ECONOMIC ACTIVITY SURVEY - RETAIL AND WHOLESALE
How should I report employment?
Employment is a headcount of all persons who worked for the business as proprietors, partners, salaried directors or other employees in the last pay period in June 2016. You should report for the last pay period in June 2016 even if this is not the last pay period in your financial reporting year.
Working proprietors and partners (Q3a)
If you are the owner-operator or partner of an unincorporated business, include yourself (and other partners) in Q3a (working proprietors and partners). Owners/directors of Pty Ltd companies should not be counted as working proprietors, but should be included in Q3b (Salaried directors). Non salaried directors are excluded and should not be counted in Employment.
Other employees (Q3c)
This is a headcount of all persons who worked for the business and were paid through the payroll in the last pay period in June 2016 excluding salaried directors for incorporated businesses or working proprietors and partners for unincorporated businesses.
What about persons working for the business under contract?
- Contractors and subcontractors who are other businesses, (i.e. have their own ABN and are paid on a fee for service or commission only basis), should not be counted in Employment.
- If the business paid another business for contract staff, and those persons were on the payroll of the other business, they should not be counted in Employment.
- Persons employed on a fixed-term contract, e.g. temporary staff, should be included in Other employees (Q3c) only if they were paid through the payroll in the last pay period of June 2016 and Pay As You Go (PAYG) tax was deducted for them.
It should be noted that both sales of goods and services which are considered exports need to be reported at this section (Q4 and 6) however freight charges and excise duties associated with these should be excluded.
What are Sales of goods bought in and resold?
Sales of goods bought in and resold (Q4a) are those goods which the business purchased ready-made, then resold without making changes to the goods. Wholesale and retail sales of goods should be reported here. Sales of goods should be reported net of discounts and/or rebates given to customers. Examples include:
- distribution or retailing of imported goods manufactured overseas, (e.g. the sale in Australia of cars imported from a related overseas manufacturer)
- sales of bulk grain
- bottle shop sales of alcohol
- fuel for resale.
What are sales of goods produced?
Sales of goods produced (Q4b) occur when the business that sells a commodity is the same business which undertook production of the commodity, or had the commodity produced for it by a third party on a contract, sub-contract or commission basis. Examples of activity generating income from sales of goods produced include:
- bakery operation that manufactures baked goods on the premises
- combining chemicals to manufacture paint
- using wood to manufacture furniture
- selling flowers or other crops grown by the business
- assembling parts.
Delivery charges separately invoiced or itemised to customers for goods sold by this business/organisation (Q5)
This item refers to the amount of income that is charged separately on invoice for the delivery of sale of goods to customers. For delivery of sales of goods not separately invoiced include income in sales of goods (Q4a).
What should be reported as income from services?
Generally, payment received for the provision of any services, regardless of whether or not they are a manufactured by this business regardless of whether they are primary or secondary activity of the business, should be reported as Income from services (Q6). These should include:
- commission income received from the sales of goods on behalf of clients
- commission income from sales of EPAY products (e.g. phone cards, gift cards, lotto tickets etc.)
- other contract, sub-contract and commission income
- repair and service income and fees.
Income from activity incidental to production or sales, such as the following, should also be included in Income from services:
- management fees/charges from related and unrelated businesses/organisations
- income from installation charges
- income from consulting services
- subscription and membership fees
- sponsorship income
- management fees/charges from related and unrelated businesses
- advertising income.
Where to report income from various sources/activities?
Although this list is not exhaustive, it does address some of the common reporting problems encountered by businesses.
Rent, leasing and hiring income is conceptually a service income, but income from this source should be reported in Q7 (Rent, leasing and hiring income).
Distinction: "Wet" and "dry" hire
Some equipment, e.g. machinery, equipment or vehicles, may be hired either with or without operator/driver. This distinction, sometimes referred to as "wet" and "dry" hire, determines how this type of income should be reported.
- Where the business derives income from hiring out equipment without operator ("dry" hire), that income should be reported as Rent, leasing and hiring income (Q7);
- Where the business derives income from hiring out equipment with operator ("wet" hire), the income should be reported as Income from services (Q6).
Royalties income is also conceptually a service income, but income from this source should be reported in Q8 (Royalties income). It includes payments received for the use of intellectual property owned by the business, (e.g. patents and copyright), and payments received for the right to extract natural resources.
