5494.0 - Economic Activity of Foreign Owned Businesses in Australia, 2014-15
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 13/08/2018
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EXPLANATORY NOTES
Statistical Unit 6 The statistical unit for the 2014-15 issue of this publication is the TAU, and is defined as a producing unit comprising one or more legal entities, sub-entities or branches of a legal entity that can report productive and employment activities via a minimum set of data items. A TAU covers all the operations within an Enterprise Group (EG) that belong to one industry subdivision and for which there are a minimum set of economic data items available. Where a business cannot supply adequate information for each industry, a TAU is formed containing activity in more than one industry. These TAUs are classified according to the industry of the main activity. TAUs may have operations in one or more states or territories. Foreign ownership of resident Australian businesses 7 This publication identifies the level of foreign ownership in terms of influence and control as defined by the Balance of Payments Manual, sixth edition (BPM6). The BPM6 states that an immediate direct investment relationship arises, ‘when a direct investor directly owns equity that entitles it to 10 percent or more of the voting power in the direct investment enterprise… [a] significant degree of influence is determined to exist if the direct investor owns from 10 to 50 percent of the voting power in the direct investment enterprise’ (BPM6, para. 6.12). In the case of this publication the enterprise is equivalent to the TAU. 8 Similarly, the level of control is determined to exist, ‘if the direct investor owns more than 50 percent of the voting power in the direct investment enterprise’ (BPM6, para. 6.12). 9 As a result, the foreign ownership disaggregation presented in this publication is as follows:
10 In instances where not all categories of disaggregation were able to be produced the following disaggregation is presented:
Business Longitudinal Analysis Data Environment (BLADE) 11 BLADE combines ATO business tax data (Business Income Tax (BIT), Business Activity Statement (BAS) and Pay As You Go (PAYG)), information from ABS surveys and data about the use of government programs to provide a better understanding of Australian businesses and the economy. 12 The categorisation of businesses within BLADE sees each business unit classified to a single industry based on the primary activity of the TAU, irrespective of any secondary activity. For more information on BLADE please refer to the Data Integration page on the ABS website. Implications of using BLADE 13 In general, administrative data is structured to suit its primary intended purpose. 14 In this publication, the data representing the variables assets and liabilities may reflect the effects of complex corporate reporting structures:
15 The export variable will represent exports as reported to the ATO. These data may differ to that reported via the Integrated Cargo System used by the ABS in the compilation of merchandise trade statistics. 16 Given this difference, exports are presented as proportions based on the administrative data from BLADE and appear as follows:
Comparability to the previous issue 17 While covering the same economic concepts, this publication has not been compiled on an identical basis to that of the 2000-01 reference period issue. Users should exercise caution when making comparisons between issues as the data is not directly comparable due to the changes in data sources and methodology. 18 The data in this publication have been derived using existing ABS sources at the ANZSIC Division level and disaggregated by business characteristics using BLADE. The application of this methodology and the use of BLADE enabled the following enhancements over the 2000-01 publication:
19 Data relating to foreign ownership and country of origin in this publication was derived at the ABN level from the BIT data, whereas these variables in the 2000-01 issue were estimated based on linking the Economic Activity Survey (EAS) to the Survey of International Investment (SII), which derives country of origin information on an EG basis. As a result, country of ownership data is not directly comparable between the two publications. 20 There have been a number of changes to the ABS Business Register (ABSBR) since the last issue of this publication was released in 2004. These changes are outlined in detail within Appendix 1 of Counts of Australian Businesses, including Entries and Exits, Jun 2013 to Jun 2017 (cat. no. 8165.0). 21 The industry structure for the 2000-01 issue was presented in accordance with ANZSIC 1993. Changes in the structure between 1993 and 2006 will impact the value of estimates presented due to the increase in the number of industry categories. For more information on changes between ANZSIC 1993 and ANZSIC 2006 refer to Appendix 3 of the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (cat. no. 1292.0). Relationship with other ABS statistics 22 The macroeconomic concepts used in this publication are consistent with estimates published in Australian Industry 2014-15, (cat. no. 8155.0), at the industry division level for the following data items:
23 Australian Industry (cat. no. 8155.0) does not include estimates for the Financial and Insurance services industry. This publication includes estimates for the Financial and Insurance services industry based on data from BLADE, supported by relevant ABS estimates. 24 The ABS presents data on foreign investment in Balance of Payments and International Investment Position, Australia, (cat. no. 5302.0) and the related release International Investment Position, Australia: Supplementary Statistics (cat. no. 5352.0). Both releases capture levels of investment between residents of Australia and residents of the rest of the world (non-residents). For example, the value of foreign investment, such as levels of equity or debt held in Australian resident businesses. 25 In comparison, this publication provides estimates for the economic activity of businesses by level of foreign ownership in the Australian economy. 26 In International Investment Position, Australia: Supplementary Statistics, the country allocation of financial transactions and level is based on the immediate country of residence of the creditor in the case of Australia's foreign liabilities, or of the debtor in the case of Australia's foreign assets. The country of residence of the ultimate beneficial owner (UBO)/recipient is not identified. This is in contrast to this publication which presents country information on a UBO basis. See paragraphs 30-34 below for more information on country of origin. 27 Additionally, Balance of Payments and International Investment Position, Australia information relates to the industry of the EG which comprises one or more TAUs, rather than industries of specific TAU as presented in this publication. Aggregation from TAU and EG may result in different industry profiles. 28 Comparisons between Balance of Payments and International Investment Position, Australia, International Investment Position, Australia: Supplementary Statistics and this publication should be undertaken with the above information in mind. Estimation of Foreign Share 29 For this publication, the level of foreign ownership was calculated using the foreign share data as reported in the BIT dataset and linked to BLADE. In order to align with the ABS Economic Units Model (EUM) (see appendix 1), data reported at the ABN level from BIT reporting was calculated based on the average level of foreign ownership by all ABNs within a TAU. Country of Origin 30 The Organization for Economic Cooperation and Development’s Handbook of Economic Globalisation Indicators (HEGI) recommends that, where possible, foreign investment indicator data should be compiled on the Ultimate Beneficial Owner (UBO) basis. 