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Financial Statements Discussion and Analysis - Administered Activities

Introduction

The Financial Statements - Administered Activities reflect the total assets and liabilities, tax and non-tax revenues, expenses and recoveries, and cash flows administered by the Canada Revenue Agency on behalf of the Government of Canada, provinces, territories, First Nations, and other government organizations. Revenues and expenses are recognized on an accrual basis. Tax revenues are net of tax concessions. Expenses which provide a financial benefit other than relief of taxes are classified as transfers made through the tax system.

Tax revenues

The Canada Revenue Agency collects the majority of federal tax revenues. Other agencies and departments, such as the Canada Border Services Agency, account for the balance of total federal revenues reported in the Public Accounts of Canada. For further information on revenues collected by the Government of Canada as a whole, please refer to the Annual Financial Report of the Government of Canada, available at www.fin.gc.ca/purl/afr-eng.asp.

Revenues administered on behalf of the Government of Canada

Revenues were $210.2 billion in 2013, approximately $8.0 billion higher than in 2012. All administered revenues were higher except non-resident tax withholdings, goods and services tax, other excise taxes and duties, and miscellaneous charges.

Individual and trust income tax

Individual and trust income tax revenues increased by $5,076.4 million, or 4.2%. The increase reflects continued economic growth from higher employment and wages, and is in line with the increase in individual taxable income.

Corporate income tax

Corporate income tax revenues increased by $1,344.8 million or 4.0%. While revenues showed a decrease due to reductions in tax rates, this was offset by adjustments to 2013 revenues to recognize higher corporate income tax revenues than what had been estimated for 2012.

Non-resident tax withholdings

Non-Resident Tax Withholdings revenues decreased by $228.3 million or 4.3%. Revenues were impacted by a decline in the resource sector.

Goods and services tax

GST revenues decreased by $29.5 million or 0.3%. The decline reflects the impact of higher input tax credits from the resource sector. This was offset by the growth in retail sales and higher GST on real property.

Energy taxes

Energy taxes increased by $55.5 million or 1.1%. The increase stems from a modest increase in gasoline and diesel fuel revenues, as well as higher aviation fuel revenues.

Other excise taxes and duties

Other excise taxes and duties decreased by $14.3 million or 0.4%. This decrease stems from lower tobacco duty revenues offset in part by higher beer duty and liquor duty, as well as higher revenues on automotive air conditioners.

Miscellaneous charges

Miscellaneous charges decreased by $69.6 million or 8.0%. This was due to lower softwood lumber export charge revenues, especially towards the end of the year.

Employment insurance premiums

Employment insurance premiums increased by $1,765.3 million or 9.3%. The increase reflects continued economic growth and an employment insurance premium rate increase.

Interest, penalties, and other revenues

Interest, penalties, and other revenues increased by $138.7 million or 3.8%. This reflects higher individual and corporate tax receivables, offset in part by large corporate tax reassessments.

Figure 1: Direct tax revenues

As shown in figure 1, the distribution of direct tax revenues remained stable in 2013.

Figure 2: Indirect tax revenues

As shown in figure 2, the distribution of indirect tax revenues remained stable in 2013.

Revenues administered on behalf of the provincial, territorial governments, First Nations, and the Canada Pension Plan

Provincial, territorial, and First Nations revenues were $94.8 billion in 2013, approximately $1.4 billion higher than in 2012. Canada Pension Plan Revenues were $41.7 billion in 2013; $2.7 billion more than in 2012.

Income tax revenues - individual and trust

Individual and trust income tax revenues increased by $1,187.6 million, or 2.2%. The increase stems from continued economic growth and is in line with the increase in individual taxable income.

Income tax revenues - corporate

Corporate income tax revenues decreased by $1,736.7 million or 11.7%. This decrease is mostly due to adjustments to 2013 revenues to recognize lower corporate income tax revenues than what had been estimated for 2012.

Harmonized sales tax (HST)

HST revenues increased by $1,869.5 billion or 7.4%. The increase is due to the growth in retail sales and the end of the Ontario sales tax transitional benefit last year. On August 26, 2011 the Province of British Columbia announced that it would return to the provincial sales tax; this change was effective April 1, 2013. During 2012-2013, the CRA continued to administer the HST in British Columbia. On April 18, 2012, the province of Prince Edward Island announced that it had entered into an agreement with the government of Canada in order to bring Prince Edward Island into the HST revenue allocation framework effective April 1, 2013.

Other revenues

Other revenues increased by $31.0 million or 109.2%, due to the administration of QST applicable to selected listed financial institutions effective January 1, 2013.

Figure 3: Revenues administered on behalf of the provincial and territorial governments and First Nations

As shown in figure 3, the distribution of revenues administered on behalf of the provincial and territorial governments, and First Nations remained relatively stable in 2013. The proportion of corporate income tax did however decrease due to adjustments to 2013 revenues to recognize lower corporate income tax revenues than what had been estimated for 2012.

Revenues administered on behalf of the Canada Pension Plan

Canada Pension Plan revenues rose by $2,716.4 million or 7.0%. The increase reflects continued economic growth.

Expenses and recoveries administered on behalf of the Government of Canada, provincial, and territorial governments

Net federal expenses and recoveries were $18,829.9 million in 2013, $553.8 million lower than in 2012. Net provincial and territorial expenses were $4,708.7 million, $385.0 million higher than in 2012.

Federal administered expenses

Federal administered expenses decreased by $510.6 million or 2.5%. The provision for doubtful accounts decreased due to a lower increase in the allowance for doubtful accounts than last year. Interest expense was lower due to a decline in interest on corporate tax accounts. This was offset in part by higher child tax benefits, which rose due to the indexation of entitlements.

Federal administered recoveries

Federal administered recoveries rose by $43.2 million or 3.1% due to higher old age security recoveries. This increase stems from a rise in the number of old age security benefit recipients and a growth in taxable income.

Net expenses administered for provinces and territories

Net expenses administered for provinces and territories increased by $385.0 million or 8.9%. The increase is due to the impact of a full year of the Ontario energy and property tax credit. This was partially offset by lower other property tax credits, which resulted from the termination of the Ontario property tax credit subsequently replaced by the Ontario energy and property tax credit.

Provision for doubtful accounts administered for the Canada Pension Plan

The provision for doubtful accounts administered for the Canada Pension Plan decreased by $14.6 million or 14.2%. This decrease was due to a lower increase in the allowance for doubtful accounts than last year.

Figure 4: Expenses and recoveries administered on behalf of the Government of Canada, provincial, and territorial governments

As shown in figure 4, the distribution of expenses and recoveries administered on behalf of the Government of Canada, provincial, and territorial governments remained relatively stable in 2013. The proportion of federal administered expenses and recoveries has however decreased slightly due to the lower provision for doubtful accounts.

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