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3 In undertaking these projects, the ABS complied fully with the High Level Principles for Data Integration Involving Commonwealth Data for Statistical and Research Purposes.
4 For further information on the LEED Foundation Projects see the project entry on the Public Register of Data Integration Projects on the National Statistical Services (NSS) website.
Personal Income Tax data
5 The PIT data is sourced from the ATO.
6 The results of the LEED Foundation Projects are based, in part, on tax data supplied by the ATO to the ABS under the Taxation Administration Act 1953, which requires that such data is only used for the purpose of administering the Census and Statistics Act 1905. Any discussion of data limitations or weaknesses is in the context of using the data for statistical purposes, and is not related to the ability of the data to support the ATO's core operational requirements.
7 Legislative requirements to ensure privacy and secrecy of this data have been adhered to. In accordance with the Census and Statistics Act 1905, results have been confidentialised to ensure that they are not likely to enable identification of a particular person or organisation.
8 The data has been collected in compliance with Australian taxation laws. The unit record data was provided to the ABS for a variety of statistical purposes and so was not tailored specifically to this project. The unit record PIT dataset contains a range of key data items such as income and demographic data items such as age, sex and birth year. Information on the statistics contained in the dataset is generally available through the ATO website.
9 Data provided to the ABS by the ATO are from ITR processed up to 16 months after the end of the financial year (i.e. returns processed up to 31 October 2013 for the financial year ending 30 June 2012). Due to the identifying nature of the data it contains, access to all ATO datasets is strictly regulated by the ATO. Both the ATO and the ABS handle personal information in accordance with the Australian Privacy Principles contained in the Privacy Act 1988.
10 The LEED Foundation Projects used an extract of the PIT data for the 2011-12 financial year containing selected variables (see Data Sources).
11 According to taxation laws, individuals whose income is below a certain threshold are in many instances not required to submit tax returns. However, amendments to the taxation laws can significantly alter the information that is required to be reported in the ITRs. Statistics derived from the PIT dataset will be influenced by tax regulation changes. The tax-free threshold in the 2011-12 financial year was $6,000.
Expanded Analytical Business Longitudinal Database
12 In partnership with the Department of Industry, Innovation and Science, the ABS is developing an enduring firm level statistical asset that will increase the capacity of the research community to undertake firm level analysis of micro-economic drivers of performance, competitiveness, and productivity, and improve the evidence base for policy development and evaluation, leading to more targeted expenditure of government funds.
13 The EABLD integrates administrative data from the ATO with collected ABS survey data for all economically active businesses in the Australian economy from 2001-02 to 2012-13.
14 The LEED Foundation Projects used an extract of the EABLD for the 2011-12 financial year containing selected variables. The EABLD extract contains a record for every business ever registered up to and including the 2011-12 financial year.
15 The EABLD is comprised of two business populations, as described below:
16 For further information on the construction of the EABLD, refer to Information Paper: Construction of the Expanded Analytical Business Longitudinal Database, 2001-02 to 2012-13 (cat. no. 8171.0).
17 For further information on the ABS Units Model, refer to the Appendix of the Standard Economic Sector Classifications of Australia, 2008 (cat. no. 1218.0).
18 The results of the LEED Foundation Projects are based, in part, on Australian Business Register (ABR) data supplied by the Registrar to the ABS under A New Tax System (Australian Business Number) Act 1999 which requires that such data is only used for the purpose of carrying out functions of the ABS. Any discussion of data limitations or weaknesses is in the context of using the data for statistical purposes, and is not related to the ability of the data to support the ABR's core operational requirements.
19 The LEED Foundation Projects capture information on all employee earnings and jobs in Australia throughout the reference period of 1 July 2011 to 30 June 2012.
20 The scope of the LEED Foundation Projects includes:
21 Coverage restrictions apply to the LEED Foundation Projects Integrated Dataset.
22 The LEED Foundation Projects' use of unique identifiers ensures that each individual is unlikely to be included more than once in the experimental statistics.
23 Employees who meet one of the following conditions will be partially excluded from the LEED Foundation Projects. For these employees, missing information from one source (e.g. missing PAYG data) will result in exclusion from certain statistics (e.g. Mean Gross Payments, or Number of Jobs).