Computer Software Sales: The treatment of income from computer software sales differs depending on the situation.
- If the business sells non-customised software it has created, this income should be reported as Sales of goods produced (Q4b).
- Where the business provides a customised software solution, income should be reported as Income from services (Q6).
- On-selling software created by another business is reported as Sales of goods bought in and resold by this business/organisation (Q4a).
Discounts/Rebates received: Discount or rebates received by a business from its suppliers should not be reported as income, but should be deducted from the expense item to which the discount or rebate applied (e.g. Purchases [Q18], Other operating expenses [Q23]).
Export sales (f.o.b): Where goods are produced or purchased in Australia for sale overseas, income from Sales of goods (Q4) should represent the free-on-board (f.o.b.) price of the goods, i.e. a price which may cover the cost of transporting goods to the Australian customs frontier (point of exit from Australia) only, and not the cost of transporting the goods outside Australia. (Note the exclusion of Export freight charges from the concept of Sales of goods.)
Food and beverages:
- Food and beverages manufactured and sold to the consumer on the same premises (e.g. retail bakery) are considered Sales of goods produced (Q4b).
- Food and beverages sold in original packaging, for example bottled water or confectionery, are considered Sales of goods bought in and resold (Q4a).
- If the food sold by the business is transformed through preparation and/or table service, sales should be reported as Income from services (Q6). This treatment covers restaurant food sales, takeaway meals in containers, and catering services.
- If liquor and other beverages are sold for consumption on premises (i.e. bar, cafe or restaurant sales), then these sales should be reported as Income from services (Q6). If they have been sold for consumption off premises (e.g. bottle shop sales), then these sales should be reported as Sales of goods bought in and resold (Q4b).
Progress payments billed on long term contracts: Where a business has entered into a long term contract to supply goods or services, and recognises expenses and progress payments in its accounts, the progress payments should be reported as Sales of goods (Q4) or Income from services (Q6), depending on the nature of the contract.
Asset sales: The proceeds from the sale of assets should be reported as Disposal of assets (Q29-Q33). The profit or loss from the sale of assets should be reported in Other Income (Q11) as a positive or negative value.
Asset revaluation/impairment: should be reported under Other income (Q11) as either a net gain or loss. Negative revaluations and impairments should not be reported as an expense. This follows the same principles that apply to other examples listed on the form, such as share trading or sales of assets.
How should I report Labour costs?
Payments made to an unrelated business for the supply of staff on a fee or contract basis, where the staff entitlements are paid by the business supplying the employees, should be recorded in Labour Costs question part (e) Payments to other businesses/organizations (e.g. employment agencies) for staff (Q13e). Payment to another business for recruitment services (i.e. advertising vacancies, conducting interviews) on behalf of your business should also be included in Payments to other businesses/organisations (e.g. employment agencies) for staff (Q13e). However, any costs incurred by your business in the conduct of its own recruitment processes (e.g. payment directly to newspapers for running job vacancy advertisements) should be reported in Other operating expenses (Q23).
Labour costs (Q13) do not include payments to contractors or sub-contractors operating under their own ABN. Information on payments to contractors can be found under How should I report payments to contractors and other businesses for services?
Only include Employer contributions paid into superannuation in Q13a. This does not include personal superannuation contributions for business owners not drawing a wage.
Payroll tax (Q13d) is levied by State/Territory governments on businesses with large payrolls (usually greater than $0.5 million for the year). It does not refer to income tax withholding for employees.
Wages and salaries including provisions for employee entitlements (Q13f). Report gross (i.e. before tax) wages and salaries.
Capitalised wages and salaries (i.e. wages and salaries for work relating to the creation of capital assets) should not be included in Labour costs but instead at Capitalised wages and salaries (Q34a).
How should I report Purchases?
If a commodity is purchased to be used or consumed in the production of goods or services (including office consumables), or for repairs and maintenance of equipment, its cost should be reported as Purchases of materials, components, containers, packaging materials, electricity, fuels and water (Q18b).
If the same commodity is purchased simply to be on-sold in the same form (without transformation), its cost should be reported as Purchases of finished goods for resale (Q18a). For example:
- Where a business buys packaging materials for its use, the cost of the packaging materials should be included in Purchases of materials, components, containers, packaging materials, electricity, fuels and water (Q18b); but
- Where a business buys packaging materials for sale (without processing) to other business or to the public, the cost of the packaging materials should be included in Purchases of finished goods for resale (Q18a).
