Chapter 13 The income account
Types of income accounts and additional components to compile income accounts
Types of income accounts
13.1 The national income account shows how gross disposable income is used for final consumption expenditure and the consumption of fixed capital (depreciation), with the balance being the nation's net saving. On the sources of income side, it shows compensation of employees, gross operating surplus, gross mixed income (from unincorporated enterprises) and taxes less subsidies on production and imports. Net secondary income from non-residents is added to derive gross national disposable income.
13.2 Saving is carried forward into the capital account. Saving must be used to acquire financial or non-financial assets of one kind or another, including cash, the most liquid of financial assets, or to reduce liabilities. When saving is negative, the excess of consumption over disposable income must be financed by disposing of assets or incurring liabilities.
| Sources of income | Use of income | ||
|---|---|---|---|
| Compensation of employees | Final consumption expenditure | ||
| Gross operating surplus | General government final consumption expenditure | ||
| Gross mixed income | Households final consumption expenditure | ||
| Taxes less subsidies on production and imports | Consumption of fixed capital | ||
| Net primary income from non-residents | Net savings | ||
| Gross national income | Non-financial corporations | ||
| Net secondary income from non-residents | Financial corporations | ||
| Current taxes on income, wealth, etc. | General government corporations | ||
| Other secondary income | Households | ||
| Gross disposable income | Gross disposable Income | ||
13.3 The sectoral income accounts are disaggregations of the national income account, and record for each institutional sector its net income arising both from production and from transfers from other sectors, and its uses of income (disbursements). The difference between income and use of income is net saving (the balancing item). Income accounts are also compiled for selected subsectors. As consumption of fixed capital is not calculated for some subsectors, the balancing item in their subsector accounts is equal to net saving plus consumption of fixed capital (i.e. gross saving). This applies to public and private non-financial corporations subsectors.
13.4 The income accounts for corporations (both financial and non-financial), show income arising from gross operating surplus from the Income from GDP account and property income (such as interest, dividends, reinvested earnings on direct foreign investment and investment funds, property income attributed to insurance policyholders, and rent on natural assets) from other sectors. Total income is used to make various payments (such as interest, dividends, reinvested earnings on direct foreign investment and investment funds, property income attributed to insurance policyholders, and rent on natural assets) to other sectors. The balance is the saving of the respective sectors and is transferred to their capital accounts.
13.5 The following tables are representations of the non-financial and financial corporations income accounts as presented in the ASNA. The subsectoral accounts for private and public non-financial corporations are consistent with the non-financial corporations account.
| Sources of income | Use of income | ||||
|---|---|---|---|---|---|
| Primary income receivable | Primary income payable | ||||
| Gross operating surplus | Property income payable | ||||
| Property income receivable | Interest | ||||
| Interest | Dividends | ||||
| Dividends | Reinvested Earnings | ||||
| Reinvested Earnings | Rent on natural assets | ||||
| Property income attributed to insurance policy holders | |||||
| Rent on natural assets | |||||
| Secondary income receivable | Secondary income payable | ||||
| Non-life insurance claims | Current taxes on income, wealth, etc. | ||||
| Other current transfers | Income taxes | ||||
| Other current taxes on income, wealth, etc. | |||||
| Net non-life insurance premiums | |||||
| Current transfers to non-profit institutions | |||||
| Other current transfers | |||||
| Gross disposable income | |||||
| Consumption of fixed capital | |||||
| Net saving | |||||
| Total gross income | Total use of gross income | ||||
| Sources of income | Use of income | ||||
|---|---|---|---|---|---|
| Primary income receivable | Primary income payable | ||||
| Gross operating surplus | Property income payable | ||||
| Property income receivable | Interest | ||||
| Interest | Dividends | ||||
| Dividends | Reinvested earnings | ||||
| Reinvested earnings | Property income attributable to insurance policy holders | ||||
| Rent on natural assets | Rent on natural assets | ||||
| Secondary income receivable | Secondary income payable | ||||
| Net non-life insurance premiums | Current taxes on income, wealth, etc. | ||||
| Other current transfers | Income taxes | ||||
| Other current taxes on income, wealth, etc. | |||||
| Net non-life insurance claims | |||||
| Other current transfers | |||||
| Gross disposable income | |||||
| Consumption of fixed capital | |||||
| Net saving | |||||
| Total gross income | Total use of gross income | ||||
13.6 The income account of the household sector shows compensation of employees, gross mixed income (on account of unincorporated enterprises) and gross operating surplus on dwellings owned by persons, which are all from the Income from GDP account, as well as property income (interest, dividends, reinvested earnings on investment funds, property income attributed to insurance policyholders and rent on natural assets) from other sectors, social benefits receivable (social insurance benefits – workers' compensation claims and social assistance benefits) and various other forms of secondary income (such as non-life insurance claims, current transfers to NPIs and other current transfers). Use of income shows final consumption expenditure, consumer debt interest and dwellings and other property income payable, income taxes and other current taxes payable, other current transfers, consumption of fixed capital (on account of unincorporated enterprises and dwellings owned by persons) and net saving (the balancing item).
13.7 The following table is a representation of the household income account as presented in the ASNA.
| Sources of income | Use of income | ||||
|---|---|---|---|---|---|
| Primary income receivable | Primary income payable | ||||
| Gross operating surplus - dwellings owned by persons | Property income payable | ||||
| Gross mixed income | Interest - Dwellings | ||||
| Compensation of employees | Interest - Consumer debt | ||||
| Property income receivable | Interest - Unincorporated enterprises | ||||
| Interest | Rent on natural assets | ||||
| Imputed interest | |||||
| Dividends | |||||
| Reinvested earnings | |||||
| Rent on natural assets | |||||
| Secondary income receivable | Secondary income payable | ||||
| Social benefits receivable | Income tax payable | ||||
| Workers' compensation | Other current taxes on income, wealth, etc. | ||||
| Social assistance benefits | Social contributions for workers' compensation | ||||
| Non-life insurance claims | Net non-life insurance premiums | ||||
| Current transfers to non-profit institutions | Other current transfers | ||||
| Other current transfers | Non-residents | ||||
| Non-residents | Other sectors | ||||
| Other sectors | |||||
| Gross disposable income | |||||
| Final consumption expenditure | |||||
| Consumption of fixed capital | |||||
| Net saving | |||||
| Total gross income | Total use of gross income | ||||
13.8 The general government income account shows receipts from income taxes, other taxes on income, wealth, etc., taxes on production and imports, property income (interest, dividends and rent on natural assets) and gross operating surplus (which is equal to consumption of fixed capital for the general government sector). The use of income side shows final consumption expenditure, property income payable to other sectors, subsidies, social assistance benefits and other current transfers to non-residents and other sectors, consumption of fixed capital and net saving (the balancing item).
13.9 The following table is a representation of the general government income account as presented in the ASNA. The subsectoral accounts for the National and State and Local government accounts are consistent with the general government income account.
| Sources of income | Use of income | ||||
|---|---|---|---|---|---|
| Primary income receivable | Primary income payable | ||||
| Gross operating surplus | Property income payable | ||||
| Taxes on production and imports | Interest - On unfunded superannuation liabilities | ||||
| Property income receivable | Interest - Other interest | ||||
| Interest | Subsidies | ||||
| Dividends - Public non-financial corporations | |||||
| Dividends - Public financial corporations | |||||
| Dividends - Other | |||||
| Rent on natural assets | |||||
| Secondary income receivable | Secondary income payable | ||||
| Current taxes on income, wealth,etc | Social assistance benefits in cash to residents | ||||
| Other current transfers | Other current transfers | ||||
| Non-residents | |||||
| Other sectors | |||||
| Gross disposable Income | |||||
| Final consumption expenditure | |||||
| Consumption of fixed capital | |||||
| Net saving | |||||
| Total gross income | Total use of gross income | ||||
13.10 In the core income accounts, social transfers in kind are technically part of government final consumption expenditure because they are produced and purchased by government. However, income redistribution also includes social transfers in kind, that is, social benefits in kind transferred from the government to households. For analytical purposes, it is useful to show the value of these transfers as part of household, rather than government, final consumption expenditure to form a broader aggregate called actual individual consumption. These are represented in the adjusted disposable income accounts as secondary income transfers from the government sector to the household sector with corresponding adjustments to the final consumption expenditures of the two sectors.
13.11 The following tables outline both the general government adjusted disposable income account and the household adjusted disposable income account as presented in the ASNA.
| Sources of income | Use of income | |
|---|---|---|
| Gross disposable income | ||
| Outlays in kind | Actual collective consumption | |
| Social assistance benefits in kind | Consumption of fixed capital | |
| Transfers of individual non-market goods and services | Net saving | |
| Adjusted disposable income | Total saving and use of adjusted disposable income | |
| Sources of income | Use of income | |
|---|---|---|
| Gross disposable income | ||
| Social transfers in kind | Actual individual consumption | |
| Social assistance benefits in kind | Consumption of fixed capital | |
| Transfers of individual non-market goods and services from general government | Net saving | |
| Adjusted disposable income | Total saving and use of adjusted disposable income | |
Additional components to compile income accounts
13.12 Income flows are divided into primary income and secondary income. Primary incomes are incomes that accrue to institutional units as a consequence of their involvement in processes of production or ownership of assets that may be needed for purposes of production. Therefore, primary income consists of the components used to derive production, namely compensation of employees, gross operating surplus, gross mixed income and taxes less subsidies on production and imports, as well as property income which accrues by lending or renting financial or natural resources, including land, to other units for use in production.
