INTRODUCTION
1 This release contains regional estimates relating to all persons aged 15 years and over who received income from Wages and salaries in the years 2003-04 to 2007-08. The previous issue in this series included estimates for the years 2003-04 to 2006-07. Estimates for the income year 2007-08 have been added to the existing series to form a five years time series of data from 2003-04 to 2007-08.
2 The estimates in this release include the number of persons, their income from Wages and salaries, and characteristics such as age, sex and occupation. Key data items in this series (number of persons, income and average income) have already been released in Estimates of Personal Income for Small Areas, Time Series, 2003-04 to 2007-08 (cat. no. 6524.0.55.002).
3 Data is presented at various levels of the Australian Standard Geographical Classification (ASGC), including Statistical Local Areas (SLAs) and Local Government Areas (LGAs), in each state and territory of Australia. Paragraphs 39 to 48 contain more information about Statistical Geography.
4 These data have been compiled from the Australian Taxation Office's (ATO) Individual Income Tax Return Database and are part of the Australian Bureau of Statistics' (ABS) program to increase the range of regional statistics available, particularly through the use of administrative information collected by other government agencies. The ABS wishes to acknowledge the ATO which provided data used in compiling the statistics presented in this release.
SUMMARY OF CHANGES TO THIS SERIES
5 Estimates of Wage and salary earner statistics for the years 1995-96 to 2005-06 have previously been released in an Information Paper and in Regional Wage and Salary Earner Statistics, Australia (cat. nos. 5673.0, 5673.0.55.001 and 5673.0.55.003). These releases contained data relating to persons whose main (or principal) sources of income were from Wages and s
6 Data for 1995-96 to 2000-01 included only 'Gross Wage and salary income' and 'Allowances, tips etc' items from the individual tax return. Data for 2001-02 to 2005-06 included 'Attributable personal services income' in the definition of Wages and salaries.
7 In this current issue (containing estimates for the years 2003-04 to 2007-08) and in the previous issue (containing estimates for the years 2003-04 to 2006-07) income from Lump sums and Eligible termination payments have been included in Wages and salaries.
8 A summary of the changes to the Wage and salary earner series since the 1995-96 financial year are presented in the table below:
| Release | Reference periods | Government pensions and allowances | Wages and salaries inclusions | Number of individuals |
|
| 5673.0 and 5673.0.55.001 | 1995-96 to 2000-01 | Included |
- Gross wage and salary income
- Allowances, commissions, tips etc.
| Individuals with positive net income |
| 5673.0.55.003 | 2001-02 to 2005-06 | Excluded |
- Gross wage and salary income
- Allowances, commissions, tips etc.
- Attributed personal services income
| Individuals with positive net income |
| 5673.0.55.003 | 2003-04 to 2006-07 &
2003-04 to 2007-08 | Excluded |
- Gross wage and salary income
- Allowances, commissions, tips etc.
- Attributed personal services income
- Lump sums
- Eligible termination payments
| Individuals with positive and negative net income |
|
CONFIDENTIALITY
9 All individual income tax statistics provided to the ABS by the ATO have been in aggregated form only, at the SLA level. Information about individual taxpayers has not been released to the ABS.
10 Prior to being provided to the ABS, the statistics have also been subjected to a confidentiality process that randomly adjusts table cells with small values. This includes altering some small cells to zero. Caution should therefore be exercised in deducing that there are no people in an area with certain characteristics and, in general, no reliance should be placed on table cells with small values. The confidentiality process prevents the risk of inadvertently releasing any information that may identify an individual while preserving the overall information value of the statistics.
SCOPE AND COVERAGE
11 The scope of these data relate to persons receiving income from Wages and salaries.
12 Wage and salary earners have been defined as:
persons aged 15 years and over who have submitted an individual income tax return and have received wage and salary income in that financial year.
