GLOSSARY

Age

Age of earner as at 30 June 2013 as reported on the Individual Tax Return.

Annuities

Annuities are guaranteed regular and recurring receipts, generally from an insurance company, the right to which was purchased with a lump sum or regular contributions at some point in the past.

Assets

An entity of a financial or non-financial nature, owned by the household or its members, and from which economic benefits may be derived by holding or use over a period of time.

Australian Statistical Geography Standard (ASGS)

The ASGS came into effect in July 2011 to replace the Australian Statistical Geographical Classification (ASGC). The ASGS provides a common framework of statistical geography used by the ABS to enable the publication of statistics that are comparable and spatially integrated. Its purpose is to outline the conceptual basis of Mesh Blocks, the regions of the main structure and the Greater Capital City Statistical Areas and their relationships to each other. For further information refer to Australian Statistical Geography Standard (ASGS): Volume 1 - Main Structure and Greater Capital City Statistical Areas, July 2011 (cat. no. 1270.0.55.001) and https://www.abs.gov.au/geography.

Australian Quartile Ranges

Quartiles are groupings that result from ranking all persons who lodged tax returns in ascending order according to total income, and then dividing them into four equal groups, each comprising 25% of the reference population. In 2012-13, 25% of Australia's population earned less than $21,400 (lowest quartile), 25% earned between $21,400 and $44,940 (second quartile), 25% earned between $44,941 and $74,999 (third quartile) and 25% earned over $75,000 (highest quartile). Australia's quartile ranges (the amount one must earn to fall into a certain quartile) are used to compare the income distributions of regions to Australia, for example, a region which shows greater than 25% of the population earning over $75,000 shows a region with a greater proportion of high income earners than Australia overall.

Deciles

Groupings that result from ranking all households or persons in the population in ascending order according to some characteristic such as their household income and then dividing the population into 10 equal groups, each comprising 10% of the estimated population.

Disposable income

Gross income less income tax, the Medicare levy and the Medicare levy surcharge i.e. remaining income after taxes are deducted, which is available to support consumption and/or saving. Income tax, Medicare levy and the Medicare levy surcharge are imputed based on each person's income and other characteristics as reported in the survey. Disposable income is sometimes referred to as net income.

Dividends

Dividends may be the main source of income for people who run their own incorporated business. They can be:

• 'franked' which are shares of company profit paid or credited by an Australian resident public company from profits on which Australian company tax has been paid, or
• 'unfranked' which are those shares of company profit paid by an Australian resident company from profits on which Australian company tax has not been paid.

Earners

Persons (including children) who receive income (either positive or negative) from employee income, investment income, own unincorporated business income, superannuation income or other income.

Employee

Employees are defined as persons who worked for a private or public sector employer and received pay for the reference period in the form of wages or salaries, a commission while also receiving a retainer, tips, piece rates or payments in kind. Persons who operated their own incorporated enterprises with or without hiring employees are also included as employees.

Employee income

An employee's total remuneration, whether monetary or in kind, received as a return to labour from an employer or from a person's own incorporated business. It comprises wages and salaries, bonuses, amounts salary sacrificed, non-cash benefits such as the use of motor vehicles and subsidised housing (where valued over certain threshold, see Explanatory Notes at paragraph 6 for more information), and termination payments.

Employee income usually includes all employer social contributions. However, many components of this income are not reported on the Personal Income Tax (PIT) dataset and hence are not included in this publication.

Financial assets

An asset whose value arises not from its physical existence (as would a building, piece of land, or capital equipment) but from a contractual relationship. Financial assets are mostly financial claims (with the exception of shares and value of own unincorporated business). Financial claims entitle the owner to receive a payment, or a series of payments, from an institutional unit to which the owner has provided funds. Examples include accounts held with financial institutions (including offset accounts), ownership of an incorporated business, shares, debentures and bonds, trusts, superannuation funds, and loans to other persons.

