2.5 INCOME TAX AND OTHER MODELLED DATA ITEMS
MODELLED DATA ITEMS
Some data items of interest cannot reliably be collected from respondents, and some cannot be collected at all. However, in some cases it is possible to utilise other information provided by respondents as a basis for estimating the data items of interest. The process is referred to as modelling.
Income tax and the Medicare levy
As described in section 1.1, disposable income is calculated by deducting income tax (including the Medicare levy) from gross income. The model is based on the liability rules described in Tax Pack for the year concerned, the income reported by respondents, and other relevant information reported by respondents.
Estimates of income tax are modelled, rather than collected from respondents, for a number of reasons.
- As noted in section 1.4, an accruals approach is taken to estimating these items. The estimates should therefore relate to the tax liability being incurred with respect to the income being reported by the respondent in the survey. For estimates of current income (see section 1.2 'Current, annual and weekly income'), the current income tax liability is calculated as though the current income is the average income for the whole year. If actual income fluctuates during the year, respondents are unlikely to have an actual income tax assessment that is relevant to the required estimate.
- In addition to income changes during the course of the year, full year income tax assessments may be affected by changes in family or other circumstances of the respondent which are not described in the survey, and are best ignored when deriving an income tax estimate to use with the other survey data.
- Income tax assessments are only made after the end of the financial year, and therefore are not yet available at the time that current income is collected from respondents.
- The income tax assessment of respondents may be affected by certain expenditures which they make, such as donations to charities, or other particular circumstances which are not captured in the survey. For many purposes it is desirable to exclude the impact on tax liabilities of specific influences which are not captured in the survey.
- The HES and SIH provide sufficient relevant information to allow a relatively comprehensive model to be constructed.
One-off payment to seniors and one-off payments to families and carers
The one-off payment to seniors paid in 2000-01 and the one-off payments to families and carers paid in 2003-04 are included as income as they were primarily a supplement to existing income support payments. As described under Government pensions and allowances in section 1.4 'Components of income', an annualised approach is taken to these payments. The annualised approach requires the estimates to be modelled rather than collected from respondents, since in all cases the payments were only announced late in the financial year and so respondents could not know that they would receive the payments.
In the model, the payments are assigned to all respondents who it is expected would have met the eligibility criteria at the time that they were interviewed. In the case of the one-off payment to seniors, payments were assigned to all recipients of age pension, wife pension, carer payment, widow allowance, disability support pension, mature age allowance and service pension, providing they were at least 65 years old if male, and at least 61 years old if female. The one off payment to families was assigned to recipients of family tax benefit (one payment was assigned for each dependent child) and persons under 18 living at home and receiving youth allowance. The one off payment to carers was assigned to recipients of carer payment and carer allowance.
Final income
The methodology used to estimate final income is described separately in Government Benefits, Taxes and Household Income, Australia (cat. no. 6537.0).
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