6524.0.55.002 - Personal Income in Australia, 2011-12 to 2016-17 Quality Declaration 
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 17/12/2019   
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Explanatory notes


Source

The data in this release are compiled from the Linked Employer Employee Dataset (LEED), a cross-sectional database based on administrative data from the Australian taxation system.

The LEED includes more than 100 million tax records over six consecutive years between 2011-12 and 2016-17.

The Australian Bureau of Statistics acknowledges the continuing support of the Australian Tax Office (ATO).

Scope

All persons who interacted with the Australian taxation system for the 2011-12 to 2016-17 financial years and for whom personal income is identified.

This includes persons who have lodged Individual Tax Returns (ITR) within 16 months of the end of the financial year or who received Pay As You Go (PAYG) payment summaries from an employer in that year.

Geographic coverage

Data are provided for over 2,000 regions, at the SA2, SA3, SA4, LGA and GCCSA levels. Aggregate data are available by state and territory and national estimates.

The geographic boundaries have been updated to align with the latest ASGS. The six year time series of data are all produced on the same boundaries for ease of comparability across years.

All geographic variables are based on the individual's residential address as stipulated on the income tax return, or for non-lodgers, the address listed on the payment summary.

Further information, including access to Australian Statistical Geography Standard (ASGS) boundaries, which underpin the data presented in this publication, can be accessed from the ABS Statistical Geography Portal on the ABS website.

Dataset size

Over 12 million persons each year.

The high number of records in the LEED (over 100 million over six years) enables Personal Income in Australia to provide data at a national, state and regional level.

Collection method

The statistics in this publication are produced from the LEED, using ATO administrative data.

Changes in the series

This publication, Personal Income in Australia (previously known as Estimates of Personal Income for Small Areas), has been renamed to better align with the Jobs in Australia, 2011-12 to 2016-17 (cat. no. 6160.0) publication, as both publications are now produced from the LEED.

Data from 2010-11 is not published in this issue, as it is not included on the LEED. This data is available in previous editions of Estimates of Personal Income for Small Areas.

Data in previous years have not been revised, except to update to the latest ASGS. The latest edition of ASGS contains updates to the Local Government Areas from 2017 to 2018. These changes result in some LGAs being renamed. No boundaries have changed.

Occupation has been omitted from this publication, as it is available from Jobs in Australia, 2011-12 to 2016-17 (cat. no. 6160.0) and Microdata: Jobs in Australia, 2011-12 to 2016-17 (cat. no. 6160.0.00.001).

Other territories have been excluded from publication in the download tables. The data for these persons are included in the Australia total.

Using the LEED has allowed data for some areas to be published which were not available in previous editions of this publication. This data are currently only available for 2016-17.

Notes on selected variables

Personal Income

All monetary values are presented as gross pre-tax dollars, as far as possible. This means they reflect income before deductions and loses, and before any taxation or levies (e.g. the Medicare levy or the temporary budget repair levy) are applied. The amounts shown are nominal, they have not been adjusted for inflation.

The income presented in this publication has been categorised into income types, these categories have been devised by the ABS to closely align to ABS definitions of income.

Personal income is provided for the following five categories:

  • Employee income
  • Own unincorporated business income
  • Investment income
  • Superannuation income
  • Total income

Employee income

Employee income is the total (or gross) income received as a return to labour from an employer or from a person's own incorporated business (when they are employed by this business). The data used in deriving employee income comes from both ITRs and payment summaries (where an individual has not lodged an ITR).

This income category includes the following data items from the payment summary and/or individual income tax return:

Employee income includes the following data items on the ITR:
  • Salary or wages
  • Allowances, earnings, tips, director's fees
  • Employer lump sum payment amount A
  • Employer lump sum payment 5 per cent
  • Employment termination payments taxable component
  • Attributed personal services income
  • Employee share schemes total assessable discount
  • Total reportable fringe benefit amount
  • Reportable employer superannuation contributions
  • Exempt foreign employment income
  • Other net foreign employment income

Own unincorporated business income

Own unincorporated business income (or OMUE income) is the profit or loss that accrues to owners of, or partners in, their own unincorporated businesses. Profit or loss is the value of the gross output of the enterprise after the deduction of operating expenses, including reportable superannuation contributions, depreciation and operating costs, but before income tax is taken out. Losses occur when operating expenses are greater than receipts and are treated as negative income.