13 Wage and salary income, as reported on the income tax return, includes:
- gross income as shown on the 'PAYG payment summary - individual non-business';
- allowances, commissions, bonuses, tips, gratuities, consultation fees, honoraria and other payments for services. Allowances and other earnings may include car, travel or transport allowances, allowances for tools, clothing or laundry and dirt, risk, meal or entertainment allowances;
- attributed personal services income;
- eligible termination payments; and
- lump sums.
14 It should be noted that this definition does not take account of whether Wage and salary earners work on a full-time or part-time basis. Consequently, differences in the extent of part-time work may account for some differences in the number of Wage and salary earners and average Wage and salary incomes across regions. Similarly, average Wage and salary incomes may be affected by overtime earnings and multiple job holdings.
DATA CONSIDERATIONS
15 There are several data considerations that users should be aware of when analysing the data. Overall, these are not viewed as being so severe that they would lead to the production of misleading information. Users are cautioned to be aware of these considerations and take them into account when analysing the results.
16 For the purposes of providing statistical measures for the entire population, the ATO database has some limitations in its coverage. Persons who receive less than the taxable income threshold are not necessarily required to lodge a tax return. Consequently, the coverage of low income earners is not complete in ATO records.
17 Generally, the ATO considers someone to be an Australian resident for tax purposes if they:
- have either always lived in Australia or have come to Australia to live permanently;
- have been in Australia for more than half of the financial year (unless their usual home is overseas and they don't intend to live in Australia);
- have been in Australia continuously for six months or more and for most of that time have been in the one job and living in the same place;
- are an overseas student enrolled in a course of study for more than six months duration.
Processing of tax returns
18 The data presented in this publication were compiled before the processing of all income tax returns for any given year may have been completed. Data provided to the ABS by the ATO are from returns processed up to 31 October, 16 months after the end of the financial year. Any returns lodged after this date are not included. Therefore, for 2007-08, returns processed after 31 October 2009 are not included. This also applies for each of the previous four years of data presented in this release, so for 2005-06 data for example, returns processed after 31 October 2007 are not included.
19 Annual revised data is published by the ATO in Taxation Statistics, Personal Tax, Table 7 for selected income items. One of these items is 'Salary or wages'. Although this data item is different to the data contained in this release (as it does not include all the items listed in paragraph 13), it can be used to give an indication of the likely direction of change in the number of Wage and salary earners and total Wage and salary income as more tax returns are lodged.
20 As an example, Table 1 below shows that for the 2003-04 income year, an additional 4.8% of taxpayers earning income from 'Salary or wages' lodged their income tax returns in the four years after the initial processing cut off of 31 October 2005. This translated to a further 5.0% of 'Salary or wages' income being reported.
Table 1. Comparison of ATO Original and revised data - Number of 'Salary or wages' earners and total 'Salary or wages' income, 2003-04
|
 | 2003-04
|
| Returns lodged as at: | No. Wage and Salary Earners | % Change from
31 October 2005 | Total Income from Wage and Salaries $ | % Change from
31 October 2007 |
|
| 31 Oct 2005 | 8 435 280 | | 305 009 561 208 | |
| 31 Oct 2006 | 8 658 015 | 2.6 | 313 953 461 851 | 2.9 |
| 31 Oct 2007 | 8 747 130 | 3.7 | 317 085 266 107 | 4.0 |
| 31 Oct 2008 | 8 793 750 | 4.2 | 318 675 652 655 | 4.5 |
| 31 Oct 2009 | 8 841 265 | 4.8 | 320 280 652 016 | 5.0 |
|
21 Due to the later lodgement dates for a small portion of tax returns (as shown above) the data provided in this release slightly under-estimates the total taxable income for a given financial year.
22 The ATO has noted in Chapter 2 of Taxation Statistics 2007-08 that 'Lodgement of individuals' income tax returns grew by 7.1% for the 2007-08 income year. This increase reflects, in part, individual lodgements brought forward to access the government's tax bonus payment'.
