QUALITY DECLARATION
INSTITUTIONAL ENVIRONMENT
These estimates of personal income published by the ABS are sourced from the Australian Taxation Office (ATO). The ATO collects personal income tax information from the lodged personal income tax returns as part of their role to manage and shape tax, excise and superannuation systems that fund services for Australians, please see the ATO website.
The ATO compiles a range of data from this collection for release on the ATO website. An extract of personal income tax is provided to the ABS on an annual basis under a Memorandum of Understanding (MOU) between the ABS and the ATO.
Individual tax return data, and payment summaries data for the financial years 2011 to 2016 have been provided by the ATO to the ABS as a de-identified Unit Record File.
For information on the institutional environment of the ABS, including the legislative obligations of the ABS, financing and governance arrangements, and mechanisms for scrutiny of ABS operations, please see ABS Institutional Environment.
RELEVANCE
Personal income data are produced by ABS at regional (small area) level to provide valuable information about regional economies and the income of individuals resident in regions. This annual regional level income data is not available from existing ABS censuses and surveys.
The scope of the personal income tax data includes individuals who submit an individual income tax return to the Australian Tax Office, and individuals who have had a payment summary issued by an employer and then remitted to the ATO.
The main statistics released from ATO personal income tax data are the number of persons and the amount of income from Wages and salaries and other employee related payments (Employee income), Own unincorporated business, Investment, Superannuation and annuities, Other income (excluding Government pensions and allowances) and Total income (excluding Government pensions and allowances). Other income measures such as mean and median income, and income percentile indicators (80th, 50th for example) are also produced.
Data for source of income categories are aggregated from line items in the individual income tax return, and are selected to conform as closely as possible to ABS Income Standards.
These statistical releases are presented at the following levels of geography of the Australian Statistical Geography Standard (ASGS): Statistical Area Level 2 (SA2); Statistical Area Level 3 (SA3); Statistical Area Level 4 (SA4); Greater Capital City Statistical Area (GCCSA); Local Government Area; and state/territory, Australia.
TIMELINESS
Individuals may lodge income tax returns in respect of each financial year (1 July to 30 June). The de-identified personal income tax data for the financial years 2011 to 2016 was provided to the ABS in December 2016.
Data are taken from an extraction from the ATO database. As this single extraction contains data for multiple years, a 16 month cut off is applied to each reference year so that the number of returns lodged for each year would be comparable. For example, data for the 2012-13 financial was compiled by using the tax returns lodged between 1 July 2013 and 31 October 2014.
ACCURACY
Personal income tax data is derived from information contained in personal income tax returns lodged with the Australian Taxation Office. 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 ($18,200 in 2012-13) are not necessarily required to lodge a tax return. This can include persons who derive their income from government pensions and allowances, and occasional or temporary workers. Consequently, the coverage of low income earners is incomplete when looking solely at tax returns. The ABS fills this gap by also requesting payment summary data that are submitted by employers.
Other streams of income – for example superannuation income received by persons aged 60 years and over – are currently tax exempt. Hence estimates of superannuation and annuities income from the tax file will be understated.
Data are provided by the ATO 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. It is estimated that approximately an additional 3% of taxpayers lodge their income tax returns in the twelve months after the initial processing cut off each year and approximately 5% of taxpayers lodge their income tax returns in the three years following the processing cut off. This means that data provided to the ABS slightly under-estimates the ‘final’ number of income earners and the total income earned.
Perturbation is applied to the data that is published by the ABS. Perturbation is the process of adjusting each cell count by 1, or 2, or 3 and also adjusting the top contributors of a continuous cell by 15%, 10% and 10%. Because of this treatment, the data is altered compared to the original untreated form. The effects of this treatment is slight at the larger cell level but can be more pronounced with small cells - so care should be taken in interpreting small counts.
COHERENCE
Personal income tax statistics can be impacted by changes to tax legislation. For example in 2012-13, the tax reporting threshold rose from $6,000 in the previous financial year to $18,200. The ATO outlines any such changes in their annual release of Taxation Statistics on the ATO website.
