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8165.0 - Counts of Australian Businesses, including Entries and Exits , Jun 2007 to Jun 2009 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 21/10/2010   
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This document was added 02/16/2011.



QUALITY DECLARATION - SUMMARY

INSTITUTIONAL ENVIRONMENT

The statistics presented in this release were derived using a combination of data collected directly by the Australian Bureau of Statistics (ABS) under the authority of the Census and Statistics Act 1905 and Business Activity Statement (BAS) data collected by the Australian Taxation Office (ATO). The Income Tax Assessment Act 1936 provides for the ATO to pass information to the Australian Statistician for the purposes of the Census and Statistics Act 1905.

For information on the institutional environment of the Australian Bureau of Statistics (ABS), including the legislative obligations of the ABS, financing and governance arrangements, and mechanisms for scrutiny of ABS operations, please see ABS Institutional Environment.


RELEVANCE

This publication presents counts of businesses sourced from the Australian Bureau of Statistics Business Register (ABSBR), including entry, exit and survival information.

The scope of the publication included all actively trading businesses operating in the Australian economy as at June 2007, June 2008 and June 2009. However, 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 counts. Please refer to the Explanatory Notes of the publication for further information.

Actively trading businesses are:
  • Type of Activity Units (TAUs) from the profiled population (where activity is monitored by direct contact by ABS); and
  • ABNs from the non-profiled population, which are actively remitting in respect of a Goods and Services Tax (GST) tax role.
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 are treated as "long term non-remitters" (LTNRs). As they are not actively remitting GST, they are considered not to be actively trading and are therefore excluded from counts.

This publication includes businesses classified by:
  • industry, in accordance with the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 edition ( cat. no. 1292.0)
  • state and territory (and sub-state geography in accordance with the Australian Standard Geographical Classification (cat. no. 1216.0).
  • institutional sector, in accordance with the Standard Institutional Sector Classification of Australia (SISCA, cat. no. 1218.0)
  • type of legal organisation
  • business size (employment size and annual turnover size).


TIMELINESS

The data was extracted from the ABS Business Register to provide a snapshot of actively trading businesses as at June 2007, June 2008 and June 2009. The publication was released in October 2010, sixteen months after the end of the reference period. The next release of Counts of Australian Businesses, including Entries and Exits (cat. no. 8165.0) is currently scheduled for release in December 2011.


ACCURACY

The counts in this release are intended to provide an accurate measure of actively trading businesses. That is, businesses that are producing or distributing goods or providing services (defined by a GST role) and are active (defined as having remitted GST obligations within the past five quarters).

For non-profiled businesses, most classificatory data items reflect information provided to the ATO at the time of ABN registration. The exception is Number of Payees, which is updated annually by the ATO, and turnover, which is based on BAS reporting. In the profiled population, classificatory data items for the most significant businesses are updated annually. Businesses on the next level of significance are updated biennially. Other businesses in the profiled population are not routinely updated, but may be updated as a result of ABS survey feedback or other maintenance activity.

The counts in this publication are subject to non-sampling error, and the cyclical administrative workflows of the ATO may impact on data interpretability. Non-sampling error arises from inaccuracies in collecting, editing and processing the data. Every effort was made to minimise non-sampling error, by reviewing editing strategies and efficient data processing procedures. The counts are not subject to sampling error as they represent a complete enumeration of those "economically active" businesses on the ABSBR.

There are six known sources of error in these counts which are likely to impact on the number of actively trading businesses reported. However, the ABS believes that these sources of error (identified below) are likely to have a relatively small impact on the accuracy of the business counts contained in this release.

    Businesses with Low Turnover

    From July 1 2007, businesses with turnover of at least $75,000 per annum ($150,000 in the case of non-profit organisations) were required to register for an ABN and remit GST. Businesses with turnover under $75,000 were able to voluntarily register and these voluntarily-registered businesses are also included in the counts in this release. There are certainly, however, businesses that are actively trading with turnover of less than $75,000 which chose not to register for an ABN or remit GST. The number of businesses in this category is currently unknown to the ABS. Similarly, the same applied prior to 2007 for businesses with turnover of at least $50,000 per annum ($100,000 for non-profit organisations).

    Businesses which have Recently Ceased Trading

    An analysis of recent ABS surveys indicates that a proportion of businesses which have remitted GST within the most recent five quarters of the end of the reference period had in fact ceased operation by the end of the reference period. In many cases, these businesses had not yet been classified as a LTNR business. The exclusion of LTNRs from the counts in this release thus excludes the majority of, but not all, businesses who have ceased trading.

