APPENDIX ABS BUSINESS COUNTS
The ABS has been producing business counts for many years, either as direct counts of businesses, as by-product from survey processing, or as a combination of the two.
Over time, the scope and coverage of businesses included in these counts has changed significantly.
Counts included in this release are a relevant source for users interested in understanding the number of businesses actively producing or distributing goods or providing services in the Australian economy. Nevertheless, these counts are still subject to error, mainly due to difficulties in accurately identifying when businesses have ceased trading. While the ABS will retain the conceptual basis of these counts in future releases, continuing refinements will be made in an effort to reduce these errors. The Explanatory Notes discusses the errors in these counts and ABS plans to reduce these errors.
COUNTS FROM THE ABS BUSINESS REGISTER PRIOR TO 2002
The ABS has maintained an integrated business register (ABSBR) since the development phase of the first Integrated Economic Censuses conducted in respect of 1968-69.
From the amendment of the Income Tax Assessment Act in 1986 until 2002, this was primarily sourced from Group Employer (GE) registrations with the Australian Taxation Office (ATO). When a business commenced employing staff, a GE registration was required to enable the business to deduct income tax from its employees.
No comprehensive register of non-employing businesses was maintained by any government organisation and the ABS did not seek to create such a register.
As such, any business counts produced from the ABSBR prior to 2002 included employing businesses only.
A further short-coming in these counts was that proper recording of businesses which had commenced, ceased or continued operation did not occur consistently over time. For example, a units survey in 1991 identified a significant number of businesses which had previously been included on the ABSBR but had ceased operation. These businesses were subsequently removed from the ABSBR. In 1996, a survey of businesses which had been removed as a result of feedback from survey processing identified a significant number of businesses which were in fact still operating.
In both these cases and other in similar instances over time, ABS economic statistics were backcast to adjust for these effects over time.
COUNTS INCLUDED IN SMALL BUSINESS IN AUSTRALIA
The ABS first released Small Business in Australia (cat. no. 1321.0) in 1988. This compendium release included a range of statistics about small businesses.
Non-employing businesses (such as self-employed tradespeople) are a significant component of the small business sector. As such, it was important to include both counts and characteristics of these in Small Business in Australia.
These counts were derived from the monthly Labour Force Survey (LFS) and were progressively updated until the final issue of Small Business in Australia in 2001. To produce a comprehensive count of small businesses, the LFS-sourced counts of non-employers were added to counts of employing businesses sourced from the Survey of Employment and Earnings (which used the ABSBR as a frame). The counts of small businesses stood at approximately 1.2 million in 2001.
The counts of non-employing businesses were almost certainly significantly understated for two reasons:
- those counts did not fully capture businesses operated by people whose predominant labour force status was other than a small business operator; and
- those counts did not fully capture multiple businesses owned by one operator. It has not been possible to accurately quantify this understatement.
COUNTS RELEASED IN 2005
From 2002, the ABS changed the basis of the ABSBR from GE registrations to ABN registrations sourced from the Australian Business Register (ABR). From the introduction of the new tax system in July 2000, businesses required to remit GST, deduct income tax from employees or to participate in several other aspects of the tax system were required to register for an ABN on the Australian Business Register.
The ABS released experimental estimates of business entries and exits and the first counts from the ABR-based ABSBR in 2005.
The release of Australian Bureau of Statistics Business Register, Counts of Businesses (cat. no. 8161.0.55.001) in October 2005 showed 3.0 million businesses operating as at June 2004, 2.9 million of which were small businesses.
These counts significantly overstated the number of businesses actively producing or distributing goods or providing services in the Australian economy for two reasons:
- they included businesses which did not have a GST role and whose only tax role was to enable the payment of Income Tax Instalment Provisions. Subsequent investigations indicate that these entities tend to be investment vehicles rather than trading businesses; and
- they also included businesses with a GST role but which had not remitted GST obligations for at least five successive quarters. These businesses have been termed "long-term non-remitters" (LTNRs). Subsequent investigations indicate that the majority of these businesses were no longer active.
Both categories of businesses, which in combination (noting some overlap) contributed over 1 million to these previously-released counts, have been excluded from the counts in this release.
COUNTS PRODUCED FROM ABS BUSINESS SURVEYS
Since 1968, several ABS business surveys, using the ABSBR to provide a survey frame, produced counts of businesses as by-product from survey processing.
These counts were consistent with business counts sourced directly from the ABSBR except they were adjusted to account for businesses identified in survey processing as no longer operating. However, the scope of these counts aligned with the scope of the respective surveys.