Glossary
- Annuity or superannuation
Annuities are paid by Australian life insurance companies and friendly societies whereas superannuation income streams are paid by superannuation funds, retirement savings account providers and or life insurance companies (ATO 2023b).
- Business income
People need to report their personal income from business sources on their tax return. It is supplementary information collected from applicable individuals only, including those who operate their businesses as a sole trader (ATO 2021).
- Disposable income
Disposable income is the income available to a person or household after income tax, Medicare levy and Medicare levy surcharge (if applicable) have been deducted (ABS 2022d).
- Dissaving action
Spending more than one has earned in a given period.
- Equivalised disposable household income
Equivalised disposable household income enables the direct comparison of the relative economic well-being of households of different size and composition. It is obtained by adjusting total household income by the number of adult and child household members. For a single-person household, it is equal to disposable household income. For larger households, it is an indicator of disposable household income that would be needed by a single-person household to enjoy the same living standard (ABS 2022d).
Equivalised disposable household income is calculated by summing the personal disposable incomes of household members aged 15 years and over, divided by an equivalence factor (ABS 2022d). The equivalence factor is computed by summing 1 point to the first adult, 0.5 points to each additional person who is 15 years and over, and 0.3 to each child under the age of 15.
- Equivalised total household income
- Equivalised total household income is a measure of the economic resources available to a standardised household. It is obtained by adjusting total household income by the number of adult and child household members. For a single-person household, it is equal to household income. For larger households, it is an indicator of household income that would be needed by a single-person household to enjoy the same living standard (ABS 2021).
Equivalised total household income is calculated by summing the personal incomes of household members aged 15 years and over, divided by an equivalence factor (ABS 2017). The equivalence factor is computed by summing 1 point to the first adult, 0.5 points to each additional person who is 15 years and over, and 0.3 to each child under the age of 15 (ABS 2021).
- Government pensions and allowances
- Government pensions and allowances include payments such as Newstart allowance, Youth Allowance, Austudy, age pension, carer payment, Jobseeker payment, Defence Force income support allowance (where taxable), veteran payment (where taxable), invalidity service pension (where taxable), disability support pension (where taxable), and sickness allowance among others (ATO 2023a).
- Income support paid by Services Australia
Income support payments are classed as benefits that generally serve as a recipient’s primary source of income; they are regular payments that assist with the day-to-day cost of living (AIHW, 2021). For this report, income support payments are limited to those paid by Services Australia and do not include payments from DVA.
Income support paid by Services Australia are subject to means testing – as income and assets rise, the rate of payment is reduced towards zero. Some payments are also subject to activity tests; for example, to remain qualified for a payment, recipients of unemployment payments are required to actively look and prepare for work in the future. Individuals can receive only one income support payment at a time. Income support payments aim to alleviate poverty and hardship by ensuring that Australians without adequate income from employment or other sources are able to afford the necessities (Parliament of Australia, 2004).
The income support paid by Services Australia explored in this report include:
- Age Pension
- Student payments – Youth Allowance Student and Apprentice, Austudy
- Unemployment payments – JobSeeker Payment (from 20 March 2020) for people aged from 22 to Age Pension qualifying age, and Youth Allowance (other) for people aged 16 to 21
- Parenting payments – Parenting Payment Single and Parenting Payment Partnered
- Disability-related payments – Disability Support Pension and Carer Payment.
In this report, ‘income support paid by Services Australia’ is defined as the combination of all these payments, as well as other small payments. These include Special Benefit and Farm Household Allowance; as well as payments that are closed to new recipients but still paid to existing recipients such as Wife Pension.
- Receipt of income support paid by Services Australia
- The people described as receiving income support paid by Services Australia were those who had applied for one of the identified benefits or allowances and had been assessed by Services Australia as eligible to receive the payment. Payments data was not used to identify this group.
- Salary or wages
- Salaries or wages includes bonuses, parental leave pay, dad-and-partner pay, lost salary or wages paid under income protection, sickness or accident insurance or workers compensation (ATO 2022d).
- Total income or loss
Total income or loss for a financial year corresponds to the value on the bottom of page 3 on the ATO's tax return for individuals for the financial year (ATO 2022c).
Total income or loss is income before tax and deductions. It includes income from the following categories:
- Salary or wages
- Allowances, earnings, tips, director’s fees etcetera
- Employer lump sum payments
- Employment termination payment
- Australian Government allowances and payments like Newstart, Youth Allowance and Austudy payment
- Australian Government pensions and allowances
- Australian annuities and superannuation income streams
- Australian superannuation lump sum payments
- Attributed personal services income
- Gross interest
- Dividends
- Employee share schemes
- Supplement income or loss (for example, business income).
ABS (Australian Bureau of Statistics) (2021) Equivalised total household income (weekly) (HIED), ABS, Australian Government, accessed 6 March 2023.
ABS (2022d) Australian National Accounts: Distribution of Household Income, Consumption and Wealth, ABS, Australian Government, accessed 16 March 2023.
ATO (Australian Taxation Office) (2022c) Total income or loss 2022, ATO, Australian Government, accessed 3 May 2023.
ATO (2022d) Salary or wages 2022, ATO, Australian Government, accessed 3 May 2023.
ATO (2023a) Government payments and allowances, ATO, Australian Government, accessed 3 May 2023.
ATO (2023b) Superannuation pensions and annuities, ATO, Australian Government, accessed 3 May 2023.
ATO (2021) Income tax return, ATO, Australian Government, accessed 3 May 2023.
Parliament of Australia (2004) A hand up not a hand out: Renewing the fight against poverty - Report on poverty and financial hardship. APH, Australian Government, accessed 24 February 2023.