1 These data are estimates relating to persons whose principal (or main) source of income in 2005-06 was from wages and salaries. The estimates include the number of persons, their income from wages and salaries, their total income from all sources, and characteristics such as age, sex, and occupation. This is the final release of this series by the main source of income. In future data will be provided for all persons receiving any income from this source.
2 These data have been compiled from the Australian Taxation Office's (ATO) Individual Income Tax Return Database and are part of the Australian Bureau of Statistics' (ABS) program to increase the range of regional statistics available, particularly through the use of administrative information collected by other government agencies. The ABS wishes to acknowledge the support provided by the ATO in compiling these statistics.
3 Data are available for various levels of the the Australian Standard Geographical Classification (ASGC), including Statistical Local Areas (SLA) and Local Government Areas (LGA).
4 Data for the years from 1995-96 to 2004-05 are available from the Past & Future Issues tab of this release, and in Regional Wage and Salary Earner releases contained in the Related Products tab.
5 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.
6 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 tale 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.
SCOPE AND COVERAGE
7 The scope of these data relate to persons whose principal (or main) source of income in 2005-06 was wages and salaries.
8 Wage and salary earners have been defined as:
persons aged 15 years and over who have submitted an individual income tax return and for whom wage and salary income was the principal (or main) source of income for the financial year.
9 Wage and salary income, as reported on the income tax return, includes gross income as shown on the 'PAYG payment summary - individual non-business' as well as allowances, commissions, bonuses, tips, gratuities, consultation fees, honoraria and other payments for services. Allowances and other earnings may include car, travel or transport allowances, allowances for tools, clothing or laundry and dirt, risk, meal or entertainment allowances. (Note: PAYG (Pay as You Go) payment summaries were previously known as Group Certificates).
10 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.
DEFINING MAIN SOURCE OF INCOME
11 Wage and salary income is determined as the principal source of income when the income derived from this source (as defined in paragraph 8 above) is greater than the income derived from each of the following other income sources:
- Commonwealth of Australia government pensions, allowances and other payments;
- superannuation and annuities;
- unincorporated business income;
- investments (i.e. aggregate of gross interest, dividends, net rent and distributions from trusts - non-primary production); and
- other income (e.g. income from foreign pensions or from foreign investments).
For example: A person reports the following income in their Individual Income Tax Return;
- $11,000 investment income
- $10,000 salary
- $3,000 government allowance
- $2,000 transport allowance, and
- $1,000 honorarium.
Based on the above definitions, these would be grouped as follows to establish the main source of income:
- $13,000 wage and salary income (aggregate of $10,000 salary, $2,000 transport allowance and $1,000 honorarium)
- $11,000 investment income, and
- $3,000 government allowance.
As the aggregate of income for the categories that make up wages and salary income ($13,000) is greater than the income for each of the other groups of income separately ($11,000 investment and $3,000 government allowance) the person is classified as having wage and salary income as their main source of income.
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.
ATO data based on postcodes has been converted to data for Local Government Areas (LGA) and 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.
Data in this publication is presented on boundaries in Australian Standard Geographical Classification, 2006
(cat. no. 1216.0).
The ABS uses geographic concordances to enable the conversion of data from one type of geographic region to another. These geographic concordances are generally used to convert data for 'non-standard areas' to data for standard areas used by the ABS. Geographic concordances (or conversions) are expressed as conversion factors based on population.
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 concordances are based on the Estimated Resident Population for each particular year.
The concordance process:
- enables the data to be more easily compared with standard ABS output;
- enables the data to be output for other standard ABS geographic areas such as Statistical Divisions (SD), Statistical Subdivisions (SSD) and Local Government Areas; and
- provides flexibility so that data can be provided for the different regions of interest being studied by users of regional data (which are usually groupings of SLAs and/or LGAs).
When analysing concorded data the following limitations of this methodology need to be taken into account:
- in applying the concordances it is assumed that the particular characteristics of any data item are uniformly distributed across a postcode area. Therefore, concorded data may not truly reflect the distribution of the characteristics of the population. In some cases, where the same postcode is split across two or more SLAs and there are no other contributing postcodes, distinct numerical estimates will be derived but rates or averages will be identical for each SLA (as these will be equivalent to the original rate or average of the contributing postcode);
- the conversion factors are based on total population only but have been applied across all ATO data items, i.e. the number of wage and salary earners, wage and salary income, total income and sex, age and occupation groups;
- some official postcodes (such as PO boxes, etc.) do not correspond to residential areas but may still have been reported under the current home address field on the income tax return. Data for these and other 'invalid' postcodes, such as those due to incorrect reporting or processing errors, have been included in an 'unknown' category for each state and territory and for Australia where the state or territory was not known; and
- concorded figures have been rounded so discrepancies may occur between sums of the component items and totals.
