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9 Changes in this issue, and the impact on the estimates, are discussed in more detail in the Appendix (Changes to this Series). As a guide, these changes resulted in an increase of almost 10% in the number of individuals receiving Wage and salary income, a 4% increase in total Wage and salary income, and around a 5% reduction in average Wage and salary income in each reference year.
10 All individual income tax statistics provided to the ABS by the ATO have been in aggregated form only, at the SLA level. Information about individual taxpayers has not been released to the ABS.
11 Prior to being provided to the ABS, the statistics have also been subjected to a confidentiality process that randomly adjusts table cells with small values. This includes altering some small cells to zero. Caution should therefore be exercised in deducing that there are no people in an area with certain characteristics and, in general, no reliance should be placed on table cells with small values. The confidentiality process prevents the risk of inadvertently releasing any information that may identify an individual while preserving the overall information value of the statistics.
SCOPE AND COVERAGE
12 The scope of these data relate to persons receiving income from Wages and salaries.
13 Wage and salary earners have been defined as:
persons aged 15 years and over who have submitted an individual income tax return and have received wage and salary income in that financial year.
14 Wage and salary income, as reported on the income tax return, includes:
15 It should be noted that this definition does not take account of whether wage and salary earners work on a full-time or part-time basis. Consequently, differences in the extent of part-time work may account for some differences in the number of wage and salary earners and average wage and salary incomes across regions. Similarly, average wage and salary incomes may be affected by overtime earnings and multiple job holdings.
16 There are several data considerations that users should be aware of when analysing the data. Overall, these are not viewed as being so severe that they would lead to the production of misleading information. Users are cautioned to be aware of these considerations and take them into account when analysing the results.
17 For the purposes of providing statistical measures for the entire population, the ATO database has some limitations in its coverage. Persons who receive less than the taxable income threshold are not necessarily required to lodge a tax return. Consequently, the coverage of low income earners is not complete in ATO records.
18 Generally, the ATO considers someone to be an Australian resident for tax purposes if they have either always lived in Australia or have come to Australia to live permanently, have been in Australia for more than half of the financial year (unless their usual home is overseas and they don't intend to live in Australia), have been in Australia continuously for six months or more and for most of that time have been in the one job and living in the same place, or are an overseas student enrolled in a course of study for more than six months duration.
Processing of tax returns
19 The data presented in this publication were compiled before the processing of all income tax returns for any given year may have been completed. Data provided to the ABS by the ATO are from returns processed up to 31 October, 16 months after the end of the financial year. Any returns lodged after this date are not included. Therefore, for 2006-07, returns processed after 31 October 2008 are not included. This also applies for each of the previous three years of data presented in this release, so for 2005-06 data for example, returns processed after 31 October 2007 are not included.
20 Annual revised data is published by the ATO in Taxation Statistics, Personal Tax, Table 7 for selected income items. One of these items is 'Salary or wages'. Although this data item is different to the data contained in this release (as it does not include all the items listed in paragraph 14), it can be used to give an indication of the likely direction of change in the number of Wage and salary earners and total Wage and salary income as more tax returns are lodged.
21 As an example, Table 1 below shows that for the 2003-04 income year, an additional 4.2% of taxpayers earning income from 'Salary or wages' lodged their income tax returns in the three years after the initial processing cut off of 31 October 2005. This translated to a further 4.5% of 'Salary or wages' income being reported.
22 Due to the later lodgement dates for a small portion of tax returns (as shown above) the data provided in this release slightly under-estimates the total taxable income for a given financial year.
Changes in taxation policy
23 The ATO provides information annually in Taxation Statistics on their website about changes that may affect taxation statistics. Changes relating to personal income tax are in each edition of Taxation Statistics.
24 For the income year 2006-07, the following changes were noted in Chapter 2 of Taxation Statistics:
25 For the income year 2005-06, the following changes were noted in Chapter 2 of Taxation Statistics:
26 For the income year 2004-05, the following changes were noted in Chapter 2 of Taxation Statistics:
27 For the income year 2003-04, the following change was noted in Chapter 3 of Taxation Statistics:
COMPARISON WITH OTHER ABS INCOME DATA
Survey of Income and Housing
28 The ABS Survey of Income and Housing (SIH) collects information on sources of income, amounts received and the characteristics of persons aged 15 years and over resident in private dwellings throughout Australia. The survey was conducted every year from 1994-95 to 1997-98, and then in 1999-2000, 2000-01 and 2002-03. From 2003-04, the survey is being conducted every two years. For further information about the concepts, definitions, methodology and estimation procedures used in the SIH, refer to Survey of Income and Housing, User Guide, 2005-06 (cat. no. 6553.0).