Geography

All geographic variables are based on an earner's home address at February 2015 as reported in the Personal Income Tax (PIT) Client Register, and are aligned to the Australian Statistical Geography Standard (ACGS): Volume 1 – Main Structure and Greater Capital City Statistical Areas, July 2011 (cat. no. 1270.0.55.001). See Explanatory Notes at paragraph 57 for more information.

Gini coefficient

A summary measure of inequality of income distribution. For more information see paragraphs 14-17 in the Explanatory Notes.

Government pensions and allowances

Income support payments from government to persons under social security and related government programs. Included are pensions and allowances received by aged, disabled, unemployed and sick persons, families and children, veterans or their survivors, and study allowances for students.

Gross income

Income from all sources, whether monetary or in kind, before income tax, the Medicare levy and the Medicare levy surcharge are deducted.

Greater Capital City Statistical Area Structure

Greater Capital City Statistical Areas (GCCSAs) represent the socio-economic extent of each of the eight state and territory capital cities. They include the people who regularly socialise, shop or work within the city, but live in the small towns and rural areas surrounding the city.

High income earner

High income earners are defined as earners who are earning above the bottom of the highest Australia level quartile range at $75,000. High income earners are presented as a proportion of the whole income earner population, by region, to identify areas where there are many or few high income earners.

Income

Income consists of all annual receipts, that are received by an individual, and which are reported on an Individual Tax Return.

Gross income (used in this publication) is the sum of the income from all sources before income tax, the Medicare levy and the Medicare levy surcharge are deducted. Other measures of income are Disposable income and Equivalised disposable household income.

Income tax

See Taxes on income.

Individual Tax Return

The annual tax return submitted by individuals to the Australian Taxation Office (ATO).

Investment income

Income received as a result of ownership of assets. It comprises returns from financial assets (interest, dividends), and from non-financial assets (rent).

Local Government Area (LGA)

These areas are the spatial units which represent the geographical areas of incorporated local government councils. LGAs include sub categories such as Cities (C), NSW Local Government Areas (A), Boroughs (B), Rural Cities (RC), Towns (T), Shires (S), District Councils (DC), Municipalities (M), SA Municipal Councils (M), SA Regional Councils (RegC) and Qld Regional Councils (R). Unless stated otherwise, data are presented for LGA boundaries at 2014.

Main source of income

The income source from which the most positive income is received. If total income is nil or negative the main source is undefined. As there are several possible sources, the main source may account for less than 50% of gross income.

Mean income

The total income received by a group of units divided by the number of units in the group.

Median age

That level of age which divides the units in a group into two equal parts, one half having incomes above the median and the other half having incomes below the median.

Median income

That level of income which divides the units in a group into two equal parts, one half having incomes above the median and the other half having incomes below the median.

Medicare levy

Medicare is Australia's universal health care system. The Medicare levy is a specific tax, based on individual income, intended to assist in the funding of this system.

Medicare levy surcharge

The Medicare levy surcharge is a levy, or an additional tax, on Australian taxpayers who do not have an appropriate level of private hospital insurance and who are earning more than the specified income threshold.

Negative income

Income may be negative when a loss accrues to an individual as an owner or partner in unincorporated businesses, rental properties or other investment income. Losses occur when operating expenses and depreciation are greater than gross receipts.

Net Capital Gains

Capital gains cover the sale of assets such as: land, units in a unit trust and other investment properties, company shares, licenses, rights, options and leases; various collectables (paintings, antiques, coins, jewellery and similar) with an original market value of over $500; and personal use assets such as boats, furniture and electrical goods with an original value of over $10,000. More ATO information on this topic is available from Capital Gains and Exemptions.

Other income

Income other than employee income, own unincorporated business income, investment income and superannuation income. This includes other current receipts from sources such as child support, royalties, workers' compensation and scholarships.

Own unincorporated business income

The profit/loss that accrues to persons as owners of, or partners in, unincorporated businesses. Profit/loss consists of the value of gross output of the business after the deduction of operating expenses (including depreciation). Losses occur when operating expenses are greater than gross receipts and are treated as negative income.

