1287.0 - Standards for Income Variables, Jun 2015  
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For most people, household income is the most important determinant of their economic wellbeing. People living in low income households are more likely to have insufficient economic resources to support a minimum material standard of living. However, income is not the only economic resource available to people. Households with substantial reserves of wealth can use them to finance a higher standard of living, at least for a period of time, by running down bank balances, selling assets or borrowing against assets.

The financial needs of a household can also influence its economic wellbeing. The financial needs of a household are directly affected by the size and composition of the household, and a range of other factors. For example, some households have more expensive medical needs than others. Some are in regions with higher prices than others, such as housing costs; but on the other hand, regions with higher housing costs may be closer to employment opportunities or to medical, educational and other services.


Household income statistics produced from specialised income surveys are critical to the analysis and modelling that supports the understanding of the socioeconomic circumstances of different household types, as well as changes in income distribution over time and differences between countries. They are also essential in developing and evaluating government policies on income support, income distribution and income taxation.

Income is an important explanatory variable in the Census of Population and Housing and in other household collections concerned with social wellbeing such as health, education and working life. Information on income can contribute to the understanding of a wide range of social issues by enabling an examination of the relationships between economic wellbeing and the outcomes in other aspects of people's lives.


The Australian Bureau of Statistics (ABS) regularly conducts specialised income surveys, such as the Survey of Income and Housing and the Household Expenditure Survey, that serve to provide detailed data on the type and value of economic resources acquired and consumed by people. In recent years, the collection of wealth and financial stress data have been integrated into this program.

Many of the other household collections conducted by the ABS provide measures of income and main source of income, as indicators of a person's or household's economic wellbeing. Employee earnings, a component of income for employed wage and salary earners, is also collected in the ABS Surveys of Employee Earnings, Benefits and Trade Union Membership and Average Weekly Earnings.

The five yearly Census of Population and Housing provides information on the distribution of income among individuals, families and households in Australia. Because of its complete coverage of the population, Census income data can be useful in assessing income levels of people in small geographic areas or small groups that may be of special interest for example, one-parent families or recent immigrants to Australia. However, income data in the Census is currently collected in ranges using a single question, limiting the usefulness of the data and the extent of analysis possible.

Australian income data is also available from the:

    • Household, Income and Labour Dynamics in Australia (HILDA) Survey. A longitudinal survey, sponsored by the Department of Social Services (DSS), that aims to describe how household income and patterns of engagement in paid work of household members change over time.
    • Australian Taxation Office (ATO). Statistical data on the numbers of taxpayers by levels of taxable income are published in the annual ATO publication 'Taxation Statistics'. The ATO also produces a 1% sample file of confidentialised individual tax records. Personal income tax data is used by the ABS to present an annual series of wage and salary earners by small area including Local Government Area (LGA) and Statistical Area (SA2, SA3 and SA4) (<ABS Home Page> see ABS Home/Regional Statistics/Data by Region).
    • Other administrative data collections. Administrative data collections within DSS, Department of Employment and the Department of Veterans' Affairs provide both official statistics, including those published in annual reports and statistical publications, and internal analytical and research collections. Administrative data collections only contain sufficient data to administer payments, and as such, limited data are available on the specific characteristics and circumstances or total resources available to income support recipients.
    • Australian System of National Accounts (ASNA). The ASNA incorporates a wide range of information about the Australian economy and its components, including statistics on the total income accruing to the household sector and its major elements (ABS cat. no. 5204.0).


The documentation for the ABS income standards is organised as follows:
    • Conceptual framework for income
    • Standard variable - Total income
    • Standard variable - Sources of income
    • Standard variable - Equivalised household income
    • Standard variable - Main source of income


This section provides the ABS standard conceptual definition of income for use in micro level statistics in the household sector, including a description of its components and exclusions. It outlines how the components of income are aggregated to produce the various measures of income required (including private, gross, disposable, and final income). The definition can be applied to a range of statistical units (for example, households, income units, and persons) provided transfers between units are appropriately treated in each case.

Conceptual definition of income

The ABS conceptual definition of household income is based on the definition of household income set out in the international standards by the International Conference of Labour Statisticians (ICLS 2003). The ABS has followed the ICLS wording except where improvements were identified or changes were required to satisfy Australian requirements. The international standards are further explained in the Canberra Group Handbook on Household Income Statistics, Second Edition (2011).

The standard ABS conceptual definition of household 'income' is:

Household income consists of all current receipts, whether monetary or in kind, that are received by the household or by individual members of the household, and which are available for, or intended to support, current consumption by the household.