13.13 Secondary incomes are incomes that are redistributed between institutional units by means of payments and receipts of current transfers. A current transfer is a transaction in which one institutional unit provides a good or service to another unit without receiving from the latter any good or service directly in return as counterpart and does not oblige one or both parties to acquire, or dispose of, an asset.
13.14 In the adjusted disposable income accounts of the general government sector and the household sector, social transfers in kind are shown as part of household rather than government final consumption expenditure to represent actual individual consumption for analytical purposes.
13.15 Therefore, the additional components required to compile the income account are:
- property income;
- current taxes on income, wealth, etc.
- social contributions and social benefits;
- net non-life insurance premiums and non-life insurance claims;
- miscellaneous current transfers; and
- social transfers in kind.
Property income
Introduction
13.16 Property incomes are received by the owners of financial assets and non-produced non-financial assets such as land and mineral and energy resources. Property income accrues when an assets' owner puts the asset at the disposal of other institutional units. Units with surplus funds lend or provide equity finance to other units and derive property income in the form of interest, dividends, etc. Owners of land and mineral and energy resources arrange leases or other contracts with other units who pay rent to the owners. Regular payments made by lessees of mineral and energy resources are sometimes known as royalties but are treated as rents in the national accounts. A distinction is made between rent, which is a form of property income derived from non-produced assets, and rentals payable under operating leases relating to produced assets, including dwellings and other buildings. Under operating leases, rentals are treated as output of the lessor and purchase of a service by the lessee.
13.17 Property income is recorded net of intra-sector receipts and payments (i.e. property income flows within an institutional sector are not recorded because they cancel out on consolidation). While the household sector may be disaggregated into its business (unincorporated trading enterprises) and non-business subsectors, property income flows between these subsectors are considered intra-sector and are netted out. In relation to property income payments by the household sector, a distinction is drawn between consumer debt interest paid by households and interest on loans for business purposes paid by their unincorporated trading enterprises.
13.18 In the ASNA, property income is presented for the following categories: interest, property income attributed to insurance policyholders, dividends, rent on natural assets and reinvested earnings on direct foreign investment and investment funds.
Interest
13.19 Interest is receivable by the owners of financial assets such as deposits, loans, and securities other than shares. Interest is the amount that the debtor becomes liable to pay the creditor over a given period of time without reducing the amount of the principal outstanding. However, interest that accrues and is not paid may be added to the principal amount. In the system, the addition of outstanding interest to the principal constitutes a separate financing transaction. Under the accrual basis of recording used in the system, interest which, under the terms of the contract, does not have to be paid until the asset matures, nevertheless must be attributed to the accounting periods over which it accrues. Under a financial lease the lessor is treated as making a loan to the lessee. Interest on such loans is a component of the lease payments, which have to be broken down between interest and repayment of principal.
13.20 Banks and similar financial intermediaries largely finance their operations by charging higher interest rates on their loans than they pay out on deposits. In effect, the interest paid by borrowers, referred to in the 2008 SNA as 'bank interest', can be regarded as comprising two components, a service charge and a 'pure' interest flow. Likewise, the 'bank interest' paid to depositors can be viewed as a 'pure' interest flow from which a service charge has been deducted. The 2008 SNA refers to the pure interest as 'SNA interest’. As these service charges cannot be measured directly, the imputed charges are accordingly referred to as financial intermediation services indirectly measured (FISIM).
13.21 FISIM for a particular category of financial intermediaries is the sum of the imputed service charges for both borrowers and depositors. The service charge on borrowers is calculated as the level of loans outstanding multiplied by the difference between the average interest rate received on loans and a 'pure' interest rate. Similarly, the service charge on depositors is calculated as the level of deposits multiplied by the difference between the 'pure' interest rate and the average interest rate paid on deposits. The reference rate should contain no service element and reflect the risk and maturity structure of deposits and loans and could be determined as being equal to a particular market rate of interest. The ASNA uses the mid-point between the average interest rate on loans and the average interest rate on deposits (for practical reasons) as the reference rate of interest, and the long-term bond rate for institutions that are not deposit taking institutions.
13.22 FISIM output is estimated for the following financial intermediaries: banks, other depository corporations, central borrowing authorities and securitisers. The interest flows recorded in the sectoral income accounts are after adjusting the actual interest flows by FISIM relating to both borrowers and depositors. Consequently, interest paid by banks (and similar financial intermediaries) and received by depositors is increased by the amount of FISIM payable by depositors, while interest received by banks (and similar financial intermediaries) and paid by borrowers is reduced by the amount of FISIM payable by borrowers in each institutional sector (e.g. households, general government, non-financial corporations).
13.23 There are two schools of thought on the measurement of income flows on tradeable securities during times of changing interest rates. The debtor approach records the interest accruing at the contractual rate agreed at the time of issue of the security. The creditor approach records the interest accruing at the current market interest rate. Proponents of the debtor approach argue that it records the legal liability of the debtor to the creditor. Proponents of the creditor approach argue that it is consistent with the market valuation principle. The 2008 SNA recommends the debtor approach be applied for recording interest accruing on debt securities. However, the ABS believes that this approach leads to complications as interest rates may change after the date of issue of variable interest rate instruments. Therefore, the ASNA applies the creditor approach as the best reflection of the market reality in terms of valuing the underlying instrument and the interest that accrues over the life of the instrument.
Property income attributed to insurance policyholders
13.24 Property income flows also include imputed flows relating to life insurance, pension funds and non-life insurance operations. Three distinct categories of such flows are included in the sectoral income accounts:
13.25 Imputed interest from life insurance and pension funds to households is recorded as the current income earned by statutory funds on behalf of policyholders. This income mainly comprises interest (adjusted for FISIM) and dividend income earned by the funds, but it also includes net rental income earned on real property such as office buildings which are owned by the statutory funds (separately constituted long-service leave boards are also included with these funds). In effect, the net increase in policyholders' equity in the funds (excluding capital gains and losses) is regarded as being transferred from the funds to households and is also recorded as an imputed flow in the sectoral financial accounts from households back to the funds (recorded as Net equity of households in reserves under the category Insurance technical reserves).
13.26 Premium supplements are recorded as an imputed property income flow from non-life insurance corporations to policyholders. Premium supplements represent income earned on the technical reserves of non-life insurance corporations, which consist of unearned premiums (most premiums are paid for a full year in advance) and unpaid claims (which arise because of delays in finalising the payment of claims). Premium supplements do not include any income from the investment of insurance corporations' own funds. The interest component of the investment income is net of FISIM.
13.27 Imputed interest from the general government sector to households is recorded on account of the unfunded superannuation schemes operated by the general government sector.
13.28 In Australia, most governments operate, or used to operate, superannuation schemes that are unfunded or only partly funded for their employees. Some general government schemes have one component funded through direct employee contributions, and another (the employer's contributions) which is unfunded. Other general government schemes comprise only an unfunded employer component.
13.29 In the ASNA, the increase in the liabilities of a public sector employer due to the current services provided by employees covered by unfunded superannuation schemes must be imputed. Public sector accounting standards specify how such imputations should be calculated.
13.30 The value of these imputed contributions is estimated as the amount which the employer would be required to pay into a separate superannuation fund if the scheme were to be operated as a fully funded scheme. The general government employer does not transfer the imputed contributions into a separate superannuation fund, but instead effectively borrows this amount and should therefore pay property income on the outstanding liability of the unfunded scheme. Consequently, a further imputation is included in the income accounts of general government and households for imputed interest on the accruing liability to pay unfunded superannuation.
13.31 For the purposes of deriving the imputed flows on account of general government unfunded superannuation, a notional superannuation 'fund' is created which is treated as a financial asset of the household sector and a liability of the general government sector. Consistent with the operation of funded schemes, imputations are derived for both the employers' contributions to the notional fund and property income on the notional use of the assets of the fund in each period by general government. Only the imputed employers' contributions are included in compensation of employees, government final consumption expenditure and GDP. Both components, however, impact on household and general government saving. This approach ensures that government final consumption expenditure and GDP are not affected by whether general government superannuation schemes are funded or unfunded. The outstanding liability in relation to unfunded superannuation schemes is recorded as a liability in the general government balance sheet and as an asset in the household balance sheet.
Dividends
13.32 Corporations raise equity capital through the issue of shares, and shareholders become entitled to dividends as a form of property income for having placed funds at the disposal of the corporations. Dividends include all distributions of profits by corporations, whether or not the distributions are called dividends. Issues of bonus shares in lieu of dividends are not included. In the ASNA, dividends are not recorded on a strict accrual basis, with the time of recording dividends being the point at which the share price starts to be quoted on an ex-dividend basis (rather than at a price that includes the dividend). Super dividends occur when the dividends are disproportionally large relative to the recent level of dividends and earnings. They are treated as a financial transaction, specifically the withdrawal of owners' equity from the corporation.
13.33 Dividends payable to general government by public corporations (or quasi-corporations) record that part of the income of public corporations which is paid to general government, whether described by the corporations (or quasi-corporations) as dividends or transfers of profits. Income tax and other forms of taxation are excluded.
