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Survey Participant Information - Economic Activity Survey - AIC12CO
 

ECONOMIC ACTIVITY SURVEY - AIC12CO

Employment
Income Items
Expense Items
Inventories
Capital Expenditure and Disposal of Assets
Checklist

EMPLOYMENT

How should I report employment?


Employment
is a headcount of all persons who worked for the business as proprietors, partners, salaried directors or other employees in the last pay period of June 2012. It excludes casual or seasonal employees who are on the payroll, but did not work during this pay period. You should report for the last pay period in June 2012 even if this is not the last pay period in your financial reporting year.

Working proprietors and partners (Q3a)
If you are the owner-operator or partner of an unincorporated business, include yourself (and other partners) in Q3a (working proprietors and partners). Owners/directors of Pty Ltd companies should not be counted as working proprietors, but should be included in Q3b (Salaried directors) or Q3c (Other employees).


Other employees (Q3c)
This is a headcount of all persons who worked for the business and were paid through the payroll in the last pay period of June 2012.

What about persons working for the business under contract?
  • Contractors and subcontractors who are other businesses (i.e. have their own ABN and are paid on a fee for service or commission only basis) should not be counted in Employment.
  • If the business paid another business for contract staff, and those persons were on the payroll of the other business, they should not be counted in Employment.
  • Persons employed on a fixed-term contract, e.g. temporary staff/ workforce, should be included in Other employees (Q3c) only if they were paid through the payroll in the last pay period of June 2012 and PAYG tax was deducted for them.

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:
  • combining chemicals to manufacture paint;
  • using wood to manufacture furniture;
  • selling processing waste or by-product (e.g. sawdust from timber processing);
  • electricity generation;
  • brewing beer.

For Sales of goods produced to be reported in Q4a, the business must have owned the input to production (i.e. raw materials, components, parts used) and, therefore, the product for sale. If the goods were assembled or manufactured on a contract or commission basis (i.e. without ownership of the inputs), payment received should be included in Income from services (Q5). Further information can be found under What should be reported as income from services?

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. Income from energy retail or wholesale activity would also 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 for 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 (Q5), as should income from incidental activity, including:
  • delivery charges separately invoiced to customers;
  • packaging services;
  • installation;
  • repairs and maintenance service. (Please note that, if a business providing repairs and maintenance services, invoices customers for parts and service separately, income from both parts and service is included in Income from services[Q5].)

Other examples of Income from services include:
  • sales commission;
  • fees received for connection to an energy or communications network (e.g. internet or telephone);
  • electricity, gas or water distribution through wires, pipes, etc operated by the business;
  • income from the sale of advertising 'space' in print or other media;
  • consulting fees;
  • franchising fees received.

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 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.
  • Where the business derives income from hiring out equipment without operator ("dry" hire), that income should be reported as Rent, leasing and hiring income (Q6);
  • Where the business derives income from hiring out equipment with operator ("wet" hire), the income should be reported as Income from services (Q5).

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.

"Bundled sales": This term is often used to refer to the transactions between a telecommunication provider and a customer which include both telecommunication services (e.g. connection to network, message bank, silent number service) and equipment, such as handsets.
  • Payment received for network connection, installation and other ancillary services should be reported as Income from services (Q5), whereas
  • payment received from the sale of equipment should be reported as Sales of goods produced (Q4a), if the business which sold the handset also manufactured, modified or assembled the equipment or, otherwise, as Sales of goods not produced (Q4b).

Computer Software Sales: The treatment of income from computer software sales differs depending on the situation.
  • If the business sells non-customised software it has created, this income should be reported as Sales of goods produced (Q4a).
  • Where the business provides a customised software solution, income should be reported as Income from services (Q5).
  • Onselling software created by another business is reported as Sales of goods not produced (Q4b).

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]).

Food and beverages:
  • Food and beverages manufactured and sold to the consumer on the same premises (e.g. retail bakery) are considered Sales of goods produced (Q4a).
  • Food and beverages sold in original packaging, for example bottled water or confectionery, are considered Sales of goods not produced (Q4b).
  • If the food and beverages sold by the business are transformed through preparation and/or table service, sales should be reported as Income from services (Q5). This treatment covers restaurant food and drink sales, takeaway meals in containers, and catering services.

Asset sales: The proceeds from the sale of certain assets should be reported in Disposal of selected assets (Q30). The profit or loss from the sale of any 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.

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 or income from services, depending on the nature of the contract.

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)

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 $0.5million 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:
  • where a business buys computer cable for its own use or as a part for assembly of another product for sale, the cost of the cable should be included in Purchases of materials, components, containers, packaging materials, electricity, fuels and water (Q17a); but
  • where a business buys computer cable and onsells it as is (without processing), the cost of the cable should be included in Purchases of finished goods for resale (Q17b).

