QUALITY DECLARATION – SUMMARY
The statistics presented in this release have been derived using a combination of data collected directly by the Australian Bureau of Statistics (ABS) under the authority of the Census and Statistics Act 1905, tax data supplied by the Australian Taxation Office (ATO) under the Taxation Administration Act 1953 and Australian Business Register (ABR) data supplied by the Registrar under A New Tax System (Australian Business Number) Act 1999 to the Australian Statistician. The Taxation Administration Act 1953 requires that such data is only used for the purpose of administering the Census and Statistics Act 1905 and the Australian Business Number Act 1999 requires that such data is only used for the purpose of carrying out functions of the ABS.
For information on the institutional environment of the ABS, including the legislative obligations of the ABS, financing and governance arrangements, and mechanisms for scrutiny of ABS operations, please see ABS Institutional Environment.
The publication collects information on the counts of Australian businesses, sourcing data from the Australian Bureau of Statistics Business Register (ABSBR). The publication includes information on the entry, exit and survival rate of businesses.
The scope of the publication includes all actively trading businesses which were operating in the Australian economy as at June 2009, June 2010, June 2011, June 2012 and June 2013. It is important to note that entities which are not considered to be actively trading in the market sector are not considered to be businesses and, as such, are excluded from the counts. Please refer to the Explanatory Notes of the publication for further information.
Actively trading businesses are:
- Type of Activity Units (TAUs) from the profiled population (where activity is monitored by direct contact by ABS)
- Australian Business Numbers (ABNs) from the Non profiled population, which are actively remitting in respect of a Goods and Services Tax (GST) tax role.
Limiting the scope to only businesses with a GST role means that only entities which are actively trading in goods or services are included. Businesses which have not submitted a Business Activity Statement (BAS) and/or have reported zero dollar amounts over five consecutive quarters (or three years in the case of annual remitters) are treated as 'long term non–remitters' (LTNRs). As these businesses are not actively remitting GST, they are considered not to be actively trading and are therefore excluded from counts.
This publication includes businesses classified by:
The data was extracted from the ABSBR to provide a snapshot of actively trading businesses as at June 2009, June 2010, June 2011, June 2012 and June 2013.
The publication was released in March 2014,
nine months after the end of the reference period. The next release of Counts of Australian Businesses, including Entries and Exits
(cat. no. 8165.0) is currently scheduled for release in February 2015.
The counts in this release are intended to provide an accurate measure of actively trading businesses. That is, businesses that are producing or distributing goods or providing services (defined by a GST role) and are active (defined as having remitted GST obligations within the past five quarters or three years in the case of annual remitters).
For Non profiled businesses, most classificatory data items reflect information provided to the ATO at the time of ABN registration. The exception is the payees information which is updated quarterly by the ATO, and employment and turnover, which is based on BAS reporting. In the profiled population, classificatory data items for the most significant businesses are updated annually. Businesses on the next level of significance are updated biennially. Other businesses in the profiled population are not routinely updated, but may be updated as a result of ABS survey feedback or other maintenance activity.
The counts in this publication are subject to non–sampling error, and the cyclical administrative workflows of the ATO may impact on data interpretability. Non–sampling error arises from inaccuracies in collecting, editing and processing the data. Every effort was made to minimise non–sampling error by reviewing editing strategies and efficient data processing procedures. The counts are not subject to sampling error as they represent a complete enumeration of those 'economically active' businesses on the ABSBR.
There are six known sources of error in these counts which are likely to impact on the number of actively trading businesses reported. However, the ABS believes that these sources of error (identified below) 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 which chose not to register for an ABN or remit GST. The number of businesses in this category is currently unknown to the ABS. Similarly, the same applied prior to 2007 for businesses with turnover of at least $50,000 per annum ($100,000 for non–profit organisations).
- Businesses which have Recently Ceased Trading
An analysis of recent ABS surveys indicates that a proportion of businesses which have remitted GST within the most recent five quarters of the end of the reference period had in fact ceased operation by the end of the reference period. In many cases, these businesses had not yet been classified as a LTNR business. The exclusion of LTNRs from the counts in this release thus excludes the majority of, but not all, businesses who have ceased trading.
