Standard Economic Sector Classifications of Australia (SESCA)

Statistical units are businesses, government entities, households or other entities about which statistics are compiled. They are defined in a consistent way to enable users of ABS statistics to make valid comparisons of information compiled from different statistical sources and to enable composite pictures of the economy to be drawn.

The basic statistical unit that is classified by sector is the institutional unit. An institutional unit is one that is able to:

• own or exchange goods and assets in its own right;
• make economic decisions and engage in economic activities for which it is held directly responsible and accountable at law;
• enter into contracts and incur liabilities on its own behalf; and
• compile a complete set of accounts, including a statement of financial position.

In some instances it is statistically advantageous to recognise as separate institutional units some entities which do not meet the above criteria. Although these units do not exist as separate institutional units from their owners, and therefore are not institutional units in their own right, where they operate autonomously and keep a full set of accounts, notional institutional units are created to enable their separate collection.

Institutional units can be originated either formally or informally. They can be created formally, either individually, as in the case of some government authorities through an Act of Parliament; or as a specific type of unit, as in the case of corporations through the Corporations Act 2001. The law establishes the existence of such entities as separate from their owners or members. Institutional units can also be created informally, such as a household formed by individual members sharing a dwelling.

The ABS statistical unit is considered an approximation to the institutional unit as defined by 2008 SNA. There are, however, some differences between the institutional unit and the practices adopted for the ABS Business Register as outlined in the ABS Economic Units Model Appendix.

There are four types of institutional units:

• Corporations;
• Government units;
• Non-profit institutions; and
• Households.

The institutional sector classification of the institutional units is presented in the suite of sectorial classifications.

Corporations

A corporation is 'a legal entity, created for the purpose of producing goods and services for the market, that may be a source of profit or other financial gain to its owner(s); it is collectively owned by shareholders who have the authority to appoint directors responsible for its general management' (2008 SNA, paragraph 4.39).

Corporations are typically:

• created by processes of law that establish their existence as independent from their shareholders, including other institutional units (i.e. other corporations, household unincorporated enterprises, government units and NPIs) that may own shares or other equity in the corporations;
• created for the purpose of market production;
• owned by shareholders who receive a distribution of profits in proportion to their shareholdings; and
• fully accountable at law for their actions, obligations and contracts and are liable to pay taxes (i.e. they are a legal entity).

The company structure of corporations enables profits to be distributed to their shareholders.

Examples of corporations are proprietary companies, limited liability companies and no liability companies.

Some incorporated entities are prohibited from distributing profits to their shareholders or members. Most companies limited by guarantee and all incorporated associations fall into this category. These types of institutional units are Non-Profit Institutions (NPIs) and are discussed later in this chapter.

As noted earlier, to qualify as a corporation a unit must be a recognised legal entity. The exception to this rule is where notional institutional units are created for 'foreign branches', or unincorporated enterprises owned by non-resident units (see 'Key concepts' for further detail on the concept of residence). To qualify as a notional institutional unit, a foreign branch must:

• have the same relationship to its owners as a corporation has to its shareholders;
• have a full set of accounts, including a statement of financial position; and
• be a market producer.

Artificial subsidiaries and holding corporations whose activities are confined to owning the controlling level of equity in the group are not recognised as separate institutional units. For statistical purposes these are merged with the parent unit.

Government units

Government units are 'legal entities established by political processes that have legislative, judicial or executive authority over other institutional units within a given area'. (2008 SNA, paragraph 4.117).

The principal functions of government units are:

• to provide goods and services to individuals or the community at large;
• to redistribute income and wealth; and
• to engage in non-market production.

The majority of government units are readily identifiable as their operations are mainly financed from taxation and they redistribute income by means of transfers (e.g. subsidies, grants, welfare payments) or engage in other forms of non-market production, such as the provision of government services (e.g. defence, education, health services, economic advice) free of charge or at nominal prices.

To qualify as a separate legal entity, a government unit must:

• have funds of its own, raised by taxing other institutional units or received as transfers from other government units;
• have authority to disburse some, or all, of such funds in the pursuit of its policy objectives; and
• have authority to borrow funds on its own account.

Units that do not meet all of these criteria are treated as part of a larger government unit, i.e. the collective legal entity comprising all government units included in the public accounts. Included in this collective legal entity are departments and agencies operating from the public accounts of the parent government.

The exception to this rule is where notional institutional units are created from entities which are part of the public accounts. These are usually government entities that do not exist as separate legal entities from the collective parent government unit, but that operate autonomously in the market. To be recognised as a notional institutional unit of government, a unit must:

• have the same relationship to its owners as a corporation has to its shareholders;
• have a full set of accounts, including a statement of financial position; and
• be a market producer.

In practice, notional institutional units of government will only be created where they engage in significant market activity.

Statutory authorities and companies created by legislation or regulation which operate outside the public accounts, along with local government authorities, qualify individually as government units.

A Statutory Authority is a public sector agency set up by an Act of Parliament, more or less independent of day-to-day ministerial control, usually not bound by public service procedures to the same extent as ordinary departments, and which is responsible finally to Parliament.

In the event of dissolution of units under government control, the assets are returned to the government. As a result, units under government control do not meet the non-distribution criteria set out for NPIs detailed below.

Non-Profit Institutions (NPIs)

Non-Profit Institutions (NPIs) are defined as 'legal or social entities created for the purpose of producing goods and services whose status does not permit them to be a source of income, profit or other financial gain for the units that establish, control or finance them'. (2008 SNA, paragraph 4.83).

NPIs must have an enabling instrument which includes a clause that prohibits the NPI from distributing income, profit or other financial gain to its establishing, controlling or financing unit. This includes benefitting from the sale of assets in the event of the dissolution of the unit.

The productive activities of NPIs may generate either surpluses or deficits but any surpluses they make cannot be appropriated by the establishing, controlling or financing institutional unit. For this reason, they are frequently exempted from various kinds of taxes.

The main characteristics of NPIs are they:

• are created by processes of law that establish the NPI's separate existence from the units that establish, finance, control or manage them;
• have purpose statements set out in articles of association;
• are associations with members who have equal voting rights and limited liability with respect to the NPI's operations;
• cannot distribute profits to members (the term 'non-profit institution' reflects the embargo on distribution of financial gains and is not intended to imply that NPIs cannot make a profit); and
• are self-governing, with their direction usually vested in a group of officers, an executive committee or a similar body elected by a majority of members.

