1 This release contains regional estimates relating to all persons aged 15 years and over who received income from Wages and salaries in the 2009-10 financial year. The previous issue in this series included estimates for the years 2003-04 to 2008-09. A revised time series will be included in the National Regional Profile, 2007-2011, due for release in April 2013. In addition, two summary tables covering 2005-06 to 2009-10 have been included in the spreadsheets attached to this release.
2 The estimates in this release include the number of persons, their income from Wages and salaries, and characteristics such as age, sex and occupation. Key data items in this series (number of persons, income and average income) have already been released in Estimates of Personal Income for Small Areas, Time Series, 2009-10 (cat. no. 6524.0.55.002).
3 This is the first issue to use the new Australian Statistical Geography Standard (ASGS) boundaries. For more information, see the Statistical Geography Portal on the ABS website and paragraphs 46 to 54 below. Data are presented for geographies including Statistical Area Level 2 (SA2), Statistical Area Level 3 (SA3), Statistical Area Level 4 (SA4) and Greater Capital City Statistical Area (GCCSA). Data for local government areas (LGAs), in each state and territory of Australia are also presented.
4 These data have been compiled from postcode level aggregates from the Australian Taxation Office's (ATO) Individual Income Tax Return Database and form 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 ATO which provided data used in compiling the statistics presented in this release.
BREAKS IN SERIES
5 In recent years there have been breaks in the Wage and salary earners data series, thus limiting its continuity and comparability for some periods. These breaks were associated with the one-off tax bonus introduced as part of the Economic Stimulus Package in response to the Global Financial Crisis. The one-off tax bonus was available to all individuals whose 2007-08 taxable income was $100,000 or less, whose adjusted tax liability was greater than zero and who had filed their 2007-08 tax return by 30 June 2009. The Australian Taxation Office has reported in their Taxation Statistics publications that there was a 7.1% increase in individual tax lodgements for the 2007-08 financial year, in part due to individual lodgements being brought forward to access the tax bonus. This was followed by a fall of 2.8% in individual tax lodgements in 2008-09.
6 In the ABS series published in Wage and Salary Earner Statistics for Small Areas, 2003-04 to 2007-08, the number of Wage and salary earners increased by over 8% (to 10.1 million) between 2006-07 and 2007-08, before falling by over 3% in the subsequent financial year. Income derived from Wages and salaries increased by 12.8% ($50.3 billion) between 2006-07 and 2007-08, but rose by only 2.6% ($11.4 billion) from 2007-08 to 2008-09. Put differently, series breaks were recorded for persons and total income for Wages and salaries. However, it should be noted that a series break was not recorded for average Wage and salary income in 2007-08.
7 From 2009, there was a change in the classification used by the ATO to code occupation data. The ATO changed from the Australian Standard Classification of Occupations (ASCO) to the Australian and New Zealand Standard of Occupations (ANZSCO). The occupation categories for 2008-09 and 2009-10, as presented in this issue, are thus not comparable to those featured in earlier issues of this product.
SUMMARY OF CHANGES TO THIS SERIES
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 16).
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).
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 when comparing data in the 2003-04 to 2006-07 issue with those published in subsequent issues.
12 In this current issue (mainly containing estimates for 2009-10) and in the previous two issues (containing estimates for the years 2003-04 to 2006-07 and 2003-04 to 2008-09) income from Lump sums and Eligible termination payments have been included in Wages and salaries.
13 In this issue, for the first time, Reportable fringe benefits (gross value adjusted) have been included in total Wage and salary income. Where the value of benefits provided by an employer exceeds $3,738 in the Fringe Benefits Tax (FBT) reference year (e.g. April 2009 to March 2010), then that value must be reported as the gross taxable value of those benefits on the recipient's payment summary for the similar income year (e.g. 1 July 2009 to 30 June 2010). Since ABS income standards focus on taxable (not gross) values, we have published an adjusted gross value; that is, Reportable fringe benefits adjusted by 0.535 for the 2009-10 data. More information on ATO tax adjustment factors can be obtained from their website: FBT
14 The effect of the inclusion of Reportable fringe benefits (gross value adjusted by 0.535) in Wage and Salary income has been relatively small, increasing the estimate of Total Wages and Salaries income by just over one percent. In 2013, ABS will publish back data for regions for 2005-06 to 2008-09 which will incorporate Reportable fringe benefits (gross value adjusted), thus ensuring comparability over time. The new back data for Wages and salaries will differ however, from information published in the previous issue (for 2003-04 to 2008-09).
