Classification of components of Income-based Gross Domestic Product

1 - Compensation of employees

Compensation of employees' refers to the total remuneration, in cash or in kind, payable by an employer to an employee in return for work done by the latter during the accounting period. Compensation of employees is recorded on an accrual basis; that is, it is measured by the value of the remuneration in cash or in kind that an employee becomes entitled to receive from an employer in respect of work done during the relevant period, whether paid in advance, simultaneously or in arrears of the work itself. In the production account, compensation of employees is the cost of labour services.

2 - Gross operating surplus

'Gross operating surplus' refers to the income of corporations, governments, households and non-profit institutions serving households accruing to the capital factor of production from the production of goods and services.

3 - Gross mixed income

'Gross mixed income' refers to income of unincorporated enterprises. It may not be possible to estimate compensation of employees, consumption of fixed capital and a return to capital separately, in which case an estimate of mixed income, covering all these items, should be made. In practice, all unincorporated enterprises owned by households that are not quasi-corporations are deemed to have mixed income as their balancing item, except owner-occupiers in their capacity as producers of housing services for own final consumption, households leasing dwellings and households employing paid domestic staff. For owner-occupiers and those leasing dwellings, all value-added is operating surplus. For domestic staff all value-added is compensation of employees (unless any taxes or subsidies on production are payable or receivable on the output).

4 - Taxes less subsidies on production

'Taxes less subsidies on production' refers to taxes payable less subsidies receivable on goods or services produced as outputs and other taxes or subsidies on production, such as those payable on the labour, machinery, buildings or other assets used in production. Taxes on production and imports do not include any income taxes payable by the recipients of incomes accruing from production, whether employers or employees.

5 - Taxes less subsidies on products and imports

'Taxes less subsidies on products and imports' refers to the difference between taxes on products and subsidies on products. These taxes and subsidies are payable (received) based on the quantity or value of the goods and services produced or sold. To that we add taxes and duties on imports that become payable when goods enter the economic territory by crossing the frontier or when services are delivered to resident units by non-resident units.

6 - Statistical discrepancy

'Statistical discrepancy' refers to the difference between two theoretically equal aggregates arising as a result of basic statistics and estimation techniques. National accounting macroeconomic aggregates, such as gross domestic product and net lending, can often be calculated in two or more ways. In principle, all the measures of an aggregate are equal. In practice, differences invariably arise due to imperfections in basic statistics and estimation techniques. This difference is called a statistical discrepancy and serves as the balancing item between two theoretically equal aggregates. It can be recorded as is, like the discrepancy between the Current and Capital Accounts and the Financial Account in the Balance of Payments. Alternatively, it can be divided in two, with one half being subtracted from the higher estimate and the other, added to the lower one, such as the discrepancy between income-based and expenditure-based gross domestic product.