Own unincorporated business income includes the following data items on the ITR:
  • Net income or loss from business primary production
  • Net income or loss from business non primary production
  • Distribution from trusts primary production
  • Net Personal Services Income
  • Distribution from partnerships less foreign income non primary production
  • Distribution from partnerships primary production

The data excludes distributions from trusts for non-primary production activities as this may include aspects of investment income. It also excludes the income of working directors/owners of incorporated businesses who are classified as employees; consequently their income is included under Wage and salary income.

"Net personal services income" does not include income a person received as an employee, making it different from "Attributed personal services income".

Own unincorporated business income is conceptually consistent with OMUE income published in Jobs in Australia, 2011-12 to 2016-17 (cat. no. 6160.0).

Investment income

Investment income includes the following data items on the ITR:
  • Gross interest
  • Dividends unfranked amount
  • Dividends franked amount
  • Dividends franking credit
  • Share of net income from trusts less net capital gains and foreign income non primary production
  • Franked distributions from trusts - non-primary production
  • Australian franking credits from a New Zealand company
  • Net foreign rent
  • Net rent

Superannuation income

Superannuation income includes the following data items on the ITR:
  • Australian annuities and superannuation income streams taxable component taxed element
  • Australian annuities and superannuation income streams taxable component untaxed element
  • Australian annuities and superannuation income streams lump sum in arrears taxable component taxed element
  • Australian annuities and superannuation income streams lump sum in arrears taxable component untaxed element
  • Australian superannuation lump sum payments taxed element
  • Australian superannuation lump sum payments untaxed element
  • Bonuses from life insurance companies and friendly societies

A change to legislation relating to superannuation, taking effect from 1 July 2007, meant that people aged 60 years and over who receive superannuation income in the form of a lump sum or income stream (such as a pension) from a taxed source, receive that income tax free. Therefore, if a person has no other income, or their total income is below the tax-free threshold, or any tax payable is mitigated by a tax offset (such as Senior Australian Tax Offset), then this person is not required to lodge a tax return.

Due to such changes, the superannuation statistics (persons, income) published in this publication are regarded as partial, subject to under-coverage. A more comprehensive snapshot of superannuation income (at aggregate state/territory level) can be obtained from the ABS Survey of Income and Housing - see Household Income and Wealth, Australia, 2015-16.

Other income

Other income comprises income items reported on the individual income tax return that were not allocated to one of the above categories. For example, Other income can include transfer or trust income, controlled foreign company income, net foreign pension and annuity income, and foreign investment and life insurance income.

Other income is not published separately as it does not provide a reliable view of the category. It is included in total income.

Other income includes the following data items on the ITR:
  • Foreign source income net foreign pension or annuity (without Undeducted Purchase Price)
  • Foreign source income net foreign pension or annuity (with Undeducted Purchase Price)
  • Foreign entities controlled foreign company income
  • Foreign entities Transferor trust income
  • Foreign source income other net foreign source income
  • Other income category 1
  • Other income category 2

Total income

Total Income is the sum of all reported income derived from Employee income, Own unincorporated business, Superannuation, Investments and Other income, as defined above. Total income does not include the non-lodger population.

Government pensions, benefits or allowances are excluded from the ABS income data and do not appear in Other income or Total income. Pension recipients can fall below the income threshold that necessitates them lodging a tax return, or they may only receive tax free pensions or allowances. Hence they will be missing from the personal income tax data set. Recent estimates from the ABS Survey of Income and Housing (which records Government pensions and allowances) suggest that this component can account for between 9% to 11% of Total income.

