1. The ABS has developed the concept of the 'income unit' as a statistical unit appropriate for certain types of income analysis, especially when considering income support (through social security) and income tax. The standard variable 'Income unit composition' supports the identification of Income units within households.
2. A major determinant of economic wellbeing for most people is the level of income they and other family members in the same household receive. While income is usually received by individuals, it is normally shared between partners in a couple relationship and with dependent children. To a lesser extent, it may be shared with other children, other relatives and possibly other people living in the same household, for example through the provision of accommodation either free or at less than market price. This situation is particularly likely in the case of non-dependent children and other relatives with low levels of income of their own. Even when there is no transfer of income between members of a household, nor provision of free or discounted accommodation, members are still likely to benefit from the economies of scale that arise from sharing a dwelling. Therefore the household is the statistical unit most commonly used for the analysis of the levels and distribution of income.
3. However, for some types of analysis, it is appropriate to utilise a statistical unit in which it can be assumed that a high degree of sharing of income, and other economic resources, takes place. A unit based on the degree of sharing of income that can be assumed to take place between couples and dependent children may be more useful, in such cases, than one based on the income sharing which may take place to a lesser extent with other persons in the household. The income unit serves this purpose.
4. Terminology used in this standard is defined in the Glossary section of the 'Overview of family, household and income unit standards'.