15 For the first time, Other net foreign employment source income was separately identified by the ATO on the 2009-10 tax form for individuals (as Question 20T).
16 Previously this item was reported with 'other' income on the tax form and included in the 'Other income (excluding Govt. pensions and allowances)' series. This income item has now been included in Wage and salary income for 2009-10, in line with ABS income data standards. In 2009-10, Other net foreign employment source income amounted to $968 million (ATO Taxation Statistics, 2009-10). The impact on the Wage and salary income series has been minor - an estimated 0.2% increase.
17 In 2012, all individual income tax statistics were provided by the ATO to the ABS in aggregate form at the postcode level. Information about individual taxpayers has not been released to the ABS.
18 The ATO has provided ABS with data for 2009-10, plus back data for 2005-06 to 2008-09 incorporating the new data items. The data have been subject to confidentialisation processes that randomly adjust table cells with small values. Therefore, caution should be exercised by users when deducing that there are nil people in an area with certain types of income. In general, no reliance should be placed on table cells with small values. The data have been subject to several transformation steps, for example to convert it from postcode to ASGS geographies. In some cases, the confidentialisation process has been applied at each step to provide extra confidentiality. See Geographic Correspondences for more information about the data transformation.
SCOPE AND COVERAGE
19 The scope of these data relate to persons receiving income from Wages and salaries.
20 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.
21 Wage and salary income, as reported on the income tax return, includes:
- gross income as shown on the 'PAYG payment summary - individual non-business';
- 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;
- attributed personal services income;
- eligible termination payments;
- lump sums;
- employee share schemes;
- reportable fringe benefits (gross value adjusted by 0.535); and
- other net foreign employment income.
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.
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.
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.
Generally, the ATO considers someone to be an Australian resident for tax purposes if they:
Processing of tax returns
- have either always lived in Australia or have come to Australia to live permanently;
- have been in Australia for more than half of the financial year (unless their usual home is overseas and they don't intend to live in Australia);
- have been in Australia continuously for six months or more and for most of that time have been in the one job and living in the same place;
- are an overseas student enrolled in a course of study for more than six months duration.
The data presented in this publication were compiled before the processing of all income tax returns for any given year was 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 2009-10 data, returns processed after 31 October 2011 are not included.
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 21), 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.
As an example, Table 1 below shows that for the 2003-04 income year, an additional 5.1 % of taxpayers earning income from 'Salary or wages' lodged their income tax returns in the six years after the initial processing cut off of 31 October 2005. This translated to a further 5.3% of 'Salary or wages' income being reported, six years onwards.
Table 1. Comparison of ATO Original and revised data - Number of 'Salary or wages' earners and total 'Salary or wages' income, 2003-04
|Returns lodged as at:|
Wage and Salary Earners
|31 Oct 2005|
8 435 280
305 009 561 208
|31 Oct 2006|
8 658 015
313 953 461 851
|31 Oct 2007|
8 747 130
317 085 266 107
|31 Oct 2008|
8 793 750
318 675 652 655
|31 Oct 2009|
31 Oct 2010
31 Oct 2011
8 841 265
8 855 570
8 865 995
320 280 652 016
320 772 352 004
321 128 753 043
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
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.
For the income year 2009-10, a number of changes were noted in Chapter 2 of Taxation Statistics
- the change in personal tax thresholds;
- reforms to some entitlements such as tax offsets, deductions and tax concessions, the Medicare levy surcharge and Higher Education Loan Program (HELP) or Student Financial Supplement Scheme (SFSS) repayment amounts;
- the change in definition of a spouse to include same-sex couples;
- the change in treatment of income earned in overseas employment; and
- the changes to the tax treatment of employee share schemes.
For the income year 2008-09, a number of changes were noted in Chapter 2 of Taxation Statistics
- the change in personal tax thresholds;
- the education tax refund which allows eligible parents to claim a refund on some educational expenses;
- the introduction of first home saver accounts;
- extra HECS/HELP benefits available to mathematics and science graduates and early childhood education teachers in specified locations;
- changes to death benefits for dependants of same sex couples;
- the introduction of the small business and general business tax break;
- the introduction of an upper income limit for certain tax offsets;
- adjustment in the Medicare levy surcharge thresholds; and
- special arrangements for people affected by the bushfires and floods.
