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12 Limiting the scope to only businesses with a GST role means that only entities which are actively trading in goods or services are included. Businesses which have not submitted a Business Activity Statement (BAS) and/or have reported zero dollar amounts over five consecutive quarters (or three consecutive years for annual remitters) are treated as 'long term non–remitters' (LTNRs). These businesses are not considered to be actively trading and are excluded from the counts as they are not remitting GST.
13 Units contained on the ABSBR have been allocated within the following classifications:
14 Entities which are not considered to be actively trading in the market sector are not considered to be businesses and, as such, are excluded from the business counts.
15 Entities classified to the following categories of SISCA are excluded:
16 Entities classified to the following TOLO categories are excluded:
17 Entities classified to the following 4 digit ANZSIC classes are excluded:
18 The exclusion of the General Government Institutional Sector particularly impacts on counts for the 'Public Administration and Safety', 'Education and Training' and 'Health Care and Social Assistance' ANZSIC divisions (O, P, and Q respectively). This focuses the business counts in these divisions on private sector activity only.
19 Most unincorporated entities (known as Sole Proprietors/Traders) are included in the 'Households' sector. An unincorporated entity is an entity which has not become a corporation under the Corporation Act 2001. Unincorporated entities can choose to remain 'unincorporated', where by the business does not possess a separate legal identity to that of its owner, or it can choose the limited liability status of a company where the business assets are legally separate to that of the owners. Some unincorporated businesses are excluded from CABEE because these are operated/controlled by other SISCA categories such as General Government or the Not for Profit Institutions Serving Household (NPISH) sectors which are out of scope of CABEE.
20 In addition, the scope for business counts includes those businesses that are yet to be coded by the ATO to an industry, sector and/or main State of operation through the Australian Business Register (ABR) new business registration process. Analysis conducted on these businesses indicates that, despite not having a complete set of characteristics data, these businesses were actively trading and also met the other scoping criteria of the collection (refer to the 'Conceptual and Practical Basis for Counts' section for further details). It was therefore considered appropriate that they be included within scope of CABEE.
21 These actively trading businesses have been grouped together into 'currently unknown' codes in the publication tables and the forthcoming data cubes. The inclusion of these businesses in CABEE provides a more accurate annual snapshot of businesses that are actively trading in the Australian economy.
22 It should be noted that in June 2010, the ABS implemented a new methodology for identifying annual long term non–remitters (LTNRs). For annual remitters, this LTNR period has been increased from 5 consecutive quarters to 3 consecutive years. This administrative change has resulted in a noticeable and identifiable increase in the business counts at June 2010. More specifically, it has led to an increase in business entries, as those businesses who would have previously been excluded have been brought back into scope, and therefore appear as business entries. For example, the entries for 2008–09 are 299,123. This then spikes to 342,753 in 2009–10, and reverts to 294,210 in 2010–11. Further investigations reveal that an estimated 20,909 of these 2010 entries can be attributed to the new LTNR methodology, and the majority are clustered in the 'Non–employing' size category. They are also clustered in the Households category of Standard Institutional Sector Classification of Australia (SISCA) and the Sole Proprietor and Partnerships categories of Type of Legal Organisation (TOLO). As such, users should exercise care when interpreting the 2010 business counts. This change in LTNR methodology has resulted in a more accurate count of active businesses, particularly in the small business sector.
23 There are actively trading businesses which have not registered for an ABN, either because they do not have any obligations under the Goods and Services Tax (GST) legislation or are under the threshold for registration and have chosen not to register. These businesses have not been identified or quantified and are not included in counts presented in this publication.
COMPARABILITY WITH FRAMES FOR ABS BUSINESS SURVEYS
24 The basis for business counts in this release is broadly consistent with that used for frames in most ABS business surveys. There are two exceptions to this:
25 Counts of businesses provided in the CABEE suite of products are based on annual (financial year) snapshots of the ABSBR from 30 June 2008 to 30 June 2012 (inclusive) and also reflect changes and continuity between those periods.
