Corporate Income Statistics - Data Source and Methodology

Source

The statistical tables in this report reflect corporation income tax returns filed and assessed or reassessed for the tax years that ended in 2002 to 2006. The statistics come from a database created within the Statistics and Information Management Directorate (SIMD) of the Canada Revenue Agency (CRA).

Only federal tax fields were extracted from the specially-built database, since the CRA did not collect provincial taxes for Quebec, Ontario,[Footnote 5] or Alberta for the years 2002 to 2006.

Statistical unit

A statistical unit is the unit of observation or measurement for which data are collected or derived. For the purposes of this publication, the statistical unit is the corporate legal entity, which we call a corporate taxfiler. A corporate taxfiler is given a unique 13-digit account number with a corporate tax year-end date that can be associated with a specific income tax return. Where a corporation files more than one return in a tax year, adjustments have been made to avoid the double counting of stock variables such as total assets. Due to multiple year-ends within a calendar year, there are generally more filers than corporations.

Coverage

The statistics included in this publication cover corporations with tax years that ended in 2002 to 2006, and that filed corresponding corporation income tax returns as of March 31, 2009. However, corporations with tax year-ends falling within the first seven days of the calendar year (January 1 to 7) are included in the previous calendar year, since the economic substance of these corporations is best represented in that year. For example, a corporation with a January 5, 2006, tax year-end will be included in the 2005 tax year. In some unique cases, it is possible for a corporation to have more than 366 days in its tax year.

Given their unique filing requirements, certain insurance and non-resident corporations do not have to file the General Index of Financial Information (GIFI) schedules[Footnote 6], so they are not included in the GIFI statistics.

Table IV provides the total number of corporation income tax returns filed in a given tax year by tax year-end.

Table IV: Total corporation income tax returns filed by tax year (data as of March 31, 2009)

There are differences in numbers from Table IV compared to Figure I (in Section 2) for two reasons: first, in Table IV, the tax year-end is not adjusted for the first seven days of the calendar year. Secondly, Table IV refers to returns filed, while Figure I refers to returns assessed. Percentages may not add up due to rounding.

File creation

Over 100 accounting and tax variables were selected from the specially-built database. These variables were merged with the North American Industrial Classification System (NAICS) field from the business number (BN) database to produce the T2 Publication File. Included in the file were a few calculated variables such as loss carrybacks (LCB), other tax credit carrybacks (CB), and gross revenue. For more information on each variable, see Annex 2.

Industry classification[Footnote 7]

Corporations are assigned an industry code in accordance with the North American Industrial Classification System (NAICS), which was developed by the statistical agencies of Canada, Mexico, and the United States to provide common definitions of the industrial structure of the three countries. NAICS divides the economy into 20 sectors according to production criteria, with 5 sectors being largely goods-producing and 15 sectors being entirely services producing industries.

In this publication, the economy is further aggregated into 15 groupings (see Annex 3). Corporations that have yet to be assigned a NAICS code by Statistics Canada have been classified as “uncoded” for the purpose of this publication. NAICS codes assigned to corporations are based on the April 2009 version of the BN database. The BN database provides a snapshot of NAICS codes. The codes assigned are therefore used over the five year period of this release.

Size stratification

Corporations are stratified based on total assets. Larger corporations are defined as corporations with total assets greater than $15 million or that were liable to pay the capital tax during the 2002 to 2006 tax years. All other corporations are classified as smaller corporations.

Table descriptions

The published data tables are presented in three categories: tax variables, GIFI variables, and summary tables.

The tax variable tables (tables 1 to 16), which are a condensed representation of the T2 Corporation Income Tax Return — Form 200, include select tax variables showing counts and summary totals. Table 1 shows all Canada amounts, which are also stratified by size. Tables 2 through 16 are broken down into 15 industries (see regrouped NAICS in Annex 3), but do not include size.

Three main GIFI variables (assets, gross revenue, and net income) are provided with the number of filers in tables 17 to 19, showing the data by size and industry. Tables 20 and 21 are the summary tables by revenue groups and by assets groups, respectively. They include counts and five key variables: total assets, gross revenue, net income, taxable income[Footnote 8], and total net federal taxes.

Accuracy and limitations

The data are subject to certain inherent limitations relating to the timeliness, accuracy, and completeness of the information provided by corporations. These statistics do not reflect changes resulting from late filers and reassessments (including carrybacks from future returns) processed after March 31, 2009. Data quality reviews have been designed and implemented to minimize certain limitations. However, it is not possible to eliminate every data error in a population of this magnitude.

There are a variety of non-sampling errors such as coverage errors, processing errors, and response/non-response errors. These non-sampling errors can be classified into two groups: random errors and systematic errors. Random errors may be cancelled out, but systematic errors tend to stay somewhat fixed and could result in a bias.

Statistical data review

The statistical data review included several processes aimed at examining general inconsistencies in the data that would have affected the statistical series. Erroneous extreme values were identified and corrected. For this purpose, the trend in the data, information contained in the return, and accompanying schedules were reviewed. Final tabulations were also reviewed for accuracy and reasonableness in light of the tax laws, and were compared to other sources of similar data series.

Footnotes

[Footnote 5]

On October 6, 2006, the governments of Canada and Ontario signed a memorandum of agreement to transfer the administration of Ontario corporate income tax from the Ontario Ministry of Revenue to the Canada Revenue Agency, effective for tax years ending in 2009 and later.

[Footnote 6]

The General Index of Financial Information (GIFI) is a standard list of codes that are used by corporations to prepare their financial statements. The codes identify items that are usually found on a corporation's financial statements (balance sheets, income statements, and statements of retained earnings). Each item is assigned its own unique code. This allows the CRA to collect financial statement information in a standardized format. For more information, see Guide RC4088.

[Footnote 7]

The classification by industry is based on the North American Industry Classification System (NAICS). When a corporation is engaged in more than one activity, it is classified in the industry that corresponds to its main activity.

[Footnote 8]

Taxable income excludes exempt income.

Date modified:

2011-07-14