8165.0 - Counts of Australian Businesses, including Entries and Exits, June 2014 to June 2018 Quality Declaration 
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 21/02/2019   
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EXPLANATORY NOTES

INTRODUCTION

1 This release of Counts of Australian Businesses, including Entries and Exits (CABEE), presents counts of businesses based on snapshots of actively trading businesses as at June 30, 2014, 2015, 2016, 2017 and 2018 from the Australian Bureau of Statistics Business Register (ABSBR). It contains counts and rates of business entries and exits from the Australian economy as well as counts of the survival of businesses.

2 Most businesses in Australia need to obtain an Australian Business Number (ABN). These businesses are then included on the whole of government register of businesses, the Australian Business Register (ABR). The ABS uses information from the ABR as well as data supplied by the Australian Tax Office (ATO) to populate its internal register of businesses, the Australian Bureau of Statistics Business Register (ABSBR). The statistics included in this release are extracted from the ABSBR. The data supplied to the ABS is provided under the Taxation Administration Act 1953 and A New Tax System (Australian Business Number) Act 1999. Under the Census and Statistics Act 1905, this data can only be used for the purpose of carrying out the functions of the ABS.

3 Further information regarding these Acts can be found at the Federal Register of Legislation website. Information about the ABR can be obtained from the ABR website and the ATO website.

4 Legislative requirements to ensure privacy and confidentiality of these data have been followed. Only people authorised under the Australian Bureau of Statistics Act 1975 have been allowed to view data about any particular firm in conducting these analyses. Results have been confidentialised in accordance with the Census and Statistics Act 1905, to ensure that they are not likely to enable identification of a particular person or organisation.

5 ABS statistics draw extensively on information provided freely by individuals, businesses, governments and other organisations. Their continued cooperation is very much appreciated: without it, the wide range of statistics published by the ABS would not be available. Information received by the ABS is treated in strict confidence and is subject to the requirements of the Census and Statistics Act 1905.

STATISTICAL UNIT

6 In mid 2002, the ABS commenced sourcing information for the ABSBR from the ABR and at that time changed to a two population model. The two populations are known as 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 and the degree of intervention required to reflect the business structure for statistical purposes.

7 The vast majority of businesses included on the ABSBR are in the non-profiled population. Most of these businesses are understood to have simple structures. After some system processes are applied to a unit registered for an ABN, the resulting statistical unit is a good approximation satisfying ABS' statistical requirements. For these businesses, the ABS statistical units structure directly aligns with the ABN unit: one ABN equates to one business.

8 For a relatively small number of businesses, the ABN unit is not suitable for ABS economic statistics purposes and the ABS maintains its own units structure through direct contact with businesses. These businesses constitute the profiled population. This population typically consists of large, complex and diverse groups of businesses. An Enterprise Group (EG) is a statistical unit covering all the operations within Australia's economic territory of legal entities under common control. Control is defined under Corporations legislation. Majority ownership is not required for control to be exercised.

9 A Type of Activity Unit (TAU) covers all the operations within an EG that belong to one industry subdivision and for which there are a minimum set of economic data items available. Where a business cannot supply adequate information for each industry, a TAU is formed containing activity in more than one industry. These TAUs are classified according to the industry of the main activity. TAUs may have operations in one or more states or territories.

10 The unit referred to as a 'business' thus consists of ABNs from the non-profiled population and TAUs from the profiled population. For a comprehensive definition of a business, refer to the Glossary.

SCOPE

11 Counts of businesses produced from the ABSBR are comprised of actively trading businesses in the Australian economy. Actively trading businesses are:

  • TAUs from the profiled population
  • ABNs from the non-profiled population that are actively remitting in respect of a Goods and Services Tax (GST) role.

Limiting the scope to only businesses with a GST role means that only entities that are actively trading in goods or services are included. Business entities with a turnover below $75,000 do not have to register for GST and hence those who have not registered will not be included in these counts. Entities not considered to be actively trading in the market sector are not considered to be businesses and, as such, are also excluded from these business counts.