Percentiles

When all persons in the population are ranked from the lowest to the highest on the basis of some characteristic such as their income, they can then be divided into equal sized groups. Division into 100 groups gives percentiles. The highest value of the characteristic in the tenth percentile is denoted P10. The median or the top of the 50th percentile is denoted P50. P20, P80 and P90 denote the highest values in the 20th, 80th and 90th percentiles. Ratios of values at the top of selected percentiles, such as P90/P10, are often called percentile ratios.

Percentile ratios

Percentile ratios summarise the relative distance between two points in a distribution. To illustrate the full spread of the income distribution, the percentile ratio needs to refer to points near the extremes of the distribution, for example, the P90/P10 ratio. The P80/P20 ratio better illustrates the magnitude of the range within which the income or net worth of the majority of persons falls. The P80/P50 and P50/P20 ratios focus on comparing the ends of the income distribution with the midpoint.

Positively skewed income distribution

The distribution of income tends to be asymmetrical, with a small number of people having relatively high incomes and a larger number of people having relatively lower incomes. The greater the asymmetry, the greater the difference there will be between the mean and the median, and the more positively skewed the income distribution is said to be.

Quartiles

Groupings that result from ranking all people in the population in ascending order according to some characteristic such as their personal income and then dividing the population into four equal groups, each comprising 25% of the estimated population.

Rest of State

Under the Australian Statistical Geography Standard (ASGS), Rest of State is any area not defined as being part of the Greater Capital City Statistical Areas (GCCSAs). In the case of Australian Capital Territory, there is no Rest of State balance.

Shares

A share is a contract between the issuing company and the owner of the share which gives the latter an interest in the management of the corporation and the right to participate in profits. The "value of shares" excludes the value of shares held by individuals in their own incorporated business. Such shares are included in "value of own incorporated business".

Statistical Area Level 1 (SA1)

Statistical Areas Level 1 (SA1s) have been designed as the smallest unit for the release of Census data. SA1s generally have a population of 200 to 800 persons, and an average population of about 400 persons. They are built from whole Mesh Blocks and there are approximately 55,000 SA1s covering the whole of Australia.

Statistical Area Level 2 (SA2)

Statistical Areas Level 2 (SA2s) are part of the ASGS and are general purpose, medium sized areas designed to represent communities that interact socially and economically. SA2s generally have an average population of 10,000 persons, or a population size range of 3,000-25,000 persons, tending towards the lower limit of this range in rural and remote regions. There are 2,214 SA2s Australia wide covering the whole of Australia without gaps or overlaps.

Statistical Area Level 2 (SA3)

Statistical Areas Level 3 (SA3s) are part of the ASGS and have been created as a standard for the analysis of ABS data at broader geographies through the clustering of SA2s with similar regional characteristics. Generally, SA3s have a population size range of 30,000-130,000 persons. There are 351 SA3s Australia wide.

Statistical Area Level 4 (SA4)

Statistical Areas Level 4 (SA4s) are part of the ASGS and are used for the output of a variety of regional data, including the 2011 Census Data. There are 106 SA4s covering the whole of Australia without gaps or overlaps. They are built up from SA1s. In regional areas, SA4s tend to have populations of between 100,000 to 300,000 people. In metropolitan areas, SA4s tend to have larger populations (300,000 – 500,000 people).

Superannuation

A long-term savings arrangement which operates primarily to provide income for retirement.

Superannuation/annuity income

Income from superannuation, annuities and private pensions such as allocated pensions.

Taxes on income

Taxes on income is the sum of personal income tax plus the Medicare levy and Medicare levy surcharge.

Trusts

Any type of managed fund which involves the pooling of investors' money in order for a trustee or professional manager to administer that fund. Examples include listed and unlisted public unit trusts, cash management trusts, property trusts and family trusts used only for investment purposes.

Unincorporated business

A business in which the owner(s) and the business are the same legal entity, so that, for example, the owner(s) are personally liable for any business debts that are incurred. The business may be registered (in their own state) as a sole trader, partnership or firm; however they are not registered with the Australian Securities and Investments Commission and are not legally a company.