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.
  1. Electricity purchased for retail sale - report as Purchases of finished goods for resale (Q17b).
  2. Petroleum and diesel fuel purchased for use in own vehicles and equipment - report as Purchases of materials, components, containers, packaging materials, electricity, fuels and water (Q17a).
  3. Water rates paid - include in Purchases of materials, components, containers and packaging materials, electricity, fuels and water (Q17a).
  4. Electricity bills for powering office, plant, etc - include in Purchases of materials, components, containers and packaging materials, electricity, fuels and water (Q17a).

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.
  1. Postage costs - include in Outward freight, cartage, delivery and transport expenses (Q18a).
  2. Payments made to owner-drivers to transport goods sold by your business to customers - include in Outward freight, cartage, delivery and transport expenses (Q18a).
  3. Payment made to a courier for pick-up of goods and delivery to your office - include in Other freight, cartage, delivery and transport expenses (Q18b).
  4. Payment to a supplier of separately invoiced delivery charges - include in Purchases (Q17), i.e. the supplier's delivery fee is taken to be part of the cost of buying the goods.
  5. Payment for the use of copyright material - include in Other royalties expenses (Q21b).
  6. Payment of commission to another business for selling goods owned by your business - report as Other operating expenses (Q22).
  7. Payment to a catering business to provide meals at a filming location - include in Other operating expenses (Q22).
  8. Travel and accommodation expenses for your employees - include in Other operating expenses (Q22).

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:

Connection costs: If the business is a telecommunication or internet service provider which pays for the use of a network operated by another business, such payment should be included in Other operating expenses (Q22).

Consumables: Consumables such as stationery, staff amenity supplies, cleaning materials etc. should be reported as Purchases of materials, components, containers, packaging materials, electricity, fuels and water (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).

Land Purchases: Land purchases are to be reported under Capital expenditure including capitalised work done by own employees (land) (Q28i). Land is a non-current asset and purchases should therefore not be reported as an inventory.

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.

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 (Q28) 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).

Motor vehicle insurance premiums:
  • Optional third party insurance premiums, payable at the discretion of the business, should be included in Insurance premiums (Q13).
  • Compulsory third party insurance premiums, payable as part of the vehicle registration process should be included in Other operating expenses (Q22).

INVENTORIES

How should I report inventories?


Inventories (Q27) are divided into three sections; Raw materials, Work-in-progress and Finished goods.

Raw materials
(Q27a) 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
(Q27b) 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
(Q27c) 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 (Q28).

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:
  • employees carry out work to build a structure, such as an outbuilding;
  • employees carry out work to develop an in-house software inventory control system.

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 (Q28). Capitalised work done by own employees should also be reported under the Capitalised wages and salaries (Q29a) and Purchases of materials for capital work (Q29b) questions. That is to say that capitalised work done by own employees (Q29c) is a subset of Capital expenditure...(Q28).

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)
  • Are the reported numbers a headcount of persons working for the business? (Should not be FTE.)
  • Have you reported only those who worked for the business in the last pay period ending in June 2012? (i.e. Regardless of your reporting period; not including casual/seasonal employees who did not work during that pay period.)
  • Does Total number of persons (Q3d) equal the sum of Working proprietors and partners (Q3a), Salaried directors (Q3b) and Other employees (Q3c)?
  • Working proprietors and partners (Q3a) should only be reported for an unincorporated business, not if the business is incorporated (e.g. Pty Ltd).
  • If the business had offices/locations with staff in more than one state or territory, does the total for Australia (Q32) equal both the sum of components and Total number of persons in Q3(d)?

Financial information
  • Are all reported financial items reported in $'000s( thousands)? For example, if business income for the year were $123,456, it should be reported as 123.
  • Do total income (Q11)and total expenses (Q23) equal the sum of their components?
  • Have sales and purchases been reported net of GST?
  • Have the nature and amount of the main components of 'other...' items been provided in Q10, Q22, Q28h and Q29d(iv)?
  • If income from sales of goods produced by the business has been reported, have purchases been reported correctly, i.e. as Purchases of materials, components, containers and packaging materials, electricity, fuels and water (Q17a)?
  • If income from sales of goods not produced by the business has been reported, have purchases been reported correctly, i.e. as Purchases of finished goods for resale (Q17b)?
  • Have the values of both opening and closing inventories (Q27) both been reported, where applicable?
  • If Capitalised work done by own employees is reported in Q29c, the value must be less than or equal to the sum of Capital expenditure items reported in Q28.
  • If the business had offices/locations with staff in more than one state or territory, do the totals for Australia (Q32) equal both the sum of components and the amounts specified at the foot of each column?

Other information
  • Have you answered 'yes' to the use of this online help facility (Q34)?
  • Have you provided an estimate of the time taken to complete this form (Q35)? (Please note that we use the time taken information to help us to design effective survey forms while minimising the burden on our providers.)

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