13.34 The sectors and subsectors total dividend payable and receivable estimates are used to derive a dividend matrix of the flows of dividends between the various sectors and subsectors of the economy, including the external sector. Rest of the world, general government and public non-financial corporation dividend flows are allocated to their counterparty sector based on annual ratios. The quarterly sectoral estimates are then aggregated up to determine total dividends received and paid by each of the domestic sectors.
13.35 Dividends paid by financial corporations and private non-financial corporations are benchmarked to the annual estimate using data from APRA and ASX100 financial reports. Dividends paid by private non-financial corporations and financial corporations, and dividends received by private non-financial corporations, households and financial corporations are then calculated as the sum of their lower level counterparty information. This matrix represents a balanced system so that total payments equal total receipts and therefore there is no quarterly imbalance.
Withdrawals from income of quasi-corporations
13.36 Quasi-corporations are unincorporated enterprises that behave as if they were corporations. Quasi-corporations cannot distribute profits by way of dividends because they are not corporations. Nevertheless, the owner of a quasi-corporation may choose to withdraw some or all of the entrepreneurial income of the quasi-corporation. Such withdrawals are the conceptual equivalent of dividends and are distinguished in order to separate the income of the quasi-corporation from the income of the owner.
13.37 Because quasi-corporations must, by definition, keep a full set of accounts, withdrawals of income should be explicitly identified in the accounts. Such withdrawals must be distinguished from withdrawals of funds realised as a result of the disposal of assets, which constitute capital disposal by the quasi-corporation and withdrawal of equity (a financing transaction) by the owner. Withdrawals financed by liquidating large amounts of accumulated retained earnings are treated in the same manner. Conversely, funds provided by the owner so that the quasi-corporation can acquire assets or reduce liabilities are treated as equity injections – there is no concept of negative withdrawals of income.
Reinvested earnings
13.38 Reinvested earnings relate to that component of income that is not distributed to equity and or unit holders in direct foreign investment enterprises, and resident and non-resident investment funds in the form of dividends. In effect, retained earnings are treated as if they are distributed and remitted to investors in proportion to their ownership of the equity in the enterprise or fund and then reinvested by them. They are imputed transactions, with offsetting entries being recorded in property income flows in the income account and the 'shares and other equity' items in the financial account.
Reinvested earnings on direct foreign investment
13.39 A foreign direct investment enterprise is either a branch (including unincorporated joint ventures) of a non-resident enterprise or an enterprise, either corporate or unincorporated, in which at least one foreign investor owns sufficient shares to have an effective voice in the decision making processes of the enterprise. In these cases, an amount of the enterprise's retained earnings, proportional to the ownership of the foreign direct investor, is imputed as a remittance of property income to the foreign direct investor, even though the remittance does not take place in practice. An equal amount (with opposite sign) is shown as reinvestment of retained earnings, a financing transaction. This treatment is adopted because it is considered that direct investors, through their significant influence on the operations of the direct investment enterprise, are able to determine the level of distributed income and therefore the reinvested earnings of the direct investment enterprise.
13.40 Reinvested earnings on direct foreign investment are measured on the basis of the direct investors' equity share in the gross operating surplus, transfer income and other current income of the direct investment enterprise. Gross operating surplus represents income from the normal operations of the enterprise and does not include holding gains or losses. Earnings of direct investment enterprises are measured after deducting a provision for corporate taxes and consumption of fixed capital.
Reinvested earnings on resident and non-resident investment funds
13.41 Investment income attributed to holders of shares or units in investment funds is shown as two separate items. The first of these is the dividends distributed to investment fund shareholders. The second is retained earnings attributed to investment fund shareholders. These earnings are attributed to the investors as an imputed dividend payment and an imputed purchase of additional equity (reinvestment). This treatment adds to the fund's equity and its liabilities to the unit holders and leaves the investment fund with no saving and increases the saving of the investor. This treatment is adopted for investment funds on the grounds that investors are able to withdraw and reinvest their equity in the investment funds.
Rent on natural assets
13.42 Rent is the income receivable by the owner of a natural resource (the lessor or landlord) for putting the natural resource at the disposal of another institutional unit (a lessee or tenant) for use of the natural resource in production. The resource rent is applicable for rents on land, native standing timber and mineral and energy resources. Note there is a distinction between rent and the rentals receivable and payable under an operational lease. The latter are treated as sales or purchases of services whereas the former is property income.
13.43 Rent on land is recorded as accruing continuously to the landowner throughout the period of the contract between the landowner and tenant and is equal to the value of the accumulated rent payable over that period of time. The owners of mineral and energy resources, whether private or government units, grant leases to other institutional units permitting them to extract deposits over a specified period of time in return for the payment of rent. These payments are commonly referred to as royalties.
Sources and methods - Annual
13.44 Property income estimates are derived by constructing matrices of the flows of property income between the various sectors and subsectors of the economy, including the external sector. The matrices represent a balanced system so that total payments of property income equal total receipts of property income. The interest and dividends matrices are by far the largest and include each of the broad types of financial institutions as well as the non-financial sectors of the economy. The matrices relating to land rent and rent on other natural assets are compiled at the institutional sector level only.
13.45 The tables below outline the data sources and methods used in the estimation of annual property income by type of property income in current prices.
| Item | Comment |
|---|---|
| Interest and dividends | |
| Balance sheet, income and expenditure and interest rate information are used to compile interest and dividend flows by financial instruments (deposits, bills of exchange, one-name paper, bonds, loans and equities) and the counterparty sectoral and subsectoral flows for the following 15 sectors and subsectors: rest of the world; the central bank; banks; other depository corporations; central borrowing authorities; non-life insurance corporations; national general government; state and local general government; national public non-financial corporations; state and local public non-financial corporations; life insurance corporations; pension fund; financial intermediaries not elsewhere classified; private non-financial corporations; and households. The following outlines the data sources used to estimate the various components of interest and dividends: Balance sheets:
Income and expenditure:
Interest rates and dividend yields
Three data sources are required to compile the flows:
The sectors' and subsectors' total interest and dividend payable and receivable estimates are used to derive interest and dividend matrices of the flows of interest and dividends between the various sectors and subsectors. The matrices represent a balanced system so that total payments of interest and dividends equal total receipts of interest and dividends.
Wherever possible, actual interest or dividends flows are used to construct the interest and dividend matrix. Indirect estimation methods are used to complete the full matrix because there is insufficient data on flows by instrument and counterparty. For example, average interest rates (or dividend yields) are applied to sectoral balance sheet information to derive the detailed estimates of flows by instrument and counterparty. These estimates are either used as a direct estimate of a flow or are used as a basis for splitting the total flows to the detail required. Total flows are either estimated directly from source data or are derived by aggregation. The interest flows relating to loans and deposits are adjusted to allow for FISIM. Interest flows from borrowers to financial intermediaries are reduced by FISIM, while interest flows from financial intermediaries to depositors are increased by FISIM. Adjustments are also made to put interest on debt securities onto an accrual basis for all sectors, except the external sector. This is achieved by replacing estimates of nominal interest flows for debt securities for a particular sector by an accrual estimate obtained by applying the current market rate of interest for debt securities to the average balance sheet level of debt securities for that sector. Accrued interest on debt securities for transactions with the external sector are sourced directly from the Balance of Payments and, consequently, do not require any adjustment before they are included in the interest matrix. |
| Item | Comment | |
|---|---|---|
| Life insurance and pension funds | ||
| Imputed property income attributable to life insurance and pension fund policyholders is calculated as: Gross operating surplus | |
| Gross operating surplus | ||
| From the annual benchmarks and latest year estimates for GOS for life insurance corporations and pension funds. The GOS estimate includes rental income earned on real property such as office buildings which are owned by the life insurance statutory funds and pension funds. | |
| Interest and dividends receivable and payable | ||
| Estimates are derived from the interest and dividends matrices. Estimates for interest are adjusted for FISIM. FISIM is added to the total interest received (from deposits) and deducted from interest paid (on loans). Pension funds do not pay dividends. | ||
| Taxes payable | ||
| Estimates for taxes payable are sourced from Government Finance Statistics. | ||
| Consumption of fixed capital | ||
| Estimates for consumption of fixed capital are obtained from the Perpetual Inventory Method (PIM). | ||
| Income to shareholders | ||
| The proportion of shareholders' funds to total assets (from the Life Insurance balance sheet from the ABS publication, Australian National Accounts: Finance and Wealth is applied to total income to derive an estimate of shareholders' income. Pension funds do not have shareholders. | ||
| Non-life insurance corporations | ||
| Imputed property income attributable to non-life insurance and pension fund policyholders is equal to:
Premium supplements are calculated as the proportion of policyholders funds to total assets of non-life insurance corporations (from the APRA's Quarterly General Insurance Performance Statistics and General Insurance Supplementary Statistical Tables) which is applied to total income to derive premium supplements. Total non-life insurance investment income is derived from the interest and dividend matrices (the interest share of investment income is net of FISIM). | |
| Unfunded superannuation fund | ||
| Data up to 1997-98 for imputed employer contributions and imputed property income flows are modelled based on estimates of unfunded employee entitlements from the ABS publication, Government Financial Estimates, Australia, and implicit employer contribution rates provided by the Australian Government Actuary (AGA). Both of these sources provide data which are derived from actuarial calculations. The model is applied to annual data. Quarterly estimates for the imputed employer contributions and imputed property income flows are derived using appropriate indicators. With the introduction of accrual accounting in the Commonwealth and State general government sectors direct estimates of both the imputed employer contributions to unfunded superannuation and the imputed interest on the outstanding liability are now being compiled by the Commonwealth, State and Territory Treasuries. From 1998–99, these direct estimates are generally used, although some adjustments are required to the estimates for some States to ensure that the estimates for all jurisdictions are on as comparable a basis as possible. | |
Item | Comment |
|---|---|
| Reinvested earnings on direct foreign investment and non-resident investment funds | |
| Estimates for reinvested earnings for foreign direct investment and non-resident investment funds are sourced from the quarterly Survey of International Investment. The survey provides data on reinvested earnings on direct foreign investment, both payable to non-residents and receivable from non-residents. For investment funds, direct data and some modelled estimates are used to estimate amounts payable to non-residents and receivable from non-residents. |
| Reinvested earnings resident investment funds | |
| Balance sheet and income and expenditure data are used to compile reinvested earnings for the following resident investment funds, non-financial investment funds (Infrastructure funds, listed and unlisted property trusts), money market financial investment funds (cash common funds and cash management trusts) and non-money market financial investment funds (unlisted mortgage trusts, listed invested companies, wholesale trusts, non-cash common funds and other trusts). Reinvested earnings of these funds are allocated to financial corporations, private non-financial corporations and household sectors. The following outlines the data sources used to estimate the various components of reinvested earnings: Balance sheets:
Income and expenditure:
Reported income and expense data from surveys and annual reports are used to derive reinvested earnings for the domestic investment funds as: Total Income The reinvested earnings of the domestic investments funds are allocated to domestic reinvested earnings receivable using quarterly sectoral asset holders of the equity issued by the investment funds from the ABS publication, Australian National Accounts: Finance and Wealth. The compilation process for reinvested earnings described above produces quarterly estimates, and the sum of the four quarters is used as the annual estimate. |
Item | Comment |
|---|---|
| Rent on natural resources | |
| Rent on natural assets is mainly paid by corporations and unincorporated enterprises, and received by general government, public corporations and persons. Major data sources used are the government administrative records used to compile Government Finance Statistics and are used directly where data is available. Some modelled estimates are used to estimate rent on natural assets received by households. Total rent on natural assets is compiled as the sum of rent on land and royalties on natural assets for each sector. Rent on land paid by households is derived as a residual using the following calculation: Rent on land received by general government Royalties on natural assets paid by private non-financial corporations is derived as a residual using the following calculation: Royalties on natural assets paid by non-financial corporations |
Sources and methods - Quarterly
13.46 On a quarterly basis, property income estimates are compiled for each sector, including private and public non-financial corporations. The external account is compiled using Balance of Payments statistics.
13.47 The tables below outline the data sources and methods used in the estimation of quarterly property income by sector by type of property income in current prices.
| Item | Comment | |
|---|---|---|
| Public sector | ||
Quarterly indicators for public sector interest series are sourced from Government Finance Statistics. Data are derived from administrative sources such as the Commonwealth Department of Finance, State government financial statements, and quarterly surveys of local government authorities and public non-financial corporations. Public financial corporations are surveyed on an annual basis only. These quarterly estimates are used as indicators to produce interest series for general government and public non-financial corporations by applying a benchmarking process to the corresponding annual series. | ||
| Private sector | ||
| Quarterly indicators for private sector interest series are based on quarterly banks, other depository corporations and securitisers data and banks' FISIM. Banks are the biggest contributor to interest flows and FISIM out of all the financial intermediaries in Australia. Using indicators based on bank data is considered to produce a good representative estimate for quarterly household interest. Quarterly balance sheets, income and expenditure and interest rate information are used to compile interest flows for banks, other depository corporations and securitisers by financial instruments (deposits, bills of exchange, one-name paper, bonds and loans) and by all counterparty sectoral and subsectoral flows. The estimates are compiled using bank balance sheets (Australian National Accounts: Finance and Wealth and monthly RBA Statistical Bulletin); detailed loans and deposits data (APRA forms from the monthly bank Statement of Financial Position); income and expenditure (suite of APRA forms from the quarterly Statement of Financial Performance – banks and APRA publications, Quarterly Banks, Building Societies and Credit Unions Performance Statistics) and indicator interest rates (monthly RBA Statistical Bulletin). | |
| Households | ||
| Household interest receivable is calculated as: | |
Bank interest payable on deposits to persons, unincorporated enterprises and NPISHs | ||
Household interest payable on dwellings is calculated as: | ||
Bank interest receivable from housing | ||
Household interest payable on consumer debt is calculated as: | ||
Bank interest receivable from personal loans (consumer credit) | ||
Unincorporated enterprises interest payable is calculated as: | ||
| Bank interest receivable on unincorporated enterprises loans plus other depository corporations interest receivable on unincorporated enterprises loans equals interest payable by unincorporated enterprises indicator equals interest payable by unincorporated enterprises before adjusting for FISIM (the interest payable by unincorporated enterprises indicator series is used to derive the quarterly interest payable by unincorporated enterprises before adjusting for FISIM series by applying a benchmarking process to the annual interest payable by unincorporated enterprises series) minus FISIM for intermediate use for unincorporated enterprises (the bank FISIM for intermediate use for unincorporated enterprises indicator series is used to derive the quarterly series by applying a benchmarking process to the annual series for intermediate use unincorporated enterprises FISIM on loans). | ||
| Private non-financial corporations | ||
Private non-financial corporations interest receivable is calculated as: | ||
Bank interest receivable on private non-financial corporations loans and placements | ||
Private non-financial corporations interest payable is calculated as: | ||
| Bank interest receivable on private non-financial corporations loans and placements minus FISIM for intermediate use for private non-financial corporations plus Bank interest receivable on private non-financial corporations bills of exchange plus interest receivable by Rest of the world (sourced directly from Balance of Payments statistics) equals interest payable by private non-financial corporations indicator (the interest payable by private non-financial corporations indicator series is used to derive the quarterly interest payable by private non-financial corporations series by applying a benchmarking process to the annual interest payable by private non-financial corporations series). | ||
| Financial corporations | ||
Financial corporations interest receivable is calculated as: | ||
Bank interest receivable on resident loans and placements | ||
Financial corporations interest payable is calculated as: | ||
| Bank interest payable on resident currency and deposits minus FISIM for intermediate use for financial corporations equals interest payable by financial corporations indicator (the interest payable by financial corporations indicator series is used to derive the quarterly interest payable by financial corporations series by applying a benchmarking process to the annual interest payable by financial corporations series). | ||
| Rest of the world | ||
Quarterly estimates of rest of the world interest series are sourced directly from Balance of Payments Statistics. There exists a small quarterly imbalance between the rest of the world and the domestic sectors interest flows as they are derived with a number of different data sources. This imbalance is balanced off in financial corporations interest receivable as it is the largest interest series, and where the imbalance has the smallest impact. | ||
| Item | Comment |
|---|---|
| Public sector | |
| Quarterly dividends series are calculated using a matrix-based approach. There is no quarterly imbalance as quarterly dividends are calculated on a "from-whom-to-whom" basis, and then aggregated to determine total dividends received and paid for each sector. Quarterly indicators for public sector dividends received and paid series are sourced from Government Finance Statistics. Data are derived from administrative sources such as the Commonwealth Department of Finance, State government financial statements, and quarterly surveys of local government authorities and public non-financial corporations. Public financial corporations are surveyed on an annual basis only. These quarterly estimates are used as indicators to produce dividend series for general government and public corporations (financial and non-financial) by applying a benchmarking process to the corresponding annual series. They are allocated to their private sector received counterparties based on annual proportions. |
| Private sector | |
| Quarterly estimates for private sector dividends paid series are based on dividends paid by banks and private non-financial corporations. Quarterly indicators of dividends paid by banks are sourced from the APRA Quarterly Bank Statement of Financial Performance. Quarterly indicators of dividends paid by private non-financial corporations are sourced from the ASX Top 100 financial reports. These quarterly estimates are used as indicators to produce dividends paid series for financial corporations and private non-financial corporations by applying a benchmarking process to the corresponding annual series. They are allocated to their private sector received counterparties based on annual proportions. | |
| Rest of the world | |
| Quarterly estimates of Rest of the world dividend received and paid series are sourced directly from Balance of Payments Statistics. They are allocated to their domestic sector counterparties based on annual proportions. | |
| Item | Comment |
|---|---|
| Property income attributed to insurance policyholders | |
Quarterly estimates of property income attributed to insurance policyholders for life insurance corporations, pension funds and non-life insurance corporations are compiled by applying a linear trend formula to the annual estimates. Quarterly estimates of rest of the world property income attributed to insurance policy holders series are sourced directly from Balance of Payments statistics. There exists a small quarterly imbalance between the rest of the world and the domestic sectors property income attributed to insurance policyholders flows as they are derived separately. This imbalance is balanced off in financial corporations property income attributed to insurance policyholders payable as it is the largest property income attributed to insurance policyholders series, and where the imbalance has the smallest impact. | |
| Property income attributed to insurance policyholders – imputed interest on unfunded superannuation | |
Quarterly indicators for imputed interest on unfunded superannuation series are sourced from Government Finance Statistics. Data are derived from administrative sources such as the Commonwealth Department of Finance, State government financial statements, and quarterly surveys of local government authorities. These quarterly estimates are used as indicators to produce imputed interest on unfunded superannuation series for general government and households by applying a benchmarking process to the corresponding annual series. There is no quarterly imbalance as quarterly imputed interest on unfunded superannuation is calculated on a "from-whom-to-whom" basis. The two series above are then summed to produce the quarterly series for property income attributed to insurance policyholders. | |
| Item | Comment |
|---|---|
| Reinvested earnings in direct foreign investment and non-resident investment funds | |
| Estimates for reinvested earnings for foreign direct investment and non-resident investment funds are sourced from the quarterly Survey of International Investment. The survey provides data on reinvested earnings on direct foreign investment, both payable to non-residents and receivable from non-residents. For investment funds, direct data and some modelled estimates are used to estimate amounts payable to non-residents and receivable from non-residents. |
| Reinvested earnings in resident investment funds | |
Balance sheet data from Australian National Accounts: Finance and Wealth and income and expenditure data from the quarterly Survey of Financial Information, ASX market capitalisation data, superannuation actuarial and annual reports are used to compile reinvested earnings for the following resident investment funds:
Reported income and expense data are used to derive reinvested earnings for the domestic investment funds as: Total income The reinvested earnings of the domestic investment funds are then allocated to financial corporations, private non-financial corporations and household reinvested earnings receivable using quarterly sectoral asset holders of the equity issued by the investment funds from the ABS publication, Australian National Accounts: Finance and Wealth. There is no quarterly imbalance as quarterly reinvested earnings is calculated on a "from-whom-to-whom" basis. | |
| Item | Comment |
|---|---|
| Rent on natural assets | |
| Quarterly indicators for public sector rent on natural assets series are sourced from Government Finance Statistics. Data are derived from administrative sources such as the Commonwealth Department of Finance, State government financial statements, and quarterly surveys of local government authorities and public non-financial corporations. These quarterly estimates are used as indicators to produce rent on natural assets series for general government and public non-financial corporations by applying a benchmarking process to the corresponding annual series. Quarterly estimates of rent on natural assets received by households are compiled by applying a linear trend formula to the annual household rent estimates. Rent on natural assets paid by households and private non-financial corporations is derived as a residual using the following calculation: Rent on natural assets received by general government Quarterly rent on natural assets paid by households and private non-financial corporations is then allocated to both sectors based on the annual contribution of rent on natural assets paid by households and private non-financial corporations to the sum of both sectors There is no quarterly imbalance as quarterly rent on natural assets paid by households and private non-financial corporations is derived as a residual. |
Current taxes on income, wealth, etc.
