GLOSSARY



A B C D E F G I L M N O P R S V W

Advertising, marketing and promotion

Advertising expenses are the costs incurred by an organisation for promotional and publicity campaigns aimed at bringing the activities of the organisation to the attention of consumers for the purpose of increasing sales. Marketing expenses are the costs incurred in the long-range promotion of an organisation and its goods or services. Promotional expenses are those costs associated with generating good relations of an organisation and/or its services to the general public, e.g. promotional brochures. Sponsorship expenses are excluded.

Assets

This refers to items with future economic benefits, for example providing future costs savings or generating future revenue. Includes cash and deposits, investments held with fund managers, property, plant and equipment and other items.

Australian resident organisation

This item represents any organisation domiciled in Australia. Australian branches and Australian subsidiaries of foreign organisations are regarded as Australian residents.

Bad and doubtful debts

This item represents the amount of accounts receivable which is either written off or estimated to be uncollectable during an accounting period, and which is charged to profit as an expense in that period. It is net of any previous bad or doubtful debts recovered during the period.

Bequests/legacies

This item represents amounts left to an organisation as part of someone's will.

Capital expenditure

This item refers to the total expenditure on acquiring fixed tangible and intangible assets, before deduction of trade-in allowances, and including expenses (except capitalised interest) incurred during the year in acquiring such assets. Fixed tangible assets include land, dwellings, other buildings and structures, plant, machinery and equipment (including motor vehicles). Intangible assets include patents and licences. This item also includes capitalised work done by own employees.

Capitalised wages and salaries and purchases of materials for capital work

This item refers to the payments of wages and salaries and the purchases of materials, capitalised in the accounts, for work done by the organisation's own employees in manufacturing, constructing, installing or repairing assets or in developing computer software in-house for its own use or for rental or lease.

Capitalised work done by own employees

This item refers to the value of capital work done by the organisation's own employees in manufacturing, constructing, installing or repairing assets, and the in-house development of computer software, for use by the business or for rental or lease. This work is valued at the capitalised costs of the materials and the wages and salaries involved.

Casual employees

This item refers to employees who are not entitled to take paid leave.

Computer software expensed

This item refers to the cost of computer software that has been fully charged to profit as an expense in the current accounting period.
Depreciation and amortisation

This item refers to regularly recurring financial charges made in the accounts to reflect that part of the value of the asset which may be regarded as having been used up in producing revenue in a particular accounting period. Depreciation generally refers to physical (tangible) non-current assets, and amortisation generally refers to intangible non-current assets.

Donations

This item refers to transactions for which the donor receives no material benefit other than a tax deduction (if eligible). Donations can be financial or in-kind.
Employer contributions to superannuation funds

This item refers to all employer contributions to superannuation schemes excluding contributions paid in lieu of wages and salaries (as part of a salary package).

Employment at end June

This item represents all permanent, temporary and casual employees on the payroll of the organisation for the last pay period ending in June. Employees absent on paid or prepaid leave are included. Consultants, contractors, people paid by commission only and volunteers are excluded.
Fringe benefits tax

Fringe benefits tax is payable by employers when certain benefits in excess of normal wages or salaries (e.g. free or discounted goods or services) are received by their employees (or associates of employees) in connection with their employment.

Funding from federal, state and local government

This item refers to project or program payments made by federal, state/territory or local government in the form of funds for ongoing (current) operations and capital funds to purchase or improve equipment or property. It includes:

• volume based funding, which refers to funding provided subject to an agreement or contract specifying the volume of services to be delivered, and paid in proportion to the volume of services delivered (e.g. per student funding to schools, per bed funding to residential aged care facilities);
• non-volume based funding, which refers to general purpose grants or to funding which may be provided under a funding agreement for a specific purpose, but which is not dependent on the delivery of a specified volume of services; and
• funding for specific capital items, which refers to one-off funds to make capital improvements or to purchase equipment or property (e.g. motor vehicles, buildings, etc.).

Grants and other payments made to other organisations/businesses and individuals

This item includes grants, distributions, allocations and affiliation fees, but excludes membership fees, donations and sponsorships paid. This includes payments to:

• related or affiliated organisations, i.e. an organisation which has a legal relationship with the paying organisation, or which is part of the same group of organisations (e.g. a state equivalent of an Australian organisation, or an Australian chapter of an international organisation); and
• other organisations/businesses and individuals.