Geography

All geographic variables are based on a person’s home address as reported on their ITR form. Addresses are coded to the Australian Statistical Geography Standard.

If a geography variable is missing on the ITR, if possible it is imputed from the individual's most recent PAYG payment summary.

Details of income earners from regions unknown (not stated or indeterminate) or who are lodging returns from overseas are included in the totals shown. Persons living in Other territories are not published separately, but included in the totals. Therefore, the totals in each table may not necessarily be the sum of their components.

The sum of sub state geographies (GCCSA, SA4, SA3, SA2 and LGA) may not equal the state statistics due to some records having inadequate address information to be geocoded. Where a record was unable to be geocoded to an SA2, it has not been included in totals for SA2 through to GCCSA. However, where possible, these records have been included in the State and Territory and Australia totals.

Confidentiality rules have been applied to the statistics to ensure there is no likely risk of individuals in the aggregate statistics presented in this publication. Therefore, the sum of sub-state statistics may also not equal state statistics due to some regions being suppressed through the confidentialising process.

Notes on selected statistics

Gini coefficient

Taken together, the simple measures of income distribution such as mean, median, percentile ratios and income shares can provide an indication of differences in the income distributions of two separate regions. However, none of the simple measures comprise a single statistic that summarises the whole income distribution in a way that directly considers the individual incomes of all regions. In this publication, the Gini coefficient is used to compile a single statistic of inequality by summarising the distribution of income across the population in each region.

The Gini coefficient is provided here for Total income. This is a single statistic that lies between 0 and 1 and is a summary indicator of the degree of inequality in income between members of the tax form lodging population. Values closer to 1 represent greater inequality.

The Gini coefficients shown in this publication can be regarded as indicative but not definitive. They should not be directly compared with other ABS published Gini coefficients. The Gini coefficients presented in this publication are calculated from gross personal income and not from equivalised disposable income as presented in Household Income and Wealth, Australia, 2015-16. There is also an acknowledged under-coverage of certain income groups in taxation data due to tax exemptions, and people being under the tax free threshold. For instance, persons aged 60 years and over who are mostly dependent on superannuation income and those mostly reliant on government pensions and allowances may be missing from the tax data.

Main source of income

The income source from which a person derives most of their (positive) income. For a stated income type, this measure reflects the proportion of all persons in a region for whom the income type is their main source of income.

If a region is particularly reliant on one source, it may be susceptible to policy or economic changes that affect that income type.

As there are several types of income, the main source may account for less than 50% of total income. Where persons receive exactly the same amount across multiple income types, they have been excluded from the derivation of this indicator. Persons with negative or nil total income have also been excluded.

Counts of individuals

Individuals may receive income from a number of sources. Also, net income from a specific source may be positive or negative. For example, an individual may have positive income from Employee income yet negative net income from Investments. The number of individuals for each income source includes all persons with either positive or negative net income from that source.

Readers should note that the total number of individuals in receipt of income from at least one source cannot be calculated as the sum of the individuals in each income category, since people can have more than one source of income in any given year. For example, an individual could derive income from multiple sources such as Employee income, Investment income and income from their own unincorporated business and thus contribute to the regional person count in all three income categories.


Concepts sources and methods

Non-lodgers

Are individuals who do not lodge a tax return. However, this population may have income that is in scope of this publication. This can include persons who receive an income below certain levels or derive their income from some Commonwealth of Australia Government pension, benefit and allowance payments that are exempt from income tax. Their absence should be taken into consideration when interpreting these statistics.

Because the LEED contains information about jobs sourced from PAYG payment summaries, it is possible to impute income information for non-lodgers who are employees.

Non-lodgers are included in the Employee income category, except where cross-classified with age and sex. Previously, age and sex were unavailable for non-lodgers. Whilst this information is now available for non-lodgers from the LEED, they remain excluded from the following table to ensure consistency with previous results.
    Table 4 Employee income by age and sex 2011-12 to 2016-17

Non-lodgers are excluded from the Total income category in all instances.

