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Taxation Revenue, Australia methodology

Reference period
2018 - 2019

Explanatory notes

Introduction

1 This publication contains statistics of revenue collected by all levels of government in Australia in the form of taxes since 2009-10.

Concepts and definitions

2 The concepts and definitions underlying the statistics in this publication are described in detail in Australian System of Government Finance Statistics: Concepts, Sources and Methods, 2015 (cat. no. 5514.0).

3 The main purpose of the Concepts, Sources and Methods publication is to serve as a reference manual for users of GFS statistics who require a detailed understanding of the concepts, sources and methods in order to analyse and interpret the information that the statistics convey. It contains a copy of the Taxes Classification, which dissects this major form of government revenue according to the type of tax collected.

Taxes classification

4 A tax is a compulsory levy imposed by the government, mainly to raise revenue. There is usually no clear and direct link between the payment of taxes and the provision of particular goods and services by government. Taxes are levied, inter alia, on income, wealth, production, sale and/or use of goods and services and the performance of activities.

5 Governments may regulate certain activities by issuing licences for which fees are payable. If the issue of such licences involves little or no work by the government then the revenue raised is deemed to be taxation revenue. However, if the government uses the issue of licences to exercise some proper regulatory function, such as checking the competency or qualifications of a would-be licensee, then the revenue raised is deemed not to be taxation revenue, but revenue from the sale of services by government unless it is clearly out of all proportion to the costs of providing the services.

6 The Taxes Classification is used to classify by detailed type all transactions in governments’ operating statements which are classified to the following economic type framework categories:

  • taxes on income
  • other current taxes
  • taxes on products
  • other taxes on production
  • capital taxes.
     

7 The Taxes Classification has been developed to provide sufficient detail for international reporting. The five groups of the Taxes Classification, which represent the broad bases on which taxes are levied in Australia, are:

  • taxes on income
  • employers’ payroll taxes
  • taxes on property
  • taxes on the provision of goods and services
  • taxes on the use of goods and performance of activities.
     

8 These tax groups are divided into fifteen subgroups according to the type of entities, property, activities, goods or services being taxed. The subgroups are further subdivided into sixty eight classes, generally describing the specific type of tax actually collected in Australia.

Consolidation

9 To compile statistics about the financial activities of a particular level of government, or any other grouping of public sector units, transactions and debtor/creditor relationships between units within the chosen grouping (sector or subsector) have to be matched and eliminated to avoid double counting. The process of matching and eliminating these items within the chosen group is known as 'consolidation'.

Other aggregates used

10 Gross domestic product (GDP) is defined as the total market value of goods and services produced in Australia within a given period after deducting the cost of goods and services used up in the process of production, but before deducting allowances for the consumption of fixed capital (depreciation). The current price estimate of GDP is used to calculate the GDP ratios in this publication, see note 13.

Interstate comparisons

11 As well as showing the variety of types of taxes levied in Australia, the tables in this publication have been designed to show the relative importance of the tax system of the Commonwealth, state and local levels of government. They have also been designed to show the extent and composition of taxation levied by each state government (including subsidiary authorities). In this latter connection, it should be noted that interstate comparison of tax collections by state or local governments separately can be misleading unless account is taken of state-to-state variations in the range of activities for which these two levels of government are responsible. In the Australian Capital Territory, for example, only a state level of government exists and a number of functions performed by it are undertaken by local government authorities in other jurisdictions.

Historical comparisons

12 GFS taxation statistics are presented on an accrual accounting basis. Due to changes associated with the introduction of accrual accounting, data for 1998-99 and subsequent years have been compiled on a different methodological basis to that of previous years which were compiled using a cash accounting methodology. Consequently, data for 1998-99 and following years are not directly comparable with the data for 1997-98 and earlier periods.

