BUSINESS INCOME TAX AND SAMPLE DESIGNS
For several years the ABS has been supplementing the business data collected in the Economic Activity Survey (EAS), with business income tax data collected by the Australian Taxation Office (ATO), in order to produce more reliable estimates for National Accounts. While preliminary estimates are still produced using just the EAS data for all employing businesses, the final estimates are produced using EAS data for the relatively few large and complex employing businesses, supplemented with ATO data (using the Income Tax Survey (ITS) which collects information by matching selected businesses to business income tax returns) for the many small, simply structured employing businesses, as well as non-employing businesses.
While the estimation for EAS and ITS have been fully integrated, the sample allocations for EAS and ITS have continued to be conducted sequentially. The previous sample allocation for EAS was designed to achieve equal industry level relative standard errors on the preliminary estimates, based on a fixed total sample size. About nine months later, the sample allocation for ITS was designed to achieve much lower approximately equal industry level relative standard errors on the final estimates. The major problem with this sample allocation strategy was that the sample allocations failed to achieve the approximately equal industry level relative standard errors on the final estimates. This was primarily due to the fact that the sample allocation for EAS, in particular the relatively small sample allocation within the complex employing businesses component of EAS, was fixed at the time of the sample allocation for ITS.
Under the latest sample allocation strategy, the sample allocations for EAS and ITS have been conducted simultaneously. The sample allocations have been be designed to achieve specified industry level relative standard errors on both preliminary and final estimates, under a total fixed total cost constraint. The key to the success of latest sample allocation strategy was the availability of information on the fixed costs (i.e. overhead costs) and variable costs (i.e. cost per unit) of conducting EAS and ITS. This also provided National Accounts with the opportunity to review the relative importance of the preliminary and final estimates - it was decided to improve the accuracy of the final estimates and hence relax the accuracy of the preliminary estimates.
The latest sample allocations for EAS and ITS satisfied these revised industry level relative standard errors for less than the total fixed cost constraint - principally due to a substantial reduction in the total sample size for ITS. In order to improve the accuracy of the final estimates and relax the accuracy of the preliminary estimates, there was a shift in the sample allocation from the simple employing businesses component to the complex employing businesses component of the EAS. Hence there was no reduction in the total sample size for the EAS.
For more information, please contact: John Preston on (02) 6252 6970.
Email: john.preston@abs.gov.au
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