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Monthly Business Turnover Indicator methodology

Reference period
August 2021
Released
15/10/2021

Introduction

The experimental Monthly Business Turnover Indicator is derived by the Australian Bureau of Statistics (ABS) using Australian Taxation Office (ATO) Business Activity Statement (BAS) turnover data from monthly BAS remitters. As businesses with GST annual turnover of $20 million or more are required to remit monthly, the majority of turnover for most industries is contributed by monthly remitters.

The ABS transforms the BAS data in order to derive the Monthly Business Turnover Indicator. As BAS data is not collected for statistical purposes, its scope varies from Australian National Accounts concepts of income and production. The transformation of the BAS data aligns the measured monthly change in turnover as closely as is feasible to the Australian System of National Accounts concept of market output.

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    This diagram is a flow chart outlining the key steps undertaken to produce the Monthly Business Turnover Indicator from the BAS turnover data.
    The flow chart starts with BAS turnover data from monthly remitters, supplied by the ATO. The ABS then undertakes BAS data transformation processes, consisting of three steps: Imputation, Mapping to the ABS Economic Units Model, and Validation. The fourth step, following on from the steps in the transformation processes, is the aggregation of the data by the ABS. This flows into the final stage of the chart, which is the Monthly Business Turnover Indicator.

    The Monthly Business Turnover indicator builds on the proof-of-concept development work outlined in an information paper released in June 2021. The information paper explored the potential use of BAS data to develop an indicator of business turnover, including proposed concepts, frameworks, data sources, and initial quality assessments. The indicator should be considered experimental at this stage, as further enhancements to the transformation processes (i.e. methodology) are expected in the future.

    The ABS would like to acknowledge the vital support from the ATO in enabling the ABS to produce this indicator.

    Source of the data

    Source

    The ATO collects BAS data for the purpose of administering the GST and provides it to the ABS for statistical purposes. The ABS uses the turnover data supplied by monthly remitters to derive the indicator. Monthly BAS reporting covers businesses with GST annual turnover of $20 million or more and a proportion of smaller businesses that report BAS monthly on a voluntary basis.

    BAS data is supplied by the ATO to the ABS under the Taxation Administration Act 1953, which requires that such data is only used for the purposes of administering the Census and Statistics Act 1905. Australian Business Register (ABR) data is supplied by the Registrar to the ABS under A New Tax System (Australian Business Number) Act 1999, which requires that such data is only used for the purpose of carrying out functions of the ABS. Any discussion of data limitations or weaknesses is in the context of using the data for statistical purposes, and is not related to the ability of the data to support the ABR’s core operational requirements.

    Scope and coverage

    The Monthly Business Turnover Indicator is derived from BAS turnover data from monthly remitters. Both public corporations and private businesses are included, however, units classified to General government according to the Standard Institutional Sector Classification of Australia (SISCA) are excluded.

    Outputs are released for thirteen of the nineteen industry divisions from the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006. For more information see Outputs.

    Table 1: Summary of scope and coverage of the Monthly Business Turnover Indicator

     In scopeOut of scope
    Type of BAS remittersMonthly remitters (businesses with GST annual turnover of $20 million or more and a proportion of smaller businesses that report BAS monthly on a voluntary basis)

    Quarterly and yearly remitters

    Employment statusEmploying and non-employing businesses 
    Type of businessBoth public corporations and private businesses General government (SISCA 3000)
    Industry classificationsIndustry divisions where BAS turnover can be used as an appropriate indicator of market output – see Data limitations and revisions for more information.

    Industry divisions where BAS turnover is not an appropriate indicator of market output – see Data limitations and revisions for more information.

    Units in group 960 (Private households employing staff and undifferentiated goods- and service-producing activities of households for own use) are also excluded from the Other services division.

    Timing of BAS data extract

    The BAS data used in compiling the Monthly Business Turnover Indicator is generally extracted on the 27th day of the month following the end of the taxable period (or, where this falls on a public holiday or weekend, the next working day). The extract includes all remitters up to the end of the day prior to the extraction. The timing of the extract date balances the demand for producing the indicator in a timely manner, with the improvements to data quality attained over time as a greater proportion of BAS data is submitted.

    Transformation of the data

    Overview

    The BAS data collected by the ATO is not collected for statistical purposes. A number of data transformation steps are required to derive the Monthly Business Turnover Indicator from BAS data. These include:

    • Imputation
    • Mapping to the ABS Economic Units Model
    • Data validation

    Imputation

    Some monthly remitters will not have submitted their BAS data at the time the BAS extract is taken. Imputation is applied to account for the expected contribution from these businesses. Turnover is imputed based on the last historical monthly turnover value provided by the business, with imputed values diminishing each month according to the decreasing probability the business is both still alive and has not changed lodgement frequency.

