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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.
23.4 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
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.
23.9 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.