Household income includes receipts from:
    • employment (employee income and income from self employment)
    • investment (interest, dividends, rents and royalties)
    • production of household services for own consumption (owner-occupied dwellings, unpaid domestic services, and services from consumer durables)
    • current transfers (pensions, annuities, benefits and allowances, transfers from non-profit institutions, and other households).

Household income excludes capital transfers received and certain current transfers treated as offsets against expenditures. It excludes receipts that reduce the net worth of the household through a reduction of its cash reserves, the disposal of its other financial or non-financial assets, or an increase in its liabilities. It also excludes holding gains/losses resulting from changes in the value of assets and liabilities.

    • capital transfers such as inheritances, lump-sum retirement benefits, life insurance claims (except annuities), compensation (except for foregone earnings), loan repayments
    • certain current transfers offset against expenditures (for example, lottery and other gambling winnings, non-life insurance claims, government reimbursements of expenditure such as Medicare and child care rebates)
    • receipts that result from a reduction in net worth (for example, sale of assets, withdrawals from savings, and loans obtained)
    • holding gains/losses resulting from changes in the value of financial and non-financial assets and liabilities (for example, the value of shares held).

Components of income

Income includes:
    (i) income from employment
    (ii) investment income
    (iii) income from production of household services for own consumption, and
    (iv) current transfers received.

Conceptually, all of these components and the elements that make them up are included in income. However, in practice, some elements cannot be included in the operational measures of income because they cannot be readily captured or modelled.

(i) Income from employment

Income from employment comprises receipts from participation in economic activities in a strictly employment-related capacity. It consists of employee income and income from self-employment.

Employee income comprises direct wages and salaries for time worked and work done, cash bonuses and gratuities, commissions and tips, directors’ fees, profit-sharing bonuses and other forms of profit-related pay, remuneration for time not worked, free or subsidised goods and services from an employer, severance and termination pay, and employers' social insurance contributions. An employee may receive income from an employer or from their own incorporated business (company). It may be received in cash (monetary) or in kind.

Income from self-employment consists of the profit or loss that accrues to owners of, or partners in, their own unincorporated businesses. Profit or loss is the value of the gross output of the enterprise after the deduction of operating expenses, including depreciation and operating costs, but before income tax. Income from self-employment excludes profits from capital investments of partners who do not work in these enterprises (silent partners). Income from self-employment includes the estimated value of goods and services produced for barter as well as goods produced for own consumption, less expenses.

(ii) Investment income

Investment income, also commonly referred to as property income, is defined as receipts that arise from the ownerships of assets (return for use of assets) that are provided to others for their use. These are returns from:
    • Financial assets - interest and dividends
      • Interest receipts are payments from banks and other financial institutions (for example, credit unions), for the use of funds held in accounts with them, certificates of deposit, government bonds, securities, debentures and loans to non-household members (excluding repayments of the principal).
      • Dividends are receipts from investment in an enterprise in which the investor does not work. Dividends should be recorded net of any expenses incurred in earning them
    • Non-financial assets - rents
      • Rents are payments received for the use of both unproduced assets (i.e. natural resources), such as land, and for produced assets, such as houses. Rents should be included in income net of expenses
    • Royalties
      • Royalties are receipts received from writings, rights to make use of inventions, etc. (i.e. patented or copyright materials).

(iii) Income from household production of services for own consumption

Income from household production of services for own consumption consists of the net estimated value of:
    • housing services provided by owner-occupied dwellings (i.e. imputed rent)
    • unpaid domestic services
    • services from household consumer durables (such as cars, washing machines, fridges, etc.).

(iv) Current transfers received

Transfers are receipts for which the recipient does not provide anything to the donor in direct return for the receipts. Transfers can consist of money, of goods or of services.