31 A related concept that is available within BLADE is the Ultimate Holding Company (UHC) country code. The UHC represents the country where the ultimate beneficiary in terms of a holding company resides. As a result this publication has compiled country data on the UHC basis. Estimation of Country of Origin 32 Where units indicated foreign ownership of greater than 50%, but did not have a UHC country code assigned in BLADE, confrontation against other sources, including SII data, was used to determine the country of origin for the largest units. 33 Not all countries available in the source data are separately identified in the relevant tables within this publication. A minimum business count threshold was used to determine whether a country was separately identifiable in the publication. Those countries below the minimum business count threshold will be added to an All other country category. 34 While in all cases the level of foreign ownership of a business could be determined, in some instances the country of ownership itself could not be identified. As a result, the activity reported by businesses with an unknown country of origin contributed to the total, but are not separately identified in the published tables. These units are generally small in terms of activity and represent a negligible proportion of the total IVA. Consolidated Reporting 35 The ABS predominantly uses the EUM from the ABS Business Register (ABSBR) at the TAU or EG level in the development of ABS business survey frames. ATO data reporting groups do not necessarily align with the classification structures reported in ABS survey data. To ensure tax data reported aligned with the EUM in this publication, data were disaggregated to the highest level common to both reporting arrangements, being the ABN level. From the ABN level, the data were then aggregated to the relevant level of the EUM for the output. 36 Where consolidated reporting could be identified, foreign share data from the BIT data were assigned to all ABNs within a reporting group. These ABN-level data were then aggregated up to TAU level by calculating the mean of all ABNs that make up the TAU. Operating Businesses 37 The counts of operating businesses across time are affected by factors such as internal restructuring of businesses (e.g. changes in divisional structure), mergers and takeovers. For information on business counts in the ABS please refer to Count of Australian Businesses Entries and Exits, (cat. no. 8165.0) - Appendix 1. Business Size 38 Business size data in this publication have been derived from the level of employment for each unit based on data reported to the ATO. These counts may differ from other sources estimating business size based on employment data obtained from survey data or information from the ABSBR. Off-June reporting 39 The data collected in the BLADE generally represent the 12 month period ended 30 June. However, where businesses report data on a different basis an alternate or off-June year accounting period is used. As a result, in some instances estimates may reflect trading conditions occurring outside of the published reference year. Sales of goods and services 40 The sales of goods and services variable relates to income derived expressly from the exchange of goods and services for consideration between two or more parties. This excludes income indirectly derived from other sources, such as government payments or interest income. Industry Value Added (IVA) 41 Industry value added (IVA) is the measure of the difference between the market value of the output of an industry and the purchases of materials and expenses incurred in the production of that output. The application of the standard formula for IVA is known to result in an understatement of the value added for businesses which do not charge directly, or do not charge full commercial value for their output. For this reason IVA is not calculated for the Financial and insurance services industry. Accuracy and reliability 42 Data from the ATO are not subject to sampling error as they represent a complete enumeration of economically active businesses on the ABSBR. However, they are subject to non-sampling error, specifically around variables that have limited bearing on the primary interests of the ATO and the cyclical administrative work flows of the ATO may also impact on data interpretability. 43 Industry division level variables used in this publication are consistent with published estimates in Australian Industry (cat. no. 8155.0) (see paragraph 22 of these Explanatory Notes). For information regarding the data quality of Australian Industry (cat. no. 8155.0), please see the relevant data quality technical note. Rounding 44 Where figures have been rounded, discrepancies may occur between sums of the component items and totals. ABS Confidentiality Restrictions 45 In accordance with the Census and Statistics Act 1905, estimates in this publication have been confidentialised to ensure that they are not likely to enable identification of a particular person or organisation. For this reason, it has been necessary to suppress some cells of the published tables (shown as ‘np’). In most cases, where a cell relating to a particular country has been suppressed, the suppressed data have been included in the total for that indicator. Acknowledgement 46 ABS publications draw extensively on information provided freely by individuals, businesses, governments and other organisations. Their continued cooperation is very much appreciated; without it, the wide range of statistics published by the ABS would not be available. Information received by the ABS is treated in strict confidence as required by the the Census and Statistics Act 1905. Use of ATO data in this publication 47 The results of these statistics are based, in part, on tax data supplied by the ATO to the ABS under the Income Tax Assessment Act 1936 which requires that such data are only used for statistical purposes. No individual information collected under the Census and Statistics Act 1905 is provided back to the ATO for administrative or regulatory purposes. Any discussion of data limitations or weaknesses is in the context of using the data for statistical purposes, and is not related to the ability of the data to support the ATO's core operational requirements. 48 Legislative requirements to ensure privacy and secrecy of these data have been followed. Only people authorised under the Australian Bureau of Statistics Act 1975 have been permitted to view data about any particular business and/or person in conducting these analyses. No information about individual taxpayers (persons) has been released to the ABS. Aggregated personal income tax data are confidentialised by the ATO before release to the ABS. In accordance with the Census and Statistics Act 1905, results have been confidentialised to ensure that they are not likely to enable identification of a particular person or organisation. Document Selection These documents will be presented in a new window.
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