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Graph 1 - NUMBER OF PERSONS WITH WAGE AND SALARY INCOME - Australia (a)
(a) Breaks in series between 2006-07 and 2007-08 and between 2007-08 and 2008-09
Graph 2 - TOTAL WAGE AND SALARY INCOME - Australia (a)
(a) Breaks in series between 2006-07 and 2007-08 and between 2007-08 and 2008-09
Graph 3 - AVERAGE WAGE AND SALARY INCOME - Australia (a)
CHANGES IN THIS ISSUE
7 There has been a change in the classification used by the ATO to code occupation data. In 2009 the ATO changed from using the Australian Standard Classification of Occupations (ASCO) to the Australian and New Zealand Standard of Occupations (ANZSCO). The occupation categories for 2008-09 presented in this issue are not therefore comparable to those featured for 2003-04 to 2007-08 in previous issues of this product.
8 Since the first issue in this series, there have been a number of other changes in the data items included in Wages and salaries, and in the data released. These changes are outlined in the following paragraphs (9 to 13).
SUMMARY OF CHANGES TO THIS SERIES
9 Estimates of Wage and salary earner statistics for the years 1995-96 to 2005-06 have previously been released in an Information Paper and in Regional Wage and Salary Earner Statistics, Australia (cat. nos. 5673.0, 5673.0.55.001 and 5673.0.55.003).
eases contained data relating to persons whose main (or principal) sources of income were from Wages and
10 Data for 1995-96 to 2000-01 included only 'Gross Wage and salary income' and 'Allowances, tips etc' items from the individual tax return. Data for 2001-02 to 2005-06 included 'Attributable personal services income' in the definition of Wages and salaries.
11 Estimates of Wage and salary earner statistics prior to the 2003-04 to 2006-07 issue related only to persons whose main (or principal) source of income was from Wages and salaries. From the 2003-04 to 2006-07 issue, estimates of Wage and salary earner statistics related to all persons who received income from Wages and salaries. Users should exercise caution in comparing data in the 2003-04 to 2006-07 issue and subsequent issues with data in previous issues.
12 In this current issue (containing estimates for the years 2003-04 to 2008-09) and in the previous two issues (containing estimates for the years 2003-04 to 2006-07 and 2003-04 to 2007-08) income from Lump sums and Eligible termination payments have been included in Wages and salaries.
13 A summary of the changes to the Wage and salary earner series since the 1995-96 financial year are presented in the table below:
14 All individual income tax statistics provided to the ABS by the ATO have been in aggregated form only, at the SLA level. Information about individual taxpayers has not been released to the ABS.
15 Prior to being provided to the ABS, the statistics have also been subjected to a confidentiality process that randomly adjusts table cells with small values. This includes altering some small cells to zero. Caution should therefore be exercised in deducing that there are no people in an area with certain characteristics and, in general, no reliance should be placed on table cells with small values. The confidentiality process prevents the risk of inadvertently releasing any information that may identify an individual while preserving the overall information value of the statistics. As individual table cells are adjusted in the confidentiality process, the sum of values in the cells of a table row may not equal the table row total. Caution should be exercised, in particular in using data for small regions. In datacubes 2 to 9, in some cases where there are large differences in the sum of the row cells and the row total, the row totals have been preserved but other data for that region has not been shown.
SCOPE AND COVERAGE
16 The scope of these data relate to persons receiving income from Wages and salaries.
17 Wage and salary earners have been defined as:
persons aged 15 years and over who have submitted an individual income tax return and have received wage and salary income in that financial year.
18 Wage and salary income, as reported on the income tax return, includes:
19 It should be noted that this definition does not take account of whether Wage and salary earners work on a full-time or part-time basis. Consequently, differences in the extent of part-time work may account for some differences in the number of Wage and salary earners and average Wage and salary incomes across regions. Similarly, average Wage and salary incomes may be affected by overtime earnings and multiple job holdings.
20 There are several data considerations that users should be aware of when analysing the data. Overall, these are not viewed as being so severe that they would lead to the production of misleading information. Users are cautioned to be aware of these considerations and take them into account when analysing the results.
21 For the purposes of providing statistical measures for the entire population, the ATO database has some limitations in its coverage. Persons who receive less than the taxable income threshold are not necessarily required to lodge a tax return. Consequently, the coverage of low income earners is not complete in ATO records.