    Missing data will be imputed for up to 11 consecutive months. If a business later provides the missing data, the imputed values will be replaced with the reported values. If a business provides data for later months but earlier months are still missing, it will be assumed there is zero turnover for the missing months.

    Mapping to the ABS Economic Units Model

    BAS data is reported at the ABN level. To produce this indicator, the ABN level data needs to be mapped to the Type of Activity Unit (TAU) from the ABS Business Register.

    The ABS Business Register is maintained by the ABS for the purpose of producing statistical frames and business demography outputs.

    The TAU is a standard statistical unit on the ABS Business Register, used across most business statistics in the ABS. Undertaking ABN/TAU mapping of BAS turnover data enables the incorporation of additional information from the ABS Business Register, improves industry classification of the data, and increases alignment with other ABS business statistics outputs.

    Information to populate the ABS Business Register is largely sourced from the ATO’s Australian Business Register. To ensure coherence across the various ABS collections, an extract from the ABS Business Register is taken each quarter. This extract, used as the collection frame for ABS business surveys, is called the Common Frame. The Common Frame is scoped to businesses with a GST and/or income tax withholding role.

    To produce the Monthly Business Turnover Indicator, a population of monthly BAS remitters is linked to the corresponding quarter’s Common Frame at the TAU level. If the corresponding quarter’s Common Frame is not available for the latest month at the time of mapping, the previous quarter’s frame will be used. For most businesses there is a direct one-to-one link between ABN and TAU. For more complex units, the mapping method used for the indicator involves first aggregating ABN level data to the Enterprise Group (EG) level and subsequently prorating across TAUs using modelled wages or turnover factors.

    Data validation

    As BAS data is not produced for statistical purposes, its scope varies substantially from Australian National Accounts concepts of income and production. Some of the differences, such as the inclusion of business asset sales in BAS turnover, can have a large impact on movement estimates of the measure.

    The data is reviewed for large anomalies that will impact its utility as a monthly indicator of change in economic activity. This includes actions such as removing large changes in turnover at the TAU level as a result of misreporting or scoping differences e.g. asset sales. It may also include smoothing some highly irregular movements within a TAU that are driven by factors such as irregular project payments that significantly distort month-to-month industry movements.

    It is not possible to match the scope of the BAS turnover data to the National Accounts concept of ‘market output’. However, the ABS data transformation process aims to align the measured change in monthly turnover as closely as is feasible to this concept.

    Seasonal adjustment

    Seasonally adjusted estimates are produced for both the monthly movements and index values.

    Standard ABS seasonal adjustment procedures have been applied to eliminate the impact of seasonal patterns on the series. The industries included in the indicator have all been found to be seasonal, with some having prominent seasonal patterns. The seasonal adjustment includes adjustment for calendar-related effects including:

    • trading day influences arising from weekly patterns in sales, the varying length of each month and the varying number of Sundays, Mondays, Tuesdays, etc. in each month
    • Proximity effects for moving holidays such as Easter and Fathers’ day.

    Appropriate adjustments for extreme values and trend breaks have also been applied as part of the seasonal adjustment process. 

    For more information on ABS seasonal adjustment methodology, refer to Time Series Analysis: The Basics.

    Outputs

    Summary of outputs

    Monthly movements of the business turnover indicator are produced for thirteen industry divisions:

    • Mining
    • Manufacturing
    • Electricity, gas, water and waste services
    • Construction
    • Wholesale trade
    • Retail trade
    • Accommodation and food services
    • Transport, postal and warehousing
    • Information media and telecommunications
    • Professional, scientific and technical services
    • Administrative and support services
    • Arts and recreation services
    • Other services

    The time series commences in January 2010, with monthly movements available from February 2010. As levels of turnover are not available from the indicator, index values are produced to assist users to calculate movements between any two time periods within the series. The base period, where the index values are equal to 100.0, is July 2019.

    Monthly movements and index values are available in both original and seasonally adjusted terms.

    Privacy and confidentiality

    Legislative requirements to ensure privacy and secrecy of this data have been adhered to. In accordance with the Census and Statistics Act 1905, results have been confidentialised to ensure that they are not likely to enable identification of a particular person or organisation.

    All personal information is handled in accordance with the Australian Privacy Principles contained in the Privacy Act 1988. For more information, see ABS Privacy.

    Data limitations and revisions

    The ATO collects BAS turnover data for the purposes of administering the GST. The Monthly Business Turnover Indicator is derived from monthly BAS remitters and there are limitations in using this data for statistical purposes. 

    Coverage of monthly remitters

    The coverage of this indicator consists of the BAS monthly remitters only. Quarterly and annual remitters are excluded. The number of monthly remitters and their shares of business turnover vary considerably by industry.

    Analysis has shown that the population of monthly remitters adequately represents the turnover movements of the whole population for those industry divisions included in this indicator. However, the population of monthly remitters does not grow at the same rate as the whole population and this may affect long-term trends. In addition, any sudden changes in the coverage by monthly remitters (such as a sudden change in remission frequency by many businesses during an economic shock) may distort movements of the indicator.

