TECHNICAL NOTE 1 METHODOLOGY
1 The estimates in this publication are produced using a combination of ABS directly collected data and Business Income Tax (BIT) data sourced from the Australian Taxation Office (ATO).
2 The directly collected data have been reported by a sample of businesses, as recorded on the ABS Business Register (ABSBR). The ABS uses an economic statistics units model on the ABSBR to describe the characteristics of businesses, and the structural relationships between related businesses. Within large and diverse business groups, the units model is used also to define reporting units that can provide data to the ABS at suitable levels of detail.
STATISTICAL UNITS DEFINED ON THE ABS BUSINESS REGISTER
3 The current economic statistics units model was introduced in mid 2002, to better use the information available as a result of The New Tax System (TNTS). This units model allocates businesses to one of two sub-populations. The vast majority of businesses are in what is called the ATO maintained population, while the remaining businesses are in the ABS maintained population. Together, these two sub-populations make up the ABSBR population.
ATO MAINTAINED POPULATION
4 Most businesses and organisations in Australia need to obtain an Australian Business Number (ABN). They are then included on the whole-of-government register of businesses, the Australian Business Register (ABR), which is maintained by the ATO. Most of these businesses have simple structures; therefore, the unit registered for an ABN will satisfy ABS statistical requirements. For these businesses, the ABS has aligned its statistical units structure with the ABN unit. The businesses with simple structures constitute the ATO maintained population (ATOMP), and the ABN unit is used as the statistical unit for all ABS economic collections.
ABS MAINTAINED POPULATION
5 For the population of businesses where the ABN unit is not suitable for ABS statistical requirements, the ABS maintains its own units structure through direct contact with the business. These businesses constitute the ABS maintained population (ABSMP). This population consists typically of large, complex and diverse businesses. The statistical units model described below caters for such businesses.
- Enterprise group: This is a unit covering all the operations in Australia of one or more legal entities under common ownership and/or control. It covers all the operations in Australia of legal entities which are related in terms of the current Corporations Law (as amended by the Corporations Legislation Amendment Act 1991), including legal entities such as companies, trusts and partnerships. Majority ownership is not required for control to be exercised.
- Enterprise: An institutional unit comprising:
- a single legal entity or business entity, or
- more than one legal entity or business entity within the same enterprise group and in the same institutional sub-sector (i.e. they are all classified to a single Standard Institutional Sector Classification of Australia (SISCA) sub-sector).
- Type of activity unit (TAU): The TAU comprises one or more business entities, sub-entities or branches of a business entity within an enterprise group that can report production and employment data for similar economic activities. When a minimum set of data items are available, a TAU is created which covers all the operations within an industry subdivision (and the TAU is classified to the relevant subdivision of the ANZSIC). Where a business cannot supply adequate data for each industry, a TAU is formed which contains activity in more than one industry subdivision.
CONTRIBUTION OF THE STATISTICAL UNITS TO THE ESTIMATES
6 The following paragraphs outline the way in which categories of statistical units contribute to the estimates of financial and economic variables presented in this publication. Estimates of employment are derived in a different manner; see Appendix 1 for details.
7 All units in the ABS maintained population (i.e. TAUs) were eligible to be selected for direct collection. Direct collection of data from these units is necessary because:
8 The balance of units on the ABSBR were ABN units, from the ATO maintained population.
- many large and complex employing businesses have more than one legal entity, making it difficult to identify all legal entities for that business in the BIT data
- BIT data do not include all of the detailed information that the ABS requires from large and complex businesses
- 'tax exempt' businesses that are not required to complete business income tax returns would otherwise not contribute to the statistics.
PRODUCING EAS ESTIMATES
9 The following diagram illustrates the ways in which Australian businesses contribute to the estimates in this publication.
10 The counts of businesses in the diagram refer to the numbers of businesses on the survey 'frame', or list of business units, from which the sample to produce these estimates is selected. During processing of the survey, units no longer in operation can be detected, and the counts of the numbers of businesses adjusted accordingly. Hence the total number of businesses shown in the diagram is higher than the count of operating businesses presented in the tables.
TYPES OF BUSINESS, AND DATA STREAMING
11 For the purpose of compiling the estimates in this publication, data for businesses as recorded on the ABSBR contribute via one of three categories (or 'streams') in accordance with significance and collection-related characteristics.
Stream D: direct collection of data
12 Stream D, consisting of directly collected survey data, comprises data for:
13 Information for these businesses was sourced from the ABS EAS collection, for the reasons outlined in paragraph 7 above.
- those businesses from the ATOMP of the ABSBR that are either:
- tax-exempt, or
- completely enumerated in the Economic Activity Survey (EAS) - a business may be completely enumerated when it is significant in employment and/or assets and/or turnover
- businesses from the ABS maintained population of the ABSBR.