Current transfers include:
    • Government pensions and allowances
      • Includes cash receipts from welfare support provided through a range of programs at all levels of government. Some government payments are excluded as they are considered to be either a capital transfer or a reimbursement of expenditure.
        • In deciding whether a government payment is a capital or current transfer, both the intent of the government payment and the associated eligibility criteria are considered. For example, receipts from the First Home Owner Grant Scheme are regarded as capital transfers as they are designed to help first home buyers purchase their own home while the Newborn Upfront Payment is considered a current transfer as the intention of the payment is to offset some of the extra consumption costs incurred with the birth of a child.
        • Government payments that are reimbursements of approved expenditures (such as the Medicare Rebate, the Private Health Insurance Rebate, the Child Care Benefit and the Child Care Rebate) should not be treated as current transfers in cash, rather as social transfers in kind (see 'Other current transfers' below).
    • Superannuation pensions and annuities
      • Includes superannuation pensions and annuities. It excludes retirement lump-sum benefits.
        • Pensions received from contributory or private-funded schemes may represent a running down of the household's assets where the underlying capital is consumed (e.g. an allocated pension). They are, however, included in income as they are considered to be income by the households receiving them, especially retired households, and are used to support consumption. Otherwise the analysis of income distribution would be affected since these households would then have little or no income.
    • Other current transfers
      • Include:
        • Transfers from non-profit institutions, including charities
        • Workers compensation and payments from accident/sickness insurance (for example, income protection insurance or life insurance annuities)
        • Transfers from other households in cash or in kind. Includes alimony, child support and financial support such as between family members not living in the same household
        • Social transfers in kind (STIK). Non-cash benefits and services provided by the government to households for education, health, housing, electricity concessions, and social security and welfare. It includes reimbursements of approved expenditures such as the Medicare Rebate, the Private Health Insurance Rebate, the Child Care Benefit and the Child Care Rebate.


(i) Capital transfers

Capital transfers refer to the acquisition of, or disposal of, assets. Capital transfers received are considered an addition to capital, even though they may subsequently be dissaved. A household may receive capital transfers from other households, private institutions and enterprises, and from government. Capital transfers include inheritances, lump-sum retirement benefits, life insurance claims (except annuities), compensation (except for foregone earnings) and loan repayments (the principal component only).

(ii) Certain current transfers offset against expenditures

Lottery and other gambling winnings and payments received from any non-life insurance claims are excluded from the definition of income. The household sector overall incurs net expenditure on these items and, by convention, the transfers received are offset against expenditures. In respect of lottery and other gambling winnings, the stakes (expenditure) are included as part of household consumption which is then offset by any winnings which are effectively considered negative expenditures. A similar treatment is applied to non-life insurance claims, with premiums paid included in household consumption expenditure and offset by any payments received in respect of any claims made.

(iii) Holding gains or losses

Holding gains or losses refer to changes in the value of financial and non-financial assets and liabilities over a reference period. A holding gain, the result of an increase in the value of assets or a reduction in the value of liabilities, increases the net worth of the owner's assets while a holding loss has the opposite effect. All holding gains and losses are excluded from income whether they are realised (if the owner sells the asset) or remain unrealised.

(iv) Other receipts that result from a reduction in net worth

Receipts that represent a running down of assets are excluded from income and may include the sale of assets, withdrawals from savings and loans obtained. Reductions in net worth can be used to support consumption, at least for a time, just as income is.


The components of income can be aggregated in a hierarchy to produce selected measures of income for particular analytical purposes. Gross and disposable income are the main income aggregates produced.

Total income (interchangeably referred to as gross income) is the sum of income from all sources before income tax or levies, such as the Medicare Levy and Medicare Levy Surcharge, are deducted. It is the most commonly used measure of income across ABS household collections.

Disposable income is derived by deducting taxes and levies on income from gross income. It is the remaining income which is available to support consumption and/or saving. Disposable income generally better represents the economic resources available to meet the needs of households than gross income. It is the main measure produced from the specialised ABS income surveys.

For some purposes, private income and final income measures may be produced.

Private income is the most restricted concept of income, and relates to total income less all benefits received from government, i.e. government benefits in cash and in kind.

Final income is the most extensive concept of income, being equal to household disposable income, including government social transfers in kind, less taxes on household consumption expenditure (also referred to as taxes on production). Final income is used to study the effects of taxation and government expenditure on the distribution of income among private households in Australia.

Income and its relationship to the broader framework for household economic resources

The conceptual definition of income relies on some discussion about the boundaries between income and capital flows and about household consumption. The Canberra Group Handbook on Household Income Statistics, Second Edition (2011) illustrates how the various concepts can be brought together in an integrated manner. The following tables summarise the key measures and their relationships, as outlined in the Handbook.