26 The data presented in this publication were produced on a similar conceptual basis to the data included in previous publications. In terms of time series, at an aggregate level, data comparability is considered high between this and previous publications. Refer to the section entitled 'Scope' for further information.
27 However, users should exercise caution when comparing geographical data between this publication and publications released prior to the June 2007 to June 2011 publication. The ABS has implemented a new geographical framework, namely the Australian Statistical Geography Standard (ASGS). With the move to the new geography framework, both National data and State based data will remain unchanged. Refer to section entitled 'ASGS' for further information.
28 Users should also exercise caution when making data comparisons between this publication and previous publications containing ANZSIC 1993 industry detail and annual turnover size ranges which will not be directly comparable with the data included in this publication.
29 This release contains snapshots of counts of active businesses at regular points in time. These data also assist in providing a point in time 'snapshot' of those businesses that are entering and exiting the Australian economy, as well as those businesses that continue to survive. For further information, refer to the publication's Technical Note.
30 Business entry and exit counts are restricted to new or ceasing businesses. In particular, entries do not include the establishment of new locations associated with an existing business.
31 A business entry event is the registration of a new business for an ABN and the allocation of a GST role, or the allocation of a GST role to an existing ABN which previously did not have this role.
32 This also includes businesses which had:
33 Thus, a business entry is defined as a business which is actively trading on the business register at 30 June in the reference year but was not actively trading at 30 June the previous year.
34 A business exit event is the cancellation of a business' ABN or GST role and/or when a business ceases to remit GST for at least five consecutive quarters in respect of that ABN (or 3 consecutive years for annual remitters).
35 Thus, a business exit is defined as a business which was actively trading on the business register at 30 June in the previous year but was not actively trading at 30 June in the reference year.
36 It is important to note that a business exit event does not necessarily equate to a business 'failure'. There may be a number of other reasons why a business exit event has occurred, including events relating to selling a business (e.g. due to an owner/operator retiring), and events relating to changes in a business' structure (e.g. due to merger or takeover activities), etc. Such events may result in one or more business exit events occurring, and in some cases, no net loss of businesses.
37 A surviving business is defined as a business which is active on the ABSBR at 30 June of the current year and was also active in the previous year. In this release, two types of survivors are recorded:
38 One of the enhancements to the business counts data in recent publications involves the provision of data which indicates the growth of business survivals (in terms of employment and annual turnover classifications) over time. For further information, refer to the publication's Technical Note.
INTRA–YEAR ENTRIES AND EXITS
39 It is possible that a business can enter after 30 June in a given year and exit before 30 June in the following year. A small number of these instances occur in any given year. This release excludes those instances in order to assist interpretation of results.
40 The counts in this publication are subject to non sampling error and the cyclical administrative workflows of the ATO may impact on data interpretability. The counts are not subject to sampling error as they represent a complete enumeration of those 'economically active' businesses on the ABSBR. For further information on this, and other likely sources of error in this release, refer to the Quality Declaration associated with CABEE.
A COMPREHENSIVE COUNT OF ALL ECONOMICALLY ACTIVE ENTITIES
41 Ideally, the ABS would capture all economically active entities in Australia. These would then be split by actively trading businesses and other entities. However, it is not possible to accurately capture all such entities at this stage as there are a number of options open to these entities with regard to registration or participation in the tax system using existing data sources. Only partial coverage of these entities is possible using existing data sources and it is not possible to quantify the extent of this partial coverage.
42 Each business (either an ABN unit or TAU on the ABSBR) has been classified to a single ANZSIC 2006 industry class, irrespective of any diversity of activities undertaken. The industry class allocated is the activity which provides the main source of industry value added (sales of goods and services, wages and salaries or number of employees as a proxy), which is generally based on a description provided by the business.
43 For further information on ANZSIC 2006, users may wish to consult the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (cat. no. 1292.0) on the ABS website <www.abs.gov.au>.
