A basic tenant of the SNA is that holding gains are not considered to form part of income.  The income accounts in the SNA are transaction accounts.  A transaction is an economic flow that is an interaction between institutional units by mutual agreement or an action within an institutional unit that it is analytically useful to treat like a transaction, often because the unit is operating in two different capacities¹.  Holding gains and losses, which are due to changes in the level and structure of prices, are not transactions, because there is no interaction between institutional units².   The particular relationship between income and holding gains is discussed in the 1993 SNA paragraph 8.15, which explicitly states that holding gains and losses accruing during the accounting period do not form part of (disposable) income.

The exclusion of holding gains from income is raised as an issue from time to time, and it has been suggested that alternative measures of income should be considered in the core SNA accounts.  However, the issue has not been considered as part of the current update.  It was not on the list of issues agreed to by the Statistical Commission; presumably because including holding gains as part of income would have been a fundamental change to the system and fundamental changes were outside of the scope of the update.  The exclusion of this issue from the update was confirmed at the first AEG meeting, although discussion at a number of AEG meetings indicated that this was an issue that many thought worthy of further research.

However, the current update process did consider whether the current convention of excluding holding gains from income was being consistently applied.  A paper for consultation was prepared by Peter Harper, and the result of that consultation was strong agreement that there was in fact no inconsistency in the SNA.  As this consultation process started from the premise that holding gains are excluded from income, the question of whether the SNA should be changed in this regard was not canvassed.
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¹ 1993 SNA para 3.12
² 1993 SNA para 3.57

This topic is proposed for the research agenda because it is one that attracts interest from time to time, both from national accounts ‘theoreticians’ and also from users of the accounts.  Many users come from a business accounting perspective, where holding gains (or at least realised holding gains) are considered as part of income.  Some users have also suggested that including holding gains in income would strengthen the (economic) links between income and other key elements of the system; notably consumption.

Para 8.15 of the SNA makes it clear that the current concept of income is narrower than the concept of income as understood by economists.  Any research on the issue should focus on this essential point – what concept of income should be measured in the SNA and why should this be the appropriate measure.  The ‘why’ part can only be properly answered by gaining an understanding of the purpose of a system of national accounts, and what concept of income best serves this purpose.  This issue should not be addressed solely from a theoretical perspective, but it should involve consultation with key users of national accounts.

If it is considered that holding gains should be included as part of income in the system, a subsequent question is how should this treatment be actually given effect?  As mentioned above, the income accounts as currently constituted are transaction accounts, and holding gains are not transactions.  A way would need to be found around this, although this is a second order issue compared to the more fundamental question as to what should actually be measured in income.