Self governing units "dissolves themselves by their own authority". A unit that is ‘self-governing’ retains full responsibility for the economic risks and rewards entailed by its operations, and its governing body has the authority to dissolve the unit and legally dispose of its assets. (Satellite Account on Non-profit and Related Institutions and Volunteer Work 2018, paragraph 3.64).

Households

A household is 'a group of persons who share the same living accommodation, who pool some, or all, of their income and wealth and who consume certain types of goods and services collectively, mainly housing and food' (2008 SNA, paragraph 4.149).

Individual members of households are not treated as institutional units because many assets are owned (and liabilities incurred) jointly by two or more members of a household. Income can be pooled, and expenditure decisions are often made for the household as a whole. As a result, the household as a whole, including all individual members, is considered to be an institutional unit.

Where an unincorporated enterprise is entirely owned by a household, it is treated as an integral part of that household.

Some members of households engage in market production through unincorporated enterprises such as sole proprietorships, partnerships and trusts.

Partnerships can be comprised of partners belonging to different households.

The liability of the owners of unincorporated businesses is unlimited. As a result, these businesses are treated as household units since all the assets of the household, including the dwelling itself, are at risk if the enterprise goes bankrupt. The institutional unit of each household involved in the partnership therefore represents the individual members of the household as well as the share of the unincorporated partnership owned by each household.

The exception to this rule is where notional institutional units are created from unincorporated enterprises within household units. These are usually unincorporated enterprises that do not exist as separate legal entities from the household institutional unit, but:

• have the same relationship to their owners as a corporation has to its shareholders;
• have a full set of accounts, including a statement of financial position;
• are market producers; and
• are assessable for income tax purposes as companies.

Examples of the types of unincorporated enterprises recognised as notional institutional units include unincorporated financial enterprises (except for financial auxiliaries); unincorporated partnerships of companies and trading trusts; and all other unincorporated enterprises assessable for income tax purposes as companies.

Control

Control is used to delineate the public and private sectors and to identify artificial subsidiaries and holding corporations in groups of corporations.

Control is the ability of one entity (other than a household institutional unit) to determine another entity’s financial and operating policies governing the entity's strategic or long-term directions. A controlled entity is known as a subsidiary. The entity that exercises control is known as the parent.

As outlined in the Corporations Act 2001, an entity may exercise control through:

• holding majority ownership of shares;
• holding majority of the voting interest where decisions are not made on a one share: one vote basis;
• determining the composition of the entity's board; or,
• being in a position to cast, or control the casting of, the majority of votes that might be cast at a general meeting.

The control exercised by a parent need not necessarily extend to control over the day-to-day operations of the subsidiary. The officers of the subsidiary would normally be expected to manage these in a manner consistent with and in support of its overall objectives. Similarly, it also does not necessarily extend to the direct control over any professional, technical or scientific judgments, as these would normally be viewed as part of the core business of the subsidiary.

Control may be exercised by a government unit over a corporation, other government unit or NPI. Corporations can exercise control over other corporations. NPIs can control corporations.

Corporations

In general, control of a corporation is exercised by the shareholders collectively. A corporation has a board of directors, appointed by the shareholders, that is responsible for the corporation's policy and appoints the senior management of the corporation.

Government units may control a corporation through a variety of mechanisms. In addition to those listed in "Control" section of Key concepts,  governments may exercise control of corporations through:

• appointing the board or its key members through legislative, regulatory or contractual means;
• appointing key personnel such as the chief executive;
• controlling key committees;
• determining corporate policy or programmes through other means such as legislation, regulation, contractual arrangements, golden share arrangements, or loan conditions; or,
• acting as guarantor or accepting the risk associated with the corporation's activities.

Government regulation of an industry or a group of entities does not in itself indicate control of a unit's corporate policy. Similarly legal entities created by legislation are not necessarily controlled by government. The Australian Government, for example, oversees the Corporations Act 2001 but does not control every entity created under this Act.

Other entities

A trust is a legal arrangement whereby a trustee manages an asset on behalf of the beneficiaries of the trust. This can involve overseeing business activity on behalf of the beneficiaries. The terms of the arrangement are set out in the trust deed.

A trust is controlled in the same manner as a corporation. For example an entity may control the trust through majority ownership of the trust units. The trustee acts in accordance with the trust deed and is not considered to be in control of the trust.

Artificial subsidiaries

An artificial subsidiary is defined as a subsidiary that is wholly owned by a parent entity and is strictly confined to providing services to the parent entity of the subsidiary, or other entities under common control.

Artificial subsidiaries are created to place the parent entity in an advantageous position. They may receive benefits from minimising taxes, minimising liabilities in the event of bankruptcy or to secure other advantages under tax or corporations legislation. Artificial subsidiaries can be the nominal employer of staff who is contracted to other subsidiaries. Typical services provided by artificial subsidiaries to their parents include transport, purchasing, sales, financial services, computing services, communications, security, maintenance and cleaning.

Artificial subsidiaries are not treated as separate institutional units because they are considered to be artificial in nature and an integral part of the parent corporation. They lack the autonomy to operate independently. Artificial subsidiaries are merged into the unit in the group from which they were artificially split.

Holding corporations

A holding corporation owns controlling levels of equity in a group of subsidiary corporations. Broadly speaking there are three types of holding corporations defined by their activities:

• Holding corporations whose activities are confined to owning the controlling levels of equity;
• Holding corporations whose principal activity is owning and directing the group; and,
• Holding corporations whose principal activity is not confined to owning and controlling the group.

Holding corporations whose principal activity is confined to owning the controlling level of equity in the group are not regarded as separate institutional units. They are merged with their largest subsidiary.

Holding corporations whose activity is owning and directing the group are regarded as separate institutional units.

Holding corporations whose activity is not confined to owning and controlling the group are also regarded as separate institutional units.

Market and non-market producers

Market producers are units which respond to market forces. Market producers make decisions about what to produce and how much to produce in response to expected levels of demand and expected costs of supply and are exposed to the risks associated with this production. Market producers adjust supply either with the goal of making a profit in the long run or, at a minimum, covering capital and other costs.