- Businesses which Appeared to have Ceased Trading but are Likely to be Active
Conversely, investigations show that a relatively small proportion (15% on average) of businesses identified as LTNRs at a point in time (and thus excluded from these counts) recommence remitting at a later date. At this stage, it is not clear whether these businesses were not active during the period (in which case their exclusion provides an accurate count) or were actively trading but failing to remit their GST obligations (in which case they were incorrectly excluded).
There are reasons why a business may not respond to the ATO for a period of time and then recommence remitting GST obligations. 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. It would be difficult however to categorise LTNR units which later remit into these groupings without a detailed investigation of each unit.
- 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 some businesses in the profiled population, Main State is not necessarily the State or Territory of the main business address.
- Multi–Location Businesses
The Australian taxation system provides flexibility during the new business registration process as it allows businesses operating in single or multiple States or Territories to register on the ABR and report taxation obligations in a variety of ways. For instance, it is possible for a business entity to register for a single ABN regardless of the number of commercial activities it undertakes (sometimes visible in the number of physical 'shopfronts' it may operate). Alternatively, multiple commercial activities of a single business enterprise may be registered for separate ABNs, depending on the legal structure adopted by the enterprise. Hence where commercial activities are carried out by a number of different, but related entities, each entity may register for a separate ABN.
This publication therefore may be regarded as providing partial coverage of businesses in a given State. For example, if a business registers for a single ABN, but then operates from many physical locations (or 'shopfronts'), coverage will be restricted to the State of the main or 'head office' location only. This is particularly relevant for larger businesses, which commonly establish outlets in numerous States and Territories across Australia and also operate from a head office location.
The issues of multi–location businesses are more pronounced for counts at the Statistical Area Level 2 (SA2) level, as multi–location businesses may 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. Users should be aware of this limitation when using counts of businesses included in this publication and should be particularly cautious in equating the number of businesses, represented by ABNs (and TAUs) with the number of business operations.
- Business Size Classifications
In terms of annual turnover values, the transition between 2009 and 2013 to a new annual turnover imputation technique had some effect on this publication's annual turnover size range tables, compared with data included in previous publications. Annual turnover values are based on data reported to the ATO through Business Activity Statements (BAS) and include imputation for missing periods. More specifically, where businesses report zero values on their BAS, or have failed to report at all, this data is compared with auxiliary BAS data which are then used for the purposes of assigning annual turnover values. In cases where auxiliary BAS data is not available, an impute based on auxiliary ABSBR data is used.
In terms of employment range values an improved methodology has been included in this publication to provide the ABS's best estimate of the number of employees at the end of the financial year. This statistical adjustment is based on the most recent and consistent information from surveys, the Australian Business Register (ABR) and the Australian Taxation Office (ATO). Details explaining this methodology are included in Technical Note 2 of the current publication.
An important definitional change introduced in the June 2007 to June 2011 release of Counts of Australian Businesses, including Entries and Exits (cat. no. 8165.0), resulted in a break in series with earlier releases. The scope of the 2011 publication was changed to better reflect Australia's actively trading business population, and as such, it was necessary to rebase the publication tables and datacubes to 2007. As a result, the counts presented in this release are not comparable with the releases from 2007 and earlier. For further information, please see the Introductory Notes contained in this publication.
The scope of this publication is also significantly different to previously released (and now discontinued) ABS business counts publications:
In particular, this publication only includes businesses which actively traded in goods or services during the reference period.
This publication continues to provide business counts by selected demographics including industry, geography, institutional sector, type of legal organisation and business size. Business size data is provided by selected annual turnover and employment size ranges. These (employment) data indicate that most Australian businesses are small (95.9%) and that most of Australia's small businesses do not employ any staff (61.0%). This means the counts in this release are heavily influenced by the entry and exit of businesses within Australia's small business sector. Therefore, this should be considered when comparing the data with other ABS statistics.
Further information about scope and coverage, terminology and other technical aspects associated with these statistics can be found in the publication Counts of Australian Businesses, including Entries and Exits
(cat. no. 8165.0), which contains detailed Explanatory Notes, Technical Notes and a Glossary.
Counts of Australian Businesses, including Entries and Exits
(cat. no. 8165.0) data and metadata are available free of charge from webpages, Excel spreadsheets and ABS.Stat on the ABS website.
If the information you require is not available as a standard product,
the ABS may have other relevant data available on request and for a charge. Please contact the National Information and Referral Service on 1300 135 070.