Stream B: Both direct collection and BIT data
14 Stream B comprises data for ATOMP businesses not selected in Stream D and which are above the cut-off for inclusion in Stream T. This cut-off is usually set so that businesses in Stream T contribute 15% of industry turnover, as determined from ATO Business Activity Statement (BAS) data.
15 Data for businesses in Stream B are sourced from the BIT files. However, a sample of these businesses is also included in the direct EAS collection, for the purpose of calculating 'proration' factors. These factors are applied to the Stream B BIT data in order to produce estimates of items not available from the BIT files.
Stream T: BIT data only
16 Stream T comprises data for ATOMP businesses not selected in Stream D and which are below the Stream T cut-off. Data for businesses in Stream T are sourced from the BIT files. Directly collected survey data are used to prorate the Stream T BIT data, in order to produce estimates of items not available from the BIT files.
17 For businesses in Streams B and T, the more detailed information presented in this publication is derived by using a two phase estimation technique. Firstly, a set of key data items is sourced from the BIT files. Then these data items are 'prorated' to generate a set of detailed financial information for each business. The proration factors are sourced from businesses in the EAS in the appropriate industry.
18 The sampling and estimation methods used by the ABS take into account those selected businesses that are not able to be identified on the BIT files. The ABS is unable to match all of the selected ABSBR businesses to records on the BIT files, as:
- not all businesses have completed their business income tax return by the time the ABS receives the snapshot of the BIT file, and
- a proportion of businesses that are included on the ABSBR would not have traded for the reference year.
AUSTRALIAN INDUSTRY ESTIMATES
Income contribution by unit type
19 Estimates for each of the selected industries were produced by aggregating the contributing data streams. An indication of the importance of these populations to the data can be gained from their contribution to the estimate of total income for Total selected industries. The following table shows their proportional contributions to total income.
INDUSTRY CLASS EXPERIMENTAL ESTIMATES
20 All business units that contribute to the data carry an industry code at the ANZSIC industry class (four digit) level. The sample used for the ABS-collected component of these estimates, however, is designed mainly at the ANZSIC industry subdivision (two digit) level. Industry subdivision is also the level at which proration, and adjustments to take account of new and likely ceased businesses, are performed. Some loss of precision will therefore arise in apportionment of directly-collected data to individual industry groups and classes.
STATE AND TERRITORY EXPERIMENTAL ESTIMATES
21 The methodology for producing the state and territory experimental estimates separates businesses entities into two groups:
22 For businesses in Streams B and D, the EAS collection uses information collected by other ABS surveys that share similar concepts but ask a variety of state/territory based questions. Where the EAS collection finds data from one of these 'donor' surveys for a business, the state/territory proportions collected from the donor survey are used to allocate the business's data across the states/territories.
- those businesses identified as operating in only one state or territory ('single state' businesses) and
- those businesses identified as operating across more than one state and/or territory ('multi-state' businesses).
23 It is from these donor surveys that the majority of state/territory proportions are produced. In descending order of relevance, the ABS collections used to obtain state/territory proportions for sales and wages and salaries were the following:
Quarterly business indicator survey.
24 The EAS attempts to match businesses to these ABS donor collections. If matched to more than one collection, the most relevant collection as per the list above takes precedence. Sales-based proportions obtained for each multi-state business were used to allocate EAS total income, total expenses and OPBT data across the states/territories for that business. Similarly, wages and salaries proportions were used to apportion EAS wages and salaries data. Some bias may arise from obtaining state/territory dissections from various ABS collections with different reporting periods, definitions, coverage, business classifications, and scope. In some cases, employment has been used as a proxy for obtaining state/territory proportions. As well, ABS collections used to obtain state/territory proportions for multi-state businesses are not always consistent in the wording of the state/territory-based questions. These different treatments are necessary depending on the industries in scope of each collection. To understand these differences more clearly, please refer to the relevant publications' Explanatory Notes.
25 Owing to the nature of their activity, some businesses find it difficult to respond to state/territory-based questions. Examples include businesses in the Communication services industry and, to a lesser extent, the Transport and storage industry, where the activity of the business is not necessarily confined by state/territory boundaries. As much available state/territory information as possible has been utilised for each selected business; however, it is recognised that some identified single state/territory businesses may actually operate across more than one state/territory. In most cases, the effect on the estimates due to this factor is minimal.
26 The remaining businesses in Streams B and D are classified as single state, and are actively assigned to the state/territory in which they are based. Businesses in Stream T are assumed to operate in a single state/territory, and are treated accordingly. Although Stream T units comprise the majority of single state/territory units, they contribute only 20% of the estimate of total income of such units.
27 The ABSBR includes a 'States of operation' field to identify the states/territories in which each business operates. For businesses in Streams B and D for which no donor information is available, this field is used to apportion the data. Where a unit is classified as multi-state, the state/territory proportions are assigned based on an industry average.