Introduction
13.48 Taxes are compulsory, unrequited payments, in cash or in kind made by institutional units to general government units. They are transfers as the government provides nothing directly in return to the individual unit paying the tax. There are two components to current taxes on income, wealth, etc.: namely:
- income taxes; and
- other current taxes on income, wealth, etc.
13.49 These taxes are part of secondary income receivable by the general government sector and are a component of secondary income payable by other sectors.
Income taxes
13.50 Income tax consists of taxes on the income of households, corporations and non-residents, and taxes on wealth which are levied regularly (wealth taxes which are levied irregularly are classified as capital taxes and are recorded in the sectoral capital accounts).
13.51 Income tax payable by both non-financial corporations and financial corporations is recorded on an accrual basis. Their income tax payable is directly related to the financial year in which the income that gave rise to the tax liability was earned. Income taxes payable by corporations include taxes on profits, the resources rent tax and income tax on the earnings of superannuation funds.
13.52 While it could be argued that income tax payable by the household sector should be recorded on a similar basis, no accrual adjustments are currently made to the estimates for income tax paid by households which are recorded in Government Finance Statistics. This treatment was adopted on the basis that it is the actual payments by households which affect household spending decisions and disposable income in the current period.
13.53 The Medicare levy is treated as an integral part of income tax payable by the household sector.
13.54 Capital gains taxes payable by households or corporations are recorded in the period in which they become payable, irrespective of the periods over which the gains have been accrued. Capital gains taxes are included as part of income taxes in the sectoral income accounts.
13.55 Income taxes payable by non-residents comprise withholding taxes levied on their Australian income (dividends, interest etc.). Inheritance and gift taxes are excluded because they are classified as capital transfers.
Other current taxes on income, wealth, etc.
13.56 Other current taxes on income, wealth, etc. consists of payments by households to obtain licences to own or use vehicles, boats or aircraft, and for licences to hunt, shoot or fish. Other current taxes on income, wealth, etc. also consists of other current taxes including current taxes on land and buildings, current taxes on net wealth, current taxes on other assets and other miscellaneous current taxes, excluding those used in production. From 2015-16, Visa Application Charges (VAC) are included in other current taxes on income, wealth, etc. when paid by a household or non-resident. Prior to 2015-16, VAC is considered to be a sale of non-market output by the government and is not a tax.
13.57 Payments for all other kinds of licences, such as driving or pilot's licences, television or radio licences, firearms licences, and fees paid to government (payments for passports, airport fees, court fees, etc.) are treated as purchases of services rendered by general government to households. Such payments are included in household final consumption expenditure and are deducted from total general government current expenditure when deriving estimates for government final consumption expenditure from government output.
Sources and methods - Annual
13.58 The tables below outline the data sources and methods used in the estimation of annual current taxes on income, wealth, etc. by type of tax and subsequently by institutional sector in current prices.
| Item | Comment | |
|---|---|---|
| Individuals | ||
| Description | ||
| Income tax for individuals includes income tax, fringe benefits tax and tax payable on superannuation contributions. | ||
| Household sector | ||
There are three components to estimating annual current taxes on income, wealth, etc. for the household sector:
These are summed to obtain total income tax for the household sector. | ||
| Resident corporations | ||
| Description | ||
| Income tax for resident corporations includes income tax, petroleum resource rent tax, tax paid on capital gains and tax on income earned by superannuation funds. Mineral resource rent taxes were also payable from 1 July 2012 to 30 Sep 2014. | ||
| Total resident corporations | ||
|
| |
| Financial corporations | ||
| Income tax for financial corporations is obtained by using income tax payable by the finance and insurance services industry available from data provided by the ATO for all years except the current year t and year t-1. Estimates for these years are obtained by using movements in income tax payable by total resident corporations as an indicator to move forward this estimate. These amounts are then added to the annual estimate for tax on income and capital gains payable by superannuation funds. This total forms the estimate for financial corporations. | |
| Public non-financial corporations | ||
| Income tax for public non-financial corporations is sourced from Government Finance Statistics. Data are derived from administrative sources such as the Commonwealth Department of Finance, State government financial statements and quarterly surveys of public non-financial corporations. | ||
| Private non-financial corporations | ||
| Income tax for private non-financial corporations is derived by deducting income tax payable by financial corporations and public non-financial corporations from income tax payable for total resident corporations. | ||
| Non-resident corporations | ||
| Income tax payable by non-resident corporations is obtained using survey and administrative data from Balance of Payments statistics. This series includes withholding taxes on dividends and interest. | ||
| Item | Comment |
|---|---|
| Description | |
| Other current taxes on income, wealth, etc. paid to general government includes payments by households to obtain licences to own or use vehicles, boats or aircraft, and for licences to hunt, shoot or fish. Similar taxes paid by business enterprises are treated as taxes on production. Other current taxes on income, wealth, etc. also consists of other current taxes including current taxes on land and buildings, current taxes on net wealth, current taxes on other assets and other miscellaneous current taxes, excluding those used in production |
| Household sector | |
| Estimates for the household sector are obtained from Government Finance Statistics which are based on administrative data provided by the State Treasuries. Relevant taxes need to be allocated to households as consumers and business enterprises. The part payable by business enterprises is treated as taxes on production and the part payable by households as consumers is recorded as other current taxes on income, wealth, etc. |
Sources and methods - Quarterly
13.59 The tables below outline the data sources and methods used in the estimation of quarterly current taxes on income, wealth, etc. by type of tax and subsequently by institutional sector in current prices.
| Item | Comment |
|---|---|
| Current taxes on income, wealth, etc. – Income tax – Individuals | |
Income tax for individuals includes income tax, fringe benefits tax (FBT) and tax payable on superannuation contributions.