29 Data collected from SIH can be compared to ATO data published in this release for the years 2003-04 and 2005-06. Comparison of these two series can provide a means of assessing trends, establishing whether counts are of an expected magnitude and whether the distribution of income across the various sources is similar.
30 SIH produces estimates of current income as well as estimates of annual income in respect to the previous financial year. Current income refers to income being received at the time the data were collected from respondents. The data used in the following comparison are based on current income estimates as these are thought to provide a better picture of income earners, are more up to date and are generally reported more accurately than previous financial year estimates.
31 Differences exist between the two years of SIH data which should be taken into consideration, most significantly that the 2005-06 SIH was run as a stand alone survey, whereas the 2003-04 SIH was integrated with the Household Expenditure Survey (HES). This may have had an impact on response.
32 Table 2 presents comparable income data items from ATO data contained in this release and SIH data for 2003-04 and 2005-06. SIH estimates for both Wage and salary income were higher than ATO income data in both reference years.
33 The differences observed between the two sets of income data are likely to be as a result of different definitions, methodologies and reference periods.
34 Overall, these results suggest that the ATO income tax data contained in this release is generally consistent in magnitude with the estimates derived from the ABS Survey of Income and Housing.
Survey of Average Weekly Earnings
35 The Survey of Average Weekly Earnings (AWE) is a quarterly sample survey of employing businesses. For further information about the concepts, definitions and methodology of AWE, refer to Labour Statistics, Concepts, Sources and Methods (cat. no. 6102.0.55.001).
36 The Survey of Average Weekly Earnings collects data on average weekly earnings for full-time adult employee jobs, average weekly total earnings for all employee jobs, and average weekly ordinary time earnings for full-time adult employee jobs. Table 3 shows the ATO average Wages and salary income (all Wage and salary earners, all Wage and salary income) and 'average weekly total earnings for all employees jobs' from AWE.
37 The Australian Standard Geographic Classification (ASGC) is used by the ABS for the collection and dissemination of geographically classified statistics. It is an essential reference for understanding and interpreting the geographic context of statistics published, not only by the ABS but also by other organisations, and its use enables comparability across datasets.
38 ATO data based on postcodes has been converted to data for Statistical Local Areas (SLA) as defined by the Australian Standard Geographical Classification (ASGC). Boundaries of these regions can change over time and the ABS revises and releases the ASGC annually.
39 Data in this publication for all years are presented on boundaries in Australian Standard Geographical Classification (ASGC), 2008 (cat. no. 1216.0).
40 The ABS uses geographic concordances to enable the conversion of data from one type of geographic region to another. These geographic concordances are generally used to convert data for 'non-standard areas' to data for standard areas used by the ABS. Geographic concordances (or conversions) are expressed as conversion factors based on population.
41 The geographic identifier on the ATO database is the postcode of the individuals' current home address at the time of completing the tax return. Consequently, postcode to SLA conversion factors have been used by the ATO to concord aggregated postcode data to estimates for Statistical Local Areas. The concordances are based on the Estimated Resident Population. For further information see the detailed main structure of the Australian Standard Geographical Classification (ASGC), 2008 (cat. no. 1216.0).
42 The concordance process:
43 When analysing concorded data the following limitations of this methodology need to be taken into account:
44 While care was taken in producing the concordances the ABS will not guarantee the accuracy of concorded data. Users should exercise caution when analysing data for regions with less than 100 Wage and salary earners.
45 The statistics in this release are presented according to the Australian Standard Geographical Classification (ASGC), 2008. Under this classification, statistical areas are defined as follows:
46 Further information concerning statistical areas, including information about recent changes to boundaries, is contained in Australian Standard Geographical Classification (ASGC), 2008 (cat. no. 1216.0). The ASGC also incudes a complete series of maps. SLA maps for all states and territories can be found in Chapter 16 of the publication, or can be accessed individually from the Downloads tab.
AVERAGE ANNUAL RATE OF GROWTH
47 45 The average annual growth rate is calculated as a percentage using the formula below, where W0 is the average Wages and salaries at the start of the period, Wn is the average Wages and salaries at the end of the period, and n is the length of the period (in years) between W0 and Wn.
48 [(Wn/W0)1/n -1] x 100
49 46 For further information about these statistics, contact the National Information Service on 1300 135 070.
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