5216.0 - Australian National Accounts: Concepts, Sources and Methods, 2000  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 15/11/2000   
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Contents >> Chapter 23: Capital transfers


23.1 A transfer is defined as a transaction in which one institutional unit provides a good, service or asset to another unit without receiving in return from the latter any counterpart in the form of a good, service or asset. Transfers may be made in cash or in kind and can be divided into current or capital transfers. As discussed in Chapter 4, a capital transfer is one in which the (i) ownership of an asset (other than cash or inventories) is transferred from one institutional unit to another (i.e. a capital transfer in kind); or (ii) cash is transferred to enable the recipient to acquire another asset; or (iii) the funds realised by the disposal of an asset are transferred. The first category of capital transfers includes cancellation of liabilities by mutual agreement between creditor and debtor, sometimes known as 'debt forgiveness'. However, the writing off of debt is not a transaction between institutional units and therefore does not appear in either the capital or financial accounts of the ASNA. The repudiation of debt by a debtor is also not a transaction and is not recognised in the ASNA. Ideally, the writing off of debt should be recorded in the other changes in the volume of assets account of the creditor and debtor. The second category of capital transfers includes grants made by governments or international organisations to other governments, including grants by one level of government to another. Such grants are recognised as capital grants because the recipients, under the terms of the grants, are required to spend the money on capital projects (i.e. acquisition of non-financial assets). The second category of capital transfers also includes taxes that are deemed to be capital taxes, which are taxes, such as inheritance and gift taxes, that are non-recurrent and required to be paid only when a specific event (such as the death of the taxpayer) occurs. Capital taxes do not include taxes on sales of assets (e.g. capital gains taxes) as these are not taxes on transfers.

23.2 In the ASNA, examples of capital transfers from the private sector to the public sector include contributions to local government by real estate developers towards the cost of the construction of roads etc. on their subdivisions; contributions by coal companies towards the cost of construction of railway lines; and contributions by businesses and persons towards the cost of erecting power lines on private property.

23.3 Examples of capital transfers from the general government sector to other sectors (i.e. capital grants) include building and equipment grants made by general government to research laboratories, private schools, and university residential colleges, as well as assistance to first home buyers. Capital grants from the Commonwealth government to State and local governments consist of the following:

      • general purpose capital grants (untied payments to assist with State and Territory outlays for capital purposes);
      • specific purpose grants, which are payments to the States and Territories to meet capital expenditure, the purpose of which is designated by the Commonwealth, and/or which are conditional on States agreeing to undertake particular actions. Some of these grants are passed on by State and Territory governments to local government authorities. Examples of specific purpose grants for capital purposes include grants to the States and Territories for universities and colleges of advanced education, government and non-government schools, teaching hospitals, public housing and roads; and
      • direct capital grants to local government authorities.

23.4 The only capital taxes in Australia are inheritance and gift duties. In the late 1970s, their value started to decline considerably and they are insignificant at the time of writing.

23.5 Capital transfers to non-residents comprise Commonwealth general government foreign aid in the form of the provision of capital assets, and migrants' transfers in respect of former residents emigrating from Australia. Capital transfers from non-residents comprise migrants' transfers in respect of individuals who are emigrating to Australia. Other transactions, such as debt forgiveness, could also be classified as capital transfers to/from non-residents as described in Balance of Payments and International Investment Position, Australia: Concepts, Sources and Methods (Cat. no. 5331.0), but to date no such transactions have been identified.

23.6 Capital transfers also include major payments in compensation for extensive damages or serious injuries not covered by insurance policies. The payments may be awarded by courts of law or settled out of court. Legacies and large gifts from households or corporations to non-profit institutions to finance gross fixed capital formation are also included.

Sources and methods

Annual estimates

23.7 Estimates of all capital transfers between general government and the other institutional sectors are obtained as a by-product of the compilation of ABS government finance statistics. For Commonwealth and State general government, data are extracted from administrative sources such as Commonwealth and State budget papers and Auditors'-General Reports, Commonwealth Department of Finance and Administration Ledgers and supplementary departmental documents. A joint ABS/Commonwealth Grants Commission annual return, which is collected from each local government authority, provides the details required for local government.

23.8 Capital transfers to and from non-residents are obtained directly from balance of payments statistics. Commonwealth government foreign aid transfers of a capital nature are identified from the transactions recorded in the Department of Finance and Administration Ledgers. Migrants' transfers to non-residents are estimated by applying per capita transfers, derived from the Survey of Foreign Unrequited Transfers, to the number of persons emigrating from Australia obtained from overseas arrivals and departures data. Survey data for per capita transfers are extrapolated using average weekly earnings data. Migrants' transfers from non-residents are estimated using data from the Department of Immigration and Multicultural Affairs concerning the Business Skills Category of immigrants, overseas arrivals and departures data on the number of migrants entering and leaving Australia and estimated per capita transfers (non-business) from the Survey of Foreign Unrequited Transfers. A more detailed description of the sources and methods used to compile these estimates is provided in Balance of Payments and International Investment Position, Australia: Concepts, Sources and Methods (Cat. no. 5331.0).

Quarterly estimates

23.9 On a quarterly basis, only estimates of capital transfers to and from non-residents are published. These estimates are taken directly from balance of payments statistics compiled using the same sources as for the annual estimates outlined in paragraph 23.8.

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