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1218.0 - Standard Economic Sector Classifications of Australia (SESCA), 2002  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 13/09/2002   
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Rest of the world sector

Resident

3.58. The concept of residence is based on the concept of the economic territory of a country rather than legal or political concepts. The economic territory of a country is defined in the SNA93 as 'the geographic territory administered by a government within which persons, goods and capital circulate freely'. (SNA93, paragraph 14.9.) The economic territory includes:

  • the airspace, territorial waters, and continental shelf lying in international waters over which the country enjoys exclusive rights or jurisdiction in respect of the right to fish or to exploit fuels or minerals below the sea bed
  • territorial enclaves in the rest of the world (clearly demarcated areas of land which are located in other countries and which are used by the government which owns or rents them for diplomatic, military, scientific or other purposes)
  • any free zones, or bonded warehouses or factories operated by offshore enterprises under customs control (these form part of the economic territory of the country in which they are physically located).

3.59. The economic territory of Australia includes the Cocos (Keeling) Islands and Christmas Island. It does not include the external territory of Norfolk Island or foreign governments' territorial enclaves (e.g. embassies, consulates, scientific stations, information and immigration offices, etc.) located in Australia. Conversely, Australia's economic territory includes Australian territorial enclaves in foreign countries, such as Australia's embassies, consulates, trade offices, etc.

3.60. SNA93 states that a unit has a centre of economic interest within a country:
      when there exists some location - dwelling, place of production, or other premises - within the economic territory of the country on, or from which [the unit] engages, and intends to continue to engage, in economic activities and transactions on a significant scale, either indefinitely or over a finite but long period of time. The location need not be fixed so long as it remains within the economic territory. (SNA93, paragraph 14.12.)

3.61. If a unit has operated (or intends to operate) in Australia for one year or more, it is regarded as having a centre of economic interest in Australia.

3.62. The ownership of land and structures within the economic territory of Australia is deemed sufficient justification to record a centre of economic interest in Australia on the grounds that the property can be used for production. However, if the non-resident owner does not have any economic interest other than ownership of the land and structures, ownership is treated as having been transferred to a notional resident unit in Australia. The notional unit is treated as a quasi-corporation owned and controlled by the non-resident actual owner, who is treated as receiving rent from the quasi-corporation.

3.63. A household is considered to have a centre of economic interest in Australia when it maintains a dwelling in Australia that household members use as their principal residence. If a household member leaves to live in another country, the member is no longer treated as part of that household. A resident household member who leaves Australia for a limited period of time (i.e. less than one year) continues to be treated as a resident even if short journeys abroad are made frequently. Accordingly, the following categories of persons are treated as residents:
  • individuals who leave Australia's economic territory for less than one year for recreation, business, health, education, religious, or other purposes, e.g. travellers or visitors
  • persons who work for less than one year in another economic territory, including seasonal workers, but who maintain their principal residence in Australia
  • persons who work all of the time in another economic territory, including border workers, provided they return regularly to their main household in Australia
  • non-diplomatic staff of international agencies located in Australia who remain here for one year or more
  • the Australian recruited staff of foreign embassies, consulates, military bases, etc. in Australia
  • Australian crews of ships, aircraft, or other mobile equipment operating partly, or wholly, outside the economic territory.

3.64. As indicated in paragraph 2.22, quasi-corporations that are located in Australia and are owned by non-resident units are treated as resident units and not as part of the ROW sector.

3.65. Australian military personnel and public servants, including diplomats, who work in Australia's territorial enclaves abroad (i.e. military bases, embassies, consulates, etc.) are considered to have a centre of economic interest in Australia, however long they work in the enclaves. They are considered to be resident in Australia even if they live in dwellings outside the enclaves.

3.66. Students are treated as residents of their country of origin, however long they study abroad, provided that they continue to form part of a household in their home country. Medical patients abroad also are treated as residents of their country of origin, even if their stay is one year or more, provided that they continue to form part of a household in their country of origin.

3.67. Technical assistance personnel on long-term assignments are treated as residents of the country in which they work.

3.68. A special case is cited in the SNA93 concerning units using mobile equipment, such as ships, aircraft, drilling rigs and platforms, railway rolling stock, etc., outside the economic territory in which the units are resident. Where the operations are in international waters or airspace, these activities are attributed to the economy of residence of the operator. Where the operation is in another economic territory, the unit is treated as a resident of the economy in which the activity (production) occurs, if accounted for separately by the operator and if recognised by the tax and licensing authorities there. Otherwise, the activity may be attributed to the country of residence of the operator. In cases involving the leasing of mobile equipment to one unit by another for a long or indefinite period, the lessee unit is deemed to be the operator and activities are attributed to the country in which the lessee is resident, unless the lessee operates the unit in another country.

3.69. International organisations such as the United Nations and its agencies and the IMF, are not considered to be residents of any national economy, including those in which they are located or conduct their affairs. They are treated as non-residents by all economies. However, persons working for these organisations are treated as residents of the economies in which they live.

Non-resident

3.70. The ROW sector consists of all non-resident units that enter into transactions, or have other economic links, with Australian resident units. The sector is included in many of the economic statistics produced by the ABS. However, most non-resident units do not have a physical presence in Australia and are not included in ABS statistical collections. Few are therefore recorded in the ABS Business Register. (Information about the sector is usually compiled from records relating to resident parties engaged in transactions with non-residents.) The small number of non-resident units that are located in Australia are identified in the business register only so that they can be distinguished from resident units.

3.71. After application of the residency rules, all units identified as non-resident units are allocated to the ROW sector.


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