122 Government Finance Statistics Manual 2014
a service—for example, when subcontracts are en-
tered into. Th erefore, other criteria should also be
used to defi ne more clearly the employer-employee
relationship. Th e fact that the individual is solely re-
sponsible for social contributions would suggest that
the individual is a self-employed service provider.
By contrast, payment of social contributions by the
employer is an indication of employer-employee re-
lationship. Entitlement by the individual to the same
kinds of benefi ts (e.g., allowances, holidays, and sick
leave) generally provided to an entity’s employees
would also indicate an employer-employee relation-
ship. Payment of taxes on the provision of services
(such as sales tax or value-added tax) by the indi-
vidual is an indication that the individual is a self-
employed service provider.
6.35 Certain goods and services used by gov-
ernments do not enter directly into the process of
production itself but are consumed by employees
working on that process. In general, when the goods
or services are used by employees on their own time
and at their own discretion for the direct satisfaction
of their needs or wants, they constitute remuneration
in kind (see paragraph 6.17). However, when such use
is mandatory in order to enable employees to carry
out their work, it should be recorded as use of goods
and services. Examples of the latter are:- Tools or equipment used exclusively, or mainly,
at work - Clothing or footwear of a kind that ordinary con-
sumers do not choose to purchase or wear and
that are worn exclusively, or mainly, at work—for
example, protective clothing, overalls, or uniforms - Accommodation services at the place of work of
a kind that cannot be used by the households to
which the employees belong: barracks, cabins,
dormitories, huts, etc. - Special meals or drinks necessitated by excep-
tional working conditions, while traveling for
business reasons, or meals or drinks provided to
employees while on active duty - Changing facilities, washrooms, showers, baths,
etc. necessitated by the nature of the work - First aid facilities, medical examinations, or
other health checks required because of the na-
ture of the work.
6.36 Employees may sometimes be responsible for
purchasing the kinds of goods or services just listed
and are subsequently reimbursed by the employer.
Such reimbursements are recorded as use of goods
and services rather than as wages and salaries.Th e boundary between use of goods and services and transfers
6.37 All transfers of goods and services to other
institutional units other than goods and services pro-
duced by the donor government unit are recorded as
grants (26) or transfers not elsewhere classifi ed (282).
Such transfers may entail the transfer of government-
owned fi xed assets, the transfer of goods held in inven-
tories, the construction of fi xed assets, or the purchase
and subsequent transfer of either fi xed assets or goods
and services for current consumption. Examples are
transfers of food, clothing, blankets, and medicines as
emergency aid aft er natural disasters; transfers of ma-
chinery and other equipment; the direct provision of
the construction of buildings or other structures; and
transfers of military equipment of all types.
6.38 Goods and services used by a donor govern-
ment unit to produce nonmarket goods and services
consumed by other governments and international or-
ganizations are included in use of goods and services.
An example would be the goods and services acquired
so that government employees can conduct relief op-
erations in a foreign country aft er a natural disaster.
Th e purpose of this treatment is to show in GFS the
reduction in cash, or increase in other accounts pay-
able, with an entry in the respective expense items that
made up the cost of producing nonmarket goods and
services provided by the government sector unit.^17
6.39 Use of goods and services also includes all
goods and services consumed by a general government
unit to produce nonmarket goods and services that are
distributed either as social benefi ts in kind or distrib-
uted to households in particular circumstances, such
as following a natural disaster. Such social benefi ts can(^17) Th e treatment in the 2008 SNA diff ers because national ac-
counts have the purpose to calculate production, transfers, and
consumption. Th erefore, the SNA treatment is to record the cost
of production and the imputed sale of the goods and services to
the fi nal recipient as the user of the goods and services. In addi-
tion, the SNA also records a transfer that is deemed to be used
by the recipient to pay for the imputed sale (see the 2008 SNA,
paragraphs 8.43–8.51).