of buying or selling property, including the paperwork and the review and explanation of the contract terms.

An expense you can subtract from your assessable income to reduce your taxable income, where tax law allows it. Common examples include some work-related and investment costs.

A lower-risk asset such as cash or fixed interest that is generally less volatile than growth assets and is held mainly for stability and income.

A super fund where your retirement benefit is set by a formula, often based on your salary near retirement and years of service, rather than on investment returns alone.

An asset with a limited effective life that is expected to fall in value as it is used, such as plant and equipment. Its decline in value can often be deducted over time.

Spreading money across different investments or asset classes so that a fall in any one of them has less effect on the whole. It is a common way to manage risk.

A payment a company makes to its shareholders out of profits, based on how many shares each person holds. A franked dividend is paid from profits the company has already paid tax on.

A ratio that shows how much a company pays in dividends each year compared with its share price. It measures income only, not any change in the share price.

An extra 15% tax on concessional super contributions for higher-income earners, applied where income plus those contributions are above the $250,000 threshold.

A contribution to super of up to $300,000 from the proceeds of selling your main residence, available to people who meet the eligibility rules.

Another word for shares or stocks. Holding equities means owning part of a company and being entitled to a share of its profits through dividends.

The value of an asset such as your home after subtracting any money still owing on it. If a house is worth $700,000 and the loan is $400,000, the equity is $300,000.

A managed fund or unit trust that trades on an exchange like a share. Most ETFs aim to track the performance of an index, a currency or a commodity, such as the S&P/ASX 200 or gold.

A government-backed protection for deposits of up to $250,000 per account holder at each authorised deposit-taking institution, such as a bank, building society or credit union, if that institution fails.

In Australia, the 12-month period from 1 July to 30 June used for tax and many financial records.

A grant provided by state and territory governments to eligible first home buyers. The amount, price caps and conditions differ in each state and territory.

An interest rate that stays the same for a set period on a loan or investment. It is the opposite of a variable rate.

A home loan with an interest rate locked in for a set period, often one to five years. It protects against rate rises but does not benefit from rate falls during the fixed term.

Your share of the tax a company has already paid on the profits behind a dividend. You include the dividend and the credit in your income and then claim the credit against your tax. Also called an imputation credit.

Tax an employer pays on certain non-cash benefits provided to employees, such as a work car available for private use.

A dividend paid entirely from profits the company has already paid tax on, so it carries a franking credit for the full company tax already paid.

Borrowing money to invest, for example buying a property with a mortgage or buying shares with a margin loan.

A broad tax of 10% on most goods and services sold or used in Australia. To add GST, multiply the price before GST by 1.1. To find the GST in a total, divide by 11.

A payment of up to $500 the government can add to the super of an eligible lower or middle income earner who makes after-tax contributions. The amount depends on income and how much you contribute.

An asset such as shares or property that can rise in value over time as well as produce income. Growth assets tend to move up and down more than defensive assets.

A person who agrees to be responsible for someone else's loan. If the borrower cannot pay, the guarantor is legally required to cover the debt.

Government loans, including HECS-HELP, that help eligible students pay their tuition or student contribution. Repayments are worked out through the tax system once income passes a threshold.

A managed fund built to match, rather than beat, the return of a market index such as the ASX 200, usually with lower fees than an actively managed fund.

The general rise in the cost of goods and services over time, which reduces how much a dollar can buy.

When a company first lists on a stock exchange and offers its shares to the public. Also called a float.

The cost of using money over time. You earn interest when you lend or deposit money, and you pay interest when you borrow. It is usually set as a percentage of the amount lent or borrowed.

Insurance that protects the lender, not the borrower, if the borrower cannot repay the loan. It is usually a one-off cost charged when the amount borrowed is more than 80% of the property value.

Using borrowed money or financial products to increase the size of an investment. It can magnify gains, and it can magnify losses in the same way.

Money you owe. A home loan, a personal loan and a credit card balance are all liabilities.

How quickly and easily an asset can be turned into cash. Shares in large listed companies are usually liquid, while direct property is less liquid because it takes time to sell.

The size of a loan shown as a percentage of the value of the property it buys. It is the loan amount divided by the property value. A $450,000 loan on a $600,000 home is an LVR of 75%.

A government payment of up to $500 into the super fund of eligible low-income earners, equal to 15% of their concessional contributions, for adjusted taxable income up to $37,000.

An investment where your money is pooled with other investors' money and a fund manager buys and manages the investments on everyone's behalf.

The rate of tax that applies to the income band your taxable income falls in. As income rises into higher bands, the rate on that extra income increases.

An amount most taxpayers pay to help fund the public health system, generally worked out as a percentage of taxable income. A reduction applies for some low-income earners.

An extra charge on higher-income earners who do not hold an appropriate level of private hospital cover, on top of the ordinary Medicare levy.

A loan used to buy property, where the property is held as security. If the loan is not repaid, the lender can take steps to sell the property to recover the debt.

Borrowing to invest where the interest and allowable deductions are more than the income the investment produces. Under current rules the net loss can generally be claimed against other income. Rules for established residential property change from 1 July 2027.

After-tax contributions to super, made from money you have already paid tax on. They are generally not taxed again in the fund and count towards the non-concessional cap.

The statement the ATO sends after processing your tax return. It shows the tax you owe or the refund you are due.

A transaction account linked to a home loan. The balance in the account is set against the loan balance so interest is charged only on the difference, while the money stays available to use.

The system for reporting and paying tax on business and investment income across the year, rather than in one amount at the end. It covers PAYG withholding and PAYG instalments.

The full collection of investments a person or fund holds, such as shares, property, cash and fixed interest.

The age from which you can start to access your super once you meet a condition of release. It is 60 for anyone born after 30 June 1964.

The original amount of money borrowed or invested, before any interest is added.

A feature that lets you take back extra repayments you have made above the required amount on a loan, subject to the lender's rules.

Replacing an existing loan with a new one, often to get a lower rate, change features or consolidate debt. Costs such as exit and setup fees can affect whether it saves money.

The money you make or lose on an investment, usually shown as a percentage of the amount invested. It can come from income, from a rise in value, or both.

An arrangement agreed in advance where part of your before-tax salary is paid into super instead of to you. It is a concessional contribution taxed at 15% in the fund and counts towards the concessional cap.

A private super fund that you run yourself as trustee, with responsibility for its investments and for meeting super and tax rules.

A unit of ownership in a company. Shareholders own part of the company and may receive dividends, which are a share of its profits.

A state or territory tax on property transfers. Each state and territory sets its own rates, thresholds and first home buyer concessions.

The minimum super an employer must pay for eligible employees, worked out as a percentage of their ordinary time earnings.

Money set aside during your working life to provide income in retirement. Employers must contribute for most employees, and the money is generally preserved until you meet a condition of release.

The amount of income an Australian resident can earn each year before income tax applies. Non-residents are not entitled to it.

Your assessable income after allowable deductions are subtracted. It is the amount your income tax is worked out on.

A fixed interest investment where you lock money away with a bank for a set term at a set rate. Taking the money out early usually reduces the interest earned.

An arrangement that lets you draw a super income stream after reaching preservation age while still working, within set limits.

An interest rate that can move up or down over the life of a loan or investment, usually in response to wider market rates.

How much and how quickly the price of an investment moves up and down. Higher volatility means larger swings in value.