The external account captures the income flows between Australia and the rest of the world. Compensation of Employees (COE) in the external account is employment income flows for Australian residents working overseas (receivable), and non-residents working in Australia (payable).
Non-residents who receive COE, are broadly classed as either students or non-students. It is important to note that in ABS macroeconomic statistics, all international students are treated as non-residents, (refer to article).
Improvements to the measurement of COE in the external account are reflected in revisions from 2017-18. These improvements focused on two key issues:
- determining the residency status of non-student workers in Australia and;
- estimating COE earnt by non-residents
The changes to the external account COE estimates incorporate new source data:
- Migration statistics are used to determine non-student residency status. In migration statistics, ‘residency’ is defined as staying, or intending to stay, in Australia for 12 out of 16 months. This classification was determined to closely approximate the concept of ‘centre of economic interest’ used in economic accounting. This data is used to estimate a ratio of non-residents by visa type:
- Total COE earnt by visa type is estimated using data from Personal Income in Australia (PIA). This publication estimates employee income by visa type using Australian Tax Office individual tax returns, and links migration data through the Linked Employer-Employee Dataset.
The visa type residency ratio is multiplied by the total COE earned by visa type to estimate earnings by non-residents in years where PIA is available. Revised COE estimates include PIA data from 2017-18 to 2022-23. For subsequent years, non-resident earnings are estimated using the movements of an indicator series. The indicator series is calculated by multiplying the number of visa holders in Australia by the average earnings of individuals on that visa.
Additionally, further improvements have been made to estimate employment income of residents living overseas including a correction to the allocation of COE earnt by non-residents working in Australian embassies and consulates.
Revisions have been applied to:
- COE of non-resident working in Australia – visible in external account
- COE of Australian residents working overseas – visible in external account
- COE of residents working in Australia – visible in Household Income Account. COE of residents working in Australia is calculated as the residual of total COE from domestic production minus COE of non-residents working in Australia.
Total COE from domestic production has not been revised from these improvements.
Revisions to external account COE estimates will also be visible in the current account within the Balance of Payments statistics, which the ABS publishes quarterly. More information and a quarterly breakdown of the improved estimates will be available on the 2nd of December 2025 in the Balance of Payments, and on the 3rd of December 2025 in the Australian National Accounts. In the meantime, please contact balance.of.payments.queries@abs.gov.au with any queries.
An increase in primary income payable – COE in the external account will result in a decrease in household primary income – COE. Please note that this graph includes other revisions to GDP (I) COE estimates.