VIII. THE SECONDARY DISTRIBUTION OF INCOME ACCOUNT
G. Other current transfers (D.7)
1. Introduction
| 8.84. | Other current transfers consist of all current transfers between resident institutional units, or between residents and non-residents, except those already described in previous sections of this chapter, except for current taxes on income, wealth, etc., and social contributions and benefits. Other current transfers include a number of different kinds of transfers serving quite different purposes. The most important categories are described below. |
2. Net non-life insurance premiums (D.71)
| 8.85. | Non-life insurance premiums included under this heading refer to those payable under policies taken out by enterprises or individual households. The policies taken out by individual households are those taken out on their own initiative and for their own benefit, independently of their employers or government and outside any social insurance scheme. |
| 8.86. | Non-life insurance premiums as stated earlier, comprise both the actual premiums payable by policyholders to obtain insurance cover during the accounting period (premiums earned) and the premium supplements payable out of the property income attributed to insurance policyholders. The total of the non-life insurance premiums payable in this way has to cover payments of service charges to the insurance enterprises for arranging the insurance and payments for the insurance itself. The way in which the service charges are calculated was explained in chapter VI, paragraphs 6.138 to 6.140. After deducting the service charges from total non-life insurance premiums, the remainder is described as net non-life insurance premiums. These are the amounts available to provide cover against various events or accidents resulting in damage to goods or property or harm to persons as a result of natural or human causes - fires, floods, crashes, collisions, sinkings, theft, violence, accidents, sickness, etc. - or against financial losses resulting from events such as sickness, unemployment, accidents, etc. Only the net non-life insurance premiums constitute current transfers and are recorded in the secondary distribution of income account. The service charges constitute purchases of services by the policyholders and are recorded as intermediate or final consumption, as appropriate. | | | Text refers to: table 8.1.  |
3. Non-life insurance claims (D.72)
| 8.87. | Non-life insurance claims do not include payments to households in the form of social insurance benefits. They are the amounts payable in settlement of claims that become due during the current accounting period. Claims become due at the moment when the eventuality occurs which gives rise to a valid claim accepted by the insurance enterprise. As the service charges on non-life insurance are calculated by subtracting claims due from the combined value of the premiums earned and premium supplements, it follows that the total claims due for an insurance enterprise must equal the net non-life premiums receivable by that enterprise during the same accounting period. This emphasizes the fact that the essential function of non-life insurance is to redistribute resources. |
| 8.88. | The settlement of a non-life insurance claim is treated as a transfer to the claimant. Such payments are always treated as current transfers, even when large sums may be involved as a result of the accidental destruction of a fixed asset or serious personal injury to an individual. The amounts received by claimants are usually not committed for any particular purpose and goods or assets which have been damaged or destroyed need not necessarily be repaired or replaced. |
| 8.89. | Some claims arise because of damages or injuries that the policyholders cause to the property or persons of third parties, for example, the damages or injuries that insured drivers of vehicles may cause to other vehicles or persons. In these cases, valid claims are recorded as being payable directly by the insurance enterprise to the injured parties and not indirectly via the policyholder. |
4. Current transfers within general government (D.73)
| 8.90. | These consist of current transfers between different government units or different sub-sectors of general government. They include current transfers between different levels of government, such as frequently occur between central and state or local government units, and between government units and social security funds. They do not include transfers of funds committed to finance gross fixed capital formation, such transfers being treated as capital transfers. |
| 8.91. | One government unit may act as an agent on behalf of a second government unit by, for example, collecting taxes which are due to the second unit, at the same time as it collects its own taxes. Taxes collected on behalf of the second unit in this way are to be recorded as accruing directly to the second unit and are not to be treated as a current transfer from the first to the second unit. Delays in remitting the taxes from the first to the second government unit give rise to entries under "other accounts receivable/payable" in the financial account. |
5. Current international cooperation (D.74)
| 8.92. | Current international cooperation consists of current transfers in cash or in kind between the governments of different countries or between governments and international organizations. This includes:
(a) Transfers between governments that are used by the recipients to finance current expenditures, including emergency aid after natural disasters; they include transfers in kind in the form of food, clothing, blankets, medicines, etc.;
(b) Annual or other regular contributions paid by member governments to international organizations (excluding taxes payable to supra-national organizations);
(c) Payments by governments or international organizations to other governments to cover the salaries of those technical assistance staff who are deemed to be resident in the country in which they are working.
Current international cooperation does not cover transfers intended for purposes of capital formation, such transfers being recorded as capital transfers. |
6. Miscellaneous current transfers (D.75)
| 8.93. | These consist of various different kinds of current transfers that may take place between resident institutional units or between resident and non-resident units. Some of the more important are shown below. |
Current transfers to NPISHs
| 8.94. | Most current transfers to NPISHs consist of cash transfers received from other resident or non-resident institutional units in the form of membership dues, subscriptions, voluntary donations, etc. whether made on a regular or occasional basis. Such transfers are intended to cover the costs of the non-market production of NPISHs or to provide the funds out of which current transfers may be made to resident or non-resident households in the form of social assistance benefits. This heading also covers transfers in kind in the form of gifts of food, clothing, blankets, medicines, etc. to charities for distribution to resident or non-resident households. However, payments of membership dues or subscriptions to market NPIs serving businesses, such as chambers of commerce or trade associations, are treated as payments for services rendered and are therefore not transfers (see chapter VI, paragraph 6.59). |
Current transfers between households
| 8.95. | These consist of all current transfers in cash or in kind made, or received, by resident households to or from other resident or non-resident households. They include regular remittances between members of the same family resident in different parts of the same country or in different countries, usually from a member of a family working in a foreign country for a period of a year or longer. Earnings remitted by seasonal workers to their families are not international transfers as the workers remain resident in their country of origin, i.e., members of their original households, when they work abroad for short periods of less than a year. |
Fines and penalties
| 8.96. | Fines and penalties imposed on institutional units by courts of law or quasi-judicial bodies are treated as compulsory current transfers. However, fines or other penalties imposed by tax authorities for the evasion or late payment of taxes cannot usually be distinguished from the taxes themselves and are, therefore, grouped with the latter in practice and not recorded under this heading; nor are payments of fees to obtain licences, such payments being either taxes or payments for services rendered by government units (see paragraph 8.45). |
Lotteries and gambling
| 8.97. | The amounts paid for lottery tickets or placed in bets consist of two elements: the payment of a service charge to the unit organizing the lottery or gambling and a residual current transfer that is paid out to the winners. The service charge may be quite substantial and may have to cover taxes on the production of gambling services. The transfers are regarded in the System as taking place directly between those participating in the lottery or gambling, that is, between households. When non-resident households take part there may be significant net transfers between the household sector and the rest of the world. |
Payments of compensation
| 8.98. | These consist of current transfers paid by institutional units to other institutional units in compensation for injury to persons or damage to property caused by the former excluding payments of non-life insurance claims. Payments of compensation could be either compulsory payments awarded by courts of law, or ex gratia payments agreed out of court. This heading covers only compensation for injuries or damages caused by other institutional units. It also covers ex gratia payments made by government units or NPISHs in compensation for injuries or damages caused by natural disasters. |
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