Taxation revenue as a proportion of gross domestic product (GDP)

13 The current price estimate of GDP is used to calculate the GDP ratios in this publication. This is obtained by reflating the average chain volume estimate, derived from the three independent approaches, by the implicit price deflator derived from the expenditure-based estimates. GDP is as published in Table 36, Expenditure on Gross Domestic Product (GDP), Chain volume measures and current prices in the December quarter 2019 issue of Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0).

Taxation per capita

14 The population estimates used to calculate the taxation per capita figures in this publication are Estimated Resident Population at 31 December each year, as published in Australian Demographic Statistics (cat. no. 3101.0). The annual average taxation per capita is calculated by dividing the total taxation revenue by the Estimated Resident Population, for each jurisdiction.

​​​​​​​Adjusted measures of government revenue

15 The purpose of the adjusted measures of government revenue section of this publication is to consider an alternative presentation of revenue which takes into account the level of government at which revenue is used rather than simply collected. The analysis considers the flows, by way of current grants, that occur between the levels of government in Australia, and the impact that this has on revenue at each of these levels. Also considered is the effect of direct and indirect transfers to households on total revenue. To aid in the understanding of these flows, the following analytical measures of revenue have been derived. Users should note that these measures are not themselves part of the GFS framework.

16 Adjusted taxation revenue is equal to GFS taxation revenue collected by each level of government, plus current grants received from higher levels of government, less current grants paid to lower levels of government. This measure is designed to give a clearer indication of the levels of government at which taxation revenue is actually used or spent. The source for a significant amount of the current grants distributed between levels of government is taxation revenue, such as the GST. However, some of the revenue distributed may have come from a source other than taxation. Further, it should be noted that some of the current grants transferred from Commonwealth Government to the state and local governments are Specific Purpose Payments (SPPs). Unlike the GST-related grants, these payments are 'tied' to specific policy areas as agreed between the two levels of government. Similar arrangements exist between state and local government. SPPs for current purposes are included with other current grants in deriving adjusted taxation revenue.

17 Adjusted total revenue is equal to adjusted taxation revenue plus all other non-taxation sources of revenue. Non-taxation revenue includes revenue from sales of goods and services, property income (interest, dividends, income tax equivalents, land rents and royalties), fines, capital transfers, and current transfers other than grants. Current grants are excluded from non-taxation revenue because these have already been taken into account in deriving adjusted taxation revenue.

18 An important role of government is the redistribution of income, by way of direct and indirect 'benefits', to individual households. These transfers can be deducted from adjusted total revenue to derive adjusted total revenue less transfers to households. Direct benefits are regular cash payments made to households by government without any requirement to provide goods and services in return (e.g. welfare payments). Indirect benefits are non-cash benefits and services provided by government to individual households (e.g. concessions for transport and utilities, medical and pharmaceutical benefits and natural disaster relief).

19 The three derived measures explained above are illustrated in the following diagram:

Diagram: Adjusted total revenue less transfers to households

Diagram: Adjusted total revenue less transfers to households

Diagram: Adjusted total revenue less transfers to households

GFS taxation revenue minus current grants to lower levels of government plus current grants from higher levels of government equals adjusted taxation revenue.

Adjusted taxation revenue plus non-taxation revenue collected equals adjusted total revenue.

Adjusted total revenue minus direct and indirect benefits paid to households equals adjusted total revenue less transfers to households.

Revisions

20 GFS data are revised on an annual basis. For this reason differences can occur between equivalent aggregates published in earlier years.

21 Users may refer to the following publications which contain related information:

Glossary

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Employers' payroll taxes

Taxes collected from employers, levied either as a proportion of payroll or as a fixed amount per person employed.

Excises and levies

Taxes levied on a specified good, or range of goods, intended for domestic consumption other than taxes levied exclusively on the importation of goods. Excises may be imposed at any stage of production or distribution and the assessment for tax may take into account such factors as weight, strength, quantity or value of the goods. Excises are not limited to those taxes collected under Excise Acts and include taxes on electricity, gas and agricultural production. Includes levies on statutory corporations.