2. Employees who did not receive an Individual PAYG summary from an employer for any of the following reasons:
24 No employing businesses were excluded on the basis of coverage.
25 The Integrated Dataset is comprised of three main subsets representing three separate domains in the linked employer-employee data:
26 These files are linked together using unique keys where a link is possible, or left unlinked where no link could be made. The linking keys are the Scrambled Tax File Number (STFN) and Australian Business Number (ABN).
27 At the completion of the linking process:
28 At the completion of the linking process, there were a number of unlinked records which are still included in the Integrated Dataset:
29 These unlinked records are due to:
30 Unlinked ABNs were examined and approximately 36% were found to be invalid. These errors are likely the result of erroneous data (e.g. typographical errors or Australian Company Numbers in place of ABNs) entered by employers on an Individual PAYG summary.
31 There are a number of data considerations that users should be aware of when interpreting or analysing the experimental statistics.
32 Employees are defined as persons who worked for a private or public sector employer and received pay for the reference period in the form of wages or salaries, a commission while also receiving a retainer, tips, piece rates or payments in kind. Persons who operated their own incorporated enterprises with or without hiring employees are also included as employees.
33 The definition of employees used in the experimental statistics includes Owner Managers of Incorporated Enterprises (OMIEs) as they cannot be separately identified from other employees based on the PIT data. This aligns with the previous ABS Status in Employment classification. The current ABS Status in Employment classification separately identifies employees and OMIEs. The current classification was released in 2014. As such, coherence between ABS estimates of employees in 2011-12 and the experimental statistics is not affected by the inclusion of OMIEs as employees.
34 For further information on the ABS Status in Employment classification, see Standards for Labour Force Statistics, Issue for Dec 2014 (cat. no. 1288.0).
35 For the purpose of the LEED Foundation Projects, employees only contribute to the experimental statistics if they have a record on the Employee File. The small number of employees who have valid jobs on the Job File (and therefore are conceptually employees) but do not have a corresponding a record on the Employee File, are excluded from the experimental statistics on employees (although they are included in the jobs statistics).
36 Earnings are the gross amounts paid to employees for work done or time worked (including paid leave). Earnings is the aggregate of total payments (in cash and in kind) received by each employee in all of their jobs, as reported on an ITR.
37 The variables used in constructing earnings are all taken from the ITR and their total values summed together. They are as follows:
38 Irregular payments (e.g. bonuses, share scheme discounts, employer lump sum payments etc.) are part of the notional concept of earnings but for many ABS collections they are excluded to minimise seasonal variation. Because the reference period for the LEED Foundation Projects is the entire 2011-12 financial year rather than a point in time snapshot, any irregular payments made within the reference period are included.
39 For information on the ABS concepts and definitions related to earnings, see Chapter 12: Employee Remuneration, Labour Statistics: Concepts, Sources and Methods, 2013 (cat. no. 6102.0.55.001).
40 For information on the concepts of earnings used in the ABS business and household surveys, see the feature article “Understanding Earnings in Australia Using ABS Statistics”, July 2014 issue, Australian Labour Market Statistics (cat. no. 6105.0).
41 It is important to note that earnings information included in the experimental statistics is for all jobs as reported to the ATO through an ITR. It is not possible to disaggregate all the components of earnings per job using the PIT data. The gross payment information is the only job level payment information which can be separately identified based on the PIT data (see Explanatory Notes, paragraph 61).
42 Cash in hand work or earnings within the tax free threshold (less than $6,000) will not be included if no earnings were reported to the ATO through an ITR.
43 For the purpose of the LEED Foundation Projects, employees only contribute to the experimental statistics on earnings if they have a record on the Employee File. The small numbers of employees who have valid jobs on the Job File (and therefore are conceptually employees) but do not have a corresponding record on the Employee File, are excluded from the experimental statistics on earnings (although they are included in the jobs statistics).
Components of earnings
44 Salary and wages are the main component of earnings paid to employees, and account for the majority of cash earnings paid to employees. Salary or wages includes gross income from salary and wages, commissions, bonuses, and parental leave pay. Foreign employment earnings where tax was withheld is included in this variable as it cannot be separated from the reported salary or wages.