For the income year 2007-08, a number of changes were noted in Chapter 2 of Taxation Statistics
- Personal income tax cuts;
- The increase in the low income tax offset from $600 in 2006-07 to $750 in 2007-08;
- The change in access to the entrepreneur tax offset;
- The removal of the un-deducted purchase price of an Australian pension or annuity from deduction items - it is now being accounted for and included in the tax-free component of the Australian annuities and superannuation income streams;
- The removal of age-based limits for claiming a deduction for super contributions;
- The change to super contribution limits where eligible individuals may now claim a full deduction for personal super contributions; and
- The change to super taxation where most people aged 60 and over who receive super benefits from a taxed source, the payment of a benefit as a lump sum or income stream (such as a pension) is now tax free.
For the income year 2006-07, the following changes were noted in Chapter 2 of Taxation Statistics
- Personal income tax cuts;
- The increase in the low income tax offset from $235 in 2005-06 to $600 in 2006-07;
- The abolition of the part-year tax-free threshold for individuals who ceased full-time education for the first time;
- Changes to the tax treatment of foreign income and some capital gains for temporary residents;
- An increase in the amount you can claim for contributions to registered political parties, independent candidates and members from $100 to $1,500; and
- The entitlement to claim a tax offset if you have to pay the Medicare levy surcharge as a result of you or your spouse receiving a lump sum payment in arrears.
For the income year 2005-06, the following changes were noted in Chapter 2 of Taxation Statistics
- 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 rules - people aged over 55 can now access superannuation benefits without having to retire or leave their job.
COMPARISON WITH OTHER ABS INCOME AND EARNINGS DATA
Survey of Average Weekly Earnings
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).
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 ATO average Wages and salaries income for 2007-08, 2008-09 and 2009-10 and 'average weekly total earnings for all employee jobs' from AWE. Table 2 shows that both series have tracked reasonably closely in recent years.
Table 2. COMPARISON OF ATO AND AWE TOTAL EARNINGS
(a) Based on original series, four quarter averages to May - annualised..
Survey of Income and Housing
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. Since 2003-04, the survey has been conducted every two years. The latest survey was for 2009-10. 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).
Data collected from SIH can be reasonably compared to ATO data published in this release for the years 2005-06, 2007-08 and 2009-10. Comparison of these data provides a means of assessing data series - of establishing whether counts or estimates are of an expected magnitude.
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.
Table 3 presents ATO Wages and salaries income and SIH data for 2005-06, 2007-08 and 2009-10. ATO estimates for Wages and salaries income were lower than SIH income data for all three reference periods, reaching 87.6% of the SIH total in 2009-10
Table 3. COMPARISON OF ATO AND SIH WAGE AND SALARY INCOME DATA (a)(b)
a) ATO data includes data that could not be allocated to a state or territory.
b) SIH data is current estimates rather than previous financial year.
c) Series break for ATO data from July 2007. See paragraphs 5 and 6, above.
d) SIH data includes non cash benefits in wage and salary income.
The differences observed between the two sets of income data are likely to be as a result of different definitions, collection methodologies (e.g. a sample survey of businesses versus an administrative collection based on individual returns) and data reference periods.
The higher SIH wage and salary estimate is in part due to the inclusion of non-cash benefits (including salary sacrificed income) in this income source. Reporting on a current income (rather than previous financial year) basis may also have an impact on the estimates.
The Australian Statistical Geography Standard (ASGS), July 2011, is now used by the ABS for the collection and dissemination of geographically classified statistics - replacing the former Australian Standard Geographic Classification (ASGC). The ASGS is an essential reference for understanding and interpreting the geographic context of statistics published by the ABS and its use enables comparability across datasets. The ASGS has been introduced by the ABS, in part, to obtain more consistency in population size across similar region types, to achieve more data stability and continuity and thereby minimise the need for annual geographic review.
ATO data at postcode level has undergone a number of steps to transform the information to the required levels of geography for this release. Data was transformed from postcode to SA2 and then from SA2 to the other geographies required. While this has introduced some error into the estimates (due to the assumptions implicit in correspondences, as discussed Geographic correspondences
, paragraphs 48 to 52) - compared to transforming directly from postcode to the required geographies - it has not diminished the usefulness of the data and has provided additional confidentialisation. (See paragraphs 17 and 18).
