5331.0 - Balance of Payments and International Investment Position, Australia, Concepts, Sources and Methods, 1998  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 22/09/1998   
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Contents >> Chapter 2. Conceptual framework >> Concepts of territory and residence

2.10. In compiling the Australian balance of payments and international investment position, the Australian economy is conceived as comprising the economic entities that have a closer association with the territory of Australia than with any other territory. Such economic entities are described as residents of Australia. Any economic entity which is not regarded as a resident of Australia is described as a non-resident. Australia’s territory is defined to include the territories lying within its political frontiers and territorial seas, and in the international waters over which it has exclusive jurisdiction. It also includes its territorial enclaves abroad holding embassies, consulates, military bases, scientific stations, information or immigration offices, aid agencies etc., whether owned or rented by Australian governments with the formal agreement of the countries where they are located. Similar foreign enclaves located in Australia are excluded from Australia’s economic territory. In Australia’s economic statistics the external territories of Christmas Island, Cocos (Keeling) Islands and the Australian Antarctic Territory are regarded as part of the Australian economy, but Norfolk Island is not.

2.11. The residents of Australia comprise:

      • Resident general government institutions which comprise Australian Commonwealth, State and local government authorities and statutory bodies, but exclude government-owned or controlled (public) financial and trading enterprises. Australian embassies, consulates, military establishments, etc. physically located abroad are included in Australia’s economic territory and are therefore residents; similar entities of other countries physically located within Australia are outside Australia’s economic territory and are therefore non-residents.
      • Resident financial and trading enterprises which include all enterprises engaged in the production of goods and services on a commercial or equivalent basis within the territory of Australia. Enterprises may be incorporated or unincorporated; privately or government owned and/or controlled; and locally or foreign owned and/or controlled. The definition of an enterprise in terms of the territory in which it is located often makes it necessary to divide a single legal entity into a head office operating in one economy and a branch operating in another economy. Resident enterprises include Australian branches of foreign companies and exclude foreign branches of Australian companies.
      • Resident non-profit bodies which are those in which individuals and/or enterprises combine, as owners, to produce goods and services within the territory of Australia for purposes other than to provide a financial return for themselves. Examples are churches, charitable organisations and representative business organisations such as Chambers of Commerce.
      • Resident households and individuals which broadly encompass all persons residing in the territory of Australia for one year or more, whose general centre of interest is considered to be Australia. Even though Australia’s official diplomatic and consular representatives, Australia’s armed forces, other Australian government personnel stationed abroad and their dependants, and Australian students studying abroad, may all be abroad for one year or more, they are also treated as Australian residents since their centre of interest is considered to be Australia. Generally, the centre of interest of persons visiting Australia for less than one year is considered to be outside Australia and they are therefore regarded as non-residents but if they stay for one year or more they are considered to be residents for balance of payments purposes. Irrespective of their length of stay, non-residents also include foreign diplomatic, consular, military and other government personnel, their dependants, and foreign students studying in Australia. Box 2.5 discusses the treatment of certain special cases of residency.

Mobile equipment
International transactions associated with the use of mobile equipment (such as ships, aircraft, satellites, and oil and gas drilling rigs) call for special consideration in the context of residence. Mobile equipment differs from most other equipment only in that it may be used to provide services in the territory of several countries or may operate primarily in international waters or air space. It is not the location of the mobile equipment that is crucial, but rather the residence of the enterprise which operates the equipment. When mobile equipment is operated in international waters or air space, its operation is assigned to the economy of the operator. When the mobile equipment is located on a long-term basis in one economy, different from that of the head office, consideration is given to splitting the head office and its branch (see conditions in paragraph 2.32). This has particular application for Australia when considering the activity in the Timor Sea Economic Cooperation Zone.

International bodies and their employees
International bodies (whose members are governments) which have a presence in Australia, are treated as non-residents provided their activities do not qualify as trading or financial enterprise activities; however, their employees (other than those with diplomatic status) are treated as residents.

When an agent enters into a transaction on behalf of a principal in another country, the transaction is attributed to the country of the principal and not to that of the agent. However, the services rendered by the agent to the principal are attributed to the country of which the agent is a resident. For example, an Australian travel office which sells tickets to Australian residents on behalf of a foreign airline is treated as an agent in the sale of those tickets, even if it is legally owned by or otherwise related to the foreign airline. That is, the transaction is deemed to be the purchase of an airline ticket by a resident from a non-resident airline.

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