Income from related or affiliated organisations

A related organisation is an organisation which has a legal relationship with the receiving organisation, or which is part of the same group of organisations (e.g. a state equivalent of an Australian organisation, or an Australian chapter of an international organisation). This item includes grants, distributions, allocations and affiliation fees received, but excludes government funding, membership fees, donations and sponsorships income received.

Income from services

This item refers to income earned from the provision of services. It includes income from services provided for nominal consideration, contract, subcontract and commission income, management fees/charges from related and unrelated organisations, delivery charges separately invoiced to customers and takings from gambling activities, (net of pay-outs and rebates to players, but inclusive of specific gambling taxes and/or levies). This item excludes government funding and subsidies for service delivery, income from sponsorships and other fundraising activities, and income from investments, royalties, membership fees and rent, leasing and hiring.

Industry value added

IVA represents the value added by an industry to the intermediate inputs used by the industry. IVA is the measure of the contribution by organisations in the selected industry, to gross domestic product.

The derivation of IVA for market producers is as follows:

sales and service income

plus funding from federal, state and/or local government for operational costs

plus capital work done for own use

plus closing inventories

less opening inventories

less intermediate input expenses

less capitalised purchases

less capitalised purchases of materials

equals IVA.

Wage and salary expenses and most other labour costs are not taken into account in its calculation and nor are most insurance premiums, interest expenses, depreciation or a number of lesser expenses including bad debts, computer software expensed and state gambling taxes.

The derivation of IVA for non-market producers is as follows:

labour costs

plus depreciation

plus land tax

plus capital work done for own use

less capitalised purchases

equals IVA.

However, it should be noted that IVA is not a measure of operating profit (or surplus) before tax.

Insurance premiums

This item refers to expenses incurred by an organisation in respect of different types of insurance policies but excluding workers' compensation and compulsory third party motor vehicle insurance.

Interest expenses

This item refers to outflows of funds related to the cost of borrowing money.

Investment income

This item includes three components:

• interest income - the income earned through the lending out of funds owned by the organisation or interest earned on bank deposits.;
• dividend income - the dividends received during the financial period that are recognised as income in that period; and
• other investment income - includes earnings on discounted bills and distributions from trusts and managed funds.

Labour costs

This item refers to staff-related costs such as wages and salaries (including moneys paid directly through the payroll to freelancers without an ABN), fringe benefits tax and payroll tax, employer contributions to superannuation funds, workers' compensation premiums, provision expenses for employee entitlements and salary sacrifice paid on behalf of employees. Capitalised wages and salaries are excluded

Land tax and land rates

Land tax is an annual tax levied on the owner of the land. Land rates are annual charges levied by local government for the provision of local government services.

Liabilities

Liabilities are the future sacrifices of service potential or economic benefits that the entity is presently obliged to make to other entities as a result of past transactions or other past events.
Membership fees income

This item refers to payments received by an organisation from an individual or another organisation for the purpose of securing membership, which typically grants some form of benefit or right, (e.g. discounts, use of facilities, voting rights), to the individual or organisation paying the fee.

Membership fees paid

This item refers to payments made to another organisation for the purposes of securing membership, which typically grants some form of benefit or right, (e.g. discounts, use of facilities, voting rights), in return for payment of the fee.
Non-resident organisation

This item refers to any organisation domiciled overseas. Foreign branches and foreign subsidiaries of Australian organisations are regarded as non-resident organisations.

Not-for-profit organisations

Not-for-profit organisations are legal or social entities, formed for the purpose of producing goods or services, and whose status does not permit them to be a source of income, profit or financial gain for the individuals or organisations that establish, control or finance them. To be eligible for not-for-profit status for this survey, an organisation must qualify as such with either the Australian Taxation Office or the Australian Securities and Investments Commission.
Operating surplus before tax

This item is a measure of surplus during the reference period, taken before extraordinary items are brought to account and prior to the deduction of income tax. It is derived as:

total income

less total expenses

plus closing inventories

less opening inventories

equals operating surplus before tax.

