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Gross income is the sum of the income from all these sources before income tax, the Medicare levy and the Medicare levy surcharge are deducted. Disposable income is the net income after these deductions.
Some limits have been placed on superannuation and other lump sum payments for inclusion in income, where the amounts received exceeds what is likely to be used to support current consumption (e.g. termination and workers’ compensation lump sum payments).
While income is usually received by individuals, it is normally shared between partners in a couple relationship and with dependent children. To a lesser degree, there may be sharing with other members of the household. Even when there is no transfer of income between members of a household, or provision of free or cheap accommodation, household members are still likely to benefit from the economies of scale that arise from the sharing of dwellings. The income measures shown in this publication therefore relate to household income, rather than personal income.
WEALTH (NET WORTH)
Household wealth (or net worth) is the value of all the assets owned by a household less the value of all its liabilities.
Liabilities are primarily the value of loans outstanding including:
As household size increases, consumption needs also increase but there are economies of scale. An equivalence scale is used to adjust household incomes to take account of the economies that flow from sharing resources and enable more meaningful comparisons between different types of households.
Equivalising factors are calculated based on the size and composition of the household, recognising that children typically have fewer needs than adults. The ABS uses the OECD-modified equivalence scale which assigns a value of 1 to the household head, 0.5 to each additional person 15 years or older and 0.3 to each child under 15 years.
For a lone person household, equivalised income is equal to actual income. For households comprising more than one person, it is the estimated income that a lone person household would need to enjoy the same standard of living as the household in question.
Table 1 shows that a couple household with one child would need $1,800 weekly disposable income to have the same equivalised disposable household income as a lone person household with a disposable income of $1,000.
Table 1 - EXAMPLES OF EQUIVALISED INCOME
Equivalence scales are mainly used for household income, but can also be used for household wealth.
The Household Economic Wellbeing Fact Sheet Series published in Household Income and Income Distribution, Australia, 2011–12 is available in the ‘downloads’ tab of this release. It provides a broad overview of the key concepts and data sources for measuring household economic wellbeing. The Household Economic Wellbeing fact sheet series currently comprises:
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