These are summed to obtain total quarterly income tax for individuals for the general government and household sectors. | |
| Current taxes on income, wealth, etc. – Income tax – Resident corporations | |
Income tax for resident corporations includes income tax, tax paid on capital gains and tax on income earned by superannuation funds. Mineral resource rent taxes were also payable from 1 July 2012 to 30 Sep 2014. Petroleum resource rent tax has been payable from 1 July 1990. Quarterly indicators for income tax for resident private non-financial corporations are sourced from the Quarterly Business Indicators Survey. Gross operating profits are used as a quarterly indicator to produce income tax paid by resident private non-financial corporations by applying a benchmarking process to the corresponding annual series. Quarterly indicators for income tax for resident financial corporations are sourced from APRA. Profits are used as the quarterly indicator to produce income tax for resident financial corporations by applying a benchmarking process to the corresponding annual series from 1 July 2002 onwards. Prior to this, income tax for resident financial corporations is derived as a residual using the following calculation: Income tax paid by resident corporations Quarterly estimates of income tax paid by public non-financial corporations are obtained from Government Finance Statistics. Data are sourced from a quarterly survey of public non-financial corporations. These quarterly estimates are used as indicators to produce income tax for resident public non-financial corporations by applying a benchmarking process to the corresponding annual series. Income tax received by general government from resident corporations is derived using the following calculation: Income tax paid by public non-financial corporations | |
| Current taxes on income, wealth, etc. – Income tax – Non-resident corporations | |
| Income taxes for non-resident corporations are obtained using data from Balance of Payments statistics. This series includes withholding taxes on dividends and interest. | |
| Current taxes on income, wealth, etc. – Other | |
Other current taxes on income, wealth, etc. paid to non-residents are sourced directly from Balance of Payments statistics. Other current taxes on income, wealth, etc. paid to general government includes payments by households to obtain licences to own or use vehicles, boats or aircraft, and for licences to hunt, shoot or fish. Data on other current taxes on income, wealth, etc. are obtained from Government Finance Statistics. They are derived from administrative sources such as the Commonwealth Department of Finance and State government financial statements. These quarterly estimates are used as indicators to produce other current taxes on income, wealth, etc. received by general government from households by applying a benchmarking process to the corresponding annual series. There is no quarterly imbalance as quarterly current taxes on income, wealth, etc. are calculated on a "from-whom-to-whom" basis, or have a residual. | |
Social contributions and social benefits
Introduction
13.60 Social benefits are current transfers receivable by households to provide for needs that arise from certain events or circumstances such as sickness, unemployment, retirement, housing, education or family circumstances. There are two kinds of social benefits included in ASNA; namely:
- social insurance benefits (in the ASNA, only workers' compensation is recorded here); and
- social assistance benefits.
13.61 The former are provided by social insurance schemes operated by financial institutions or by employers on behalf of their employees. Social insurance schemes pay benefits from accumulated social contributions, which are paid into the schemes by employers on behalf of employees, or directly by the employees. Social assistance benefits are paid by governments from general revenue and are not paid from social contributions. Social insurance benefits and social assistance benefits are part of the gross secondary income of households.
Social insurance benefits - workers' compensation
13.62 The only relevant social insurance scheme in the Australian context relates to workers' compensation. Households make social contributions for workers' compensation and receive social benefits from claiming for workers’ compensation. Households are regarded as receiving workers' compensation premiums as part of the employer social contributions component of compensation of employees, making social contributions for workers' compensation and consequently receiving social benefits from workers' compensation. All of these flows related to workers' compensation are recorded in the household income account. The workers' compensation premiums which are included in employers' social contributions include direct workers' compensation premiums payable and the direct cost of workers' compensation to employers who are permitted to self-insure.
Social assistance benefits
13.63 Social assistance benefits are paid by general government from general revenue and are not financed from social contributions. Social assistance benefits (in cash to residents) include age pensions, family and child benefits, sickness and unemployment benefits, benefits to ex-service persons and their dependants, and government scholarships.
Sources and methods - Annual
13.64 The tables below outline the data sources and methods used in the estimation of annual social contributions and social assistance in current prices.
| Item | Comment |
|---|---|
| Social insurance contributions – workers’ compensation | |
| Social insurance contributions for workers compensation net premiums is calculated as: Workers' compensation premiums where ISC = premiums +premium supplements - expected claims. It follows that Social contributions for workers' compensation net premiums equals Workers' compensation expected claims. (See Table 13.15 Annual secondary income- Net non-life insurance premiums and non-life insurance claims for methodology and data sources.) |
| Social benefits receivable – workers’ compensation | |
| Social benefits receivable – workers' compensation is equal to actual claims. The compilation methodology for sectoral ISC requires sectoral actual claims estimates. (See Table 13.15 Annual secondary income- Net non-life insurance premiums and non-life insurance claims for methodology and data sources.) |
| Social assistance benefits | |
| Annual estimates of social assistance benefits are sourced from Government Finance Statistics. Data are derived from administrative sources such as the Commonwealth Department of Finance and State government financial statements. | |
Sources and methods - Quarterly
13.65 The table below outlines the data sources and methods used in the estimation of quarterly social contributions and social assistance in current prices.
| Item | Comment |
|---|---|
| Social contributions and social benefits – Workers' compensation | |
| Quarterly estimates of social contributions for workers' compensation and social benefits from workers' compensation are compiled by applying a linear trend formula to the annual estimates. | |
| Social contributions and social benefits – social assistance benefits | |
Quarterly estimates of social assistance benefits are sourced from Government Finance Statistics. Data are derived from administrative sources such as the Commonwealth Department of Finance and State government financial statements. These quarterly estimates are used as indicators to produce social assistance benefits paid by general government to households by applying a benchmarking process to the corresponding annual series. There is no quarterly imbalance as quarterly social contributions and social benefits are calculated on a "from-whom-to-whom" basis. | |
Net non-life insurance premiums and non-life insurance claims
Introduction
13.66 The premiums charged by non-life insurance corporations can be regarded as comprising two components:
- an implicit service charge; and
- a transfer payment to cover the risk of providing insurance cover.
13.67 The non-life insurance service charge is defined as premiums earned plus premium supplements less expected claims. Premium supplements represent income earned on the technical reserves of non-life insurance corporations, which consist of unearned premiums (most premiums are paid for a full year in advance) and unpaid claims (which arise because of delays in finalising the payment of claims). Premium supplements do not include any income from the investment of insurance corporations' own funds. The interest share of investment income is net of FISIM. Expected claims are generally defined as a centred five year moving average of claims incurred. To estimate expected claims it is necessary to forecast claims incurred for year t+1 and year t+2. A moving average is used to avoid irregular movements in the non-life insurance service charge which would otherwise arise because of volatility in the annual data for claims incurred.
13.68 Net non-life insurance premiums are defined as non-life insurance premiums and premium supplements less the non-life insurance service charge. This flow is regarded as a transfer payment from institutional sectors which use the services provided by non-life insurance corporations and is recorded as a use of income in the sectoral income accounts and a receipt of income for non-life insurance corporations in the financial corporations income account. Non-life insurance claims are the claims incurred in the current accounting period and are recorded in the sectoral income accounts as transfers from non-life insurance corporations to other institutional sectors.
13.69 Health insurance funds are treated as part of the non-life insurance subsector, and consequently net health insurance premiums and claims are included, respectively, as part of net non-life insurance premiums and non-life insurance claims. Workers' compensation schemes may be conducted either by specialist financial corporations whose only business is workers' compensation, or by non-life insurance corporations that provide non-life insurance for various classes of business. The operating surplus generated by workers' compensation business is included in the gross operating surplus for the financial corporations sector. However, workers' compensation premiums and claims are excluded from the transfer flows for net non-life insurance premiums and non-life insurance claims because they are shown separately as a component of social benefits and social contributions.
Sources and methods - Annual
13.70 The tables below outline the data sources and methods used in the estimation of annual net non-life insurance premiums and non-life insurance claims in current prices.
| Item | Comment |
|---|---|
| Data sources | |
| Annual estimates for net premiums and claims for non-life insurance are compiled using data published by:
|
| Net non-life insurance premiums | |
| Net non-life insurance premiums is calculated as Premiums where ISC = premiums + premium supplements - expected claims It follows that Net non-life insurance premiums = Expected claims The derivation of the annual total insurance service charge for non-life insurance (see Table 9.22 ANNUAL GROSS VALUE ADDED BY INDUSTRY- Insurance and superannuation funds (ANZSIC Subdivision 63)), is compiled at the elemental insurance business class level; that is, ISC is calculated for types of insurance products such as workers' compensation. The compilation of total ISC output enables the allocation of ISC by final use (household final consumption expenditure) and intermediate consumption directly. Intermediate consumption of ISC is classified by:
|
| Non-life insurance claims | |
| Non-life insurance claims are equal to actual claims. The compilation methodology for sectoral ISC requires sectoral actual claims estimates. |
Sources and methods - Quarterly
13.71 The tables below outline the data sources and methods used in the estimation of quarterly net non-life insurance premiums and non-life insurance claims in current prices.
| Item | Comment |
|---|---|
| Net non-life insurance premiums | |
| Quarterly estimates of net non-life insurance premiums and claims are compiled by applying a linear trend formula to the annual estimates. Quarterly non-life insurance claims paid by financial corporations and received by households and private non-financial corporations are then adjusted for the insurance cost of natural disasters, which is sourced from the Insurance Council of Australia. The adjustment is split between non-life insurance claims received by households and private non-financial corporations based on their annual contribution to the total. There exists a small quarterly imbalance between the rest of the world and the domestic sectors non-life insurance flows as they are derived separately. This imbalance is balanced off in financial corporations' non-life insurance claims payable as it is the largest non-life insurance series, and where the imbalance has the smallest impact. |
Miscellaneous current transfers
Introduction
13.72 There are a number of miscellaneous current transfers recorded in the ASNA. The following categories of transfers are identified and recorded separately:
- Current transfers to non-profit institutions serving households (NPISHs);
- Current transfers from the Commonwealth government to State and local government;
- Current international cooperation; and
- Other current transfers.