Any purchases of materials that have been capitalised i.e. purchases made to create capital assets, should not be reported in Q18. Instead, they should be reported in Capitalised expenditure including cost of capital assets developed in-house by employees of this business/organisation (Q34) and Capitalised wages and salaries (Q34a) and Other capitalised costs (Q34b).
Note: In the context of selling finished goods, Purchases (expenses) are not the same as cost of goods sold. Purchases represent the amount actually expended by the business in the reporting period. Cost of goods sold, which is not collected in this survey, represents the amount expended only on goods actually sold in the reporting period (cost of goods sold is equal to purchases plus opening inventories minus closing inventories, as well as transport, handling and other costs directly attributable to the acquisition of the good).
How should I report expenditure on electricity, fuels and water?
Reporting of expenditure on electricity, fuels and water depends on how the electricity, fuels and water are used by the business, as shown in the following examples.
- Petroleum and diesel fuel purchased for retail sale - report as Purchases of finished goods for resale (Q18a).
- Petroleum and diesel fuel purchased for use in own vehicles and equipment - report as Purchases of materials, components, containers and packaging materials, electricity, fuels and water (Q18b).
- Water rates paid - include in Purchases of materials, components, containers and packaging materials, electricity, fuels and water (Q18b).
- Electricity bills for powering office, plant, etc - include in Purchases of materials, components, containers and packaging materials, electricity, fuels and water (Q18b).
How should I report payments to contractors and other businesses for services?
There is a specific question for Payments made to contractors and other businesses for freight, cartage, delivery and transport services (Q19). Otherwise, all payments to other businesses for non-transport-related services provided should be reported in Other operating expenses (Q23).
The following examples show how some commonly incurred expenses should be reported.
- Payments made to contracted and owner-drivers to transport goods sold by your business to customers - include in Outward freight, cartage, delivery and transport expenses (Q19a).
- Postage costs - include in Payments made to contractors and other businesses for freight, cartage, delivery and transport services (Q19)
- Payments made for the movements of goods between different locations of this business/organisation by a third party - include in Internal freight, cartage, delivery and transport expenses (Q19b).
- Payment of separately invoiced delivery charges for inward movement of goods - include in Other freight, cartage, delivery and transport expenses (Q19c).
- Payment for rent for your business premises - include in Other operating expenses (Q23).
- Payment of commission to another business for selling goods owned by your business - report as Other operating expenses (Q23).
- Payment to another business for training your employees - include in Other operating expenses (Q23).
- Travel and accommodation expenses for your employees - include in Other operating expenses (Q23).
Where do I report my specific expense item?
Although this list is not exhaustive, it does address some of the common reporting problems encountered by businesses:
Consumables: Consumables such as stationery, staff amenity supplies, cleaning materials etc. should be reported as Purchases of materials, components, containers and packaging materials (Q18b).
Discounts/Rebates given: Discounts or rebates given by your business to its customers should not be reported as an expense item, but should be netted off the income item to which the discount/rebate applied, e.g. Sales of goods (Q4) or Income from services (Q6).
Equipment hire: Regardless of whether the equipment was hired with or without operator (i.e. "wet/dry hire"), the expenses should be reported as Other operating expenses (Q23).
Finance lease payments: When an asset, e.g. company car, is acquired under a finance lease arrangement, the value of the acquisition should be included in Capital expenditure (Q29-34).
If any work is undertaken by own employees of this business to install any asset acquired under a financial lease to make it operational, please include the cost of this work within Capital expenditure (Q29-34) and Cost of capital assets developed in-house by employees of this business/organisation (Q34) (if applicable).
Repayments under a finance lease agreement consist of two components: interest and capital repayments. Capital repayments should not be reported in this survey. The interest component only should be included in Interest expenses (Q15).
Motor vehicle insurance premiums:
- Optional third party insurance premiums, payable at the discretion of the business, should be included in Insurance premium expenses (Q14).
- Compulsory third party insurance premiums, payable as part of the vehicle registration process should be included in Other operating expenses (Q23).