    BAS turnover as a measure of economic activity

    Due to the varying characteristics of industries and the scoping of BAS data, an informative indicator of economic activity based on BAS data could not be produced for all industries.

    The appropriateness of using BAS turnover as a measure of market output across each industry division was assessed and selected industries excluded from the Monthly Business Turnover Indicator where:

    1. There are significant differences in reporting of turnover via BAS compared to sales reported in ABS business surveys. For example, BAS is reported on a GST liabilities and credits basis and for industries where there is a high proportion of commission-based activity, turnover is not an appropriate indicator of market output.
    2. There are significant differences between BAS turnover and the National Accounts concept of output AND turnover movements cannot be used as an indicator of change in market output.
    3. Coverage of monthly remitters is low (i.e. monthly remitters account for less than 60% of total industry turnover) AND turnover movements for monthly remitters cannot be used as a proxy for movements for all remitters.

    The six industries that are currently excluded from the indicator based on this analysis are:

    • Agriculture, forestry and fishing
    • Financial and insurance services
    • Rental, hiring and real estate services
    • Public administration and safety
    • Education and training
    • Healthcare and social assistance

    Revisions

    Revisions are a change in the value of a published value, and may arise due to a variety of reasons. They reflect both the complexity of measurement, and the need to balance precision and timeliness to maximise the utility of the indicator.

    Revisions may be applied to the Monthly Business Turnover Indicator due to:

    • Revisions to the source BAS data
    • Refinements to decisions made around the treatment of data anomalies in the series
    • Revisions to seasonally adjusted estimates due to the recalculation of seasonal factors in the concurrent methodology for seasonal adjustment
    • Implementation of methodological and process improvements
       

    Revisions largely affect the current and previous two financial years. The impact of revisions will generally be largest in the previous month’s data.

    Methodological enhancements

    The methods and data sources used will be subject to ongoing review to improve outputs and maintain the relevance of this indicator. The ABS will consult on major changes prior to implementation and ensure advance notice is provided to users. As updated methods are implemented, more information will be provided here or in Transformation of the data.

    Differences to other ABS sources

    Quarterly Business Indicator Survey (QBIS)

    BAS turnover data has reasonably good conceptual alignment with QBIS sales. Both estimates measure the goods or services sold/supplied by businesses, the sale or lease of land and building (where this reflects the normal activity of a business, such as sales by property developers), and income from providing goods or services for sponsorship. Dividend income is excluded from both statistics. Despite the similarities, differences remain.

    Table 2: Summary of differences between Monthly Business Turnover Indicator and QBIS Sales
     Monthly Business Turnover IndicatorQBIS Income from sales of goods and services
    Scope and coverage

    Includes businesses with GST annual turnover of $20 million or more and a proportion of smaller businesses that report BAS monthly on a voluntary basis.

    Both public corporations and private businesses are in scope, however General government is excluded.

    The survey includes employing and non-employing units on the ABS Business Register. However, micro non-employing businesses are excluded. These are very small units on the ABS Business Register, by standard measures of size.

    The scope excludes public sector business units (i.e. all departments, authorities and other organisations owned and controlled by Commonwealth, State and Local Government).

    Industry coverage
    • Mining
    • Manufacturing
    • Electricity, Gas, Water and Waste Services
    • Construction
    • Wholesale Trade
    • Retail Trade
    • Accommodation and Food Services
    • Transport, Postal and Warehousing
    • Information Media and Telecommunications 
    • Professional, Scientific and Technical Services
    • Administrative and Support Services
    • Arts and Recreation Services
    • Other Services

    In addition to the industries included in the scope of the monthly Business Turnover Indicator, QBIS scope also includes:

    • Financial and Insurance Services (partial coverage)
    • Rental, Hiring and Real Estate Services
    Interest income and sale of business assetsAsset sales are included in BAS turnover. However, large changes in turnover identified during the validation phase of the indicator that are understood to be due to asset sales will be removed.  Excluded
    Reporting of turnover/income

    Reported on a GST liabilities and credits basis. This means that BAS turnover relates to cash flows where the business is acting as an 'agent', with related income and expenses not appearing on the Profit and Loss (P&L) statement. This can lead to significant variability in turnover for industries that include a high proportion of commission-based activity.

    Reported on a Profit and Loss (P&L) statement basis

    Abbreviations

    Show all

    ABNAustralian Business Number
    ABRAustralian Business Register
    ANZSICAustralian and New Zealand Standard Industrial Classification
    ATOAustralian Taxation Office
    BASBusiness Activity Statement
    EGEnterprise Group
    GSTGoods and Services Tax
    QBISQuarterly Business Indicators Survey
    SISCAStandard Institutional Sector Classification of Australia
    TAUType of Activity Unit