A market producer is identified through a range of attributes. A primary indicator is the expectation of the recovery of a considerable proportion of its production costs through sales income. Other factors, such as consistency across jurisdictions, may also be taken into account when determining whether units are either market or non-market producers.

Market producers are classified to the following SISCA sectors:

• 1  Non-Financial Corporations, 
• 2  Financial Corporations or 
• 4  Households

Non-market producers are not likely to respond to changes in economic conditions in the same way as market producers. Their economic behaviour is influenced by the receipt of material financial support in the form of transfers such as grants and donations.

Non-market producers are classified to the following SISCA sectors:

• 3  General Government or 
• 5  Not-Profit Institutions Serving Households (NPISH)

Non-Profit Institutions (NPIs) may be either market or non-market producers.

Australia's economic territory

Australia's economic territory is the area under the effective control of the Australian government. It includes the land area, airspace, territorial waters, including jurisdiction over fishing rights and rights to fuels and minerals. Australia's economic territory also includes territorial enclaves in the rest of the world. These are clearly demarcated areas of land, located in other countries and which are owned or rented by the Australian government for diplomatic, military, scientific or other purposes.

Specifically, the economic territory of Australia consists of:

• Geographic Australia which includes Cocos (Keeling) Islands and Christmas Island;
• Norfolk Island;
• Australian Antarctic Territory;
• Heard Island and McDonald Islands;
• Territory of Ashmore Reef and Cartier Island;
• Coral Sea Islands; and,
• Australia's territorial enclaves overseas.

Geographic Australia is defined by the Australian Statistical Geography Standard (ASGS) and is a subset of Australia's economic territory.

The Joint Petroleum Development Area (JPDA) was considered joint territory between Australia and East Timor prior to 30 August 2019.  The Maritime Boundary Treaty (MBT) took effect on 30 August 2019 and divided the JPDA into two sub-regions:

• JPDA excluding Greater Sunrise
• Greater Sunrise

The Greater Sunrise sub-region remains a joint territory between Australia and Timor-Leste and the JPDA excluding Greater Sunrise sub-region became the economic territory of Timor-Leste.

Residence

Residence is used to define resident institutional units and to ultimately distinguish between Australia's national economy and the rest of the world. This concept underpins Australia's National Accounts and Balance of Payments statistics.

A unit's economic activity should be attributed to only one country based on residence. The residence of each institutional unit is the economic territory with which it has the strongest connection - its centre of predominant economic interest. An institutional unit can only be a resident of one economic territory.

If a unit has operated (or intends to operate) in Australia for one year or more, it is regarded as having a centre of economic interest in Australia.

The ownership of land and structures within the economic territory of Australia is deemed sufficient justification to record a centre of economic interest in Australia on the grounds that the property can be used for production. Where production activities are undertaken, a resident institutional unit (an Australian subsidiary or an Australian Branch) is recognised.

Where a non-resident owner does not have any economic interest other than ownership of the land and structures, ownership of this land and structures is treated as having been transferred to a notional resident institutional unit in Australia.

A special treatment concerns units using mobile equipment, such as ships, aircraft, drilling rigs and platforms, outside the economic territory in which the units are resident. Generally the operations are considered to be resident of the economic territory where they are undertaken and a resident institutional unit is recognised in that economic territory. There are two exceptions:

• Operations in international waters or airspace which are attributed to the economy of residence of the operator; and,
• Tax and licensing authorities in the economic territory do not recognise the operator as resident.

Unincorporated enterprises (other than notional institutional units) are not separate institutional units from their owners and, therefore have the same residence as their owners.

A household is considered to have a centre of economic interest in Australia when it maintains a dwelling in Australia that household members use as their principal residence. Generally, when a household member leaves to live in another country for a period of a year or more, the member is no longer treated as part of that household except where the individuals:

• Maintain their principal residence in Australia;
• Return regularly to their main household in Australia;
• Study abroad; or,
• Receive medical treatment abroad.

Technical assistance personnel on long-term assignments are treated as residents of the country in which they work.

The following categories of persons are also treated as residents:

• Non-diplomatic staff of international agencies located in Australia who intend to stay more than 12 months;
• The Australian recruited staff of foreign embassies, consulates, military bases, etc. in Australia; and,
• Australian crews of ships, aircraft, or other mobile equipment operating partly, or wholly, outside the economic territory.

International organisations such as the United Nations and its agencies and the International Monetary Fund (IMF), are not considered to be residents of any national economy, including those in which they are located or conduct their affairs. They are treated as non-residents by all economies. However, persons working for these organisations are treated as residents of the economies in which they live.

An elaboration of the concept of residence can be found in Balance of Payments and International Investment Position, Australia, Concepts, Sources and Methods, 2011.

Classification of units

Temporary changes in control or function

The structure and intent of businesses can sometimes change over time such that the classification of a unit can be affected. This can occur for many reasons, including changes to legislation, business restructuring, subsidisation levels and the privatisation of public entities. These changes could theoretically result in a change to the sector classifications applied to the unit.

Temporary fluctuations based on minor shifts in control or function should not be reflected in the unit's sector classification. Resistance factors are applied which reduce 'flipping' of units between classes from year to year. This ensures that any changes in classification reflect relatively permanent changes in the function of the business.

Any change to the control or function of a unit must be in place for a minimum of two years before sectoral classification changes can be applied. For example, any relatively minor changes to the level of subsidisation a unit receives which puts it above or below the chosen market cost recovery threshold must remain in place for a minimum of two years before sectoral classification changes can be applied.

Consistency across jurisdictions

Certain types of government units perform the same economic functions but receive different levels of government financial support and risk. Strict application of the rules to each unit might result in a minority of units falling into a different sector. Where uniform classification is regarded as an overriding consideration, the same classification is applied to each government unit of the same type across different jurisdictions. The treatment of each type is explicitly stated within the relevant class within SESCA. These can be identified by references in the includes and excludes.

This sector consists of all resident corporations and notional institutional units mainly engaged in the production of market goods and/or non-financial services and holding companies with mainly Non-Financial Corporations as subsidiaries. Also included are NPIs that mainly engage in market production of goods and non-financial services, market producers controlled by government, and investment funds investing in predominantly non-financial assets such as infrastructure and property.

