Sources of Household Income
Expert reviewed • 14 August 2024 • 6 minute read
What are the Sources of Household Income in Australia?
Household income can come from various sources, including wages, investments, government transfers, and business profits. Based on the latest comprehensive data from the ABS Survey of Income and Housing (2019-20), the sources of household income in Australia are separated into the following:
Wages and Salaries (62%)
Wages and salaries are the primary source of income for most households. This category includes earnings from employment, both full-time and part-time. For example, in Australia, wages and salaries accounted for approximately 68% of total household income in 2023. This reflects the significant role of employment in sustaining household financial health. Furthermore, wages and salaries include the following points:
- Includes regular pay, overtime, bonuses, and commissions
- Reflects the structure of the Australian economy, which is predominantly service-based
- Has remained relatively stable as a proportion of household income over the past decade
Government Transfers (25.7%)
Government transfers include social security benefits, pensions, unemployment benefits, and other welfare payments. These transfers are vital for low-income households and retirees. In 2023, government transfers accounted for about 25.7% of total household income in Australia. This reflects the country's strong social safety net designed to support vulnerable populations. Additionally, the following can be considered different types of government transfers:
- Age Pension
- Family Tax Benefit
- Disability Support Pension
- Unemployment benefits (e.g., JobSeeker Payment)
Investment Income (6.2%)
Investment income as a source has grown in importance over the years. Investment income includes earnings from interest, dividends, and rental income. This source is typically more significant for higher-income households with substantial assets. For example, investment income contributed around 6.2% to total household income in 2023. This percentage is higher for wealthier households who have more substantial investments in stocks, bonds, and real estate.
Superannuation Income (0.9%)
Superannuation income refers to the retirement benefits and pension payments that individuals receive from their superannuation fund. In Australia, superannuation is a mandatory savings system designed to ensure individuals have financial support during their retirement years. Superannuation contributions are split into two separate categories:
- Compulsory Contributions: Employers are required to make contributions to an employee's superannuation fund, currently set at a percentage of the employee's earnings. This is known as the Superannuation Guarantee (SG).
- Personal Contributions: In addition to employer contributions, individuals can make voluntary contributions to their superannuation fund to enhance their retirement savings.
Other Income (0.2%)
This category includes various miscellaneous sources of income. Major examples of income that make up this source are:
- Workers' compensation
- Scholarships
- Income from overseas sources