22 Generally, the ATO considers someone to be an Australian resident for tax purposes if they:
23 The data presented in this publication were compiled before the processing of all income tax returns for any given year may have been completed. Data provided to the ABS by the ATO are from returns processed up to 31 October, 16 months after the end of the financial year. Any returns lodged after this date are not included. Therefore, for 2008-09, returns processed after 31 October 2010 are not included. This also applies for each of the previous five years of data presented in this release, so for 2005-06 data for example, returns processed after 31 October 2007 are not included.
24 Annual revised data is published by the ATO in Taxation Statistics, Personal Tax, Table 7 for selected income items. One of these items is 'Salary or wages'. Although this data item is different to the data contained in this release (as it does not include all the items listed in paragraph 18), it can be used to give an indication of the likely direction of change in the number of Wage and salary earners and total Wage and salary income as more tax returns are lodged.
25 As an example, Table 1 below shows that for the 2003-04 income year, an additional 5% of taxpayers earning income from 'Salary or wages' lodged their income tax returns in the five years after the initial processing cut off of 31 October 2005. This translated to a further 5.2% of 'Salary or wages' income being reported.
Table 1. Comparison of ATO Original and revised data - Number of 'Salary or wages' earners and total 'Salary or wages' income, 2003-04
26 Due to the later lodgement dates for a small portion of tax returns (as shown above) the data provided in this release under-estimates the total taxable income for a given financial year.
Changes in taxation policy
27 The ATO provides information annually in Taxation Statistics on their website about changes that may affect taxation statistics. Changes relating to personal income tax are in each edition of Taxation Statistics.
28 For the income year 2008-09, a number of changes were noted in Chapter 2 of Taxation Statistics, including:
29 The ATO has noted in Chapter 2 of 'Taxation Statistics 2008-09' that 'Lodgment of individuals’ tax returns fell by 2.8% for the 2008–09 income year. This decrease reflects, in part, individual lodgments brought forward for the 2007–08 income year to access the government’s tax bonus payment''.
30 For the income year 2007-08, the following changes were noted in Chapter 2 of Taxation Statistics:
31 For the income year 2006-07, the following changes were noted in Chapter 2 of Taxation Statistics:
32 For the income year 2005-06, the following changes were noted in Chapter 2 of Taxation Statistics:
33 For the income year 2004-05, the following changes were noted in Chapter 2 of Taxation Statistics:
34 For the income year 2003-04, the following change was noted in Chapter 3 of Taxation Statistics:
COMPARISON WITH OTHER ABS INCOME DATA
Survey of Income and Housing
35 The ABS Survey of Income and Housing (SIH) collects information on sources of income, amounts received and the characteristics of persons aged 15 years and over resident in private dwellings throughout Australia. The survey was conducted every year from 1994-95 to 1997-98, and then in 1999-2000, 2000-01 and 2002-03. From 2003-04, the survey is being conducted every two years. The latest survey was for 2007-08. For further information about the concepts, definitions, methodology and estimation procedures used in the SIH, refer to Survey of Income and Housing, User Guide, 2005-06 (cat. no. 6553.0).
36 Data collected from SIH can be compared to ATO data published in this release for the years 2003-04, 2005-06 and 2007-08. Comparison of these data can provide a means of assessing trends, establishing whether counts are of an expected magnitude and whether the distribution of income across the various sources is similar.
37 SIH produces estimates of current income as well as estimates of annual income in respect to the previous financial year. Current income refers to income being received at the time the data were collected from respondents. The data used in the following comparison are based on current income estimates as these are thought to provide a better picture of income earners, are more up to date and are generally reported more accurately than previous financial year estimates.
38 Differences exist between the three years of SIH data which should be taken into consideration, most significantly that the 2005-06 and 2007-08 SIH were run as stand alone surveys, whereas the 2003-04 SIH was integrated with the Household Expenditure Survey (HES).
39 Table 2 presents comparable income data items from ATO data contained in this release and SIH data for 2003-04, 2005-06 and 2007-08. SIH estimates for Wage and salary income were higher than ATO income data in all three reference years.