Motor vehicle taxes

Taxes levied on the operation of motor vehicles whether paid by households or corporations. These imposts are treated as taxes, rather than regulatory fees, because of the significant amount of revenue they generate. Excludes taxes on third party insurance which are included in taxes on insurance.

Taxes on gambling

Taxes levied on gambling and betting stakes. Includes taxes on lottery tickets, poker machines, casinos, racing and football pools. The taxes may be collected either from the gambler as a percentage of his/her stake or from entities providing the gambling service either as a licence fee or percentage of their gross income from gambling. Excludes taxes on individual gains from gambling.

Taxes on immovable property

Taxes levied in respect of the use or ownership of immovable property. Includes land taxes and rates.

Taxes on insurance

Taxes levied specifically on insurance services. Includes taxes levied on insurance premiums and contributions collected to finance services which reduce insurable risk.

Taxes on international trade

Taxes and stamp duties levied on specified imported or exported goods. Excludes taxes collected on imports as part of a general tax on goods, and excises applicable to both imported and domestically produced goods.

Taxes on property

Taxes on the use or ownership of property, and taxes on property transfers. Includes taxes on immovable property and taxes on financial and capital transactions.

Taxes on the provision of goods and services

Taxes levied on the production, sale, transfer, leasing or delivery of goods and rendering of services. Excludes taxes levied on the use of goods or on permission to use goods or to perform activities. From 1 July 2000 includes GST revenue receivable by the Commonwealth Government, gross of the cost of collection but net of input tax credits payable.

Taxes on use of goods and performance of activities

Taxes levied on the use of goods and taxes levied in respect of permission to perform activities. Excludes taxes levied on the value or quantity of the goods themselves which are included in Taxes on the provision of goods and services.

Quality declaration - summary

Institutional environment

Statistics presented in Taxation Revenue, Australia (cat. no. 5506.0) are based on information provided in, or underlying the published accounting statements and reports of governments and their authorities. For the Commonwealth Government and all state governments the primary data sources are:

  • public accounts and budget management systems of state treasuries and the Australian Department of Finance;
  • annual reports of government departments and authorities;
  • budget papers; and
  • reports of the Auditors–General.
     

For local government, the main data sources are annual local government consolidated data collections conducted on behalf of a range of stakeholders by departments of local government in each of the jurisdictions, as well as published financial statements.

For information on the institutional environment of the Australian Bureau of Statistics (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

The term 'Government Finance Statistics' refers to statistics that measure the financial activities of governments and reflect the impact of those activities on other sectors of the economy. The Australian system of Government Finance Statistics (GFS), is designed to provide statistical information on public sector entities in Australia classified in a uniform and systematic way. GFS taxation statistics are a subset of GFS.

GFS enables policy makers and users to analyse the financial operations and financial position of the public sector by the level of government, institutional sector or set of transactions. The system of GFS is based on international standards set out in the System of National Accounts 1993 (1993 SNA) and the International Monetary Fund's (IMF) Government Finance Statistics Manual (GFSM). The System of National Accounts has been updated and the System of National Accounts 2008 (2008 SNA) was endorsed by the United Nations Statistical Commission in February 2009. The ABS compilation of GFS adopts the updated 2008 SNA treatment in two cases. The first is that Defence Weapons Platforms are treated as gross fixed capital formation. The second is in the treatment of Special Drawing Rights. These changes have been updated in the Australian System of Government Finance Statistics: Concepts, Sources and Methods, 2005 (cat. no. 5514.0), but do not impact on taxation statistics. The ABS GFS Manual has also been updated to include the treatment of emissions schemes in ABS GFS taxation data.

The IMF has published a revised Government Finance Statistics Manual (GFSM 2014), and the Australian system has been updated to reflect the new international standards. These changes are presented in the Australian System of Government Finance Statistics: Concepts, Sources and Methods, 2015 (cat. no. 5514.0), and will be implemented for data reported for periods from 1 July 2017 onwards.

