National income is one of a family of national accounting measures of New Zealand's total productive activity. It is possible to define total productive activity in many ways. The national accounting framework provides three main measures. One of these is national income, which includes all incomes generated in the processes of production of goods and services. It includes incomes earned as salaries and wages, income from self-employment (e.g., professional farming and private trading), company income, and that earned by Government and local-authority trading concerns. National income is usually referred to as national income at factor cost – that is, it includes all incomes accruing to the various factors of production.
The greater part of the total value of production is represented by factor incomes. In measuring the total value of production of goods and services (referred to as gross national product), it is also necessary to allow for other elements. These include two price effects, indirect taxation and subsidies, which enter into the value of goods sold. Allowance is also made for depreciation of capital – such provision for the maintenance of the nation's total working capital is financed from current production and is consequently a part of total current production. On the other hand, such provision is necessary if the nation's wealth is to be maintained, and consequently is not viewed as a part of the income generated and available for general use.