Subsector 10 - Non-Financial Corporations

Group 100 – Non-Financial Corporations

Class 1001 - Non-Financial Investment Funds

This class consists of all Non-Financial Investment Funds. These are collective investment schemes, operated through trusts and corporations. They raise funds by issuing shares and/or units to the public, either via a prospectus or a distribution channel such as a platform. Investors are able to dispose of their holdings through well-developed secondary markets such as a stock exchange or through readily accessible redemption facilities. The investment funds pool and directly invest in predominantly long-term non-financial assets such as property or infrastructure.

Investment fund shares or units are generally not close substitutes for deposits.

Includes

• Infrastructure funds investing in resident assets (e.g. airports, pipelines, roads)
• Listed and unlisted infrastructure trusts investing in resident assets
• Listed and unlisted property trusts investing in resident assets

Exclusions/References

• Film funds are included in Class 1009 Other Non-Financial Corporations
• Non-financial investment syndicates which are not open to public subscription are included in Class 1009 Other Non-Financial Corporations
• Agricultural investment funds are included in Class 1009 Other Non-Financial Corporations
• Funds predominantly investing in financial assets are included in the relevant classes within Group 214 Financial Investment Funds
• Funds with overseas property investments are included in Class 2142 Non-Money Market Financial Investment Funds
   

Class 1009 - Other Non-Financial Corporations

This class consists of all Non-Financial Corporations mainly engaged in the production of market goods and/or non-financial services, other than Non-Financial Investment Funds.

Includes

• Agricultural investment funds (including pine tree, olive, flower or fish farming investment funds)
• Branches of non-resident enterprises providing non-financial goods and services
• Film funds
• Holding companies with mainly non-financial corporations as subsidiaries
• Non-financial investment syndicates which are not open to public subscription
• Non-profit institutions which provide market non-financial goods and services
• Public non-financial corporations

Exclusions/References

• Publicly listed property trusts are included in Class 1001 Non-Financial Investment Funds
• Government owned corporations and notional institutional units which are non-market producers are included in Class 3000 General Government

This sector consists of all market producers that produce financial services, including the Central Bank. It therefore includes all resident corporations and notional institutional units mainly engaged in financial intermediation and provision of auxiliary financial services. Holding companies with mainly financial corporations as subsidiaries are also included, as are private and government-controlled market NPIs that mainly engage in financial intermediation or production of auxiliary financial services.

Subsector 21 - Financial Intermediaries

Financial Intermediaries are institutional units that engage in financial transactions in open markets by incurring liabilities for the purpose of acquiring financial assets.

Group 211 - Reserve Bank of Australia

Class 2110 - Reserve Bank of Australia (RBA)

This class includes only the RBA, which has responsibility for monetary policy, issuing banknote currency, holding Australia's international reserves, holding reserve deposits and providing banking services to the Commonwealth.

Includes

• Reserve Bank of Australia

Exclusions/References

• Finance industry regulators are included in Class 2200 Financial Auxiliaries
   

Group 212 - Depository Corporations

Class 2121 - Authorised Deposit-Taking Institutions

This class consists of all financial resident Financial Corporations and notional institutional units which are licensed to operate as banks. They have liabilities in the form of deposits or deposit substitutes such as short term certificates.
Includes

• Australian branches of overseas banks
• Australian owned banks
• Building societies 
• Credit unions
   

Class 2129 - Other Broad Money Institutions

This class consists of corporations engaged in the provision of finance that are Australian Prudential Regulation Authority (APRA) registered entities (i.e. Registered Financial Corporations (RFCs) not elsewhere classified). Money market corporations operate primarily in wholesale markets, borrowing from, and lending to, large corporations and government agencies.

Includes

• Money market corporations 
• Pastoral finance companies, finance companies and general financiers

Exclusions/References

• Intra-group financiers 
• Cash management trusts 
• Authorised deposit-taking institutions ( i.e. Banks, Credit unions)
• Non money market funds 
• Securitisers

Cash management trusts are included in Class 2141 Money Market Funds; and
Intra-group financiers are considered to be artificial corporations and are classified along with the parent unit.

Group 213 – Superannuation Funds and Insurance Corporations

Class 2131 - Superannuation Funds

This class consists of all funds that provide retirement benefits for specific groups of people. They own assets and liabilities and undertake financial transactions in the market.

Includes

• Approved deposit funds (superannuation)
• Autonomous funds established for the benefit of public sector employees
• Superannuation funds that are regarded as complying funds for the purposes of the Superannuation Industry Supervision Act
   

Class 2132 - Life Insurance Corporations

This class consists of all corporations which provide life insurance (including reinsurance).

Includes

• Friendly societies
• Life insurers
• Life reinsurers

Exclusions/References

• Non-life insurers (including reinsurers) are included in Class 2133 Non-Life Insurance Corporations; and
• Life insurance brokers are included in Class 2200 Financial Auxiliaries
   

Class 2133 - Non-Life Insurance Corporations

This class consists of all corporations that provide non-life insurance cover (including reinsurance).

Includes

• Accident insurers
• Consumer credit insurers
• Discretionary mutual funds providing professional indemnity cover
• Fire insurers
• General insurers
• Health insurers
• Motor vehicle insurers
• Owners' liability insurers
• Non-life reinsurers
• Third party insurers
• Travel insurers
• Workers compensation insurers

Exclusions/References

• Life insurers (including reinsurers) are included in Class 2132 Life Insurance Corporations; and
• Insurance brokers are included in Class 2200 Financial Auxiliaries
   

Group 214 – Financial Investment Funds

Class 2141 - Money Market Funds

This class consists of all Money Market Funds. These are collective investment schemes, such as cash management trusts and cash common funds, that are constituted as legal entities. They raise funds by issuing shares or units to the public, either via a prospectus or a distribution channel such as a platform. The proceeds are invested primarily in money market instruments, money market shares/units, and transferable debt instruments with a residual maturity of less than one year, bank deposits, and instruments that pursue a rate of return that approaches the interest rates of money market instruments.

Money market fund shares or units may be regarded as a close substitute for deposits.