Sponsorship Payments: Sponsorship is not considered the same as a donation, as it involves a transaction, usually advertising or promotional benefits for the individual or business making the payment. It should therefore be reported as Other operating expenses (Q23), whereas donations are excluded altogether.
How should I report inventories?
Inventories (Q28) are divided into three sections; Raw materials, Work-in-progress and Finished goods.
Raw materials (Q28a) consist of goods that a business holds with the intention of using to produce other goods or in rendering services. For example, paper supplies for use in printing newspapers (good produced) or raw food to make a meal (provide a service).
Work-in-progress (Q28b) consists of goods that still require work to reach the condition they are to be sold in, such as partially assembled machinery. The value of work-in-progress inventories should be reported net of progress payments billed.
Finished goods (Q28c) consist of goods that are to be sold in their current condition, including goods for resale.
Inventories do not include depreciable assets of the business. These should be reported in capital expenditure and disposal of assets (Q29-34).
CAPITAL EXPENDITURE AND DISPOSAL OF ASSETS
How should I report capital expenditure?
Capital expenditure and disposal of assets (Q29-34)
Capital expenditure refers to the amount spent by a business in the current reporting period on the acquisition of non-current assets. It can be considered the amount spent to purchase or upgrade productive assets like buildings or machinery to increase the business’ capacity or efficiency. If the business hires contractors to carry out capital work, then these contractor payments should be included in the cost of the capital works. It does not include additions to inventories.
Additions: represents the expenditure on assets on an accruals basis, further to this you are required to report any Capital Work in Progress (CWIP) values against the relevant asset, as best as you possibly can.
This survey aims to capture the activity and production in the economy as it is happening rather than when the asset is capitalised.
Disposals: Refers to the sale of the asset to another individual or business. It can also include the discarding of an asset. For survey purposes we only require businesses to report the proceeds from sales of the assets.
The examples against each asset are intended to give an indication of the nature of assets a business may have to be placed into each category however it is not an exhaustive list. Further examples for each asset type can be found below.
Land (Q29a): purchases or acquisition of land.
Dwellings, other buildings and structures (Q29b):
- Dwellings: used entirely as residences including structures such as garages, and all permanent fixtures customarily installed in residences.
- Other buildings and structures: comprise of non-residential buildings, other structures and land improvements. These may include things such as highways, roads, airfield runways, bridges, tunnels, subways, harbours, dams and other water works, pipelines, communication and power lines, constructions for mining and manufacturing, warehouses and industrial or commercial buildings. Leasehold improvements that alter and improve the structure and value of the building should be included here (this does not include things such as painting and carpet additions but refers more to structural changes).
Road vehicles (Q30a): this category is for vehicles that are primarily to be used on the road such as cars, trucks, motorcycles and utes.
Other transport vehicles and equipment (Q30b): this category consists of equipment and vehicles for moving people and objects. This may include items such as trailers, semi-trailers, ships, railway and tramway locomotives, rolling stock and aircraft.
Industrial machinery and equipment (Q30c): whilst some items within this category may be mobile and capable of transporting people or goods, their primary business function is for use in the production of goods and/or services which is why they fall under this category. Additional items that could be included are:
- engines and turbines
- pumps, compressors, hydraulic power engines
- lifting and handling equipment
- machine tools and accessories (Hand tools, tools customarily in a workshop)
- equipment for food, beverage preparation
- point of sale terminals, booking systems
- industrial cooking appliances
- domestic appliances for production purposes
- climate control systems and other equipment used in core production.
Electrical machinery and electronic equipment (Q30d): this may include things such as electrical generators and motors, electrical transformers, static converters and inductors, electricity distribution or control apparatus, lighting equipment, electrical ignition or starting equipment, electrical signalling equipment.
Communications equipment (Q30e): this may include things such as radio broadcast and television receivers, video and digital cameras, microphones, loudspeakers, amplifiers.
Other plant and equipment (Q30f): consists of machinery and equipment not elsewhere classified, this may include items such as office furniture and fencing materials.
Computer hardware (Q31a): this may include things such as, hard drives, monitor screens, mouses, keyboards, printers, scanners, automatic data processing machines, and sound/video and/or network cards.
Computer Software (Q31 b): any software that may be installed in the businesses systems that enable it to operate more efficiently such as Microsoft suite, financial systems, software that operates large machinery etc.
