1. Application of existing methodology
1.1 Profiled and non profiled populations
Businesses on the ABS Business Register (ABS BR) are captured using an Economic Units Model (EUM) that has two populations; the Profiled Population and the Non-Profiled Population. The main distinction between businesses in the two populations relates to the complexity of the business structure. Businesses in the Non-Profiled Population are represented by the ABN as they have simple structures. Businesses in the Profiled Population are large and/or have complex structures. They are represented by a statistical unit known as the Type of Activity Unit (TAU). More information can be found in the Scope section of the annual CABEE publication explanatory notes.
1.2 Net Movement of Surviving Businesses
The Net Movement of Surviving Businesses calculates the movement of businesses between classifications between the start and end of a time period. These movements capture both business activity (such as businesses updating their details for real world changes and corrections, or seasonal changes to business operations).
1.3 Definition of Employing businesses
A business in the Non-profiled Population is considered to be employing if it has an active Income Tax Withholding (ITW) tax role. All businesses in the Profiled Population are considered to be employing. Employing businesses that have reduced or ceased trading during the reference period, but are still in scope of CABEE and have an active income tax role, are still considered to be employing businesses unless they meet the long term non-remitter criteria. The employment size range of these businesses may change if employees are made redundant and do not receive ongoing payments, are temporarily stood down without pay, or are on unpaid leave during the employment reference period, as these persons are no longer counted as employees. Employees receiving JobKeeper, paid leave, or other entitlements during the employment reference period are counted as employees (Appendix 2). If an employing business has no employees receiving payments during the reference period, they are classified to the 1-4 employees size range. The short-term employment indicator, uses monthly employment information, so is able to capture employment changes as they happen throughout the year including seasonal workers, or changes in response to economic events. Because of this there may be a higher net movement of surviving businesses between employment size ranges than if the annualised employment indicator were used.
1.4 Long Term Non-Remitters
Long term non-remitters is a status used by the ABS to identify a business’s inactive tax roles which have not yet been cancelled. A business is considered to be a long term non-remitter for a specific tax role, such as GST, if it has not lodged BAS, or has reported zero-dollar amounts for the relevant tax role, for five consecutive quarters (for monthly and quarterly remitters) or three consecutive years (for annual remitters). Businesses that are GST long term non-remitters are out-of-scope of this paper and the annual release of CABEE, as they are not considered to be active.
2. Methodology differences to the annual CABEE publication
2.1 Reference period
This paper is compiled using data extracted from the ABS BR; the same source as the annual release of CABEE. Data is extracted from the ABS BR each quarter. Due to the timing of the extracts from the ABS BR, the data presented in this paper align with the mid-point of each calendar quarter. For the purpose of this paper, a 'quarter' denotes the three-month period between the two data extracts. That is, the August 2020 quarter represents the period between mid-May and mid-August 2020. The exception to this timing is the employment data used to create the employment size ranges, where the highest reported payroll jobs reported by a business during the reference month are used. The annual release of CABEE uses the dataset extracted in mid-May to compile the financial year counts. For this reason, only some data presented in this paper for the May quarter will align with the counts presented in the Annual release of CABEE.
2.2 Geographical data
Counts of businesses by Main State are presented. Businesses in this paper are not coded to more granular geography (geocoding), such as SA2. In the annual publication, this geocoding process can result in a change to the Main State of a business. This occurs when the state listed in the business address does not align with the SA2 retrieved from the address coder, and so the state of the SA2 is taken to override the address state. For this reason, there may be a difference in the counts by Main State presented in this paper when compared to the same period in the annual CABEE publication.
2.3 Employment indicator
An additional data source, Single Touch Payroll (STP), has been used in this paper to derive a short-term employment indicator for the Non-Profiled Population, which makes up the vast majority of businesses. The number of payroll jobs reported through STP reflects the number of employee/employer relationships where a payment was made during the period. Monthly STP data is provided to the ABS, and is the priority data input for the algorithm used to derive the short-term employment indicator. This algorithm takes the highest reported payroll jobs for a business during the reference month. The reference month used to prepare this paper aligns with the end month of the quarter, for example the August 2020 quarter uses the August 2020 STP data as the priority input. Where this data is not available for a business, such as those yet to move to the STP system, data is substituted using the annualised employment indicator derived from ATO Payees data, the source for all businesses in the annual CABEE publication. This annualised indicator is also used for large and complex businesses in this paper, known as the Profiled Population, as the short-term indicator for this population is still being developed.
2.4 Point-in-time classification
The industry classification of a business can be represented at a point in time, or backcast over the timeseries. In this paper the State, ANZSIC and TOLO classifications represent a business' classification at the time data was extracted for that quarter, known as a point-in-time classification. This results in some businesses changing classification between quarters, which is captured in the Net Movement of Surviving Businesses. These movements may be driven by ABR or ABS quality assurance activities, or businesses updating their details to reflect changes to their activity or location. In the annual CABEE publication, the classification of a business in the final year of the publication is applied across all five years in the publication, known as a back-cast classification. For this reason, the classifications used in the quarterly data may not align with the classifications used in the annual CABEE timeseries.
2.5 Split of business entries and exits
a. Business Entries have been split into 'Business Births' and 'Other Entries'. Business Births include new ABN registrations in the Non-Profiled Population, and the creation of new units in the Profiled Population. Other Entries include; businesses that were previously cancelled and have re-activated their ABN (resurrections); businesses that were previously a GST long-term non-remitter and have become active again via BAS lodgement; and businesses that were previously out-of-scope of CABEE, such as those with a non-market sector industry classification, that have now become in-scope due to an Industry reclassification.
b. Business Exits have been split into 'Business Cancellations' and 'Other Exits'. Business Cancellations include businesses in the Non-Profiled Population that have cancelled their ABN, and units in the Profiled Population that have ceased. These events typically happen when; a business has closed down, a business has been sold, a business has significantly changed structure, or a business is no longer operating in Australia. Other Exits include; an inactive business defined as a long term non-remitter who has not lodged BAS data for 5 quarters (or 3 years for annual remitters); and businesses that were previously in-scope of CABEE that have become out-of-scope, such as those moving to a non-market sector or industry classification.
2.6 Seasonal adjustment of time series
To assist users in interpreting the data in this paper, which has a strong seasonal component, seasonally adjusted timeseries have been provided at the national level for Total Businesses, Business Entries and Business Exits. These series have been adjusted using the ABS seasonal adjustment program "SEASABS", which uses the X11 processing method. More information about this methodology can be found here. A range of ABS publications have moved to temporarily suspend the publication of trend estimates during COVID-19, until the extent of impact from COVID-19 on their data is understood and appropriate interventions can be implemented. In line with other ABS publications, trend estimates for the headline indicators in this paper will not be released at this point in time.