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TECHNICAL NOTE LOW VALUE THRESHOLD
3 Prior to November 2005 the LVT was set at $250 for sea and air cargo and $1,000 for postal items. In November 2005 the LVT for sea and air cargo was raised to $1,000.
4 Imports and exports of goods under the LVT are within the scope of Balance of Payments statistics. However, until recently there have been no sources of information to allow reliable estimates to be made for more than the component reported on Full Import Declarations and Export Declarations. The Productivity Commission released a report on the Economic Structure and Performance of the Australian Retail Industry on 9 December 2011. Data produced by Customs, and data collected about international postal movements, for that report now allow estimates to be made for the remaining goods imports under the LVT.
5 With the LVT (for SAC and FID imports) increasing in December quarter 2005 from $250 to $1000 two methodologies have been established for the new LVT adjustment. The first is for the period from September quarter 1998 to December quarter 2005 when the under–coverage is expected to be smaller (due to a lower threshold for FID and SAC imports). The second methodology covers the period from March quarter 2006 onwards when the threshold rose.
Adjustment from March quarter 2006
6 For the period from March quarter 2006 the low value adjustment comprises two components that account for under–coverage:
7 The methodology for the estimation of each of these components is covered in more detail below.
Imports with a self assessed clearance declaration estimate
Imports under the low value threshold via parcel post estimate
Pro–ration of quarterly series to monthly
Adjustment from September quarter 1998 to December quarter 2005
8 For the period from September quarter 1998 to December quarter 2005, with limited data available, a number of assumptions have been made in back–casting the estimates. These assumptions are:
Allocation to commodity categories
9 Allocation of estimates to individual Balance of Payments Broad Economic Category (BoPBEC) components are derived from analysis of a sample of records from June quarter 2012 imported as air freight with a SAC declaration and LVT imports lodged with a FID for the same time period. Weights for each BoPBEC component have been derived on a financial year basis. These weights have been back–cast to previous financial years using changes in spending between BoPBEC components obtained from household final consumption expenditure measures in the National Accounts. Weights are static within each financial year.
10 In the period 1998–99 to 2004–05 the estimates of the new adjustment are smaller with annual adjustments less than $1b. This is consistent with a lower SAC LVT of $250. From the period 2005–06 onwards the adjustment rapidly increases with the rise disrupted by a decrease in 2008–09. In 2012–13, the total value of the adjustments is $7,609m (Figure 1).
11 The allocation of the new adjustment has primarily resulted in an increase to consumption goods with between 88 – 95% allocated to this component. Intermediate and other merchandise goods has been allocated between 5 – 10%, whilst capital goods has been allocated 0 – 2% (Figure 1).
12 When the adjustment as a percentage of total goods debits is examined, similar behaviour is observed (Figure 2). The decrease in the adjustment in 2008–09 is stronger when expressed as a percentage of goods debits, with total goods debits rising 8% between 2007–08 and 2008–09.
13 The estimates presented here are made using a range of assumptions. More reliable sources of data may become available in future to replace these assumptions and improve the quality of the estimation process.
14 There is a comparable low value threshold for the reporting of exports to Customs, which is currently $2,000. There are no reliable sources of information to enable estimation of this trade not recorded on an Export Declaration, and it is expected to be much less significant.
15 The ABS is also investigating methods to estimate the value of intangible products consumed by households. These are services that are delivered online by non–residents, such as e–books, films, music, software, online newspaper and magazine subscriptions, and gambling services.
16 Estimates of the value of goods imported under the LVT are also being incorporated into the supply–use tables which underpin the National Accounts. As a result, they will be included in the accounts for the first time with the release of the 2012–13 issue of Australian System of National Accounts (cat. no. 5204.0) and the September quarter 2013 issue of Australian National Accounts: Income, Expenditure and Product (cat. no. 5206.0).
17 The Information Paper: Measurement of Online Retail Trade in Macroeconomic Statistics, 2013 (cat. no. 8501.0.55.007) was released on 19 August 2013 and explains where online retail trade is currently included in ABS macroeconomic statistics and describes enhancements to improve measurement and coverage of online retail trade activity in both retail trade statistics and the wider macroeconomic accounts.
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