Income component

1Income from employment
aEmployee income
Wages and salaries
Cash bonuses and gratuities
Commissions and tips
Directors’ fees
Profit-sharing bonuses and other forms of profit-related pay
Shares offered as part of employee remuneration
Free or subsidised goods and services from an employer
Severance and termination pay
Employers’ social insurance contributions

bIncome from self-employment
Profit/loss from unincorporated enterprise
Goods and services produced for barter, less cost of inputs
Goods produced for own consumption, less cost of inputs

2Property income
aIncome from financial assets, net of expenses
bIncome from non-financial assets, net of expenses

3Income from household production of services for own consumption
aNet value of owner-occupied housing services
bValue of unpaid domestic services
cValue of services from household consumer durables

4Current transfers received
aSocial security pensions/schemes
bPensions and other insurance benefits
cSocial assistance benefits (excluding social transfers in kind, see 10)
dCurrent transfers from non-profit institutions
eCurrent transfers from other households

5Income from production (sum of 1 and 3)

6Primary income (sum of 2 and 5)

7Total income (sum of 4 and 6)

8Current transfers paid
aDirect taxes (net of refunds)
bCompulsory fees and fines
cCurrent inter-household transfers paid
dEmployee and employers’ social insurance contributions
eCurrent transfers to non-profit institutions

9Disposable income (7 less 8)

10Social transfers in kind (STIK) received

11Adjusted disposable income (9 plus 10)

Source: Canberra Group Handbook on Household Income Statistics, Second Edition (UNECE, 2011, p11 Table 2.1).


12Household consumption expenditure, value of goods and services acquired including:
aDirect monetary purchases in the market
bFree or subsidised goods and services from an employer (component of 1a)
cGoods and services received from bartering (component of 1b)
dGoods produced for own consumption (component of 1b)
eOwn account production, i.e. production within the household including:
Gross owner-occupied housing services
Unpaid domestic services (equal to 3b)
Services from consumer durables (equal to 3c)

13Social transfers in kind (equals 10)

14Actual final consumption (sum of 12 and 13)

15Non-consumption expenditure
aDirect taxes (net of refunds) (equal to 8a)
bCompulsory fees and fines (equal to 8b)
cCurrent transfers to other households (equal to 8c)
dEmployee and employers’ social insurance contributions (equal to 8d)
eCurrent transfers to non-profit institutions (equal to 8e)
fInterest payments on consumer credit1

16Household expenditure (sum of 12 and 15)

17Household saving (7 less 16)

18Capital transfers received
aLump-sum inheritances
bLump-sum retirement payouts
cLife insurance claims less premiums
dOther windfall gains

19Capital transfers paid
Tax on inheritances
Taxes on wealth, including taxes on holding gains and losses

20Net accumulation of capital (17 plus 18 less 19)

21Memorandum item: Holding gains and losses

1Only the interest payments on consumer credit are shown in 15f, since interest payments have already been deducted from property income (2) and the net value of housing services provided by owner-occupied dwellings (3a).
Source: Canberra Group Handbook on Household Income Statistics, Second Edition (UNECE, 2011, p19 Table 2.2)


See 'Operational definition' in the 'Total Income' standard.


International standards

The international standards for micro level statistics on household income are provided in Resolution I of the Seventeenth International Conference of Labour Statisticians (ICLS): Household Income and Expenditure Statistics (ILO, 2003). The ICLS definition has been used as the starting point for developing the Australian conceptual definition of income set out in these standards. The Canberra Group Handbook on Household Income Statistics, Second Edition (2011) also draws on the ICLS definition and is the result of international collaboration by several national statistical offices and international agencies. As much as practicable, these standards align with the international standards.

There is no standard international classification for types of income. However the ICLS stated that:

"Income should be classified by types of source, at as detailed a level as relevant and, to the extent possible, by means of payment so that users would have the option of including or excluding in-kind receipts, e.g. to facilitate international comparisons. Wages and salaries packaging that is negotiated at the discretion of the employee and is to be delivered as goods and services should be considered as monetary income and not in-kind income" (ICLS Resolution I, para 87).

Income estimates are also compiled at the macro level, such as the ASNA. The objective of macro level statistics is to measure the economic wellbeing of the nation as a whole through flows such as production, income, consumption, expenditures, investment, savings etc. between sectors. The household sector is one such sector and the total income accruing to households is described in relation to other aggregate components of this system. At the macro level, the main framework developed for compilation and analysis of income estimates is the United Nations System of National Accounts (SNA). The SNA is a comprehensive system for expressing in statistical terms most elements of a country's economy, including the total income accruing to households. In SNA 2008, disposable household income is described conceptually as:

"... the maximum amount that a household or other unit can afford to spend on consumption goods or services during the accounting period without having to finance its expenditures by reducing its cash, by disposing of other financial or non-financial assets, or by increasing its liabilities" (SNA 2008, 8.25).