Concepts and definitions

Debts charged on a source of income

Debts charged on a source of income include debts attributable to farming and forestry as well as to trade and business activities.

Disposable money income

Households' disposable money income includes monetary income items and benefits in kind connected to employment relationships. Money income does not include imputed income items, of which the main one is imputed rent.

The formation of disposable money income can be described as follows:

+ wages and salaries

+ entrepreneurial income

+ property income (without imputed rent)

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= factor income

+ current transfers received (without imputed rent)

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= gross money income

– current transfers paid

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= disposable money income

When current transfers paid are deducted from gross money income, the remaining income is the household's disposable money income.

The primary income concept used in the income distribution statistics is household's disposable money income according to international recommendations, in which case sales profits and taxes paid on them do not belong to the scope of the income concept. Following international recommendations, they are treated as a memorandum item outside the income concept.

The concept of disposable money income in the total statistics on income distribution differs from disposable money income in the income distribution statistics. As a conceptual difference, the income concept of the total statistics on income distribution includes taxable realised capital gains. For practical reasons, the total statistics on income distribution do not include the majority of interest income and current transfers received and paid between households (e.g. child maintenance support). Real property tax is not deducted in the total statistics on income distribution either.

Gross income

The household's gross income is obtained when current transfers received by the household are added to the household's factor income (wages and salaries, entrepreneurial and property income), but paid current transfers (e.g. taxes and social security contributions) are not deducted.

Household-dwelling unit

A household-dwelling unit consists of the permanent occupants of a dwelling. Persons who according to the Population Information System of the Population Register Centre are institutionalised, or are homeless, or are abroad, or are registered as unknown, do not constitute household-dwelling units. Additionally, persons living in buildings classified as residential homes do not form household-dwelling units if their living quarters do not meet the definition of a dwelling. In the 1980 census household-dwelling units were also formed of these persons.

The concept of household-dwelling unit was adopted in the 1980 census. In earlier years the concept of household was used. A household consisted of family members and other persons living together who made common provision for food. A subtenant providing for his or her own food constituted a separate household. Since 1980 subtenants have been classified in the same household-dwelling units with other occupants.

Housing loan

A housing loan is debt incurred by a taxpayer in acquiring or renovating his/her own or family's permanent dwelling.

Income deciles

The income distribution is described by means of tenths or deciles. Sometimes fifths or quintiles are also used, formed in the corresponding way as deciles.

An example of how income deciles are formed:

Nowadays the decile groups or income deciles used in the income distribution statistics are formed by dividing first the household's income by the household's consumption units (so-called equivalent income). Each household member will have the same equivalent income. The persons are then arranged in the order of their income and divided into ten groups of equal size. Each income decile then has 10 per cent of the population. The first income decile contains the lowest income tenth and the last one the highest income tenth. The income shares of income deciles show how large share of the total sum of the income in question each decile gets.

Indebtedness

The indebtedness of a household-dwelling unit is the share of debts of the annual disposable income as percentages.

Indebtedness = (total debts of the household-dwelling unit/total income of the household-dwelling unit)*100

Liabilities (Debts)

Liabilities (Debts) describe the amount of debt per person in a household-dwelling unit at the end of the year (31.12.) Included are loans and credits granted by credit institutions and financial corporations, financial services offices, as well as other common lenders. The debts comprise housing loans and student loans guaranteed by the Finnish Government or the Åland Provincial Government. The debts also comprise loans granted by credit institutions and financial corporations, as well as loans exceeding EUR 1,700, granted by lenders other than credit institutions and financial corporations, the purpose of use of which is other than the aforementioned housing loan or student loan.

The debts are grouped according to their purpose of use as follows:

1. Housing loans

2. Student loans

3. Debts charged on a source of income

4. Loans taken up for the purpose of acquiring income

5. Other liabilities

Loans taken up for the purpose of acquiring income

Loans taken up for the purpose of acquiring income are debts incurred in gaining taxable income. The income may be regular income, such as rental, interest or dividend income. The income may also be based on capital appreciation, e.g. if the taxpayer acquires a commercial property or a plot of land for investment purposes.

Other liabilities

Other debts include, for example, loans raised to acquire a free-time residence or a car, as well as other consumer credits. The data for the statistics on indebtedness have been collected from annual return data submitted by financial corporations to the tax authorities. Until 2011, the data included consumer credits and other debts provided they are loans granted by credit institutions and financial corporations or loans exceeding EUR 1,700 granted by other common lenders.

From 2012, debt figures do not have to be submitted for continuous credit as defined in Chapter 7, Section 7, Paragraph 1 of the Consumer Protection Act. According to the definition in the Consumer Protection Act, continuous credit refers to all such credits that previously belonged to overdrafts. Continuous credits can include general or special credit card credits, accounts with overdraft facilities, and other credits that consumers can use continuously within the credit limits without a separate decision to grant credit from the lender.

Reference person

The household member with the highest gross income is selected as the reference person in total statistics on income distribution. Income is determined from register data.

Student loan

A student loan refers to a loan guaranteed by the Finnish Government or the Åland Provincial Government.

Referencing instructions:

Official Statistics of Finland (OSF): Indebtedness [e-publication].
Helsinki: Statistics Finland [referred: 28.7.2014].
Access method: http://tilastokeskus.fi/til/velk/kas_en.html.

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