Glossary of Terms



The wealth of an individual or company that can generate an income. Capital can be held in the form of cash or securities such as shares or property. Also refers to funding for investment in capital assets or to operate a business.

Capitalized Cost

When recording expenses associated with property in Mclowd, it is important to determine if the cost is a ”capitalized cost” or a general expense.

General expenses are correctly recorded under the Expense Tab, allocated to account 5-1150 Other Deductions, then classified by selecting from a drop-down list of expense types.

Capitalized Costs should be entered by selecting the property asset under the Assets Tab and adding an item to the Purchases list at the bottom of the screen. (Refer to  for detailed instructions on entering the two types of property expenses.

A capitalized cost is the amount of money used to acquire ownership of an asset or to increase the value of an owned asset. For example, the costs of acquisition; construction costs to build, add to, or renovate a property; costs for installing fixtures and fittings that enhance the property value (as opposed to simply replacing worn or damaged items).  Depreciation is also a ”capitalized cost”, as it reduces the value of the asset.

An expense is monetary value leaving the Fund without increasing the value of the Fund’s assets. For example, costs for repair, replacement of worn or damaged fittings, advertising, management fees, power costs, telephone, cleaning, garden maintenance, etc.

CGT Concession

A concession granted by legislation designed to reduce the amount of capital gains tax payable in certain circumstances.

The ”Capital Gains Tax Concession” (CGT Concession) was legislated to recognize the challenges faced by small business owners when winding up businesses. It enables owners of eligible small businesses to:

  • Disregard some or all of the capital gains made when disposing of active business assets, and
  • Use certain sales proceeds to make super contributions that count towards a capital against tax (CGT cap)

A lifetime CGT concession cap applies. This cap is indexed annually and rounded down to the nearest $5000.  The cap amount for 2016-7 is $1.415 million. Contributions that count toward the cap are measured from 10 May 2006. Amounts that count towards a person’s lifetime CGT cap when contributed to super include:

  • Capital proceeds from the sale of an asset that qualifies for the 15 year exemption
  • Capital proceeds from the sale of an asset that would otherwise qualify for the 15 year exemption but does not because it was a pre-CGT asset
  • An asset sold for no capital gain
  • An asset sold within the 15 year time-frame due to permanent incapacity
  • A capital gain that is exempt under the small business retirement exemption.

The 15-year asset exemption applies if you are 55 or older and retiring or permanently incapacitated, and you have owned an active business for at least 15 years. You won’t pay CGT when you dispose of the asset by gift, sale or transfer. Amounts from this exemption can be contributed to your super fund without affecting your non-concessional limits (subject to the CGT Lifetime Cap).

The government also offers a 50% Active Asset reduction, which means that if you’ve owned an active business asset, you only pay tax on 50% of the capital gain when you dispose of it.

If you are under 55 years old and sell an active business, you can claim a CGT exemption up to a lifetime limit of $500,000, provided that you pay the money from the disposal into a complying superannuation fund or retirement savings account.

If you dispose of an active business active and buy a replacement asset, or improve an existing one, you can defer your capital gain until a later year. The replacement asset can be acquired one year before or up to two years after the last CGT event in the income year for which you chose the rollover. Amounts from this exemption may be able to be contributed to your super fund without affecting your non-concessional contributions limits.

NOTE:  The CGT cap is separate to the non-concessional contribution (NCC) cap, which is currently up to $150,000, although those aged 64 under on July 1 can contribute up to $450,000 in a single year by using the three-year bring-forward provision.

CGT date

The date on which the ATO deems a Capital Gains event (acquisition or disposal) took place. Where a contract of sale is entered into, this is the date of the contract – not the date of settlement, payment or actually taking practical possession.  Where a transfer of property follows death, in  accordance with a Will, Binding Nomination, or decision of Trustees, the CGT date is the date of death, regardless of when the transfer is actually completed. Where an acquisition or disposal takes place pursuant to an option being granted, the CGT date is the date of acquisition or disposal of the asset (as stated on a contract of sale if one exists) and not the date of the option agreement.  In cases where there is no contract, the CGT date is the date the buyer took ownership of the asset.

Capital gain/loss

The difference between the purchase and sale price of a capital asset.

Capital gains are profits received when assets are disposed of for a higher price than they were originally acquired.

A capital loss is a loss incurred when an asset is sold for less than the cost of acquiring it. Capital losses may be used to offset tax obligations on capital gains, and may be carried forward to future years to offset future taxable capital gains.

Capital Gains Tax

A tax on the increase in the capital value of investments, payable when the capital gain is realised on sale of an asset.

Capital Growth

The amount or percentage by which an asset value increases over the life of an investment.

Capital Guarantee

An investment product that is fully or partially guaranteed to return the original amount invested to investors; so that investors can be sure their capital will not be reduced due to poor investment returns.

