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Australian Bureau of Statistics
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Survey Participant Information - Economic Activity Survey - AIC12C |
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ECONOMIC ACTIVITY SURVEY - AIC12C
INCOME ITEMS What is the difference between Sales of goods produced and Sales of goods not produced? What should be reported as income from services? Where to report income from various sources/activities? What is the difference between Sales of goods produced and Sales of goods not produced? Sales of goods produced (Q4a) occur when the business that sells a commodity is the same business which undertook production of the commodity, or had the commodity produced for it by a third party on a contract, sub-contract or commission basis. Examples of activity generating income from sales of goods produced include:
Sales of goods not produced (Q4b) are those goods the business purchased ready-made, then resold without making changes to the goods. Wholesale and retail sales of goods should be reported here. For example, income from the sale in Australia of cars imported from a related overseas manufacturer would be included in sales of goods not produced. What should be reported as income from services? Generally, payment received for the provision of any services, regardless of whether they are a primary or secondary activity of the business, should be reported as Income from services (Q5). Where the business receives payment for manufacturing or assembly work performed on behalf of another business on a commission or fee basis only (i.e. where the business does not own the inputs to production or the goods produced), such payment should be reported as Income from services, as should income from activity incidental to production or sales, including:
Other examples of Income from services include:
Rent, leasing and hiring income is conceptually a service income, but income from this source should be reported in Q6. Distinction: "Wet" and "dry" hire Some equipment, e.g. machinery, equipment or vehicles, may be hired either with or without operator/driver. This distinction, sometimes referred to as "wet" and "dry" hire, determines how this type of income should be reported.
Royalties income is also conceptually a service income, but income from this source should be reported in Q9. It includes payments received for the right to extract natural resources and payments received for the use of intellectual property owned by the business, e.g. patents and copyright. Where to report income from various sources/activities? Although this list is not exhaustive, it does address some of the common reporting problems encountered by businesses. Computer Software Sales: The treatment of income from computer software sales differs depending on the situation.
Discounts/Rebates received: Discount or rebates received by a business from its suppliers should not be reported as income, but should be deducted from the expense item to which the discount or rebate applied (e.g. Purchases [Q17], Other operating expenses[Q22]). Export sales (f.o.b): Where goods are produced or purchased in Australia for sale overseas, income from Sales of goods (Q4) should represent the free-on-board (f.o.b.) price of the goods, i.e. a price which may cover the cost of transporting goods to the Australian customs frontier (point of exit from Australia) only, and not the cost of transporting the goods outside Australia. (Note the exclusion of Export freight charges from the concept of Sales of goods) Food and beverages:
Gambling: Takings from gambling activities, including lottery tickets, are Income from services (Q5). This includes gambling taxes or levies but excludes payouts and rebates. Progress payments billed on long term contracts: Where a business has entered into a long term contract to supply goods or services, and recognises expenses and progress payments in its accounts, the progress payments should be reported as sales of goods (Q4) or income from services (Q5), depending on the nature of the contract. Public transport operation
Sponsorship Income: Sponsorship is not considered the same as a donation, as it involves a transaction, usually advertising or promotional benefits for the individual or business making the payment. It should therefore be reported as Income from services (Q5), unlike donations, which are reported as Other income. Ticket sales (admission): Where a business sells tickets for admission to a venue for an event (entertainment, sporting, cultural etc.), it is commission income and revenue should be included in Income from services (Q5). Ticket sales (travel agents): Where a business sells travel tickets as an agent for a passenger transport business, income from these sales should be reported as Income from services (Q5). Asset sales: The proceeds from the sale of assets should be reported as Disposal of selected assets in Q31. The profit or loss from the sale of assets should be reported in Other Income (Q10) as a positive or negative value. Asset revaluation/impairment: should be reported under Other income (Q10) as either a net gain or loss. Negative revaluations and impairments should not be reported as an expense. This follows the same principles that apply to other examples listed on the form, such as share trading or sales of assets. EXPENSE ITEMS How should I report Labour costs? How should I report Purchases? How should I report expenditure on electricity, fuels and water? How should I report payments to contractors and other businesses for services? Where do I report my specific expense item? How should I report Labour costs? Payments made to an unrelated business for the supply of staff on a fee or contract basis, where the staff entitlements are paid by the business supplying the employees, should be recorded in Labour Costs question part (e) Payments to employment agencies for staff (Q12e). Payment to another business for recruitment services (i.e. advertising vacancies, conducting interviews) on behalf of your business should also be included in Payments to employment agencies for staff (Q12e). However, any costs incurred by your business in the conduct of its own recruitment processes (e.g. payment directly to newspapers for running job vacancy advertisements) should be reported in Other operating expenses (Q22). Labour costs (Q12) exclude payments to contractors or sub-contractors operating under their own ABN. Information on payments to contractors can be found under How should I report payments to contractors and other businesses for services? Only include Employer contributions paid into superannuation in Q12a. This does not include personal superannuation contributions for business owners not drawing a wage. Payroll tax (Q12d) is levied by State/Territory governments on businesses with large payrolls (usually greater than $0.5 million for the year). It does not refer to income tax withholding for employees. Wages and salaries including provisions for employee entitlements (Q12f) - gross (i.e. before tax) wages and salaries should be reported. How should I report Purchases? If a commodity is purchased to be used or consumed in the production of goods or services, or for repairs and maintenance of equipment, its cost should be reported as Purchases of materials, components, containers, packaging materials, electricity, fuels and water (Q17a). If the same commodity is purchased simply to be onsold in the same form (without transformation), its cost should be reported as Purchases of finished goods for resale (Q17b). For example:
In the context of selling finished goods, Purchases (expenses) are not the same as cost of goods sold. Purchases represent the amount actually expended by the business in the reporting period. Cost of goods sold, which is not collected in this form, represents the amount expended only on goods actually sold in the reporting period. (Cost of goods sold is equal to purchases plus opening inventories minus closing inventories). How should I report expenditure on electricity, fuels and water? Reporting of expenditure on electricity, fuels and water depends on how the electricity, fuels and water are used by the business, as shown in the following examples.