12 Businesses that have not submitted a Business Activity Statement (BAS) and/or have reported zero dollar amounts over five consecutive quarters (or three consecutive years for annual remitters) are treated as 'long-term non-remitters' (LTNRs). These businesses are not considered to be actively trading and are excluded from the counts as they are not remitting GST.

13 Units on the ABSBR have been classified according to the Standard Institutional Sector Classification of Australia (SISCA) 2008, Type of Legal Organisation (TOLO) and Australian and New Zealand Industry Classification (ANZSIC) 2006. These classifications are used to determine whether a business unit is in scope of CABEE.

Entities classified to the following categories of SISCA are excluded:
  • 2110 Reserve Bank of Australia
  • 3000 General Government
  • 5000 Non-Profit Institutions Serving Households
  • 6000 Rest of the World.
Entities classified to the following TOLO categories are excluded:
  • 12 Charitable Institution
  • 15 Social and Sporting Clubs
  • 16 Trade Unions and Other Associations
  • 20 Other Unincorporated Entity
  • 41 Diplomatic or Trade Missions
  • 42 Other Foreign Government.

Entities classified to the following 4 digit ANZSIC classes are excluded:
  • 6210 Central Banking
  • 7711 Police Services
  • 7713 Fire Protection and Other Emergency Services
  • 9540 Religious Services
  • 9551 Business and Professional Associations
  • 9552 Labour Association Services
  • 9559 Other Interest Group Services n.e.c.
  • 9601 Private Households Employing Staff
  • 9602 Undifferentiated Goods-Producing Activities of Private Households for Own Use
  • 9603 Undifferentiated Service-Producing Activities of Private Households for Own Use.

14 The exclusion of the General Government institutional sector particularly impacts on counts for the Public Administration and Safety, Education and Training, and Health Care and Social Assistance ANZSIC divisions (O, P and Q respectively). The business counts in these divisions include private sector and public corporation activity only.

15 Most unincorporated entities (sole proprietors; partnerships) are included in the households sector. Some unincorporated businesses are excluded from CABEE because these are operated/controlled by the General Government or Non-Profit Institutions Serving Households (NPISH) sectors that are out of scope of CABEE.

COVERAGE

16 In addition, the scope for business counts includes some businesses that are yet to be coded by the ATO to an industry, sector and/or main state of operation. Analysis conducted on these businesses indicates that, despite not having a complete set of classificatory data, these businesses were actively trading and also met the other scoping criteria of the collection (refer to the Conceptual and Practical Basis for Counts section for further details). It was therefore considered appropriate that they be included within scope of CABEE. These actively trading businesses have been grouped together into Currently Unknown codes in the data cubes.

17 There are actively trading businesses that have not registered for an ABN because they do not have any obligations under the Goods and Services Tax (GST) legislation. For example businesses that have turnover that is under the threshold for registration (currently $75,000) may choose not to apply for an ABN. These businesses have not been identified or quantified and are not included in the counts presented in this release.

18 Counts for ‘Currently Unknown’ categories are included in the publication for completeness (to ensure that totals match the sum of the associated categories). However rates involving 'currently unknown' values are not published to ensure administrative changes are not misinterpreted.

COMPARABILITY WITH FRAMES FOR ABS BUSINESS SURVEYS

19 The basis for business counts in this release is broadly consistent with that used for frames in most ABS business surveys. There are two exceptions to this:
  • The scope with regard to industry, sector, or TOLO can vary according to the requirements of a particular survey. In some cases, classifications excluded from these business counts are included in a survey frame in order to measure a particular part of the economy more comprehensively. Other survey frames may only include a subset of these classifications such as excluding businesses with invalid ANZSIC codes. Most frames currently include employing businesses only.
  • Most survey frames include entities with a tax role to withhold income tax from their employees (Income Tax Withholding, or ITW role) but without a GST role. There are approximately 40,000 such entities. Investigations indicate that units with an ITW role but no GST role are likely to be part of a complex business structure. Such entities are excluded from these counts as they are not considered to be actively trading in goods and services. For business surveys designed to, amongst other things, provide estimates of wages and salaries paid (irrespective of whether the entity is actively trading or not), it is important that these entities are included on frames.

REFERENCE PERIOD

20 Counts of businesses provided in this CABEE publication are based on annual snapshots of the ABSBR as at 30 June each year from 2014 to 2018 (inclusive).

