Quality declaration - summary
For information on the institutional environment of the Australian Bureau of Statistics (ABS), including the legislative obligations of the ABS, financing and governance arrangements, and mechanisms for scrutiny of ABS operations, please see ABS Institutional Environment.
Data in this publication are sourced from the Linked Employer Employee Dataset (LEED).
The LEED includes tax data supplied by the Australian Tax Office (ATO) to the ABS under the Taxation Administration Act 1953, which requires that such data is only used for the purpose of administering the Census and Statistics Act 1905. Any discussion of data limitations or weaknesses is in the context of using the data for statistical purposes, and is not related to the ability of the data to support the ATO's core operational requirements.
The LEED also includes Australian Business Register (ABR) data supplied by the Registrar to the ABS under A New Tax System (Australian Business Number) Act 1999, which requires that such data is only used for the purpose of carrying out functions of the ABS. Any discussion of data limitations or weaknesses is in the context of using the data for statistical purposes, and is not related to the ability of the data to support the ABR’s core operational requirements.
Legislative requirements of information have been followed to ensure privacy and secrecy. In accordance with the Census and Statistics Act 1905, results have been confidentialised to ensure they are not likely to enable identification of a particular person or organisation.
All personal information is handled in accordance with the Australian Privacy Principles contained in the Privacy Act 1988.
This publication produces personal income data at regional (small area) level to provide valuable information about regional economies and the income of individuals resident in regions. This annual regional level income data is not available from existing ABS censuses and surveys.
The scope of this data includes individuals who submitted an individual tax return to the ATO, individuals who had a PAYG payment summary issued by an employer, and their employers.
The main statistics released from ATO personal income tax data are the number of persons and the amount of income from Wages and salaries and other employee related payments (Employee income), Own unincorporated business, Investment, Superannuation, and Total income. Other income measures such as mean and median income, and income percentile indicators (80th, 50th for example) are also produced.
Data for source of income categories are aggregated from line items in the individual income tax return, and are selected to conform as closely as possible to ABS Income Standards.
These statistical releases are presented at the following levels of geography of the Australian Statistical Geography Standard (ASGS): Statistical Area Level 2 (SA2); Statistical Area Level 3 (SA3); Statistical Area Level 4 (SA4); Greater Capital City Statistical Area (GCCSA); Local Government Area; and state/territory, Australia.
The ABS receives tax data from the ATO approximately 16 months after the end of the financial year. This data then requires processing time to construct Business Longitudinal Analysis Data Environment (BLADE) and to produce a coherent and clean persons dataset. These factors contribute to the long delay between the end of the financial year and the publication of statistics from the LEED.
Because taxation data may be submitted to the ATO after the ITR cut-off date, it may not be available at the time the ATO provides data to the ABS and is only added in future provisions. As such, annual data in the LEED can become more complete over time. This is estimated to have a slightly greater impact on the self-employed population than on the larger employee and employer populations, and a negligible impact overall.
Personal Income in Australia is subject to the following sources of error:
- Conceptual misalignment. The Australian tax system is purpose-built and complex, and in some cases it is difficult to determine how a particular income tax item should be used to describe income standards, and in some cases the item can be a partial conceptual match. While all care is taken, some income items are subject to this type of validity error. Coherence with other sources indicates that this has a low impact on aggregate series.
- Measurement error. This is likely to be present in both person and business information used. Most measurement error is unable to be determined or corrected; however, coherence with other similar statistics demonstrates that this has a low impact on aggregate series.
- Incomplete information. Sometimes, Individual Tax Returns are not lodged, or not all items (e.g. occupation) are completed. The ABS advises caution when interpreting data subject to high rates of missing information.
The data in this publication has been perturbed to ensure confidentiality. This has a negligible impact on accuracy.
Personal Income in Australia has an open revisions policy.
There are differences between Personal Income in Australia statistics and similar statistics produced by the ABS. When compared to other ABS sources, the number of earners, and median employment income in this publication may differ due to:
- differences in the concepts, scope and methodology used in the LEED and those used in household and business surveys.
- the LEED containing a combination of administrative data collected for taxation purposes from both individuals and businesses, whereas other ABS data sources are compiled for the explicit purpose of producing statistics.
- unreported cash in hand payments, which are excluded from the LEED but may be included in household and business surveys.