Table 2. COMPARISON OF ATO AND SIH WAGE AND SALARY INCOME DATA (a)(b)
b) SIH data is current estimates rather than previous financial year
c) SIH data includes non cash benefits in wage and salary income
40 The differences observed between the two sets of income data are likely to be as a result of different definitions, methodologies and reference periods.
41 The higher SIH wage and salary estimate is in part due to the inclusion of non-cash benefits (including salary sacrificed income) into this income source. Non-cash wage and salary income is not reported on the personal income tax form and is therefore excluded from Wage and salary income data provided by the ATO.
42 The SIH Wages and salaries estimate for 2007-08 also includes, for the first time, irregular overtime and bonuses as well as termination payments.
Survey of Average Weekly Earnings
43 The Survey of Average Weekly Earnings (AWE) is a quarterly sample survey of employing businesses. For further information about the concepts, definitions and methodology of AWE, refer to Labour Statistics, Concepts, Sources and Methods (cat. no. 6102.0.55.001).
44 The Survey of Average Weekly Earnings collects data on average weekly earnings for full-time adult employee jobs, average weekly total earnings for all employee jobs, and average weekly ordinary time earnings for full-time adult employee jobs. Table 3 shows the ATO average Wages and salary income (derived from all Wage and salary earners and all Wage and salary income) and 'average weekly total earnings for all employees jobs' from AWE.
Table 3. COMPARISON OF ATO AND AWE TOTAL EARNINGS (a)
45 The Australian Standard Geographic Classification (ASGC) is used by the ABS for the collection and dissemination of geographically classified statistics. It is an essential reference for understanding and interpreting the geographic context of statistics published, not only by the ABS but also by other organisations, and its use enables comparability across datasets.
46 ATO data based on postcodes has been converted to data for Statistical Local Areas (SLA) as defined by the Australian Standard Geographical Classification (ASGC). Boundaries of these regions can change over time and the ABS revises and releases the ASGC annually.
47 Data in this publication for all years are presented on boundaries in Australian Standard Geographical Classification (ASGC), 2008 (cat. no. 1216.0).
48 The ABS uses geographic correspondences to enable the conversion of data from one type of geographic region to another. These geographic correspondences are generally used to convert data for 'non-standard areas' to data for standard areas used by the ABS. Geographic correspondences (or conversions) are expressed as conversion factors based on population.
49 The geographic identifier on the ATO database is the postcode of the individuals' current home address at the time of completing the tax return. Consequently, postcode to SLA conversion factors have been used by the ATO to concord aggregated postcode data to estimates for Statistical Local Areas. The correspondences are based on the Estimated Resident Population. For further information see the detailed main structure of the Australian Standard Geographical Classification (ASGC), 2008 (cat. no. 1216.0).
50 The correspondence process:
51 When analysing data transformed by correspondences the following limitations of this methodology need to be taken into account:
52 While care was taken in producing the correspondences the ABS will not guarantee the accuracy of data transformed by correspondences. Users should exercise caution when analysing data for regions with less than 100 Wage and salary earners.
53 The statistics in this release are presented according to the Australian Standard Geographical Classification (ASGC), 2008. Under this classification, statistical areas are defined as follows:
54 Further information concerning statistical areas, including information about recent changes to boundaries, is contained in Australian Standard Geographical Classification (ASGC), 2008 (cat. no. 1216.0). The ASGC also incudes a complete series of maps. SLA maps for all states and territories can be found in Chapter 16 of the publication, or can be accessed individually from the Downloads tab.
55 From July 2011 the ABS will progressively replace the current Australian Standard Geographical Classification (ASGC) with the new Australian Statistical Geography Standard (ASGS) as its geographical framework. More information about the ASGS can be obtained from the Geography portal on the ABS website.
56 The next issue of this release, containing data for the 2009-10 income year, is expected to be released on the ASGS, at SA2 level and also LGA level. It is expected that a five year time series on the new geography will be released at this time.
AVERAGE ANNUAL GROWTH RATE
57 The average annual growth rate is calculated as a percentage using the formula below, where W0 is the average Wages and salaries at the start of the period, Wn is the average Wages and salaries at the end of the period, and n is the length of the period (in years) between W0 and Wn.
[(Wn/W0)1/n -1] x 100
58 For further information about these statistics, contact the National Information and Referral Service on 1300 135 070.
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