Changes in taxation policy
23 The ATO provides information annually in Taxation Statistics on their website about changes that may affect taxation statistics. Changes relating to personal income tax are in each edition of Taxation Statistics.
24 For the income year 2007-08, the following changes were noted in Chapter 2 of Taxation Statistics:
- the additional increase in individual lodgments brought forward to access the government’s tax bonus personal income tax cuts
- the increase in the low income tax offset from $600 in 2006–07 to $750 in 2007–08
- the change in access to the entrepreneur tax offset – previously only available to certain businesses within the simplified tax system it is now available to eligible small business entities with aggregated turnover less than $75,000
- the removal of the undeducted purchase price of an Australian pension or annuity from deduction items – it is now being accounted for and included in the tax-free component of the Australian annuities and superannuation (super) income streams
- the removal of the age-based limits for claiming a deduction for super contributions
- the change to super contribution limits where eligible individuals may now claim a full deduction for personal super contributions, rather than the previous limit of the first $5,000 plus 75% of the amount above $5,000
- the change to super taxation where most people aged 60 and over who receive super benefits from a taxed source, the payment of a benefit as a lump sum or income stream (such as a pension) is now tax free
- the change in the manner of reporting and taxing of eligible termination payments, and
- changes to the child care tax rebate where the 30% child care tax rebate is no longer claimed through the ATO.
25 For the income year 2006-07, the following changes were noted in Chapter 2 of Taxation Statistics:
- personal income tax cuts
- the increase in the low income tax offset from $235 in 2005-06 to $600 in 2006-07
- the abolition of the part-year tax-free threshold for individuals who ceased full-time education for the first time
- changes to the tax treatment of foreign income and some capital gains for temporary residents
- an increase in the amount you can claim for contributions to registered political parties, independent candidates and members from $100 to $1,500, and
- the entitlement to claim a tax offset if you have to pay the Medicare levy surcharge as a result of you or your spouse receiving a lump sum payment in arrears.
26 For the income year 2005-06, the following changes were noted in Chapter 2 of Taxation Statistics:
- personal income tax cuts
- the introduction of new measures such as the 30% child care tax rebate, the 25% entrepreneurs' tax offset, transitional incentives to contribute to superannuation, and
- transition to retirement rules - people aged over 55 can now access superannuation benefits without having to retire or leave their job.
27 For the income year 2004-05, the following changes were noted in Chapter 2 of Taxation Statistics:
- personal income tax cuts
- introduction of the mature age worker tax offset - workers aged 55 years and over may be entitled to the offset, based on the amount of income they received from working.
28 For the income year 2003-04, the following change was noted in Chapter 3 of Taxation Statistics:
- the Super Co-contribution, which replaced the superannuation tax offset for personal superannuation contributions.
COMPARISON WITH OTHER ABS INCOME DATA
Survey of Income and Housing
29 The ABS Survey of Income and Housing (SIH) collects information on sources of income, amounts received and the characteristics of persons aged 15 years and over resident in private dwellings throughout Australia. The survey was conducted every year from 1994-95 to 1997-98, and then in 1999-2000, 2000-01 and 2002-03. From 2003-04, the survey is being conducted every two years. For further information about the concepts, definitions, methodology and estimation procedures used in the SIH, refer to Survey of Income and Housing, User Guide, 2005-06 (cat. no. 6553.0).
30 Data collected from SIH can be compared to ATO data published in this release for the years 2003-04, 2005-06 and 2007-08. Comparison of these three series can provide a means of assessing trends, establishing whether counts are of an expected magnitude and whether the distribution of income across the various sources is similar.
31 SIH produces estimates of current income as well as estimates of annual income in respect to the previous financial year. Current income refers to income being received at the time the data were collected from respondents. The data used in the following comparison are based on current income estimates as these are thought to provide a better picture of income earners, are more up to date and are generally reported more accurately than previous financial year estimates.