Includes

• Cash common funds
• Cash management trusts
• Money market funds

Exclusions/References

• Cash management accounts offered by depository corporations are included in Class 2129 Other Broad Money Institutions
   

Class 2142 - Non-Money Market Financial Investment Funds

This class consists of all Non-Money Market Financial Investment Funds. These are collective investment schemes, operated through trusts or corporations, which are constituted as legal entities. They raise funds by issuing shares or units to the public, either via a prospectus or a distribution channel such as a platform. The proceeds are used to purchase financial assets. The assets are owned by the investment fund, and usually managed by licensed fund managers external to the fund.

Non-money market investment fund shares or units are not close substitutes for deposits.

Investors are able to dispose of their units/shares on a well-developed secondary market such as a stock exchange or through readily accessible redemption facilities.

Includes

• Funds with predominantly overseas property or infrastructure holdings
• Listed and unlisted equity trusts investing in resident and non-resident assets
• Listed and unlisted infrastructure trusts investing in non-resident assets
• Listed and unlisted non-resident property trusts investing in non-resident assets
• Listed and unlisted mortgage trusts (unit trusts)
• Listed investment companies
• Non-cash common funds

Exclusions/References

• Investment funds which predominantly invest in Australian non-financial assets are included in Class 1001 Non-Financial Investment Funds
• Financial investment syndicates which are not open to public subscription are included in Class 2309 Money Lenders and Other Captive Financial Institutions
   

Group 219 - Securitisers and Other Financial Intermediaries

Class 2191 - Securitisers

This class consists of specially created units known as special purpose vehicles (SPVs) which hold pooled assets such as residential mortgages, commercial property loans and credit card debt. These are packaged as collateral backing for bonds or short-term debt securities, referred to as asset backed securities and are then sold to investors.

Includes

• Securitisers
   

Class 2199 - Other Financial Intermediaries

This class consists of all financial Intermediaries not elsewhere classified. Included in this class are various housing finance schemes established by state governments to assist first home buyers and development funds and depository funds operated by religious institutions.

Includes

• Commercial financiers
• Co-operative housing societies
• Economic development corporations owned by governments
• Religious institution depository funds
• Religious institution development funds
• State government housing schemes
   

Subsector 22 Financial Auxiliaries

Group 220 – Financial Auxiliaries

Class 2200 - Financial Auxiliaries

This class consists of all units providing auxiliary financial services that are closely related to, and designed to facilitate, financial intermediation. Units in this class are not Financial Intermediaries because they do not incur liabilities.

Includes

• Actuarial service providers
• Claim adjusters and assessors
• Commodity futures brokers or dealers
• Derivative dealers
• Finance brokers or consultants
• Financial regulators not funded through government revenue
• Flotation companies
• Fund managers
• Holding companies with mainly financial corporations as subsidiaries
• Insurance agency
• Insurance brokers or consultants
• Loans brokers or consultants
• Money changers
• Securities brokers or consultants
• Security valuations
• Share registry
• Stock brokers or traders
• Stock exchange
• Trustees or nominees
• Units engaged in trading or broking carbon credits

Exclusions/References

• Financial industry regulators funded through parliamentary appropriations and taxation revenue are included in Class 3000 General Government
   

Subsector 23 - Captive Financial Institutions and Money Lenders

Captive financial institutions are characterised by having a balance sheet holding financial assets, usually on behalf of other companies. These institutions are usually legal entities such as corporations, trusts, or partnerships established by their parent unit for a specific and limited purpose. Captives typically have little or no employment or operations and usually do not undertake significant production.

Money lenders are units providing financial services where most of either their assets or liabilities are not transacted on open financial markets. Also included are units which provide financial services exclusively from their own funds, or funds provided by a sponsor, to a range of clients and incur the financial risk of the debtor defaulting.
 

Group 230 - Captive Financial Institutions and Money Lenders

Class 2301 - Central Borrowing Authorities (CBAs)

This class consists of all Central Borrowing Authorities (CBAs) established by each state and territory government. CBAs primarily provide finance for public corporations and notional institutional units and other units owned or controlled by the government. They also arrange the investment of surplus funds. CBAs raise funds predominantly by issuing securities. They also engage in other financial intermediation activity for investment purposes, and may participate in the financial management activities of the parent government.

Includes

• Central Borrowing Authorities
   

Class 2309 - Money Lenders and Other Captive Financial Institutions

This class consists of units providing financial services, except CBAs, where most of either their assets or liabilities are not transacted on open financial markets. Also included here are units which provide financial services exclusively from their own funds, or funds provided by a sponsor, to a range of clients and incur the financial risk of the debtor defaulting.

Includes

• Brass-plate companies
• Conduits
• Corporations engaged in lending (e.g. student loans, import/export loans) from funds received from a sponsor such as a government unit on non-profit institution
• Financial investment syndicates which are not open to public subscription (e.g. mortgage syndicates)
• Holding companies with predominantly international assets and liabilities
• Money lenders
• Pawnshops that predominantly engage in lending
• Shelf companies
• Shell companies
• Venture capital funds which do not meet the investment fund criteria

Subsector 30 General Government

Group 300 – General Government

Class 3000 - General Government 

This class consists of all non-market producers which are controlled by government. It includes government units (as defined in 'Unit of classification') of the Australian Government, each state and territory government, and all local governments. It also includes NPIs controlled by government that are non-market producers.

Includes

• Courts
• Government departments
• Governor General's Office
• Future and Sovereign Wealth Funds
• NPIs controlled by government that are non-market producers

Exclusions/References

• Government owned corporations and notional institutional units engaged in market production are included in the relevant classes in Sector 1 Non-Financial Corporations or Sector 2 Financial Corporations

Subsector 40 - Households

Group 400 – Households

Class 4000 - Households

This class consists of all resident households (as defined in 'Unit of classification'). Included are all unincorporated enterprises that are owned and controlled by households, other than those which are recognised as notional institutional units.

Includes

• Households
• Partnerships
• Sole proprietors
• Trusts

Exclusions/References

• Unincorporated enterprises which qualify as notional institutional units are included in the relevant classes in Sector 1 Non-Financial Corporations and Sector 2 Financial Corporations

Subsector 50 - Non-Profit Institutions Serving Households (NPISH)

Group 500 – Non-Profit Institutions Serving Households (NPISH)

Class 5000 - Non-Profit Institutions Serving Households (NPISH)

This class consists of all non-market producers which are not controlled by government. It therefore includes all resident NPIs providing goods and services to households free or at prices that are not economically significant. Included here are NPIs that are mainly financed from household member subscriptions and produce benefits primarily for the household members and NPIs created for philanthropic purposes which are financed mainly from donations or government grants.

