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Current taxes on income, wealth, etc.

Australian System of National Accounts: Concepts, Sources and Methods
Reference period
2020-21 financial year

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.

Table 13.10 Annual secondary income - Income tax
ItemComment
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:

  • Income tax is derived using data from Government Finance Statistics. GFS quarterly estimates are summed to form the annual estimate. These estimates include the Medicare levy and capital gains tax, as well as taxes paid by pay-as-you-go (PAYG) (for employees and self-employed) and pay-as-you-earn (PAYE) net of refunds. The GFS data are collected from administrative data provided by the Commonwealth Department of Finance.
  • Fringe benefits tax is calculated on an annual basis using estimates sourced from the Australian Taxation Office (up to year t-1) and final budget outcomes (years t and t+1). Due to the FBT being calculated based on a financial year from 1 April to 31 March, the published series uses three quarters of one year and one quarter of the next year to make it comparable and so the data are needed up until year t+1.
  • Tax payable on superannuation contributions is calculated by multiplying the average effective tax rate payable by superannuation funds by the total value of assessable contributions. These estimates are sourced from the ATO for all years except year t and t-1. For year t and t-1, the estimate is derived by extrapolating the estimate for year t-2 using annualised quarterly data on total contributions into super funds sourced from the Australian Prudential Regulatory Authority as an indicator.

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
 

 

  • The following outlines the sources and methods used to estimate the various types of income tax. These three taxes are summed in order to estimate total income tax paid by resident corporations.
  • Income taxes are derived directly using actual data from the Australian Taxation Office for all years except the current year t and year t-1. The estimate for year t-1 is derived using the data from the Commonwealth's consolidated financial statement. The current year is derived by moving forward the year t-1 estimate using the movement in the forecast value in the Commonwealth Final Budget Outcome (CFBO).
  • Estimates for tax on income earned by superannuation funds are obtained as a residual after tax payable on superannuation contributions and tax paid on capital gains by superannuation funds are deducted from the total tax payable by superannuation funds. These data are available for all years from the ATO except for the current year t and year t-1. The estimates for year t-1 and current year are derived by extrapolating the estimate for year t-2 using data from Government Finance Statistics. Tax on contributions is obtained using the method described above. This amount is deducted from the estimate of total tax on superannuation sourced from administrative data provided by the Department of Finance. The residual is tax paid on income earned and tax on capital gains earned by superannuation funds. These are not published separately in the ASNA.
  • Petroleum resource rent tax has been payable from 1 July 1990. Mineral resource rent taxes were payable from 1 July 2012 to 30 September 2014. Data were sourced from the ATO for all years except the current year. The current year was derived by using the movement in the forecast value in the CFBO.
 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.
Table 13.11 Annual secondary income - Other current taxes on income, wealth, etc
ItemComment
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.

Table 13.12 Quarterly secondary income - Current taxes on income, wealth, etc.
ItemComment
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.

  • The quarterly indicator for income tax is sourced from Government Finance Statistics. These estimates include the Medicare levy and capital gains tax, as well as taxes paid by pay-as-you-go (PAYG) (for employees and self-employed) and pay-as-you-earn (PAYE) net of refunds. Data are sourced from the Commonwealth Department of Finance. These quarterly estimates are used as indicators to produce income tax for general government and households by applying a benchmarking process to the corresponding annual series.
  • Total wages and salaries excluding payments in kind are used as a quarterly indicator to produce fringe benefits tax (FBT) by applying a benchmarking process to the corresponding annual series.
  • Total wages and salaries are used as a quarterly indicator to produce tax payable on superannuation contributions for general government and households by applying a benchmarking process to the corresponding annual series.

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
     less income tax paid by private non-financial corporations
     equals income tax paid by financial 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
     plus income tax paid by financial corporations
     plus income tax paid by private non-financial corporations
     equals income tax received by general government from resident 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.