ASGS AUSTRALIAN STATISTICAL GEOGRAPHY STANDARD (ASGS)
44 The ASGS is the new geographical framework used by the ABS. It brings together all regions for which the ABS publishes statistics within the one framework and has been used for the collection and dissemination of geographically classified statistics since 1 July 2011.
45 The ASGS replaces the Australian Standard Geographical Classification (ASGC), which is no longer produced. While there are superficial similarities between the ASGS and the ASGC, it is important to recognise that the two are fundamentally different and there are significant differences between their respective regions, both in their geographical extent and their conceptual foundation. As a whole, the ASGS represents a more comprehensive, flexible and consistent way of defining Australia's statistical geography than the ASGC. For further information to assist users move from the ASGC to the ASGS refer to the ABS website <www.abs.gov.au/geography>.
46 With the move to the new geography framework, State based data remains unchanged. However sub State data is now produced using the new ASGS. In terms of business counts data, the base unit of the ASGS will be the Statistical Area Level 2 (SA2). This SA2 data replaces the previously published Statistical Local Area (SLA) business counts data. Refer to section entitled 'Statistical Area Level 2' for further information.
47 Businesses can operate in more than one State or Territory. For businesses in the Non profiled population, Main State is derived from the main business address. For businesses in the Profiled population, Main State is the State or Territory with the highest employment. Therefore, for some businesses in the Profiled population, Main State is not necessarily the State or Territory of the main business address.
48 The Australian taxation system provides flexibility during the new business registration process, as it allows businesses operating in single or multiple States or Territories to register on the ABR and report taxation obligations in a variety of ways. For instance, it is possible for a business entity to register for a single ABN regardless of the number of commercial activities it undertakes (sometimes visible in the number of physical shopfronts it may operate from). Alternatively, multiple commercial activities of a single business enterprise may be registered for separate ABNs, depending on the legal structure adopted by the enterprise. Hence, where commercial activities are carried out by a number of different but related entities, each entity may register for a separate ABN. As this publication defines a business on the basis of an ABN (or TAU in the Profiled population), the counts may be regarded as providing partial coverage of businesses in a given State. For further information, refer to the data quality declaration associated with CABEE.
Statistical Area Level 2
49 The SA2 is a general purpose spatial unit. It is the base spatial unit used to disseminate ABS business counts data, and replaces the previous SLA. In aggregate, 2,214 SA2s cover the whole of Australia without gaps or overlaps. Further, SA2 data can be aggregated to larger geographical areas, including SA3, SA4, and States/Territories, as part of the ASGS.
50 Sub State level data cubes will be released using SA2 as the base spatial unit. For further information to assist users with the transition from the ASGC to the ASGS refer to the ABS website at <www.abs.gov.au/geography>.
51 The issues of geocoding multi location business locations are more pronounced for count data at the SA2 level, as multi location businesses (i.e. in respect of businesses registered under a single ABN/TAU) will only be attributed to a single SA2. As such, care should be taken not to assume that business counts at the SA2 level reflect all business operations within that SA2. For further information, refer to the data quality declaration associated with CABEE.
52 The sizing classifications presented in this release are based on employment and turnover reported by businesses, as defined below. The Technical Note contains additional information on business size and how business growth is represented.
53 The methods used to quantify employment in this release are based on 'headcounts' of employees. However, different methodologies are applied depending on where (i.e. in which population) businesses reside in the ABSBR.
54 The technical definition of employing units depends upon whether the unit resides in the Profiled or Non profiled population. Employing units are defined as:
55 In the Profiled population, businesses report 'employment' as defined by the number of persons who are employed by a public or private employer and receive remuneration in wages or salaries (including working proprietors and working partners), or are paid a retainer fee by their employer. Employment excludes non salaried directors, volunteers, persons paid by commission only, and self employed persons such as consultants and contractors. These data are collected through direct contact with businesses in the Profiled population and reflect a 'point in time headcount' of current employees.