Includes

• Aid agencies
• Charities
• Consumers' associations
• Cultural clubs
• Learned societies
• Political parties
• Recreational clubs
• Relief agencies
• Religious institutions
• Social clubs
• Sports clubs
• Trade unions

Exclusions/References

• NPIs which are market producers are included in Sector 1 Non-Financial Corporations or Sector 2 Financial Corporations
• NPIs which are non-market producers and controlled by government are included in Sector 3 General Government
• NPIs that are mainly financed from business member subscriptions and produce benefits primarily for the business members are included in the relevant classes in Sector 1 Non-Financial Corporations or Sector 2 Financial Corporations

Subsector 60 Rest of the World (ROW)

Group 600 – Rest of the World (ROW)

Class 6000 - Rest of the World (ROW)

This class consists of all non-resident units that enter into transactions, or have other economic links, with Australian resident units.

Includes

• Australian tourists overseas staying greater than 12 months (aside from exceptions outlined in key concepts)
• Foreign tourists in Australia staying less than 12 months
• Foreign students

This group comprises all private sector entities which have a separate legal identity from their members (i.e. shareholders). They may be incorporated through the Corporations Act or other government legislation.

Class 11 – Proprietary Companies

This class consists of entities, incorporated through the Corporations Act, as proprietary companies (defined under section 45A (1) of the Corporations Act 2001). These companies have restrictions on how they may operate, for example they are not permitted to have more than 50 shareholders or offer its shares to the public.

Under the Corporations Act there are two types of proprietary companies: those limited by shares and those with unlimited liability.

Proprietary Limited companies must have at least one non-employee shareholder and must not have more than 50 non-employee shareholders. The liability of shareholders is limited to amounts unpaid on shares held by them. These companies must use Limited at the end of their name and are known as Proprietary Limited companies.

Alternatively, shareholder liability may be unlimited. These companies are known as Proprietary companies and must use Proprietary or Pty at the end of their name.

Includes

• Proprietary companies
• Proprietary Limited companies

Exclusions/References

• Public sector companies are included in Class 31 Government Companies

Class 12 - Public Companies

This class consists of entities incorporated through the Corporations Act which are:

• Limited by shares
• Limited by guarantee
• No liability

The liability of shareholders of companies limited by shares is limited to amounts unpaid on their shares. The liability of members of companies limited by guarantee is limited to the amounts that they undertake to contribute in the event of the company being wound up. Many NPIs are incorporated as public companies limited by guarantee.

The activities of 'No liability' companies are restricted to those directly involved in mining and are not entitled to calls on the unpaid price of its shares.

Also included are companies which are incorporated through state or territory legislation that are listed in prescribed financial markets such as the Australian Stock Exchange.

Includes

• Companies limited by guarantee
• Companies limited by shares
• No liability companies

Exclusions/References

• Government controlled companies are included in Class 31 Government Companies

Class 13 - Other Incorporated Entities

This class consists of entities which are incorporated through means other than the Corporations Act such as state or territory associations' acts or the Commonwealth's Corporations (Aboriginal and Torres Strait Islander) Act 2006. These entities have a legal identity separate from their members or shareholders.

Also included here are Australian branches of corporations registered overseas.

Includes

• Associations incorporated through state or territory legislation
• Australian branches of corporations registered overseas
• Cooperatives incorporated through state or territory legislation
• Incorporated Limited partnerships
• Indigenous corporations
• Strata title bodies corporate incorporated through state or territory legislation

Exclusions/References

• Companies created through state or territory legislation that are listed in prescribed financial markets such as the Australian Stock Exchange are included in Class 12 Public Companies

Class 21 - Sole Proprietorship

This class consists of single owner entities which do not operate through an incorporated entity. The owner of the business is personally responsible for all business decisions and liabilities.
Includes

• Sole proprietorships

Class 22 - Family Partnerships

This class consists of partnerships formed by members of the same family who enter into a formal agreement to conduct business. As with sole proprietorships the partners are personally responsible for business decisions and liabilities.

Includes

• Family partnerships

Class 23 - Other Partnerships

This class consists of partnerships comprised of individuals who enter into a formal agreement to conduct business. Membership is not confined to members of the same family. The partners may be companies, government departments or individuals. Partners operate under their own names and are responsible for business decisions and liabilities.

Includes

• Public private partnerships
• Partnerships not involving family members
• Partnerships of companies

Exclusions/References

• Unincorporated joint ventures are not recognised as separate institutional units

Class 24 - Trusts regarded as Corporations

This class consists of all trusts which behave as corporations. A trust is a legal arrangement whereby a trustee manages an asset on behalf of the beneficiaries of the trust. This may include overseeing business activity on behalf of the beneficiaries. The terms of the arrangements are set out in the trust deed. Units in this class are all regarded as notional institutional units and are classified to the Corporations sectors in SISCA.

Includes

• Corporate unit trusts
• Superannuation funds
• Trading trusts

Exclusions/References

• Superannuation accounts not constituted as separate institutional units are not recognised in TOLO.

Class 25 - Other Trusts

This class consists of all trusts, other than those regarded as corporations. A trust is a legal arrangement whereby a trustee manages an asset on behalf of the beneficiaries of the trust. The terms of the arrangements are set out in the trust deed.

Includes

• Family trusts
• Service trusts
• Management trusts

Exclusions/References

• Unit trusts and corporate unit trusts are included in Class 24 Trusts regarded as Corporations
• Superannuation funds are included in Class 24 Trusts regarded as Corporations

Class 26 - Other Unincorporated Businesses

This class consists of unincorporated entities other than sole proprietors, partnerships and trusts. Examples of other unincorporated entities are sporting or social clubs. Legally these do not have a separate identity from their owners.

Includes

• Unincorporated associations
• Unincorporated clubs

Exclusions/References

• Incorporated associations and clubs are included in Class 13 Other Incorporated Entities
• Incorporated cooperatives are included in Class 13 Other Incorporated Entities

Class 31 - Government Companies

This class consists of government units (as defined in 'Unit of classification') which are created as bodies corporate through the Corporations Act in Australia or through other legislation.

