1.1 GROSS, DISPOSABLE AND FINAL INCOME
In the Household Expenditure Survey (HES) and Survey of Income and Housing (SIH), gross income broadly refers to regular and recurring cash receipts from employment, investments and transfers from government, private institutions and other households. It is measured before income tax and the Medicare levy have been deducted.
Sources from which income may be received include:
Receipts which are excluded from income because they are not regular or recurring cash payments include the following:
- wages and salaries (whether from an employer or own corporate enterprise)
- profit/loss from own unincorporated business (including partnerships)
- investment income (interest, rent, dividends, royalties)
- government pensions and allowances
- private cash transfers (e.g. superannuation, regular workers' compensation, income from annuities, child support, and other transfers from other households).
More detail on the various components of gross income are included in section 1.4 'Components of income'.
- income in-kind including employee benefits such as the provision of a house or a car and employer contributions to pension and superannuation funds - however, income in-kind provided as part of a negotiated salary sacrifice arrangement can be regarded as cash or 'near cash' income and included within the scope of cash income; it is estimated that about two thirds of salary sacrificed income was included in the 2003-04 SIH estimate of gross income
- capital transfers such as inheritances and legacies, maturity payments on life insurance policies, lump sum compensation for injuries or other damage, capital repayment of loans from other households
- capital gains and losses, such as profit from buying and selling shares unless as a business
- receipts from running down assets (excluding receipts from pension funds), such as withdrawals from savings, loans and credit obtained.
Disposable income is derived by deducting estimates of personal income tax and the Medicare levy from gross income. Disposable income better represents the economic resources available to meet the needs of households. Note that while child support and other transfers from other households are included in the income of the households receiving the transfers, they are not deducted from the disposable income of the households making the transfers.
Final income is a measure that takes into account the impact of indirect government benefits (i.e. non-cash benefits) and indirect taxes on the economic wellbeing of households. For details see Government Benefits, Taxes and Household Income, Australia (cat. no. 6537.0).
COMPARISON WITH AUSTRALIAN SYSTEM OF NATIONAL ACCOUNTS
The concepts of income used in the HES and SIH have many similarities to the household income definition used in the Australian System of National Accounts (ASNA), but also differ in some respects. A detailed comparison of 1997-98 SIH and ASNA estimates was published as an appendix to the 1997-98 issue of Income Distribution, Australia, 1997-98 (cat. no. 6523.0). Comparison of SIH data from 1994-95 to 2003-04 with ASNA data indicated that the relationship between the two estimates had not changed significantly over that period.