45 Allowances, earnings, tips, directors fees etc. include all employment related allowances, as well as payments from which tax was not withheld (such as tips, commissions, and bonuses).
46 Employer lump sum payments are payments for unused annual leave or unused long service leave.
47 Attributed personal services income (PSI) is a type of income generated through supply of service. Supply of service includes the skills, knowledge, expertise or efforts of an employee who performed the service on behalf of an organisation they work for. PSI is included in the concept of earnings as it can be regular, cash in nature, and attributed to employees.
48 Employee share schemes, total assessable discount amount is the discount on employee share scheme interests that an employee receives from their employer under an employee share scheme (ESS). The ESS discounts are treated as earnings and can be offered to the employee at any point during the financial year.
49 Total reportable fringe benefits amount is the gross value of all fringe benefits (in cash and in kind) reported on an ITR. This is reported only where the gross value is over $3,738 for the financial year. Total fringe benefits valued at $3,738 or less are not reported, which may result is slight under coverage in the experimental statistics on earnings. It is not possible to separate the cash components of fringe benefits (i.e. salary sacrifice) based on the PIT data, and thus ‘cash earnings’ is not produced separately for the LEED Foundation Projects.
50 Reportable employer superannuation contributions are additional to the compulsory contributions by employers. Since such contributions are made under a salary sacrifice arrangement, it is included in the concepts of earnings for the LEED Foundation Projects.
51 For further information on the ITR data items referred to above, please refer to the Individual tax return instructions 2012 on the ATO website.
52 A job is defined as a link between an employee and a business for $1 or more in payment as reported on an Individual PAYG summary. An employee can have multiple jobs with the same or different businesses during the financial year, and can hold two or more jobs concurrently (see Explanatory Notes, paragraphs 58-60).
53 For the purpose of the LEED Foundation Projects, jobs only contribute to the experimental statistics if they have a record on the Job File. The employees without corresponding jobs on the Job File are excluded from the experimental statistics on jobs (although they are included in the employee statistics).
54 The concept of ‘job' in other ABS publications such as Job Vacancies, Australia (cat. no. 6354.0) or the feature article “Estimating Jobs in the Australian Labour Market”, Labour Force, Australia (cat. no. 6202.0) differs from the experimental statistics, as in the other publications, a job can exist independently of an employee.
55 The experimental statistics provide a volume measure of the number of filled jobs throughout the 2011-12 financial year, and do not estimate the number of jobs at a point in time. Over the reference period, an employee can contribute to the experimental statistics on jobs more than once if they have:
56 The experimental statistics on jobs do not provide information on full-time equivalent jobs or unfilled jobs (job vacancies). They are more closely aligned with a volume measure of filled employee jobs during the reference period.
57 Main job is defined for each employee as the job in which they received the highest gross payment amount (see Explanatory Notes, paragraph 61) as reported on an Individual PAYG summary. This differs from ABS household surveys which define main job as the job in which the most hours were usually worked, however no information on hours worked is available in the PIT data. Gross payment may be considered a more appropriate indicator of the main job an employee held during the financial year. The main job allocated to an employee may not be the job they held at the end of the financial year.
Multiple job holders
58 Multiple job holders are employees who had two or more concurrent jobs during the reference period. The multiple job holder status of an employee is determined based on the date of information in the Individual PAYG summary. If two or more jobs were held on the same day, the employee was identified as a multiple job holder. This aligns with the definition of multiple job holder used in ABS household surveys, in which employees are only considered to be multiple jobholders if, in the reference period, they held multiple jobs concurrently.
59 The number of concurrent jobs presented in the experimental statistics are those that could be identified as concurrent using the date information. Multiple job holders may have other jobs for which concurrency could not be determined using the available date information, and as such these are not included. For employees who did not have a corresponding a job record, multiple job holder status cannot be determined.