    Businesses which Appeared to have Ceased Trading but are Likely to be Active

    Conversely, investigations show that a relatively small proportion (15% on average) of businesses identified as LTNRs at a point in time (and thus excluded from these counts) recommence remitting at a later date. At this stage, it is not clear whether these businesses were not active during the period (in which case their exclusion provides an accurate count) or were actively trading but failing to remit their GST obligations (in which case they were incorrectly excluded).

    There are reasons why a business may not respond to the ATO for a period of time and then recommence remitting GST obligations. For example, a business may be in a "start up" phase with minimal or no activity, could be tax exempt or recalcitrant in reporting over a period of time, or could become dormant while undertaking a change in activity. It would be difficult however to categorise LTNR units which later remit into these groupings without a detailed investigation of each unit.

    Main Business Address

    Businesses can operate in more than one State or Territory, and in these cases are classified to their Main 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.

    Multi-Location Businesses

    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). 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.

    This publication therefore may be regarded as providing partial coverage of businesses in a given State. For example, if a business registers for a single ABN, but then operates from many physical locations (or "shopfronts"), coverage will be restricted to the State of the main or "head office" location only. This is particularly relevant for larger businesses, which commonly establish outlets in numerous States and Territories across Australia and also operate from a head office location.

    The issues of multi-location businesses are more pronounced for counts at the SLA level, as multi-location businesses may only be attributed to a single SLA. As such, care should be taken not to assume that business counts at the SLA level reflect all business operations within that SLA. Users should be aware of this limitation when using counts of businesses included in this publication and should be particularly cautious in equating the number of businesses, represented by ABNs (and TAUs) with the number of business operations.

    Business Size Classifications

    In terms of annual turnover values, the transition to a new annual turnover imputation technique has had some effect on this publication's annual turnover size range tables, compared with data included in previous publications. Annual turnover values are based on data reported to the ATO through BAS and include imputation for missing periods. More specifically, 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. In cases where auxiliary BAS data are not available, an impute based on auxiliary ABSBR data is used.

    In terms of employment values, payees data has been imputed for a relatively small number of businesses. The employment data extracted from the ABSBR are generally suitable for the purposes of attributing an employment size classification to each in-scope business.  However, during processing, a subset of problem units were identified and a more robust methodology was developed to ensure all businesses were classified to an employment size range which reflected real world activity. This involved examining the reported employment values of businesses which were known to be affected by recent changes to the ABSBR and imputing values as appropriate based on auxiliary data.  Specifically, BAS wages and salaries and annual turnover data were used to develop a better quality impute.  This methodology is considered suitable for the purposes of classifying businesses into relatively broad employment size ranges.



COHERENCE

There has been a break in series between this release and the previous (2007) release of Counts of Australian Businesses, including Entries and Exits (cat. no. 8165.0). The scope of this publication has changed to better reflect Australia's actively trading business population, and as such, it has been necessary to rebase the publication tables and datacubes to 2007. As a result, the counts presented in this release are not comparable with the previous release. For further information, please see the Introductory Notes contained on page 2 of the publication.

The scope of this publication is also significantly different to previously released (and now discontinued) ABS business counts publications 8160.0.55.001, 8161.0.55.001 and 8127.0 . In particular, this publication only includes businesses which actively traded in goods or services during the reference period.


INTERPRETABILITY

This publication continues to provide business counts by selected demographics including industry, geography, institutional sector, type of legal organisation and business size. Business size data is provided by selected annual turnover and employment size ranges. These (employment) data indicate that most Australian businesses are small (95.6%) and that most of Australia's small businesses do not employ any staff (62.7%). The counts in this release are therefore heavily influenced by entry and exits within Australia's small business sector. Users should take this into account when comparing these data with other ABS statistics.

Further information about scope and coverage, terminology and other technical aspects associated with these statistics can be found in the publication Counts of Australian Businesses, including Entries and Exits (cat. no. 8165.0), which contains detailed Explanatory Notes, Technical Notes and a Glossary.


ACCESSIBILITY

Data from Counts of Australian Businesses, including Entries and Exits (cat. no. 8165.0) are contained in a pdf publication available free of charge on the ABS website.

Excel spreadsheets containing additional tables and cross classified datacubes have also been produced and are available free of charge on the ABS website.
If the information you require is not available as a standard product, the ABS may have other relevant data available on request and for a charge. Please contact the National Information and Referral Service on 1300 135 070.


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