Includes

• Government controlled companies created by legislation
• Government controlled Corporations Act companies

Exclusions/References

• Government departments are included in Class 32 Other Government Entities
• Legislature units are included in Class 32 Other Government Entities
• Courts are included in Class 32 Other Government Entities
• Local governments are included in Class 32 Other Government Entities
• Statutory authorities are included in Class 32 Other Government Entities
• Marketing boards are included in Class 32 Other Government Entities

Class 32 - Other Government Entities

This class consists of all government units (as defined in 'Unit of classification') except those that are created as bodies corporate.

Includes

• Courts
• Government departments
• Legislature
• Local governments
• Marketing boards
• Statutory authorities

Exclusions/References

• Government controlled Corporations Act companies are included in Class 31 Government Companies; and
• Government controlled companies created by legislation are included in Class 31 Government Companies.

Class 33 - Foreign Government Entities

This class consists of Foreign Government Entities which operate in Australia.

Includes

• Embassies of foreign governments in Australia

Exclusions/References

• Australian embassies operating overseas are included in Class 32 Other Government Entities

Introduction

The Units Model was reviewed in 2012. The previous version was introduced in 2000 in response to major taxation reforms.

ABS Units Model

The Units Model used by the ABS in determining the structure of businesses is consistent with Australia's Corporations Law and with the definition of institutional units outlined in 2008 System of National Accounts (SNA). The model consists of:

• The Enterprise Group (EG)
• one or more Legal Entities (LEs)
• one or more Type of Activity Units (TAUs)
• one or more Locations

The EG and LE are institutional units and the TAU and Location are producing units.

The LE and the TAU are the main institutional and producing units used by the ABS to produce statistical outputs. They do not have a universal relationship with each other, e.g. one to one, one to many, many to one. A variety of relationships exist in some of the larger and more complex Australian enterprise groups.

This is a limited departure from the 2008 SNA, which states that there is a hierarchical relationship between institutional and producing units. In the 2008 SNA the enterprise (the producing view of an individual institutional unit) can be partitioned into one or more establishments. The 2008 SNA statement is true at the EG level, but not necessarily at the LE level.

Diagram 2 illustrates the nature of the relationships between the unit types in the model. The LE is represented by the ABN in the diagram, as they are usually the same.

Unit definitions

The Legal Entity (LE) statistical unit is defined as a unit covering all the operations in Australia of an entity which possesses some or all of the rights and obligations of individual persons or corporations, or which behaves as such in respect of those matters of concern for economic statistics. Examples of legal entities include companies, partnerships, trusts, sole (business) proprietorships, government departments and statutory authorities. Legal entities are institutional units.

The Enterprise Group (EG) is an institutional unit covering all the operations within Australia's economic territory of legal entities under common control. Control is defined in Corporations legislation. Majority ownership is not required for control to be exercised.

The Type of Activity Unit (TAU) is 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. Only a small number of data items are required to be available on a quarterly basis. The data items are:

• Total capital expenditure;
• Income from the sale of goods and services;
• Wages and salaries;
• Total inventories; and,
• Total purchases and selected expenses.

A TAU can also be formed in situations where only some data items are available directly from accounts and good quality estimates can be provided.

The activity of the unit should be as homogeneous as possible. If accounts sufficient to approximate Industry Value Added (IVA) are available at the ANZSIC Subdivision level, a TAU will be formed.

Ideally, all TAUs are constructed so that two-digit ANZSIC (Subdivision) homogeneity is observed. This ensures that good quality industry estimates can be calculated by the ABS at that level. However, not all businesses are able to supply a complete set of accounts for every ANZSIC Subdivision in which they have activity.

Where a business cannot supply adequate data to form a TAU for an individual ANZSIC Subdivision, a TAU will be formed which contains activity in two or more ANZSIC Subdivisions.

A Location is a single, unbroken physical area, occupied by an organisation, at which or from which, the organisation is engaged in productive activity on a relatively permanent basis, or at which the organisation is undertaking capital expenditure with the intention of commencing productive activity on a relatively permanent basis at some time in the future.

The exception is the agricultural location unit (farm unit) where land parcels are operated as a single property and are treated as a single location.  The TAU may be subdivided into TAU-state units which cover production in each state of operation. TAU-state units are synthesised for the Labour Statistics collections. They are derived statistical units and inherit the attributes of the TAU statistical units.

Ancillary units

A business unit's productive activity is described as ‘ancillary’ when its sole function is to provide common types of services for intermediate consumption within the same enterprise group. These are typically services likely to be needed in most enterprise groups, whatever their principal activities. Examples are: transportation, purchasing, sales and marketing, various financial or business services, personnel, computing and communications, security, maintenance and cleaning.

Classification of units

Various classifications are applied to the units in the ABS Units Model. The main classifications applied are:

• ANZSIC for industry
• Type of Legal Organisation (TOLO)
• Type of Business Entity (TOBE) for the type of entity
• Standard Institutional Sector Classification of Australia (SISCA) for institutional sector and the public / private flag.

ANZSIC is used to classify the industry in which the TAU has productive activity. Each unit is assigned a four digit (class level) ANZSIC code which reflects the predominant industry of the TAU's economic activity. Further information on ANZSIC can be found in Australian and New Zealand Standard Industrial Classification (ANZSIC) 2006 publication.

SISCA provides a framework for dividing the Australian economy into institutional sectors. These sectors group Legal Entities which have similar economic functions and share similar structural characteristics.

Statistical collections

The ABS uses the TAU unit as the statistical unit for industry and some other economic statistics collections. For some activity and labour collections, the ABS uses sub-TAU units e.g. farm units, TAU State units.

ABS business register

The ABS uses the Australian Business Register (ABR) as its primary source to identify new registrants and this information flows through to the ABS Business Register. The ABS Business Register provides the register or frame for the various business surveys run by the ABS.

Organisations are included on the ABR when they register for an Australian Business Number (ABN). The Commonwealth Government requires all government departments and agencies to make use of the ABR to reduce government imposed reporting load , and to use the ABN as the primary reference number for all dealings between government and business.