60 Any misreporting of date information provided by an employer on an Individual PAYG summary may result in errors in the experimental statistics on multiple job holders. That is, some employees may be incorrectly identified as multiple job holders with two or more concurrent jobs, and some actual multiple job holders may be incorrectly identified as employees who had two or more consecutive jobs during the reference period.
61 Gross payments are the dollar amounts recorded (by businesses) on the Individual PAYG summary for each job. Gross payments are lower than earnings as the result of two key differences:
Occupation in main job
62 Occupation in main job is recorded for each employee in reference to their main job only (see Explanatory Notes, paragraph 57). Employees (or their tax agents) are asked to report their 'Main Salary and Wage Occupation' on their ITR. Employees with an ITR but without an Individual PAYG summary will have an Occupation in main job, but will not have a ‘main job’ recorded.
63 Occupation in main job is reported by an employee (or their tax agent) in reference to their 'Main Salary or Wage' job, in most cases this will align with the job identified from the Individual PAYG summaries as their main job. If an employee considers their main job to be something other than the job with the highest gross payment amount, the occupation they report for their main job may not relate to the main job selected from the Individual PAYG summaries.
64 For jobs linked to businesses in the non-profiled population, industry is based on information reported to the ATO at the time of ABN registration and is not actively maintained.
65 For jobs linked to businesses in the profiled population, industry is based on information collected by the ABS. Industry is collected through the profiling process for each major activity in which a business operates and is recorded separately at the TAU level.
66 As part of the integration methodology, each ABN was linked to a single TAU (and therefore a single industry). This process may result in a job (and therefore the employee) being linked to a business in a different industry to that of the actual job. This methodology was designed to preserve the distribution of employees and jobs among industries for the production of aggregate statistics (see ABN to TAU mapping in Integration Methodology). Other approaches such as linking individual jobs to TAUs may provide alternative means to perform this linking in future.
67 All geographic variables are based on a person’s home address at July 2014 as reported in the PIT Client Register, and are aligned to the Australian Statistical Geography Standard (cat. no. 1270.0).
68 The Client Register is a constantly evolving register which is updated using information from various sources including ITRs. As a result, the geographic information is referenced to July 2014 when the PIT data was extracted for the LEED Foundation Projects.
69 The geographic variables for the experimental statistics therefore may not align with an employee’s actual home address at the end of the reference period, 30 June 2012.
70 Taxation data is supplied to the Australian Statistician under the Taxation Administration Act 1953 for the purposes of administering the Census and Statistics Act 1905. The Australian Business Register (ABR) data is supplied to the Australian Statistician under the A New Tax System (Australian Business Number) Act 1999.
71 In accordance with the Census and Statistics Act 1905, the ABS is obligated to maintain the confidentiality of individuals and businesses in these ATO and ABR data sets, as well as comply with provisions that govern the use and release of this information, including the Privacy Act 1988. All published statistics are subjected to a confidentiality process before release. This process is undertaken to minimise the risk of identifying particular individuals or businesses in aggregate statistics, through analysis of published data.
72 The aggregate experimental statistics on employee and job counts presented are rounded to the nearest 100.
73 The aggregate experimental statistics on earnings and gross payments are based on information as reported on the ITR or the Individual PAYG summary.
COHERENCE WITH OTHER ABS DATA
74 The experimental statistics from the LEED Foundation Projects are the result of integrating data from administrative sources. They will differ from the estimates produced from other ABS household and business collections for the following key reasons:
75 The experimental statistics will differ to estimates produced from ABS household surveys which employ an ‘any responsible adult’ (ARA) collection methodology. The LEED Foundation Projects include information reported by individuals themselves, by their tax agent, or their employer.
76 The experimental statistics will differ from estimates produced from ABS business surveys for the following key reasons:
77 The experimental statistics may differ from estimates produced from ABS publications utilising PIT data due to difference in scope and due to the integration procedures used in the LEED Foundation Projects.
78 The ABS acknowledges the support provided by the ATO for the LEED Foundation Projects, and the partnership of the Department of Industry, Innovation, and Science in developing the EABLD. The provision of data as well as ongoing assistance provided by our stakeholders is essential to enable this important work to be undertaken. The enhancing of labour statistics through data integration by the ABS would not be possible without their cooperation and support.
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