The system of GFS provides details of revenues, expenses, cash flows and assets and liabilities of the Australian public sector and comprises units which are owned and/or controlled by the Commonwealth, state and local governments.

This release presents GFS taxation revenue statistics on an accrual accounting basis for each jurisdiction for the general government sector.

Timeliness

Annual Taxation Revenue statistics are released within 11 months of the end of the financial year.

Accuracy

The main influence on the accuracy of GFS data is non–sampling error. Non–sampling error arises from inaccuracies in collecting, recording and processing the data. The most significant of these errors are misreporting of data, and processing errors. Every effort is made to minimise error by working closely with data providers, training of processing staff and efficient data processing procedures.

Revisions are made to the annual Taxation Revenue data as required as a result of new and updated information available from providers.

Coherence

In 1998–99, the ABS adopted an accrual basis of recording for its GFS. Prior to this the ABS GFS was cash based. In addition to the information published, some GFS data are available back to 1961–62. However, due to the different compilation and data sources, cash flow data from 1998–99 onwards are not directly comparable with earlier cash data. The ABS has not established a quantitative measure of this break in series because the existing data sources do not permit this. Data on a pure accruals basis are only available from 1998–99.

In 1992–93 the Commonwealth and state governments implemented the uniform presentation framework (UPF) in their budget documents to introduce uniformity into the presentation of GFS.

From 2008–09 onwards, Australian Accounting Standard Board 1049 Whole of Government and General Government Sector Financial Reporting (AASB 1049) has replaced Australian Accounting Standard 31 Financial Reporting by Government (AAS 31) as the standard Governments should follow in the preparation of their financial statements. A key feature of AASB 1049 is that where the Australian System of Government Finance Statistics: Concepts, Sources and Methods, 2005 (cat. no. 5514.0) differs from the accounting standards, a reconciliation to the key GFS aggregates and an explanation for these must be presented in a reconciliation statement. Data presented in this publication may differ from data published by Treasuries in their reconciliation statements for the key aggregates where Treasuries have not adjusted their data to a GFS basis, where ABS have a different view on classification treatments, where ABS employ a different consolidation methodology, or where data have been included that were not available when a jurisdiction's GFS presentations were published.

The statistics in this release have been compiled using standard definitions, classifications and treatment of government financial transactions to facilitate comparisons between levels of government and between states within a level of government. However, the statistics also reflect real differences between the administrative and accounting arrangements of the various jurisdictions and these differences need to be taken into account when making interstate comparisons. For example, only a state level of government exists in the Australian Capital Territory (ACT). The ACT government performs a number of functions which are undertaken by local government authorities in other jurisdictions.

To compile statistics about the financial activities of a particular level of government, or any other grouping of public sector units, transactions and debtor/creditor relationships between units within the chosen grouping (sector or subsector) have to be matched and eliminated to avoid double counting. The process of matching and eliminating these items within the chosen group is known as 'consolidation'.

Interpretability

The publication Taxation Revenue, Australia (cat. no. 5506.0) contains an Explanatory Note and Glossary that provide information on the data sources, terminology, classifications and other technical aspects associated with these statistics

Detailed information on the concepts, sources and methods used in compiling GFS can be found in Australian System of Government Finance Statistics: Concepts, Sources and Methods, 2005 (cat. no. 5514.0).

Accessibility

If the information you require is not available from the published data then the ABS may have other relevant data available on request. Inquiries should be made to the National Information and Referral Service on 1300 135 070, email client.services@abs.gov.au or public.finance@abs.gov.au. The ABS Privacy Policy outlines how the ABS will handle any personal information that you provide to us.

Abbreviations

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ABSAustralian Bureau of Statistics
ERPestimated resident population
FBTfringe benefits tax
GDPgross domestic product
GFSGovernment Finance Statistics
GSTgoods and services tax
n.e.c.not elsewhere classified
PAYGpay-as-you-go tax
RECsrenewable energy certificates