TIME SERIES

21 This release contains snapshots of counts of active businesses at regular points in time. While data presented in this release were produced on a broadly similar conceptual basis to data presented in previous releases, users seeking to analyse change over time should be aware that there have been methodological, classificatory, definitional, administrative and content changes between the different releases of CABEE. Depending on the analysis being undertaken, these changes could adversely affect the comparability of CABEE data over time, and users are advised to consult the web pages of relevant releases to understand the nature and impact of such changes.

BUSINESS EVENTS

22 Snapshots of active businesses are used to identify business events, such as those businesses that are entering and exiting the Australian economy, as well as those businesses that continue to survive. The movement of businesses between the profiled and non-profiled populations can have an impact on business entry and exit counts, though this is usually minor.

23 A Business entry is counted when an actively trading business on the ABSBR at 30 June in the reference year, which was not actively trading at 30 June the previous year. Please see the Glossary for a more detailed definition of a Business entry.

24 A Business exit is counted when an actively trading business on the ABSBR at 30 June the previous year is no longer actively trading at 30 June in the reference year. Please see the Glossary for a more detailed definition of a Business exit.

25 A surviving business is defined as a business on the ABSBR that is active at 30 June of the reference year and was also active at 30 June of the previous year. Please see the Glossary for a more detailed description of a Business survival.

INTRA-YEAR ENTRIES AND EXITS

26 It is possible that a business can enter after 30 June in a given year and exit before 30 June in the following year. A small number of these instances occur in any given financial year. These businesses will not be included in the data in this publication.

DATA QUALITY

27 These counts are not subject to sampling error as they represent a complete enumeration of economically active businesses on the ABSBR. However they are subject to non-sampling error and the cyclical administrative workflows of the ATO may also impact on data interpretability.

28 There are six known sources of error in these counts that are likely to impact on the number of actively trading businesses reported. However, the ABS believes that these sources of error are likely to have a relatively small impact on the accuracy of the business counts contained in this release:
  • Businesses with low turnover
    From 1 July 2007, businesses with turnover of at least $75,000 per annum ($150,000 in the case of non–profit organisations) were required to register for an ABN and remit GST. Businesses with turnover under $75,000 were able to voluntarily register and these voluntarily registered businesses are also included in the counts in this release. There are certainly, however, businesses that are actively trading with turnover of less than $75,000 that chose not to register for an ABN or remit GST. The number of businesses in this category is currently unknown to the ABS.
  • Businesses that have recently ceased trading
    A business may have remitted GST within five quarters of the end of the reference period (or within three years for annual remitters) but not be operating at the end of the reference period. Such a business would still be counted as actively trading at the end of the reference period because it would not yet have become a long-term non-remitter (LTNR) of GST. When a business has been classified as an LTNR it is considered to have ceased operating.
  • Businesses which appeared to have ceased trading but are likely to be active
    A business may be classified as an LTNR (and thereby excluded from the count of actively trading businesses) then resume remitting GST. Such a business may have been operating but not remitting GST during the period it was classified as an LTNR.

    There are reasons why a business may not report to the ATO for a period of time and then recommence remitting GST. For example, a business may be in a start-up phase with minimal or no activity, could be tax exempt or recalcitrant in reporting over a period of time, or could become dormant while undertaking a change in activity.
  • Main business address
    Businesses can operate in more than one state or territory, and in these cases are classified to their main state or territory. For businesses in the non-profiled population, main state is derived from the main business address. For businesses in the profiled population, main state is the state or territory with the highest employment. Therefore, for businesses in the profiled population, main state is not necessarily the state or territory of the main business address.
  • Multi-location businesses
    Business counts do not necessarily reflect the number of locations of a business. It is possible for a business entity to register for a single ABN regardless of the number of commercial activities it undertakes. Alternatively, multiple commercial activities of a single business enterprise may be registered for separate ABNs, depending on the legal structure adopted by the enterprise. In any case, a business is either counted as an ABN (non-profiled population) or a TAU (profiled population).
  • Business size classifications
    For businesses in the non-profiled population, annual turnover values are based on data reported to the ATO through Business Activity Statements (BAS) and may include imputation for missing periods. For businesses in the profiled population, turnover reported on BAS for ABNs is aggregated and apportioned to the relevant TAUs. Where businesses report zero values on their BAS or have failed to report at all, these data are compared with auxiliary BAS data for the purposes of assigning annual turnover values for each in-scope business. In cases where auxiliary BAS data are not available, an imputation based on auxiliary ABSBR data (including wages and salaries and employment data) is used.