- Computer software purchased from another business/organisation (Q31(b)(i)): any software that has been purchased from another business to be installed on computers used by your staff to enable them to operate and perform their work.
Computer software developed in house by employees of this business (Q31(b)(ii)): any software that may have been developed for use by employees of your business.
Intangibles (Q32): This may include items such as trademarks, mastheads, spectrums, company brand, customer bases, licenses, patents and goodwill etc.
What is the cost of capital assets developed in-house by employees of this business/organisation (Q34)
This question aims to capture the extra layer of production in the economy that might never be exchanged in the market. Activity reported here is a subset of that reported at Capital expenditure (Q29-34) (and therefore should not exceed it).
Example: if your staff develop a new piece of software that improves the efficiency and the production process of your business but is only used in-house and never sold to another business, then the cost of this production activity needs to be reported under the Cost of capital assets developed in-house by employees of this business/organisation question. For our survey purposes, we want to know the wages and salaries of employees of your business that contribute to the development, building, construction and/or creation of the asset (including any additional ‘on-costs’ such as Fringe Benefits Tax, workers compensation, superannuation) that is used exclusively for business purposes (not for resale). This is deemed to be capitalised wages and salaries in (Q34a).
Another example may be an employee who is tasked with project managing the building and construction of an asset. Whilst they aren’t actually involved in the physical build of the asset, their insight and involvement is integral to the completion of the asset and as a result their wages are deemed as ‘capitalised wages’. The other capital costs such as hiring contractors and the materials purchased to build the asset would be deemed as ‘other capitalised costs’.
‘Other capitalised costs’ (Q34b) may include both capitalised services and capitalised goods used as inputs to assist in the building and development of the asset. For example if an upgrade or improvement to an existing building or infrastructure such as a road was project managed in-house then the cost of any goods or materials used and/or contractors undertaking the work would need to be reported in Other capitalised costs with the wages of the employees project managing reported under Capitalised wages and salaries.
What are the impacts of the legislation change introduced in the May 2015 Budget for small business owners?
In the May 2015 Budget, the Federal Treasurer announced a new incentive for Small Business owners to immediately write off assets costing less than $20,000.
The ABS expect small business owners to continue reporting these eligible capital asset purchases under capital expenditure, with the relevant write off amount reflected in Depreciation and amortisation expense (Q16).
How do I report income from sales of goods and services by state (Q36)
Income from sales of goods and services should align with amounts in Questions 4-8. It should be reported against the state or territory where the sale was made or the service was provided. For export sales, report against the state or territory from which the sale was made.
The purpose of this checklist is to assist you, if you wish, to check the information which you have supplied in the form before submitting it to ABS. Use of the checklist may reduce the need for us to contact you with further enquiries. The points covered reflect some of the most common reporting errors.
- Are the reported numbers a headcount of persons working for the business? (Should not be FTE.)
- Have you reported only those who worked for the business in the last pay period ending in June 2016?
- Working proprietors and partners (Q3a) should only be reported for an unincorporated business, not if the business is incorporated (e.g. Pty Ltd).
- If the business had offices/locations with staff in more than one state or territory, does the total for Australia (Q34) equal Total number of persons in Q3d?
- Are all reported financial items reported in $'000s (thousands)? For example, if business income for the year were $123,456, it should be reported as 123 on the survey.
- Have the nature and amount of the main components of 'Other...' items been provided in Q11 (Other Income) and Q23 (Other operating expenses)?
- If income from sales of goods produced by the business has been reported, have purchases been reported correctly, i.e. as Purchases of materials, components, containers and packaging materials, electricity, fuels and water (Q19b)?
- If income from sales of goods not produced by the business has been reported, have purchases been reported correctly, i.e. as Purchases of finished goods for resale (Q19a)?
- Have the values of both opening and closing inventories (Q26) been reported, where applicable?
- If cost of capital assets developed in-house by employees of this business/organisation (Q34) is reported, the value must be less than or equal to the sum of Capital expenditure items reported in Q29-34.
- Have you provided comments on any unusual movements regarding the information you have supplied. By taking the opportunity to do this you will enhance the value of the data you supply as well as minimising the chance of ABS staff being required to call you directly for clarification.
- Have you provided an estimate of the time taken to complete this form? (Please note that we use the time taken information to help us to design effective survey forms while minimising the burden on our respondents.)