The ABS uses geographic correspondences to enable the conversion of data from one type of geographic region to another. The geographic correspondences used for these data are expressed as conversion factors based on population.
The geographic identifier on the ATO database is the postcode of an individual's current home address at the time of completing the tax return. Consequently, postcode to SA2 conversion factors have been used by the ABS to transform aggregated postcode data to estimates for SA2, and these have then been used to aggregate the data up to SA3 and SA4 regions. The SA2 data have also been transformed to LGAs, using an SA2 to LGA correspondence. The correspondences are based on 2011 Census population distributions. For more information, or to view or download these tools, please access Correspondences
on the Statistical Geography Portal, ABS website.
- Enables converted data to be more easily compared with other standard ABS output;
- Enables the data to be output for other standard ABS geographic areas such as SA3, SA4, GCCSA and LGAs; and
- Provides flexibility so that data can be provided for the various and different regions of interest being studied by users of regional data.
When analysing data transformed by correspondences, the following points need to be taken into account:
- In applying the correspondences it is assumed that the particular characteristics of any data item are uniformly distributed across a postcode area. Therefore, data transformed by correspondences 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 SA2 and there are no other contributing postcodes, distinct numerical estimates will be derived but rates or averages will be identical for each SA2 (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;
- Data transformed by correspondences have been rounded so slight discrepancies may occur between sums of the component items and totals; and
- Some correspondences vary in terms of their quality, completeness and utility. Each ABS correspondence is published with a quality measure (for the overall correspondence) and quality indicators (for the many, specific region to region links within the correspondence). These can be viewed in tables 1 and 2 of each downloadable correspondence spreadsheet. The possibility of region to region mismatches arising from the presence of missing 'to units', or regions being below minimum output size, or the presence of null fields, are also recorded, in tables 4, 5 and 6 of each correspondence spreadsheet.
While care is taken in producing the correspondences, the ABS cannot guarantee the accuracy of data transformed by correspondences.
The statistics in this electronic release and accompanying data cubes are presented according to the Australian Statistical Geography Standard (ASGS), July 2011. Under this classification, statistical areas are defined as follows:
- Local Government Areas (LGA): These areas are the spatial units which represent the geographical areas of incorporated local government councils. LGAs include sub categories such as Cities (C), NSW Local Government Areas (A), Boroughs (B), Rural Cities (RC), Towns (T), Shires (S), District Councils (DC), Municipalities (M), SA Municipal Councils (M), SA Regional Councils (RegC), Qld Regional Councils (R) and SA Aboriginal Councils (AC);
- Statistical Area Level 2 (SA2): These are general purpose, medium sized areas designed to represent communities that interact socially and economically. SA2s generally have an average population of 10,000 persons, or a population size range of 3,000-25,000 persons, tending towards the lower limit of this range in rural and remote regions. There are 2,214 SA2s, Australia wide.
- Statistical Area Level 3 (SA3): This geography has been created as a standard for the analysis of ABS data at broader geographies through the clustering of SA2s with similar regional characteristics. Generally, SA3s have a population size range of 30,000-130,000 persons. There are 351 SA3s Australia wide.
- Statistical Area Level 4 (SA4): These are the largest sub-state regions within the main structure of the ASGS. They have been primarily designed to output labour force data, reflecting recognised major labour market regions in each jurisdiction. Population size can range from 100,000 -300,000 persons, tending towards the lower limit in rural and regional areas. There are 106 SA4s.
- Greater Capital City Statistical Area (GCCSA): These geographies, comprising 8 capital cities and their wider metro surrounds, are aggregations of SA4s. When combined with 7 Rest of State/Territory regions, they cover the whole of Australia without gaps or overlaps, aggregating directly to all States and Territories. A slight exception: the entire Australian Capital Territory comprises one GCCSA, without a 'Rest of' regional component.
Further information regarding the ASGS regions, including the detailed classification, metadata, maps and downloadable boundary files, can be accessed from the ABS Statistical Geography Portal
on the ABS website.
For further information about these and other statistics, please contact the National Information and Referral Service on 1300 135 070.