## BPM7 Chapter 13. Secondary Income Account: Annotated Outline ## Source details **Canonical URL:** [BPM7 Chapter 13. Secondary Income Account: Annotated Outline](https://www.imf.org/-/media/files/data/statistics/bmp7/chapters/ao-bpm-ch-13.pdf) ## Other formats - [Markdown version](/-/media/files/data/statistics/bmp7/chapters/ao-bpm-ch-13.pdf.md) - [Structured JSON version](/-/media/files/data/statistics/bmp7/chapters/ao-bpm-ch-13.pdf.json) --- ### Overview of changes and purpose - Chapter 13 will introduce the secondary income account and its major components, maintaining the structure from Balance of Payments and International Investment Position Manual, sixth edition (BPM6) Chapter 12. - The chapter will have separate sections on: Overview of the secondary income account (Section I), Concepts and coverage (Section II), and Types of current transfers (Section III). - Further wording changes may be made to improve consistency with other macroeconomic statistics manuals (e.g., System of National Accounts 2025) as appropriate. - Changes from BPM6 are highlighted in the annotated outline and reflect updates from guidance notes and AEG decisions. ### I. Overview of the secondary income account - The structure and content of the Overview section will be maintained as in BPM6. - The section will: - Introduce secondary income and its main components. - Describe links to gross national disposable income. - Contrast secondary income with primary income. ### II. Concepts and Coverage — key updates - The section discusses coverage, timing, and valuation for secondary income and will be maintained as in BPM6 with the following important changes. - A. Transactions: Exchanges and Transfers - No significant changes. - B. Distinction Between Current and Capital Transfers - Per GN C.8, the list of transactions considered capital transfers will be expanded to include nonrecurrent payments in compensation for accumulated losses or extensive damages; these are not listed explicitly in BPM6 (although discussed in paragraphs 12.55–56). - C. Recording and Valuation of Transfers - Per GN C.8, paragraphs 12.17–18 will be modified to clarify that fine/penalty transactions should not be recorded until the unit issuing the fine has an “unconditional claim to the funds.” - Clarification that if a judgment or ruling is subject to further appeal, an unconditional claim exists “when the appeal is resolved.” - The corresponding entry to fines and penalties accrued but not yet paid should be recorded as other accounts receivable/payable. - The redistribution of income accounts in 2008 SNA Chapter 8 includes examples of different types of transfers and how they should be recorded—such as transfers in cash, provision of goods and services by enterprises, and social transfers in kind—which may be added to BPM for consistency/completeness. ### III. Types of Current Transfers — key updates and clarifications - A. Personal Transfers - No significant changes. - B. Other Current Transfers - Pending the outcomes of GN WS.14, the discussion of the borderline between taxes and service fees would be expanded/clarified and aligned across the manuals. - Following the AEG decision (7/2012), the discussion of non-life insurance-related transfers will be expanded to clarify how a major catastrophic event should be defined for purposes of determining if transfers are current or capital. - The discussion on fines and penalties (paragraph 12.54) will be expanded per C.8 (see Annex VI). - It will be clarified that contingent fines and penalties in mergers and acquisitions contracts are updates to the market value of the acquired enterprise and therefore should be recorded as direct investment or portfolio investment flows, not as transfers. - The discussion of major compensation payments (12.55–56) will be updated to clarify when compensation payments should be treated as capital transfers (C.8). - Based on the decision in GN B.8, a new paragraph will describe the treatment of nonrefundable contributions to government (or their nominated agency) under citizen-by-investment (CBI) programs as non-tax revenue (transfers not elsewhere classified). - Given variation in operationalization of CBI programs, the choice of current or capital transfer should be based on the specific nature of the program following the statistical principles from the manual. - The current treatment of refundable contributions to CBI programs—as investment—will be retained. ### Schematic overview (structure retained from BPM6) - I Overview of Secondary Income Account - Definition - Distinguishing Primary Income from Secondary Income - Components - Table 13.1 Overview of the Secondary Income Account - II Concepts and Coverage - A. Transactions: Exchanges and Transfers - B. Distinction Between Current and Capital Transfers - C. Recording and Valuation of Transfers - III Types of Current Transfers - A. Personal Transfers - B. Other Current Transfers ### References, guidance notes, and meeting decisions referenced - GNs B.8, C.8, F.12, and WS.14*. These guidance notes are posted at Update of the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6) (imf.org) or at List of Guidance Notes for the 2008 SNA Update (unstats.un.org). - AEG 7/2012 meeting decisions on life insurance and major catastrophic events. - AEG 7/2012 and 8/2013 discussion on stability fees. - Note: Guidance notes that are under consultation at the time of writing this AO are marked by an asterisk (*). ### Key stakeholders consulted - System of National Account and Balance of Payments Manual editors - IMF Statistics Department Financial Institutions Division and Government Finance Division --- _Source: https://www.imf.org/-/media/files/data/statistics/bmp7/chapters/ao-bpm-ch-13.pdf_