While care was taken in producing the concordances the ABS will not guarantee the accuracy of concorded data.
The statistics in this electronic release and accompanying data cubes are presented according to the Australian Standard Geographical Classification, 2006
. Under this classification, statistical areas are defined as follows:
- Local Government Areas (LGAs): These areas are the spatial units which represent the geographical areas of incorporated local government councils and incorporated Community Government Councils (CGCs) where the CGC is of sufficient size and statistical significance. The various types of LGAs are cities (C), NSW local government areas (A), boroughs (B), rural cities (RC), towns (T), shires (S), district councils (DC) and municipalities (M).
- Statistical Local Areas (SLAs): These geographical areas are in most cases identical with, or have been formed from a division of, whole LGAs. In other cases, they represent unincorporated areas. In aggregate, SLAs cover the whole of a state or territory without gaps or overlaps. In some cases legal LGAs overlap Statistical Subdivision boundaries and therefore comprise two or three SLAs.
- Statistical Subdivisions (SSDs): These are of intermediate size, between SLAs and SDs. In aggregate, they cover the whole of Australia without gaps or overlaps. They are defined as socially and economically homogeneous regions characterised by identifiable links between the inhabitants. In the non-urban areas an SSD is characterised by identifiable links between the economic units within the region, under the unifying influence of one or more major towns or cities.
- Statistical Divisions (SDs): These consist of one or more SSDs. The divisions are designed to be relatively homogeneous regions characterised by identifiable social and economic units within the region, under the unifying influence of one or more major towns or cities.
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. Readers are cautioned to be aware of these considerations and take them into account when analysing the results.
Processing of tax returns
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 2005-06, returns processed after 31 October 2007 are not included. In general, caution should be exercised when making comparisons over time with data released in previous issues of this publication. The statistics for the years prior to 2001-02 were compiled from individual income tax returns processed up to 18 months after the end of each financial year, while statistics from 2001-02 onwards were compiled from returns processed up to 16 months after the end of each financial year.
Annual revised data is published by the ATO in Taxation Statistics, Personal Tax, Table 7
for some selected income items, including 'Salary or wages'. While this relates to all persons with income from 'Salary or wages', it gives an indication of the likely change in total and average income over time as more tax returns are lodged. For example, an additional 2.8% of persons with 'Salary or wages' income lodged their income tax returns in the twelve months after the initial processing of returns for 2005-06 (ie after October 31, 2007 and up to 31 October 2008), with a further 3.1% in 'Salary or wages' income reported. The average 'Salary or wages' in 2005-06 was $39,460 as at 31 October 2007, and $39,561 as at 31 October 2008, indicating that those people who lodged their 2005-06 tax returns after the initial 16 months processing period had, on average, higher incomes from 'Salary or wages' than the people who had lodged their returns within the initial 16 month processing period.
Changes in taxation policy
The ATO provides information annually in Taxation Statistics about changes that may affect taxation statistics. Changes relating to personal income tax are in Chapter 2 of Taxation Statistics.
For the income year 2005-06, the following changes were noted in Taxation Statistics:
AVERAGE ANNUAL RATE OF GROWTH
- personal income tax cuts
- the introduction of new measures such as the 30% child care tax rebate, the 25% entrepreneurs' tax offset, transitional incentives to contribute to superannuation, and
- transition to retirement rule - people aged over 55 can now access superannuation benefits without having to retire or leave their job.
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
Due to the application of both the postcode to SLA concordance and the randomisation process, totals for each variable and geographic area may differ from table to table. Concorded figures have been rounded, while column and row totals have been derived after the random adjustment process has been applied. The random adjustments have been made only to very small cells. However, the more detailed a table is, the greater the likelihood of small cells being present. This is particularly the case for SLAs with small wage and salary populations. The randomisation of small cells has only been applied at the SLA level and for most purposes the value of the data has not been impaired. Differences in totals between tables are not significant and can be ignored.
Furthermore, where figures have been rounded, discrepancies may occur between the sums of the component items and totals. Proportions and rates have been calculated on rounded figures and may differ slightly if calculated on the unrounded numbers.
For further information about these statistics, contact the National Information Service on ph: 1300 135 070.