Financial Year | Tax Free Threshold |
2010/11 | $6,000 |
2011/12 | $6,000 |
2012/13 | $18,200 |
2013/14 | $18,200 |
2014/15 | $18,200 |
2015/16 | $18,200 |
The predicted effect of the tax free threshold change is that less people would be required to lodge tax returns, however our data shows that this threshold change had little effect on returns lodged. One theory is that many individuals may fall under the tax free threshold but may have pay periods where they have paid tax - meaning a return is required to be lodged regardless.
Financial Year | Returns lodged |
2010/11 | 13,445,995 |
2011/12 | 13,450,282 |
2012/13 | 13,361,080 |
2013/14 | 13,370,182 |
2014/15 | 13,213,814 |
2015/16 | 13,508,101 |
Data for income categories described above (see
Relevance) are aggregated from line items in the individual income tax return, and are selected to conform as closely as possible to
ABS Income Standards.
Other ABS sources of income data are:
- the Survey of Income and Housing;
- the Survey of Average Weekly Earnings;
- the Census of Population and Housing; and
- the Australian System of National Accounts.
The ABS Survey of Income and Housing (SIH) also collects information on sources of income, the amounts received and related household characteristics. Some person-level details, for those aged 15 years and over and resident in private dwellings across Australia can also be derived. Data collected from SIH can generally be compared with ATO personal income tax data published in Estimates of Personal Income for Small Areas (cat no. 6524.0.55.002) at the Australia level. A few major points of difference should be noted however.
SIH has a wider coverage of all income earners; it will also capture details for people receiving pensions, or low incomes, or receiving tax exempt superannuation income, who may not be required to lodge tax forms. From another perspective, smaller area estimates are not released from SIH. Being sample survey based it cannot support the production of representative estimates for smaller geographies (such as Statistical Area Level 2, or Local Government Areas). Nonetheless, a comparison of SIH with ATO data for Australia can provide a means of assessing the shape of data movements over time; and generally indicate whether counts are of an expected magnitude and whether the distribution of income across the various sources is similar.
The Survey of Average Weekly Earnings (AWE) is a six monthly sample survey of employing businesses. It 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. Being sample survey based, AWE cannot support the release of small area (sub state) estimates.
While the ATO mean income levels for Employees can be compared at the Australia level with the 'average weekly total earnings for all employees jobs' from AWE, they will differ partly due to the tax free thresholds applied; some low income earners captured in AWE will be missing from the tax data. Also AWE does not capture details from non-employing businesses.
Income data is also available every five years in the Census of Population and Housing. The Census provides income details for for households, families and individuals. Data are available for a wide range of small areas.
The Australian System of National Accounts (ASNA) brings together Employee income estimates from multiple sources, including a range of quarterly and annual business surveys. The data are also updated iteratively whereas the SIH and ATO data are more 'point in time' snapshots. Whereas the ASNA mainly sources data from businesses and the government sector, the ATO and SIH data are primarily sourced from individuals; this methodological difference contributes to some variation in estimates across these collections. A comparison of income data from SIH and ASNA sources, and using selected ATO elements, can be found in Survey of Income and Housing, User Guide, 2015-16.
INTERPRETABILITY
Estimates of personal income in this release are gross income before deductions, and before tax and application of the Medicare levy.
Data is nominal, so not adjusted for inflation.
ABS releases of personal income tax data provide detailed Explanatory Notes which contain information on scope and coverage, confidentiality, definitional changes, the geographical presentation of the data, classifications and other technical aspects associated with these statistics.
ACCESSIBILITY
This data will be available in the following formats:
- Estimates of Personal Income for Small Areas (cat no: 6524.0.55.002) – with a summary main features, downloadable Excel spreadsheets (data cubes) and detailed Explanatory Notes.
- Data by Region – which contains regional source of income estimates and Employee income earners data (cross referenced by age, sex, occupation) as downloadable data cubes. Detailed Explanatory Notes are also provided. Data regions can be selected from a map or by using other search functions provided.
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