Corporation Income Tax 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 2001 to 2005. The statistics come from the Statistics Division Corporation Tax (SDCT) database of the Canada Revenue Agency.

Only federal tax fields were extracted from the SDCT database, as the CRA does not collect provincial taxes for Quebec, Ontario,[Footnote 5] and Alberta.

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, referred to herein as a "corporate tax filer." A corporate tax filer is given a 13-digit account number with a unique 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 eliminate 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 ended in 2001 to 2005, and that filed corresponding corporation income tax returns as of March 31, 2008. However, corporations with tax year-ends falling within the first 7 days of the calendar year (January 1st to 7th) 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, 2005 tax year-end will be included in the 2004 tax year. In some unique cases, it is possible for a corporation to have more than 366 days in its fiscal period.

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] and consequently, 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 returns filed by tax year (data as of March 31, 2008)

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; second, Table IV refers to returns filed, while Figure I refers to returns assessed.

File creation

Over 100 accounting and taxation variables were selected from the SDCT database. These variables were merged with the North American Industrial Classification System (NAICS 2002) field from the 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 further information on each variable, please refer to Annex 2.

Industry classification[Footnote 7]

Corporations are assigned an industry code in accordance with NAICS, the North American Industrial Classification System, 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 twenty sectors according to production criteria, with five sectors being largely goods-producing and fifteen 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 May 2008 version of the BN database. It should be noted that an additional step was completed for this publication. The January 2009 version of the BN database was used to, yet again, assign NAICS codes to corporations that were classified as "uncoded." The BN database simply 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 2001 to 2005 period; 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 that are also stratified by size. Tables 2 through 16 are broken down into 15 industries (see regrouped NAICS in Annex 3), but without the size component.

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 (excluding exempt income), 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 31st, 2008. Data quality reviews have been designed and implemented to minimize certain limitations. However, it is impossible 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, or 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 remain 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 statement (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, refer to Guide RC4088.

[Footnote 7]

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

Date modified:

2009-06-19