INDUSTRY

29 Each business (either an ABN unit or TAU on the ABSBR) has been classified to a single ANZSIC 2006 industry class, irrespective of any diversity of activities undertaken. The industry class allocated is the activity which provides the main source of industry value added (sales of goods and services, wages and salaries or number of employees as a proxy), which is generally based on a description provided by the business. For comparability, the ANZSIC code that a business was classified to as of 30 June 2018 is the code that is used for that business for all years in this publication. For further information on ANZSIC 2006, see the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (cat. no. 1292.0) on the ABS website.

AUSTRALIAN STATISTICAL GEOGRAPHY STANDARD (ASGS)

30 In Counts of Australian Businesses, including Entries and Exits, Jun 2012 to Jun 2016 (cat. no. 8165.0) the Australian Statistical Geography Standard (ASGS) was updated to ASGS 2016. More information about the SA2s including correspondences between ASGS 2011 and ASGS 2016 can be found in Australian Statistical Geography Standard (ASGS): Volume 1 - Main Structure and Greater Capital City Statistical Areas, July 2016(cat. no. 1270.0.55.001).


STATISTICAL AREA LEVEL 2

31 SA2s are medium-sized general purpose areas built up from whole SA1s (Statistical Area Level 1). Their purpose is to represent a community that interacts together socially and economically. The SA2 is the smallest area for the release of Australian Bureau of Statistics (ABS) business counts statistics. There are 2,310 SA2 regions covering the whole of Australia without gaps or overlaps. These include 18 non-spatial SA2 special purpose codes, comprising Migratory-Offshore-Shipping and No Usual Address for each State and Territory. SA2 data can be aggregated to larger geographical areas, including Statistical Area Level 3 (SA3), Statistical Area Level 4 (SA4), Greater Capital City Areas (GCCSA), and States and Territories.

32 The issues of geocoding multi location businesses are more pronounced for count data at the SA2 level, as multi location businesses (businesses registered under a single ABN/TAU but operating in more than one location) will only be attributed to a single SA2. As such, care should be taken not to assume that business counts at the SA2 level reflect all business operations within that SA2. For further information, refer to Main State (below) and Data Quality (above).

33 SA2 data is only coded for ABN units. TAU units are included in "Unknown" categories for SA2.

LOCAL GOVERNMENT AREA

34 LGAs are special purpose areas which do not align directly with ASGS. Their purpose is to represent a community that is administered by one local government council. LGAs are geocoded using the Geocoded National Address File (GNAF) via the same coder used to determine SA2 and state.

35 The issues of geocoding multi location businesses for LGA are much the same as for SA2. As such, care should be taken not to assume that business counts at the LGA level reflect all business operations within that LGA. For further information, refer to Main State (below) and Data Quality (above).

36 SA2 data is only coded for ABN units. TAU units are included in "Unknown" categories at the LGA level.

37 More information about geographic structures that do not align directly with ASGS can be found in Australian Statistical Geography Standard (ASGS): Volume 3 - Non ABS Structures, July 2018(cat. no. 1270.0.55.003).

MAIN STATE

38 Businesses can operate in more than one state or territory. For the purposes of this release, businesses that operate in multiple states and territories are attributed to one state or territory (Main State), to prevent double counting of businesses. For businesses in the non-profiled population, main state is derived from the main business address. For businesses in the profiled population, main state is the state or territory with the highest employment. Therefore, for some businesses in the profiled population, main state is not necessarily the state or territory of the main business address.

EMPLOYMENT SIZE

39 The technical definition of employing businesses depends upon whether the unit resides in the profiled or non-profiled population. Employing units are defined as:
  • profiled population - all TAUs in scope of CABEE.
  • non-profiled population - businesses with an active Income Tax Withholding (ITW) role and which have remitted to the ATO at least once in the preceding five quarters (or three years for annual remitters).