Capital movement

The rise and fall of the value of an asset.


Money in hand or in the bank, or an investment made in short-term money markets (for example, bank bills, treasury notes).

Closing price

The final sale price of a security at the close of trade on a particular business day on a public stock exchange.


If you earn a low income and you make contributions to your super from your after-tax pay, the Government will chip in to top up your super account. This Government payment is called a co-contribution. Some eligibility rules apply.

Collective or Managed Investments

A type of investment vehicle that pools the assets of multiple investors into a single vehicle with a common investment objective and strategy. Also called ”Managed Funds”.

Complying Fund

A regulated superannuation fund that complies with the operational standards specified in the SIS regulations. Unless a fund meets the SIS regulations, they will not be able to accept Superannuation Guarantee contributions.

Compound Interest

Interest calculated on interest as well as on the initial investment.


The right of a superannuation beneficiary to exchange one type of income for another. Under specific conditions, a fund member may elect to receive a lump sum payment instead of part or all of the regular pension income to which that member is entitled. Commutations are entered in Mclowd using the ADD PAYMENT button under the EXPENSES tab.

Concessional Contributions

Superannuation contributions for which a tax deduction can be claimed are termed ”Concessional contributions”. These include employer Superannuation Guarantee (SG) contributions, additional employer contributions, salary sacrifice, contributions made by the self-employed for which they claim a tax deduction, and personal contributions for which employees lodge a “Notice of intent to claim a tax deduction for personal contribution”.

Conditions of Release

Under law, members who have not yet retired and commenced drawing a superannuation pension can only withdraw funds from their superannuation accounts under specific circumstances. Benefits can be paid to members whose accounts remain in accumulation mode provided they satisfy one of approximately fourteen ”Conditions of Release”. Benefits can be paid prior to legal retirement when a member ceases employment if the account balance is under $200, or if the member is over 60 years of age (even if they intend to return to work); to legal heirs or beneficiaries on death; if the member is over 65 and requests a lump sum withdrawal; if the member is a non-resident and leaves the country; or in certain compassionate circumstances, including severe financial hardship or if the member is suffering serious disability or incapacity. The law regarding payment of benefits is quite strict. Trustees of self-managed superannuation funds should take care to ensure that a Condition of Release has been properly satisfied before consenting to make a benefit payment.

Conservative Assets

Assets are classed as ”conservative” or ”growth” assets, depending on whether the focus of investment in the asset is attaining income or capital growth. Conservative assets, such as fixed interest bonds and cash, generate a large part of their returns from regular income and have limited potential for capital growth.

Consumer Price Index (CPI)

The Consumer Price Index (CPI) measures the prices of a select group of goods and services that typify those bought by ordinary Australian households. This index is used to measure inflation.


Money deposited into a superannuation account either by an employer, on behalf of a member, or a member. Rollover or transfer amounts are not classed as contributions, however. Contributions may be cash or in-specie. They are entered through the Add Contributions screen under Income in Mclowd.

Contribution tax

When contributions are paid into a fund, they may, under some circumstances, be taxed, depending largely on whether or not a tax deduction can be claimed.


In a share consolidation, a company seeks to increase the price of cheap shares by reducing the total number of shares. Depending on the ratio, the company will combine a number of low value shares into a single share of higher value. The total value of the company remains the same. Consolidations sometimes enable companies to attract investment from institutional investors that are not keen to purchase low-value shares.

A share split is the opposite of a consolidation. A single share is split into multiple shares at a lower price point. By thus reducing the share price, companies can sometimes attract investors who may be resistant at a higher price. Shareholders have greater flexibility to sell part of their holding while still retaining a parcel for themselves, thus increasing liquidity of the company’s shares.

In both a consolidation and a split the total value of your holding remains unchanged, but the price of individual shares within the holding changes. The total value of the company and the ownership ratio also remains unchanged.

Refer to  Section 4.5.2 ASSETS: CORPORATE ACTIONS – CONSOLIDATION/SPLIT in the Mclowd User Manual for information on entering a Share Split or Consolidation in your Mclowd account.

Corporate Trustee

A trustee that is a company rather than an individual.


Entries recording a sum due, listed in the right column of an account. Note that a credit decreases the value of an asset or an expense, but increases a liability, income/revenue or equity/capital.

Currency Hedging

A strategy that aims to reduce the risks of loss when trading currency in a fluctuating foreign exchange market.




about the author:

Lorraine Cobcroft

With a background in accounting and financial management, followed by two decades writing software documentation, Lorraine joined the Mclowd team in mid-2016 and is enjoying working with a dynamic team to enhance an innovative product that has the potential to revolutionize the way Australians manage their retirement funding. Lorraine is also an accomplished business writer, ghost-writer, novelist and short-story writer and poet.

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