Current transfers to non-profit institutions serving households
13.73 Current transfers to non-profit institutions serving households consist of transfers received by NPISHs from other resident or non-resident institutional units in the form of grants, membership fees, subscriptions, voluntary donations, etc. whether made on a regular or occasional basis. They are made principally by households, general government and public non-financial corporations to institutions such as hospitals, private schools, charities and religious organisations.
13.74 Transfers from households to NPISHs include membership fees and subscriptions, plus donations, bequests and legacies made by individuals. Household transfers are in scope of this category, but households and NPISHs belong to the same institutional sector in the ASNA, and consolidation means that transfers paid by households and received by NPISHs net to zero. Membership fees and subscriptions paid to market non-profit institutions serving businesses are not current transfers but payments for services rendered, and are not included in this category.
13.75 Grants from general government are a major source of income for NPISHs. They are treated as current transfers whether general purpose grants or funding provided under an agreement for a specific purpose. Volume-based government funding is currently treated in the national accounts as another type of transfer, rather than as government final consumption expenditure. It refers to funding provided under an agreement or contract specifying the volume of services to be delivered, and paid in proportion to the volume of services delivered.
13.76 Current transfers are also made by public non-financial corporations (e.g. Totalisator Agency Boards) to organisations such as racing clubs and charities. Transfers from corporations to NPISHs that cannot be regarded as payments for advertising or other services would also be included in this item.
Current transfers from the commonwealth government to state and local government
13.77 Current transfers from the Commonwealth government to State and local government include the following:
- goods and services tax distributions to the States and Territories;
- financial assistance grants to the States and Territories;
- grants to fund State and Territory health care services, education services, social security and welfare services, and similar specific grants for current purposes;
- special revenue assistance grants provided to certain States and Territories;
- financial assistance grants for local governments which are provided through the State and Northern Territory governments; and
- grants for current purposes made directly to local government bodies.
13.78 These transfers appear only in the subsectoral income accounts for National, and for State and Local general government. They do not include transfers of funds committed to finance gross fixed capital formation because such transfers are treated as capital transfers.
Current international cooperation
13.79 Current international cooperation relates to transfers by the Commonwealth general government sector to non-residents, and includes current transfers to and payments made on behalf of Papua New Guinea, and current transfers under other bilateral aid projects, including food aid and disaster relief. The item includes contributions to the United Nations and other international organisations made by virtue of Australia's membership of these organisations, and contributions towards the cost of peacekeeping and emergency forces.
Other current transfers
13.80 Other current transfers are compiled using a matrix-based approach – the sector paying the transfer to each counterparty sector. The counterparty flows are then aggregated to form other current transfers received and paid by sector. The quarterly transactions between sectors are benchmarked to the annual using BOP and GFS indicator series and are aggregated up for publication. This approach means that there is no quarterly imbalance. However, the lack of data for the private sectors in this matrix approach results in a data gap for current transfers between private non-financial corporations, financial corporations and households.
13.81 The 2008 SNA states that other current transfers between households are current transfers made, or received, by resident households to or from other resident or non-resident households. The ASNA, however, does not record transfers between resident households. Other current transfers between households include all cash transfers, the value of in kind transfers and regular remittances between members of the same family resident in different parts of the same country or in different countries, usually from a member of a family working in a foreign country for a period of a year or longer. Earnings remitted by seasonal workers to their families are not international transfers as the workers remain resident in their country of origin (that is, they are still members of their original households) when they work abroad for periods of less than a year. Their earnings are recorded as compensation of employees from abroad if they have the status of an employee in the non-resident country while they are working there or as the provision of services otherwise.
13.82 Other current transfers to non-residents include social assistance benefits payable to non-residents by the Commonwealth government, personal transfers and payments made overseas by residents in respect of gifts, donations, legacies, sustenance, etc. Other current transfers from non-residents consist of receipts by households of social security benefits paid by foreign governments through the Commonwealth government to residents, and gifts, donations, legacies, other pensions, etc. When households change their economy of residence, there are changes to the status for the assets they own and liabilities they owe. These changes are recorded as reclassifications through the other changes in volume of assets account.
13.83 Fines are included as other current transfers payable to general government from other institutional sectors in the sectoral income accounts. Fines are civil and criminal penalties imposed on law breakers, other than penalties imposed by taxation authorities (which are regarded as taxes). Other current transfers (other than fines) consists of unclaimed bank and superannuation accounts as well as donations to schools, hospitals and universities from the household sector; settlement of damages and grants for research from the private non-financial sector; and private health insurance levies from financial corporations.
13.84 Other current transfers between domestic institutional sectors include amounts transferred as compensation for injury to persons and damage to property arising from the actions of the donor sector or from natural disasters (excluding payments of non-life insurance claims). Both damages awarded by law courts and out of court settlements would be included here, although no such estimates are currently available.
Sources and methods - Annual
13.85 Annual estimates of other current transfers are compiled by the sector paying the transfer to each counterparty sector. The counterparty flows are then aggregated to form other current transfers received by sector.
13.86 The tables below outline the data sources and methods used in the estimation of annual miscellaneous current transfers in current prices.
| Item | Comment |
|---|---|
| Current transfers to NPISH | |
| Current transfers to NPISHs are sourced from Government Finance Statistics. Data are derived from administrative sources such as the Commonwealth Department of Finance, State government financial statements and supplementary departmental documents. Annual financial statements data are obtained from the Department of Finance for national public non-financial corporations and quasi-corporations, and from State Treasuries for other public non-financial corporations. |
| Item | Comment |
|---|---|
| Current transfers from Commonwealth government to State and Local government | |
| Current transfers from Commonwealth government to State and Local government are sourced from Government Finance Statistics. Data are derived from administrative sources such as the Commonwealth Department of Finance, State government financial statements and supplementary departmental documents. |
| Item | Comment |
|---|---|
| Current international cooperation | |
| Estimates of current international cooperation are sourced from Government Finance Statistics. Data are derived from administrative sources such as the Commonwealth Department of Finance. | |
| Item | Comment |
|---|---|
| Other current transfers to and from non-residents | |
| Other current transfers to and from non-residents are obtained from Balance of Payments data. The following outlines the data that is used for various components:
More detailed information on the sources and methods used to compile these estimates is included in Balance of Payments and International Investment Position, Australia: Concepts, Sources and Methods. |
| Other current transfers between resident sectors | |
| Estimates of other current transfers between resident sectors are obtained from Government Finance Statistics. Data are derived from administrative sources such as the Commonwealth Department of Finance, State government financial statements and supplementary departmental documents. | |
Sources and methods - Quarterly
13.87 The tables below outline the data sources and methods used in the estimation of quarterly miscellaneous current transfers in current prices.
| Item | Comment |
|---|---|
| Current transfers to NPISH | |
| Quarterly current transfers to NPISHs are sourced from Government Finance Statistics. Data are derived from administrative sources such as the Commonwealth Department of Finance, State government financial statements, and quarterly surveys of local government authorities and public non-financial corporations. | |
| Item | Comment |
|---|---|
| Current transfers from Commonwealth government to State and Local government | |
| Quarterly current transfers from the Commonwealth to State and local government are sourced from Government Finance Statistics. Data are derived from administrative sources such as the Commonwealth Department of Finance, State government financial statements, and quarterly surveys of local government authorities and public non-financial corporations. |
| Item | Comment |
|---|---|
| Current international cooperation | |
| Quarterly estimates of current international cooperation are obtained from the Commonwealth Department of Finance. | |
| Item | Comment |
|---|---|
| Other current transfers | |
| Quarterly other current transfers are calculated using a matrix-based approach whereby other current transfers are calculated on a "from-whom-to-whom" basis, and then aggregated to obtain total other current transfers received and paid for each sector. Other current transfers to and from non-residents are obtained directly from Balance of Payments statistics. Quarterly estimates of other current transfers between public and other resident sectors are sourced from Government Finance Statistics. Data are derived from administrative sources such as the Commonwealth Department of Finance, State government financial statements, and quarterly surveys of local government authorities and public non-financial corporations. These quarterly estimates are used as indicators to produce other current transfers between public and other resident sectors by applying a benchmarking process to the corresponding annual series. There is no quarterly imbalance as quarterly other current transfers are calculated on a "from-whom-to-whom" basis, and then aggregated to obtain total other current transfers received and paid for each sector. |
Social transfers in kind
Introduction
13.88 Social transfers in kind are individual goods and services provided to individual households by general government units and non-profit institutions serving households. The goods and services may be produced by the government units and NPISHs or purchased by them from market providers. They are provided to households for free or at prices that are not economically significant. Also included are reimbursements made to individual households by general government units or NPISHs for purchases by the households under a scheme that authorises purchase of approved goods and services (e.g. reimbursement of the costs of pharmaceuticals purchased under the Pharmaceutical Benefits Scheme and Medicare rebates for medical services).
13.89 In the ASNA, NPISHs are combined with households as part of the household sector so only the transfers between the household and general government are recorded. If NPISHs were classified to a separate institutional sector, estimates of actual individual consumption and actual collective consumption would be required. The actual individual consumption would be recorded as social transfers in kind to households.
13.90 In the core set of national accounts, social transfers in kind are treated as government final consumption expenditure and not household final consumption expenditure, even though it is the households that directly benefit. Therefore, they are not included in household disposable income.