40 In the profiled population, businesses report employment as the number of persons who receive remuneration in wages or salaries (including working proprietors and working partners), or are paid a retainer fee by their employer. Employment excludes non-salaried directors, volunteers, persons paid by commission only, and self employed persons such as consultants and contractors. Data for the profiled population are collected through direct contact with businesses and reflect a point in time headcount of current employees.

41 In the non-profiled population, payees estimates are updated monthly for those units whose reported payees and/or ANZSIC has changed, and yearly for those units that haven't changed throughout the past two years. The process uses Business Activity Statement wages and salaries information and ABS survey information to bring the counts into closer alignment with the target variable (i.e. number of employees at the end of the financial year). Adjustment factors are calculated, based upon unit record differences between reported employment in ABS business surveys and information from the ATO, including payment summaries. These factors, along with payment summary information, form the inputs into the derived employment variable and, in turn, the employment size range.

42 The methodology used to derive the non-profiled population business counts for employment size changed in 2009-2013 CABEE to provide a more accurate representation of the size of businesses. A more detailed description of the methodology and its effects are described in Improved Employment Range (Technical Note) in 2009-2013 and 2010-2014 CABEE.

43 The employment data extracted from the ABSBR are generally suitable for the purposes of attributing an employment size classification to each in-scope business.

ANNUAL TURNOVER SIZE

44 For businesses in the non-profiled population, annual turnover values are based on data reported to the ATO through Business Activity Statements (BAS). For businesses in the profiled population, annual turnover reported via BAS for ABNs is apportioned to the relevant TAU.

45 Where businesses report zero values on their BAS or have failed to report at all, these data are compared with auxiliary BAS data, which are then used for the purposes of assigning annual turnover values for each in-scope business. In cases where auxiliary BAS data are not available, an imputation based on auxiliary ABSBR data (including wages and salaries and employment data) is used.

46 The imputation technique described therefore classifies all in-scope businesses to a single annual turnover size range in CABEE.

REVISIONS

47 The ABS Business Register receives updated information when a business entity reports changes to either the ABR or the ATO, such as a new registration, revised payee information, or when the business entity reports changes in its business structure or activity. These reporting changes can impact upon the business entity's industry classification (ANZSIC), institutional classification (SISCA), legal classification (TOLO), geographic classification (state/territory) or business size (employment or turnover categories). These changes to the register generate revisions to data previously published in earlier editions of CABEE.

48 Some of the revisions to currently unknown categories are attributable to updated classificatory information, such as ANZSIC, SISCA or TOLO, where this information did not previously exist for the business entity.

CONFIDENTIALITY

49 A new confidentiality methodology was first implemented in Counts of Australian Businesses, including Entries and Exits, Jun 2012 to Jun 2016 (cat. no. 8165.0) and continues with this release. The change was made to enhance the current process and utilise existing ABS infrastructure. The confidentialising process applied is expected to maximise the availability of data without introducing any bias to the counts. It perturbs data in such a way that the data presented at detailed levels will not always be additive. That is, component values will not always sum to the total due to perturbation. The discrepancies between components and totals due to perturbation can occur both within and between data cubes. Each component is individually perturbed. The effect on individual cells is minimal.

COMPARISON WITH OTHER BUSINESS COUNTS DATA

50 Users comparing data from this release with other ABS data should do so with care, as some other ABS data may exclude non-employing businesses or particular industries or sectors. For further details see the Explanatory Notes in the relevant publication.

PREVIOUS RELEASES

51 Information regarding previous releases of CABEE may be accessed on the ABS website.

NEXT RELEASE

52 The next release of CABEE is currently scheduled for February 2020.

OTHER ABS RELEASES

53 ABS releases which may be of interest to users of Counts of Australian Businesses, including Entries and Exits are listed below.

Business Demography:


Information Technology:

BLADE

Products released by the ABS are available from the ABS website. The ABS also issues a daily Release Advice on the website which details products to be released in the week ahead. There is a link from this Release Advice to a six month release schedule.