Canada Revenue Agency Financial Statements - Administered Activities

Management 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 CRA on behalf of the Government of Canada, provinces, territories, First Nations, and other government organizations. Tax revenues are recognized on an accrual basis and are net of the applicable deductions and credits allowed under various Acts.

Analysis of Revenues Administered on Behalf of the Federal Government of Canada

Federal income tax revenues were $13.1 billion higher in 2006-07 than in 2005-06. Personal and trust income tax revenues increased $6.8 billion, while corporate income tax revenues increased $6.0 billion. Non-resident income tax revenues increased $348 million. The increase in personal income tax revenues was due to gains in employment, wage levels and labour income, combined with the progressivity of the personal income tax system. This was partially offset by tax relief measures announced in Budget 2007 and the October 31, 2006 Tax Fairness Plan. The corporate income tax revenue increase resulted from higher corporate profits in 2006, particularly in the energy, base metals, and financial sectors. The rise in non-resident income tax revenue reflected strong growth in foreign direct investment in Canada.

There was a decrease of $141 million in other taxes and duties. GST revenues increased $121 million due to increased retail sales, mostly offset by the July 1, 2006 cut in the GST rate. The remaining taxes and duties were $262 million lower; revenues from the one time Softwood Lumber Charge on Refund of Duty were $494 million and revenues from the newly implemented Softwood Lumber Export Charge were $229 million. However, there was $1 billion drop in Other Excise revenues mainly attributable to lower tobacco duties as a large licensee began moving their domestic production to another country starting in October 2005.

Despite the general reduction in EI premiums, as well as the drop in premiums resulting from the implementation of the Quebec Parental Insurance Plan, revenues from employment insurance premiums increased $193 million, due to gains in employment, wages, and salaries.

Figure 24 Revenues 2006-2007

Date modified:

2007-11-01