56 In the Non profiled population, ABS indirectly collects employment data through Payment Summary information supplied by the ATO. This data provides an initial indication of employment for statistical purposes, i.e. a headcount of employees. Businesses report 'number of payees', which is defined as the estimated number of individuals to whom payments are made. This will reflect the total number of persons employed by the business 'throughout the year' rather than an estimate of current employees at a point in time. Payments to people under a voluntary agreement or labour hire arrangement are excluded.
57 The employment data extracted from the ABSBR are generally suitable for the purposes of attributing an employment size classification to each in scope business. During processing of the 2008–09 financial year data, a subset of problem units were identified. Approximately 14,000 units had unusually high values for employment numbers. In response, the ABS developed a more robust methodology to ensure all businesses were classified to an employment size range which reflected real world activity. This involved examining the reported employment values of business which were known to be affected by recent changes to the ABSBR and imputing values as appropriate based on auxiliary data. Specifically, historical employment data and BAS annual turnover data were used to develop a better quality imputation. This methodology is considered suitable for the purposes of classifying businesses into relatively broad employment size ranges.
ANNUAL TURNOVER SIZE
58 Annual turnover values are based on data reported to the ATO through Business Activity Statements (BASs) and includes imputation for missing periods for all businesses in the Non profiled population. For businesses in the Profiled population, turnover reported on BAS for ABNs is aggregated to Enterprise (EN) level and is apportioned to the relevant TAUs.
59 Where businesses report zero values on their BAS or have failed to report at all, these data are compared with auxiliary BAS data, which are then used for the purposes of assigning annual turnover values for each in scope business. In cases where auxiliary BAS data are not available, an imputation based on auxiliary ABSBR data (including wages and salaries and employment data) is used.
60 The imputation technique described therefore classifies all in scope businesses to a single annual turnover size range in CABEE.
61 The ABS Business Register receives updated information when a business entity reports changes to the ATO, such as a new registration, revised payee information, or when the business entity reports changes in its business structure or activity. These reporting changes can impact upon the business entity's industry classification (ANZSIC); institutional classification (SISCA); Legal classification (TOLO); geographic classifications (State/Territory); or business size (Employment or Turnover categories). These changes to the register generate minor revisions to data previously published in earlier editions of CABEE. These revisions are between zero and 5% in this June 2008 to June 2012 CABEE release with the following exceptions:
62 2008–09 Entries (annual turnover size ranges)
63 2009–10 Exits (annual turnover size range)
64 Some of the revisions to 'Currently Unknown' categories are attributable to updated classificatory information, such as ANZSIC, SISCA or TOLO, where this information did not previously exist for the business entity. Revisions to the 'Currently Unknown' category can be more substantial as new information comes to hand from the ATO, with the largest magnitude of change being a decrease of 25% in Table 1 for 2010–11.
65 The confidentialising process applied is expected to maximise the availability of data without introducing any bias to the estimates.
66 There have been some enhancements to the confidentiality methodology applied in this release. The confidentiality process will round data in such a way that the data presented at these detailed levels will not always be additive. That is, opening stock from the beginning of the financial year, plus entries, minus exits, may not be equal the closing stock for the end of the financial year. This is due to the fact that each of those components are individually rounded.
COMPARISON WITH OTHER BUSINESS COUNTS DATA
67 Estimates of the number of businesses operating in the Australian economy may be derived from a number of sources within the ABS or from non ABS sources. They may relate to a point in time, or may be average annual data. These estimates will not always show the same results. Variations occur because of the differing data sources, differing definitions of a business, differing scope and coverage as well as variations due to sampling and non sampling errors.
68 The definition of Employing/Non–employing in the ABS can also vary according to collection methodology, data sources, and user requirements.
69 Users comparing data from this publication with other ABS data should do so with care, as some other ABS publications may exclude 'Non–employing' businesses or particular industries or sectors.
70 For further details see the Explanatory Notes section of the relevant publications.
71 Information regarding previous releases of CABEE may be accessed on the ABS website <www.abs.gov.au>.
72 The next release of CABEE is currently scheduled for release in March 2014.
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