AUSTRALIAN TAXATION OFFICE, PERSONAL TAX
INTRODUCTION
1 Taxation data are managed by the Australian Taxation Office (ATO). The ATO is the main revenue collection agency of the Federal Government. The primary role of the ATO is to administer taxation legislation and to collect a wide variety of taxes.
2 The purpose for collecting taxation statistics is to monitor tax revenue which allows for the management and shaping of the revenue systems that sustain social and economic policy and fund services for Australians.
3 The information is collected under the Income Tax Assessment Act 1997 and other legislative provisions.
4 The ATO collects data on demographic characteristics, taxable income, deductions, expenses and tax offsets.
5 In this product data are presented on mean individual taxable income and mean individual net tax.
SCOPE
6 The scope for this collection is all personal (or individual) taxpayers in Australia.
7 The coverage is annual income tax returns and associated schedules (such as the capital gains tax schedule) submitted for the 2003–04 income year, which were processed before 31 October 2005.
8 Excluded from the collection are people who are exempt from submitting a tax return.
9 Refer to Taxation Statistics 2003–04 or the ATO's web site for further information.
REFERENCE PERIOD
10 The reference period is the 2003–04 income year.
KEY DATA ITEMS
11 The following key data items from the ATO relate to data used in this product.
12 Gross tax: The sum of tax on taxable income and complementary tax. Gross tax is calculated by applying the general rates of tax to the taxable income of most resident individual taxpayers.
13 Mean net tax: Mean (average) net tax is calculated by dividing the sum of net tax and total imputation credit by the number of taxable individuals.
14 Mean taxable income: Mean (or average) taxable income is calculated by dividing taxable income by the number of taxable individuals.
15 Net tax: Net tax refers to the 'net tax payable' personal taxpayers are liable to pay. It is calculated by deducting from gross tax any allowed tax offsets and credits (excluding 30% private health insurance tax offset, imputation credit, share of imputation credit from franked dividends and the section 100(2) credit), and adding on any Medicare levy and Medicare levy surcharge.
16 Non-taxable individuals: Non-taxable individuals are those persons who submitted an income tax return to the ATO and their net tax payable was $0. This is different to those people who did not submit a return.
17 Taxable income (or loss): The taxable income amount is a Tax Office calculated amount. It is equal to the calculated amount of assessable income less allowable deductions. If the amount calculated is less than $0 (that is, the total of the allowable deductions is greater than the calculated amount of assessable income), the taxable income amount will be reported as equal to $0.
18 Taxable individuals: An individual is considered taxable when the calculated net tax payable of the individual is greater than $0.
GEOGRAPHY
19 Data are coded according to the postcode in the residential address shown on the individual tax returns and concorded to Local Government Area (LGA). The Australian Standard Geographic Classification (ASGC) (cat. no. 1216.0), 2004 was used in the coding. In this product data are presented by LGA (see paragraph 26).
20 Cases in which the residential postcode was not shown, or where an invalid postcode was used have been classified as 'unknown'.
COLLECTION METHODOLOGY
21 Individuals receiving an income are required by law to submit a tax return at the end of each financial year. These returns can be completed either by the individual, or by an agent acting on their behalf. Individual returns can be lodged either electronically or in paper form.
22 Once lodged, the ATO processes these returns. Aggregate data from these returns is then used to derive taxation statistics.
ACCURACY
23 Australia's tax system works on self-assessment, i.e. personal taxpayers must show on their annual income tax return all their assessable income and claim only those deductions, expenses and tax offsets to which they are entitled. To assist individuals to complete their income tax returns, the ATO distributes TaxPack which provides comprehensive instructions on how to complete the income tax return.
24 This data was collected using postcode geography and then concorded to Local Government Areas (LGA). The concordance uses 2004 ABS Estimated Resident Population (ERP) data to estimate the percentage contribution of each postcode to each LGA. An assumption underlying the concordance is that the total population in the dataset is distributed throughout a postcode in the same way as the ERP data used to derive the concordance. This may be imprecise when the concordance is applied to a sub-population; for example, younger or Indigenous persons.
25 The data published in this product may differ from figures published by the ATO due to differences in the geographic coding of areas along the state borders.
26 Given that all in scope taxpayers are required to submit a return, the collection is effectively a census, which means that the data are not subject to sampling variability. However, other inaccuracies collectively referred to as non-sampling error may affect the data. These non-sampling errors may arise from a number of sources, including:
- errors in the reporting of data by respondents;
- errors in the capturing or processing of data;
- estimation for missing or misreported data; and
- definition and classification errors.
PUBLISHED DATA
27 Detailed taxation data are published by the ATO annually in Taxation Statistics. Summary data are also published in the ATO's Annual Report.
RELATED WEB SITES
28 The ATO web site can be found at <www.ato.gov.au>.
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