32 Differences exist between the three years of SIH data which should be taken into consideration, most significantly that the 2005-06 and 2007-08 SIH were run as stand alone surveys, whereas the 2003-04 SIH was integrated with the Household Expenditure Survey (HES). This may have had an impact on response.
33 Table 2 presents comparable income data items from ATO data contained in this release and SIH data for 2003-04, 2005-06 and 2007-08. SIH estimates for both Wage and salary income were higher than ATO income data in all three reference years.
Table 2. COMPARISON OF ATO AND SIH WAGE AND SALARY INCOME DATA (a)(b)
|
| 2003-04 | 2005-06 | 2007-08 |
| $b | $b | $b |
|
| ATO | 316.9 | 364.5 | 442.4 |
| SIH (c) | 341.7 | 402.1 | 513.1 |
|
a) ATO data includes data that could not be allocated to a state or territory
b) SIH data is current estimates rather than previous financial year
c) SIH data includes non cash benefits in wage and salary income
34 The differences observed between the two sets of income data are likely to be as a result of different definitions, methodologies and reference periods.
35 The higher SIH wage and salary estimate is in part due to the inclusion of non cash benefits (including salary sacrificed income) into this income source. Non cash wage and salary income is not reported on the personal income tax form and is therefore excluded from Wage and salary income data provided by the ATO.
36 The SIH Wages and salaries estimate for 2007-08 also includes, for the first time, irregular overtime and bonuses as well as termination payments.
Survey of Average Weekly Earnings
37 The Survey of Average Weekly Earnings (AWE) is a quarterly sample survey of employing businesses. For further information about the concepts, definitions and methodology of AWE, refer to Labour Statistics, Concepts, Sources and Methods (cat. no. 6102.0.55.001).
38 The Survey of Average Weekly Earnings collects data on average weekly earnings for full-time adult employee jobs, average weekly total earnings for all employee jobs, and average weekly ordinary time earnings for full-time adult employee jobs. Table 3 shows the ATO average Wages and salary income (all Wage and salary earners, all Wage and salary income) and 'average weekly total earnings for all employees jobs' from AWE.
Table 3. COMPARISON OF ATO AND AWE TOTAL EARNINGS (a)
|
| 2003-04 | 2004-05 | 2005-06 | 2006-07 | 2007-08 |
| $ | $ | $ | $ | $ |
|
| ATO | 36 889 | 38 607 | 40 276 | 42 081 | 43 921 |
| AWE | 38 484 | 40 091 | 42 072 | 43 982 | 45 707 |
|
(a) Based on Original, four quarter average to May quarter
STATISTICAL GEOGRAPHY
39 The Australian Standard Geographic Classification (ASGC) is used by the ABS for the collection and dissemination of geographically classified statistics. It is an essential reference for understanding and interpreting the geographic context of statistics published, not only by the ABS but also by other organisations, and its use enables comparability across datasets.
40 ATO data based on postcodes has been converted to data for Statistical Local Areas (SLA) as defined by the Australian Standard Geographical Classification (ASGC). Boundaries of these regions can change over time and the ABS revises and releases the ASGC annually.
41 Data in this publication for all years are presented on boundaries in Australian Standard Geographical Classification (ASGC), 2008 (cat. no. 1216.0).
Geographic correspondences
42 The ABS uses geographic correspondences to enable the conversion of data from one type of geographic region to another. These geographic correspondences are generally used to convert data for 'non-standard areas' to data for standard areas used by the ABS. Geographic correspondences (or conversions) are expressed as conversion factors based on population.
43 The geographic identifier on the ATO database is the postcode of the individuals' current home address at the time of completing the tax return. Consequently, postcode to SLA conversion factors have been used by the ATO to concord aggregated postcode data to estimates for Statistical Local Areas. The correspondences are based on the Estimated Resident Population. For further information see the detailed main structure of the Australian Standard Geographical Classification (ASGC), 2008 (cat. no. 1216.0).