- the LEED including information relating to the whole financial year, rather than a particular point in time.
Some changes to personal income derivations have been made since the publication of similar statistics in Jobs in Australia, 2011-12 to 2016-17 (cat. no. 6160.0)
. This will result in minor differences between the two publications. Differences in underlying data treatments may also have a minor impact.
Personal income tax statistics can be impacted by changes to tax legislation. For example in 2012-13, the tax reporting threshold rose from $6,000 in the previous financial year to $18,200. The ATO outlines any such changes in their annual release of Taxation Statistics on the ATO website.
Tax Free Threshold
The predicted effect of the tax free threshold change is that less people would be required to lodge tax returns, however the data shows that this threshold change had little effect on returns lodged. One theory is that many individuals may fall under the tax free threshold but may have pay periods where they have paid tax - meaning a return is required to be lodged regardless.
Data for income categories described above (see Relevance) are aggregated from line items in the individual income tax return, and are selected to conform as closely as possible to ABS Income Standards
Other ABS sources of income data are:
- the Survey of Income and Housing;
- the Survey of Average Weekly Earnings;
- the Census of Population and Housing; and
- the Australian System of National Accounts.
The ABS Survey of Income and Housing (SIH) also collects information on sources of income, the amounts received and related household characteristics. Some person-level details, for those aged 15 years and over and resident in private dwellings across Australia can also be derived. Data collected from SIH can generally be compared with ATO personal income tax data published in Personal Income in Australia
at the Australia level. A few major points of difference should be noted however.
SIH has a wider coverage of all income earners; it will also capture details for people receiving pensions, or low incomes, or receiving tax exempt superannuation income, who may not be required to lodge tax forms. From another perspective, smaller area estimates are not released from SIH. Being sample survey based it cannot support the production of representative estimates for smaller geographies (such as Statistical Area Level 2, or Local Government Areas). Nonetheless, a comparison of SIH with ATO data for Australia can provide a means of assessing the shape of data movements over time; and generally indicate whether counts are of an expected magnitude and whether the distribution of income across the various sources is similar.
The Survey of Average Weekly Earnings (AWE) is a six monthly sample survey of employing businesses. It collects data on average weekly earnings for full-time adult employee jobs, average weekly total earnings for all employee jobs, and average weekly ordinary time earnings for full-time adult employee jobs. Being sample survey based, AWE cannot support the release of small area (sub state) estimates.
While the ATO mean income levels for Employees can be compared at the Australia level with the 'average weekly total earnings for all employees jobs' from AWE, they will differ partly due to the tax free thresholds applied; some low income earners captured in AWE will be missing from the tax data. Because PIiA includes all persons who worked during the year, persons who worked only part of the year (and thus have lower employee incomes) are included and will have a negative effect of the mean, relative to AWE.
Income data is also available every five years in the Census of Population and Housing. The Census provides income details for for households, families and individuals. Data are available for a wide range of small areas.
The Australian System of National Accounts (ASNA) brings together Employee income estimates from multiple sources, including a range of quarterly and annual business surveys. The data are also updated iteratively whereas the SIH and ATO data are more 'point in time' snapshots. Whereas the ASNA mainly sources data from businesses and the government sector, the ATO and SIH data are primarily sourced from individuals; this methodological difference contributes to some variation in estimates across these collections. A comparison of income data from SIH and ASNA sources, and using selected ATO elements, can be found in Survey of Income and Housing, User Guide, 2015-16.
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.
Caution should be taken when interpreting data for areas with small populations, particularly less than 1000 earners. These areas are more susceptible to fluctuations over the time series than regions with larger populations.
ABS releases of personal income tax data provide detailed Explanatory Notes which contain information on scope and coverage, confidentiality, definitional changes, the geographical presentation of the data, classifications and other technical aspects associated with these statistics.
This data will be available in the following formats:
- Personal Income in Australia (cat. no. 6524.0.55.002) - with a summary main features, downloadable Excel spreadsheets (data cubes) and detailed Explanatory Notes.
- Data by Region – which contains regional source of income estimates and Employee income earners data (cross referenced by age, sex, occupation) as downloadable data cubes. Detailed Explanatory Notes are also provided. Data regions can be selected from a map or by using other search functions provided.