13.91 For some analytical purposes, it is useful to consider a measure of household consumption that includes the goods and services provided as social transfers in kind. Consequently, social transfers in kind are included in adjusted disposable income and actual individual consumption. They are recorded in two supplementary accounts: the general government adjusted disposable income account and the household adjusted disposable income account.
13.92 Estimates of adjusted disposable income are compiled annually only.
Sources and methods - Annual
13.93 The table below outlines the data sources and methods used in the estimation of annual social transfers in kind in current prices.
| Item | Comment |
|---|---|
| Social transfers in kind | |
Estimates of social transfers in kind are obtained as a by-product of Government Finance Statistics. For Commonwealth and State general government, data are extracted from administrative sources such as Commonwealth and State budget papers and Auditors'-General Reports, Commonwealth Department of Finance ledgers and supplementary departmental documents. For local government, a joint ABS/Commonwealth Grants Commission annual return, which is collected from each local government authority, provides the details required. | |
Adjusted disposable income account
Actual final consumption
13.94 The concept of actual final consumption is aimed at recording consumption in the sector in which the good or service is actually consumed rather than in the sector than incurs the expenditure.
13.95 Household actual final consumption includes:
- the value of the households expenditures on consumption goods and services including expenditures on non-market goods or services sold at prices that are not economically significant;
- government final consumption expenditures on education, health, social security and welfare, sport and recreation and culture, which are considered to be individual services; and
- all services provided by non-profit institutions serving households as they are treated as individual services.
13.96 Government actual final consumption is equal to government final consumption expenditures on collective services. Whilst collective services benefit the community, or certain sections of the community, rather than government, the actual consumption of these services cannot be distributed among individual households, or groups of households. Therefore, the actual consumption of these collective services is attributed to the government units that incur the corresponding expenditures.
13.97 The final consumption expenditures of NPISHs are automatically included in household actual final consumption, with NPISHs being part of the household sector in the ASNA. However, the value of the actual final consumption of NPISHs is equal to the value of its total final consumption expenditure less its expenditure on individual goods or services provided as social transfers in kind to households. The value of the actual final consumption of NPISHs is thus equal to the value of the expenditures they incur on collective services.
13.98 The following table outlines the method used to calculate adjusted disposable income for both the general government and household sectors.
| Item | Comment | |
|---|---|---|
| General government | ||
| The general government adjusted disposable income account is compiled using data which is used to compile gross disposable income for general government. The following outlines the calculation of adjusted disposable income: Adjusted disposable income Note that the sum of Social assistance in benefits kind and transfers of individual non-market goods and services is described in the ASNA as Total outlays in kind. The use of adjusted disposable income is equal to actual collective consumption plus net saving, with net saving being the difference (i.e. the balancing item) between adjusted disposable income and the used of adjusted disposable income. | |
| Social assistance benefits in kind | ||
Social assistance benefits in kind relate to benefits paid by general government on behalf of household sector. Data from the following items is used to estimate the most significant amounts to be attributed to households from general government:
| ||
| Transfers of individual non-market goods and services | ||
| Transfers of individual non-market goods and services includes expenditures on health and education services as well as any other individual good or services provided to households free, or at prices that are not economically significant. Transfers of individual non-market goods and services are derived by subtracting the social assistance benefits in kind from the total outlays in kind where total outlays in kind is total government final consumption expenditure less actual collective consumption. | |
| Actual collective consumption | ||
| Government actual final consumption, also referred to as actual collective consumption, is compiled using government final consumption expenditure data obtained from Government Finance Statistics. The government final consumption expenditure data is classified according to the Australian version of the Classification of the Functions of Government (COGOF-A), and data for COFOG-As relevant to government actual final consumption are summed to form the estimate for actual collective consumption. They are:
| |
| Household (including NPISH) | ||
| The household adjusted disposable income account is compiled using data which is used to compile gross disposable income for households. The following outlines the calculation of adjusted disposable income: Adjusted disposable income Note that the sum of Social assistance benefits in kind and transfers of individual non-market goods and services from general government is described in the ASNA as Social outlays in kind. The use of adjusted disposable income is equal to actual individual consumption plus consumption of fixed capital, with the difference between adjusted disposable income and these uses being net saving (which is derived as a balancing item) between adjusted disposable income and the use of adjusted disposable income. | |
| Social assistance benefits in kind | ||
| Social assistance benefits in kind relate to benefits paid by general government to the household sector. Data for the following items is used to estimate the most significant amounts to be attributed to households from general government:
These data are sourced from Government Finance Statistics. | |
| Transfers of individual non-market goods and services from general government | ||
| Transfers of individual non-market goods and services from general government includes, most significantly, the expenditures on health and education services as well as any other individual good or services provided to households free, or at prices that are not economically significant. Transfers of individual non-market goods and services from general government are derived by subtracting the social assistance benefits in kind from social transfers in kind where social transfers in kind is total government final consumption expenditure less actual individual consumption. | |
| Actual individual consumption | ||
| Household actual final consumption, also referred to as actual individual consumption, is compiled using government final consumption expenditure data obtained from Government Finance Statistics. The government final consumption expenditure data is classified according to the Australian version of the Classification of the Function of Government (COFOG-A), and data for COFOG-As relevant to household actual final consumption (i.e. individual consumption) are summed with household final consumption expenditure to form the estimate for actual individual consumption. The COFOG-As are:
| |
Final consumption expenditure and actual final consumption: summary
13.99 Total final consumption in the economy may be viewed from two perspectives, being:
- the expenditure side, as the total value of all expenditures on individual and collective consumption goods and services incurred by resident households, resident NPISHs and general government units; and
- actual final consumption, as the value of all the individual goods and services acquired by resident households plus the value of the collective services provided by general government to the community., or large sections of the community.
13.100 The coverage of goods and services is the same in both cases. In order to ensure that the values of the two aggregates are the same, the goods and services acquired by resident households through transfers in kind must always be valued at the prices at which they are valued in the expenditure aggregates, and the time of recording the goods and services acquired by transfers in kind must be the same as the time of recording in the expenditure aggregates. It is also assumed that the flows to non-residents are balanced by flows from government (and NPISHs) of other economies.
Agricultural income account
13.101 Historically, there has been user demand to obtain more detailed data relating to the agriculture industry. It was a significant industry in the past, so this level of detail was important for economic analysis. There is still interest in this level of detail even though the significance of the agriculture industry in the Australian economy has declined over the years.
13.102 Agricultural income is the income accruing from agricultural production during an accounting period. It is equal to gross agricultural product at factor cost (i.e. gross value added at basic prices) less consumption of fixed capital, compensation of employees and net rent and interest payments.
13.103 Agricultural income is estimated both annually and quarterly. Quarterly current price and chain volume estimates are benchmarked to annual supply and use tables at the same level of aggregation that appears in Table 50 Agricultural Income (electronic) in the ABS publication, Australian System of National Accounts. That is, agricultural output is benchmarked at the commodity level (or aggregations of 'like' commodities), and total intermediate use is benchmarked at the aggregate level. For output, this ensures that the weights of commodities in the quarterly system (in both current prices and in chain volume terms) are annually 'reset' to align with weights derived from the supply and use system, but the same does not occur for intermediate use owing to lack of detail.
13.104 Multiplicative seasonal adjustment is not appropriate for commodities where there is zero output in any given quarter. Sugar cane, wheat, and fodder and grass are examples of commodities where there is at least one quarter of zero output each year. To deal with this, a pseudo-additive decomposition method is applied to seasonally adjust these series. See paragraph 7.63 for more details.
13.105 The table below outlines the sources and methods used to calculate agricultural income.
| Item | Comment |
|---|---|
| Agricultural income | |
| Agricultural income is calculated using the current price values for gross value of production less intermediate inputs, less compensation of employees, consumption of fixed capital and net property income, less net taxes on production. Gross value of production for agriculture is estimated using data collected in the ABS publication, Value of Agricultural Commodities Produced, Australia, and is supplemented by annual data from the ABARES publication, Agricultural Commodities. Intermediate inputs are estimated using data published in the ABS publication, Value of Agricultural Commodities Produced, Australia, and is supplemented by annual data from the ABARES publication, Agricultural Commodities. Compensation of employees is estimated using supply and use benchmarks for wages and salaries and employer social contributions, and extrapolating the latest years using data from the ABARES publication, Agricultural Commodities (Farm Costs and Returns – Labour). Annual data are split across the quarters using weights as allocators. Consumption of fixed capital attributable to agriculture is estimated using a percentage of the total consumption of fixed capital value for Agriculture, Forestry and Fishing. This is based on weights estimated from data in the ABS publication, Australian Industry. Net property income payable is calculated by summing farm interest, farm rent and third-party insurance less FISIM. Data are sourced from the ABARES publication, Agricultural Commodities for interest paid; total overheads paid; farm management deposits; and rates and taxes. Other data are sourced from the Reserve Bank of Australia for small business other overdraft and total credit outstanding by sector. Annual data are split across the four quarters using a fixed proportion each quarter. Taxes less subsidies on production is estimated using S-U benchmarks and extrapolating the latest year using the movement in current price value of total farm production, sourced from the Australian Bureau of Agricultural and Resource Economics and Sciences. Income accruing to unincorporated farms, which contributes to gross mixed income for GDP(I), is estimated as gross value added for agriculture less compensation of employees payable to farm employees, less income accruing to incorporated farms. |