6553.0 - Information Paper: Survey of Income and Housing, User Guide, Australia, 2005-06  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 13/08/2007   
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Contents >> Part 2 Survey Methodology >> 2.5 Income tax and other modelled data items


Some data items of interest cannot reliably be collected from respondents, and some cannot be collected at all. However, in some cases it is possible to utilise other information provided by respondents as a basis for estimating the data items of interest. The process is referred to as modelling.

Income tax and the Medicare levy

As described in Section 1.1, disposable income is calculated by deducting income tax (including the Medicare levy) from gross income. The model is based on the liability rules described in the Tax Pack for the year concerned, the income reported by respondents, and other characteristics of household members reported in the survey.

Estimates of income tax are modelled, rather than collected from respondents, for a number of reasons.

  • As noted in Section 1.4, an accruals approach is taken to estimating these items. The estimates should therefore relate to the tax liability being incurred with respect to the income being reported by the respondent in the survey. For estimates of current income (see Section 1.2 'Current, annual and weekly income'), the current income tax liability is calculated as though the current income is the average income for the whole year. If actual income fluctuates during the year, respondents are unlikely to have an actual income tax assessment that is relevant to the required estimate.
  • In addition to income changes during the course of the year, full year income tax assessments may be affected by changes in family or other circumstances of the respondent which are not described in the survey, and are best ignored when deriving an income tax estimate to use with the other survey data.
  • Income tax assessments are only made after the end of the financial year, and therefore are not yet available at the time that current income is collected from respondents.
  • The income tax assessment of respondents may be affected by certain expenditures which they make, such as donations to charities, or other particular circumstances which are not captured in the survey. For many purposes it is desirable to exclude the impact on tax liabilities of specific influences which are not captured in the survey.
  • The SIH provides sufficient relevant information to allow a relatively comprehensive model to be constructed.

Family tax benefit

Family tax benefit (FTB) can be received as a fortnightly payment from the Family Assistance Office, a reduction in pay-as-you-go (PAYG) income tax deductions, a lump sum after the end of the year, or a combination of these. Payments received as fortnightly payments are collected in the SIH and are used in the derivation of "Current weekly income from family tax benefits". Components received in the form of reduced PAYG tax or as a lump sum are modelled using responses to the FTB questions relating to method of payment, as well as other demographic and income information. From 2005-06 income from FTB supplements has also been modelled.

Prior to 2005-06, the modelled components were not included in estimates of FTB and hence were not included as government pensions and allowances or in gross income. For practical reasons they were included as negative adjustments in the modelling of income tax. Therefore while not included in gross income, they were included in disposable income and equivalised disposable income.

In 2005-06 estimates of current income from FTB, and estimates of total government pensions and allowances and gross income, include both the amounts received as fortnightly payments and the modelled components.

Maternity payment

Maternity payment was introduced by the Commonwealth government in July 2004. The 2005-06 SIH collected information on maternity payment received in the previous financial year, but 'current' estimates of maternity payment could not be collected in the same way as other pensions and allowances, so the estimates of current income from maternity payments were modelled. They were treated as though they were paid evenly through the year, so the payment allocated to eligible recipients was the amount of the payment divided by 52.14. The payment was assigned to each family with a child aged under 1 year old at the time of interview. The family was assigned a payment for each eligible child.

Utilities allowance and Seniors concession allowance

Utilities allowance and seniors concession allowance were introduced by the government in 2005. They were not explicitly collected in the 2005-06 survey so estimates for these allowances were modelled. These allowances are paid six monthly, but the amount included in current weekly income is the total payment for the year divided by 52.14.

Utilities allowance was assigned to all recipients of age pension, wife pension, carer payment, widow allowance, disability support pension, partner allowance, parenting payment, austudy, service pension, war widow's pension and special benefit, providing they were at least 65 years old if male and at least 63 years old if female.

Seniors concession allowance was assigned to males aged 65 and over and females aged 63 and over who are not eligible for the utilities allowance, providing their income unit income (as reported in the survey) was less than $80,000 per year.

One-off payments to families, carers and older Australians

The one-off payment to seniors paid in 2000-01, the one-off payments to families paid in 2003-04, the one-off payments to carers paid in 2003-04, 2004-05 and 2005-06 and the one off payment to older Australians paid in 2005-06 are included as income as they were primarily a supplement to existing income support payments. As described under Government pensions and allowances in Section 1.4 'Components of income', an annualised approach is taken to these payments. The annualised approach requires the estimates to be modelled rather than collected from respondents, since in all cases the payments were only announced late in the financial year and so respondents could not know that they would receive the payments.

In the model, the payments are assigned to all respondents who it is expected would have met the eligibility criteria at the time that they were interviewed. In the case of the one-off payment to seniors, payments were assigned to all recipients of age pension, wife pension, carer payment, widow allowance, disability support pension, mature age allowance and service pension, providing they were at least 65 years old if male, and at least 62 years old if female. The one-off payment to families was assigned to recipients of family tax benefit (one payment was assigned for each dependent child) and persons under 18 living at home and receiving youth allowance. The one-off payment to carers was assigned to recipients of carer payment and carer allowance. The one off payment to older Australians was assigned to recipients of utilities allowance and seniors concession allowance.

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