Changes in taxation policy

Users of the data should note that there may be taxation policy changes that will influence the lodging of tax returns, as well as the amounts declared. One change that impacted the data was the increase of the tax-free threshold of $6,000 to $18,200 for the 2012-13 financial year, this appeared to result in less people needing to lodge a tax return. The ABS strongly encourages users of the data to research policy changes that may impact in the comparability of the data year to year. For more information on taxation policy change, the ATO publishes changes in their Taxation Statistics publications.


Comparison with ABS income data from the Survey of Income and Housing

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. Some data on income earned by children is also captured. Since 2003-04, SIH has been conducted biennially, with the most recent snapshots being 2011-12, 2013-14 and 2015-16 income years. Additional SIH estimates of annual income are produced for the survey gap years. Hence, SIH produces both estimates of current income as well as estimates of annual income with respect to the previous financial year. For further information about the concepts, definitions, methodology and estimation procedures used in SIH, please refer to Survey of Income and Housing, User Guide (cat. no. 6553.0).

SIH employee income includes all payments received by individuals as a result of their current or former involvement in paid employment. In addition to the regular and recurring cash receipts captured by SIH, employee income also includes non-cash benefits, bonuses, termination payments and payments for irregular overtime. Details of the composition of employee income derived from ATO sources are provided in 'income variables' below.

Table 1 below presents a selection of reasonably comparable income data items, sourced from ATO and the SIH, for 2011-12, 2013-14 and 2015-16.

Table 1. Selected sources of Income, PIiA and SIH data, 2011-12, 2013-14 and 2015-16
PIiA 2011-12
$b
SIH 2011-12
$b1
PIiA 2013-14
$b
SIH 2013-14
$b
PIiA 2015-16
$b
SIH 2015-16
$b

Employee income
573.3
591.6
648.8
679.4
724.9
729.0
Own unincorporated business income
42.4
46.4
45.3
47.7
50.6
43.8
Investment income
70.0
42.3
79.5
67.3
81.6
57.2
Superannuation income
9.8
23.0
10.7
31.4
11.7
41.4
Total personal income - percentile ratios
P80/20
5.09
4.45
4.86
4.33
4.99
4.42
P80/50
1.88
1.90
1.88
1.92
1.88
1.92
P20/50
0.37
0.43
0.39
0.44
0.38
0.43
P10/50
0.16
0.28
0.17
0.29
0.16
0.29
Total personal income - Gini coefficient
0.483
0.427
0.483
0.446
0.484
0.434

1Estimates from the Survey of Income and Housing were collected in 2013-14 and then adjusted to estimate the 2011-12 year.

Differences in collection methodologies, data collection/extraction periods, definitions, scope/coverage etc., can all contribute to variations between PIiA and SIH income data. Also, as mentioned before, SIH presents data for low income households whereas the PIiA series may be missing some individuals with low incomes (for example those earning under the $18,200 tax free threshold) because they may not need to lodge tax returns. Please see the Quality Declaration in the publication for more information about coherence.

Since changes were applied to the reporting of superannuation income in 2007, the SIH estimate is thought to provide a more accurate, complete indication of the level of income derived from Superannuation. However, the SIH estimates only include superannuation pension streams and not superannuation lump sum payments.


Confidentiality

All personal income tax statistics were provided to LEED analysts in de-identified form with no home address or date of birth. Addresses were coded to the ASGS and date of birth was converted to an age at 30 June of the reference year prior to data provision.

To minimise the risk of identifying individuals in aggregate statistics, perturbation has been applied. Perturbation involves small random adjustment of the statistics and is considered the most satisfactory technique for avoiding the release of identifiable statistics, while maximising the range of information that can be released. These adjustments have a negligible impact on the underlying pattern of the statistics. Some cells have also been suppressed due to low counts.

Further information

For further information about these and other statistics, please contact the National Information and Referral Service on 1300 135 070.