Two populations

The ABS is unable to actively apply the Units Model to all ABN registrants. Enterprise groups which are considered sufficiently complex and significant are profiled to create units according to the Units Model. These groups are known as the Profiled Population.

The remainder of ABN registrants are assumed to have simple structures. They are regarded as single legal entity, single enterprise group and single TAU units. These units are known as the Non-Profiled population.

The two populations are mutually exclusive and cover all organisations in Australia which have registered for an ABN.

Australian Business Number (ABN)

A unique business entity identifier used by businesses in their dealings with the Australian government.

ABS business register

A list of all Australian businesses and other organisations which contains identifying and classificatory data.

Australian and New Zealand Standard Industrial Classification (ANZSIC)

The Australian and New Zealand Standard Industrial Classification (ANZSIC) has been jointly developed by the Australian Bureau of Statistics (ABS) and Statistics New Zealand (Statistics NZ). An industrial classification is one way to organise data about business units. It provides a standard framework under which business units carrying out similar productive activities can be grouped together, with each resultant group referred to as an industry.

Artificial subsidiary

A subsidiary corporation with productive activities strictly confined to providing services to its parent corporation or other corporations in the same enterprise group. They are not treated as separate institutional units for statistical purposes.

Australian Business Register (ABR)

The list of entities registered for an ABN with the Australian Business Register. This list is maintained by the Register and is accessible to other government agencies and to businesses.

Centre of economic interest

An institutional unit has a centre of economic interest in Australia if it owns and/or operates a place of production within Australia's economic territory, or intends to operate for a year or more.

Control

The ability of one entity to determine another entity's financial and operating policies which relate particularly to the entity's strategic or long-term directions.

Corporation

A legal entity, created for the purpose of producing goods and services for the market, that may be a source of profit or other financial gain to its owner(s). It is collectively owned by shareholders who have the authority to appoint directors responsible for its general management.

Economic territory of Australia

The geographic area under the effective control of the Australian Government. It includes the land area, airspace, territorial waters, and the continental shelf lying in international waters for which Australia has jurisdiction. It includes Norfolk Island, the Cocos (Keeling) Islands and Christmas Island, and Australian embassies, consulates, military bases and similar enclaves located in other countries.  The Greater Sunrise sub-region of the Joint Petroleum Development Area (JPDA) is joint territory between Australia and Timor-Leste.

Enterprise Group

A statistical unit covering all the operations in Australia of legal entities under common control.

Financial Corporation

A corporation or notional institutional unit that is mainly engaged in financial intermediation or the provision of auxiliary financial services.

Government units

Legal entities established by political processes that have legislative, judicial or executive authority over other institutional units in a given area. They are financed mainly from taxation or government transfers and are principally involved in the provision of goods and services free of charge or at economically insignificant prices.

Household

A group of persons who share the same living accommodation, who pool some, or all, of their income and wealth and who consume certain types of goods and services collectively, mainly housing and food.

Household unincorporated enterprise

An unincorporated enterprise that is owned by members of a household and is therefore included as part of the household.

Institutional unit

The basic statistical unit that is classifiable by sector. It is defined as an economic entity that is capable, in its own right, of owning assets, incurring liabilities and engaging in economic activities and transactions with other entities.

Legal Entity

The statistical unit which:

1. is classified to institutional sector;
2. is the ABS unit closest in concept to the SNA08 institutional unit, and;
3. is defined as a unit covering all the operations in Australia of an entity that possesses some or all of the rights and obligations of individual persons or corporations; or that behaves as such, in respect of those matters of concern for economic statistics.

Location

A single unbroken physical area occupied by an organisation at which, or from which, the organisation is engaged in productive activity on a relatively permanent basis. A location also exists where the organisation is undertaking capital expenditure with the intention of commencing productive activity on a relatively permanent basis at some time in the future.

Market producer

An entity which produces goods or services for the market which are sold at economically significant prices aimed at making a profit.

Non-Financial Corporation

A corporation or notional institutional unit that is mainly engaged in the production of market goods and/or non-financial services.

Non-market producer

An entity which produces goods and services but does not have the primary goal of making profit, increasing market share or influencing market prices or market behaviour. The costs of its economic activities are generally covered by the receipt of material financial support in the form of transfers such as grants and donations.

Non-Profit Institution (NPI)

A legal entity which:

1. is created for the purpose of producing goods and services, and;
2. whose articles of association prohibit it from being a source of income, profit or other financial gain to the units that establish, control or finance the legal entity.

Non-Profit Institutions Serving Households (NPISH)

Non-Profit Institutions which are not controlled by government and which provide goods or services to households for free or at prices that are not economically significant. Examples include churches and religious societies, sports and other clubs, trade unions and political parties.

Non-resident unit

A unit whose centre of economic interest is outside the economic territory of Australia.

Notional institutional units

Units which do not exist as separate legal entities from their owners, and therefore are not institutional units in their own right, but operate autonomously and keep a full set of accounts.

Private sector

The combination of the household sector, the NPISH sector and all resident corporations and quasi-corporations not controlled by the general government sector.

Producing units

Statistical units which:

1. are owned and financed by institutional units;
2. are so named because they exercise a degree of control over production activities, and;
3. comprise type of activity based units.

Public Sector

The combination of the general government sector, and all resident corporations and quasi-corporations controlled by the general government sector.

Quasi-corporation

A notional institutional unit which engages in market production.

Registered Financial Corporations

Corporations registered under the Financial Sector (Collection of Data) Act 2001. 

Resident unit

An institutional unit that has a centre of economic interest within the economic territory of Australia as evidenced by the location of a place of production.

Standard Institutional Sector Classification of Australia (SISCA)

A classification of institutional units which provides a framework for dividing the Australian economy into institutional sectors. These sectors group units which have similar economic functions and structural characteristics.

Statistical units

Units about which statistics are tabulated, compiled or published.

Subsidiary corporation

A legal entity controlled by a parent legal entity.

Type of Activity Unit (TAU)

A producing unit comprising one or more business entities, sub-entities or branches of a business entity that can report production and employment activities.

Type of Legal Organisation (TOLO)

The Type of Legal Organisation (TOLO) classification is used to classify institutional units according to the type of legal organisation that best describes their structure.