A key characteristic of not-for-profit organisations is that any operating surplus made is reinvested in the operations of the organisation, and is not redistributed to individuals or organisations that establish, control or finance them.

Other expenses

This item refers to all other operating expenses which are not itemised as separate expense items (e.g. rent, leasing and hiring, management fees, repair and maintenance, and payments to other businesses/organisations and self-employed persons for work done or sales made on a contract or commission basis.)

Other fundraising

This item refers to forms of fundraising other than donations, bequests/legacies and sponsorships, for example, events and raffles.

Other income

This item refers to all other income sources which are not listed as separate income items (e.g. net surplus (deficit) resulting from revaluation of assets in accordance with Australian Equivalents to International Financial Reporting Standards, net surplus (deficit) resulting from variations in foreign exchange rates, net surplus (deficit) on share trading and net surplus (deficit) on the sale of other assets.)
Payments to other businesses (e.g. employment agencies) for staff

This item refers to payments made to other businesses/organisations, such as employment agencies, for the supply or recruitment of staff.

Payroll tax

Payroll tax is a tax levied by state and territory governments upon the amount of wages and salaries paid by an organisation. It should be noted that each state and territory has legislative provision for payroll tax exemption for certain classes of organisation commonly found in the not-for-profit sector.

Permanent full-time employees

This item refers to employees who work 35 hours or more per week and are entitled to paid leave.

Permanent part-time employees

This item refers to employees who work less than 35 hours per week and are entitled to paid leave.

Philanthropic trusts/foundations

Philanthropic trusts/foundations are not-for-profit organisations which hold money in trust for the public benefit and which make grants of money for charitable or socially useful purposes

Poker/gaming machines and other gambling taxes/levies

This item refers to all taxes/levies paid to the government and funds transferred to government bodies in accordance with gambling regulations. These taxes and levies are paid by the owners of the poker/gaming machines and other gambling facilities.

Purchases

This item refers to the cost of non-capitalised goods and services used in the production of the final output of an organisation. It includes finished goods for resale and materials and goods for the organisation's use. Contract, subcontract and commission expenses, capitalised purchases, and parts and fuel for motor vehicles are excluded.
Rent, leasing and hiring income

This item refers to revenue derived from the renting, leasing or hiring of assets such as land, buildings, vehicles, machinery or equipment to other businesses/organisations or individuals.
Salary sacrificed earnings paid on behalf of employees

Salary sacrifice earnings refer to an arrangement where employees agree to forgo part of their pre-tax salary in return for benefits. It includes earnings sacrificed by employees in order to make superannuation contributions or for other employee benefits (e.g. motor vehicles and laptop computers).

Sales of goods

This item refers to income earned from the sale of goods, whether or not produced by the organisation. It includes export sales, sales or transfers to related organisations or to overseas branches of the organisation, sales made for nominal consideration and delivery charges not separately invoiced to customers. This item excludes excise and duties received on behalf of the government, sales of assets, delivery charges separately invoiced to customers and income from investment, royalties and rent, leasing and hiring.

Sponsorship income

This item refers to transactions made which result in advertising and/or other benefits to the sponsoring business/organisation. Donations of a financial or in-kind nature are excluded.
Volunteers

This item refers to the number of volunteers who worked during the 2006-07 financial year. Volunteers are people who willingly give unpaid help, in the form of time, service or skills, to an organisation. Included in this category are the volunteer component of boards of management, fundraising committee members and auxiliary members.
Wages and salaries

This item refers to the gross wages and salaries (excluding capitalised wages and salaries) of all employees of the organisation. It includes severance, termination and redundancy payments, salaries and fees of directors and executives, retainers and commissions of persons who received a retainer, bonuses and annual and other types of leave. Provision expenses for employee entitlements are also included (e.g. provisions for annual leave and leave bonus, long service leave, sick leave, and severance, termination and redundancy payments). Payments related to salary sacrifice and payments to self-employed persons such as consultants, contractors and persons paid solely by commission without a retainer, are excluded.

Workers’ compensation premiums/costs

Workers' compensation is a compulsory insurance cover taken out by all employers, except for self-insured workers, according to legislative schemes to cover employees suffering injury or disease in the course of, or arising out of employment.