How should I report payments to contractors and other businesses for services? There is a specific question for Payments to contractors and other businesses for freight, cartage, delivery and transport services (Q18). Otherwise, all payments to other businesses for non-transport-related services provided should be reported in Other operating expenses (Q22). The following examples show how some commonly incurred expenses should be reported.
Where do I report my specific expense item? Although this list is not exhaustive, it does address some of the common reporting problems encountered by businesses: Consumables: Consumables such as stationery, staff amenity supplies, cleaning materials etc. should be reported as Purchases of materials, components, containers and packaging materials (Q17a). Discounts/Rebates given: Discounts or rebates given by your business to its customers should not be reported as an expense item, but should be netted off the income item to which the discount/rebate applied, e.g. Sales of goods (Q4) or Income from services (Q5). Equipment hire: should be included in Other operating expenses (Q22). Finance lease payments: When an asset, e.g. company car, is acquired under a finance lease arrangement, the value of the acquisition should be included in Capital expenditure including capitalised work done by own employees (Q29) in the year of acquisition. Repayments under a finance lease agreement consist of two components: interest and capital repayments. Capital repayments should not be reported in this form. The interest component only should be included in Interest expenses (Q14). Franchise fees: If the business is a franchisee paying fees to a franchisor, those fees should be included in Other operating expenses (Q22). Land Purchases: Land purchases are to be reported as Capital expenditure including capitalised work done by own employees (Q29i). Land is a non-current asset and purchases should therefore not be reported as an inventory. Motor vehicle insurance premiums:
Sponsorship Payments: Sponsorship is not considered the same as a donation, as it involves a transaction, usually advertising or promotional benefits for the individual or business making the payment. It should therefore be reported as Other operating expenses (Q22), whereas donations are excluded altogether. INVENTORIES How should I report inventories? Inventories (Q28) are divided into three sections; Raw materials, Work-in-progress and Finished goods. Raw materials (Q28a) consist of goods that a business holds with the intention of using to produce other goods or in rendering services. For example, paper supplies for use in printing newspapers (good produced) or raw food to make a meal (provide a service). Work-in-progress (Q28b) consists of goods that still require work to reach the condition they are to be sold in, such as partially assembled machinery. The value of work-in-progress inventories should be reported net of progress payments billed. Finished goods (Q28c) consist of goods that are to be sold in their current condition, including goods for resale. Inventories do not include depreciable assets such as land. CAPITAL EXPENDITURE AND DISPOSAL OF ASSETS How should I report capital expenditure? What is capitalised work done by own employees? How should I report capital expenditure? Capital expenditure refers to the amount spent by a business in the current reporting period on the acquisition of non-current assets. It does not represent the value of asset holdings purchased prior to the current reporting period and does not include additions to inventories. It is reported under Capital expenditure including capitalised work done by own employees (Q29). If the business hires contractors to carry out capital work, then these contractor payments should be included in the cost of the capital works. What is capitalised work done by own employees? Capitalised work done by own employees occurs when a business uses its own employees to add to the value of its assets by virtue of project work. Examples include:
In these cases, the cost of the project - both wages and salaries paid to employees and materials used for the capital work - may be capitalised, so that the cost can be amortised over more than one reporting period. If the project work relates to a non-current asset, it is included in the relevant section of the question Capital expenditure including capitalised work done by own employees (Q29). Capitalised work done by own employees should also be reported as Capitalised wages and salaries (Q30a) and Purchases of materials for capital work (Q30b). That is to say that Capitalised work done by own employees (Q30) is a subset of Capital expenditure... (Q29) Capitalised wages and salaries and purchases of materials must relate to capital works. If they are wages and salaries or purchases relating to the daily operations of the business, they are reported as an expense item. CHECKLIST The purpose of this checklist is to assist you, if you wish, to check the information which you have supplied in the form before returning it to ABS. Use of the checklist may reduce the need for us to contact you with further enquiries. The points covered reflect some of the most common reporting errors. Employment (Q3)
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Return to Economic Activity Survey - Help Page This page first published 10 August 2012, last updated 20 August 2012
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