44 The correspondence process:
- enables the data to be more easily compared with standard ABS output;
- enables the data to be output for other standard ABS geographic areas such as Statistical Divisions (SD), Statistical Subdivisions (SSD) and Local Government Areas; and
- provides flexibility so that data can be provided for the different regions of interest being studied by users of regional data (which are usually groupings of SLAs and/or LGAs).
45 When analysing data transformed by correspondences the following limitations of this methodology need to be taken into account:
- in applying the correspondences it is assumed that the particular characteristics of any data item are uniformly distributed across a postcode area. Therefore, data transformed by correspondences may not truly reflect the distribution of the characteristics of the population. In some cases, where the same postcode is split across two or more SLAs and there are no other contributing postcodes, distinct numerical estimates will be derived but rates or averages will be identical for each SLA (as these will be equivalent to the original rate or average of the contributing postcode);
- the conversion factors are based on total population only but have been applied across all ATO data items, i.e. the number of Wage and salary earners, Wage and salary income, total income and sex, age and occupation groups;
- some official postcodes (such as PO boxes, etc.) do not correspond to residential areas but may still have been reported under the current home address field on the income tax return. Data for these and other 'invalid' postcodes, such as those due to incorrect reporting or processing errors, have been included in an 'unknown' category for each state and territory and for Australia where the state or territory was not known; and
- data transformed by correspondences have been rounded so discrepancies may occur between sums of the component items and totals.
46 While care was taken in producing the correspondences the ABS will not guarantee the accuracy of data transformed by correspondences. Users should exercise caution when analysing data for regions with less than 100 Wage and salary earners.
Geographic regions
47 The statistics in this release are presented according to the Australian Standard Geographical Classification (ASGC), 2008. Under this classification, statistical areas are defined as follows:
- Local Government Areas (LGAs): These areas are the spatial units which represent the geographical areas of incorporated local government councils. The various types of LGAs are cities (C), NSW local government areas (A), boroughs (B), rural cities (RC), towns (T), shires (S), district councils (DC), municipalities (M), SA regional councils (RegC), Qld regional councils (R) and SA Aboriginal councils (AC).
- Statistical Local Areas (SLAs): These geographical areas are in most cases identical with, or have been formed from a division of, whole LGAs. In other cases, they represent unincorporated areas. In aggregate, SLAs cover the whole of a state or territory without gaps or overlaps. In some cases legal LGAs overlap Statistical Subdivision boundaries and therefore comprise two or three SLAs.
- Statistical Subdivisions (SSDs): These are of intermediate size, between SLAs and SDs. In aggregate, they cover the whole of Australia without gaps or overlaps. They are defined as socially and economically homogeneous regions characterised by identifiable links between the inhabitants. In the non-urban areas an SSD is characterised by identifiable links between the economic units within the region, under the unifying influence of one or more major towns or cities.
- Statistical Divisions (SDs): These consist of one or more SSDs. The divisions are designed to be relatively homogeneous regions characterised by identifiable social and economic units within the region, under the unifying influence of one or more major towns or cities.
48 Further information concerning statistical areas, including information about recent changes to boundaries, is contained in Australian Standard Geographical Classification (ASGC), 2008 (cat. no. 1216.0). The ASGC also incudes a complete series of maps. SLA maps for all states and territories can be found in Chapter 16 of the publication, or can be accessed individually from the Downloads tab.
AVERAGE ANNUAL RATE OF GROWTH
49 The average annual growth rate is calculated as a percentage using the formula below, where W0 is the average Wages and salaries at the start of the period, Wn is the average Wages and salaries at the end of the period, and n is the length of the period (in years) between W0 and Wn.
[(Yn/Y0)1/n -1] x 100
FURTHER INFORMATION
50 For further information about these statistics, contact the National Information and Referral Service on 1300 135 070.
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