Corporation Income Tax Statistics - Analysis

Highlights

The total number of corporate tax filers increased an average of 3.3% per year from 2001 to 2004. The increase for 2005 is smaller due to the fact that the data in this publication is current as of March 31, 2008.

The total net federal taxes (total Part I tax including taxes such as the federal capital tax,[Footnote 1] non-resident tax and dividend taxes minus applicable federal credit refunds) rose to $31.3 billion in 2005 compared to $24.1 billion in 2001.

On average, larger corporations (those with total assets greater than $15 million or who had capital tax payable) accounted for 71.5% of taxable income (excluding exempt income) and 83.0% of the total net federal taxes, but constituted only 6.3% of the total number of corporations for the period from 2001 to 2005.

The percentage of Canadian corporations that had net federal taxes otherwise payable was consistent during the 2001 to 2004 period (from 35.4% to 35.7%).[Footnote 2] The number for 2005 is expected to be similar when additional information becomes available.

The number of corporate tax filers grows annually

In Figure I, the total number of corporate tax filers increased an average of 3.3% per year from 2001 to 2004. The increase for 2005 is smaller due to the fact that the data in this publication is current as of March 31, 2008. Subsequent publications will reflect additional data for 2005.[Footnote 3]

Figure I: Total number of tax filers, 2001 to 2005

Total net federal taxes increase from 2002 to 2005

Figure II shows the level of the corporate tax base (taxable income, excluding exempt income), Part I tax (the basic corporate income tax) and total net federal taxes (total Part I tax, including taxes such as the federal capital tax, non-resident tax and dividend taxes minus applicable federal credit refunds) over the 2001 to 2005 period. In 2001 and 2002, the levels of taxable income (excluding exempt income), Part I tax and total net federal taxes all remained virtually unchanged, but increased thereafter.

Figure II: Taxable income (excluding exempt income), Part I tax and total net federal taxes (in $ millions)

Total net federal taxes increased 8.9% in 2003 and 12.9% in 2004, rising to $29.5 billion in 2004. Similarly, both taxable income (excluding exempt income) and Part I tax showed significant increases for 2004. Taxable income (excluding exempt income) surged 9.0% and 22.8%, while Part I tax increased 6.9% and 17.0% for 2003 and 2004, respectively. These trends continued at a lesser pace into 2005.

Distribution of the tax base by industry [Footnote 4]

There was a widespread increase in the tax base (taxable income excluding exempt income) from 2001 to 2005 among most industrial groups. Corporations in the finance, oil and gas, construction, services and trade industries each recorded an increase in their share of total taxable income excluding exempt income (5.2, 2.4, 1.5, 0.9 and 0.7 percentage points, respectively). Manufacturing and the Other industry category showed a decrease in their share of taxable income excluding exempt income (9.5 and 1.2 percentage points, respectively). See Figure III.

Figure III: Taxable income (excluding exempt income), by industry share (%) - 2001 and 2005

Other includes Agriculture, Forestry, Fishing and Hunting (1.8%), Mining (0.5%), Public Utilities (1.1%), Transportation and Warehousing (2.3%), Information and Cultural Industries (4.4%), Management of Companies and Enterprises (5.1%), and Uncoded (0.3%).

Other includes Agriculture, Forestry, Fishing and Hunting (1.6%), Mining (1.3%), Public Utilities (0.7%), Transportation and Warehousing (2.9%), Information and Cultural Industries (1.6%), Management of Companies and Enterprises (5.5%), and Uncoded (0.7%).

Note:
Trade includes wholesale trade and retail trade.
Finance includes deposit accepting and other finance and insurance.

Size of corporations

Table I provides a comparative picture of the corporate filer's counts, taxable income (excluding exempt income) and total net federal taxes for 2001 and 2005. The data shows that, for the 2001 to 2005 period, the number of smaller Canadian-controlled private corporations (CCPCs) was growing at a slightly faster pace than larger corporations. Over the five-year period, larger corporations (those with total assets greater than $15 million or those with capital tax payable) accounted for 71.5% of taxable income and 83.0% of total net federal taxes but constituted 6.3% of the total number of corporations.

Table I: Share (%) of number of filers, taxable income* and total net federal taxes, by size, 2001 and 2005

*Taxable income excludes exempt income.
**Larger CCPCs and non-CCPCs are corporations with total assets greater than $15 million or those with the capital tax payable(or large corporation tax).

Contribution by industry

Table II provides the average contribution by industry in terms of the number of filers, taxable income (excluding exempt income), and the total net federal taxes over the 2001 and 2005 tax years. Although the manufacturing industry represented only 4.9% of total filers, it reported the highest share for taxable income (excluding exempt income) (21.0%) and the second highest share for total net federal taxes (19.6%). The Other finance and insurance industry reported the second highest share for taxable income (excluding exempt income) (18.5%) and the highest share for total net federal taxes (20.4%), with 16.5% of total filers. The other key industry is services. It contributed the highest share of corporate filers (31.4%) but came third with its 12.5% share of taxable income (excluding exempt income) and fifth with its 8.9% share of total net federal taxes.

Table II: Percentage contribution by industry of counts, taxable income* and total net federal taxes (five-year average: 2001-2005)

*Taxable income excludes exempt income.
**Totals may not add due to rounding.

Proportion of taxable corporations

The percentage of Canadian corporations that had net federal taxes otherwise payable was consistent (from 35.4% to 35.7%) during the 2001 to 2004 period (see Table III). The number for 2005 is expected to be similar as additional information becomes available. Generally, corporations do not pay taxes if they have no taxable income, and are not subject to other prescribed taxes such as the capital tax, or if they have deductions and credits available to offset their entire tax liabilities. Also, corporate tax filers include non-profit organizations, tax-exempt corporations, and inactive corporations that do not pay corporate taxes.

Table III: Taxable vs. non-taxable corporate tax filers - 2001 to 2005

*For this publication, a corporation is non-taxable when the net federal tax was equal or less than zero.

Footnotes

[Footnote 1]

The federal capital tax was eliminated as of January 1, 2006.

[Footnote 2]

Generally, corporations do not pay taxes if they have no taxable income, and are not subject to other prescribed taxes such as the capital tax, or if they have deductions and credits available which can offset entirely their tax liabilities. Also, corporate tax filers include non-profit organizations, tax-exempt corporations, and inactive corporations that do not pay corporate taxes.

[Footnote 3]

See Data Source and Methodology Section for further information on the coverage.

[Footnote 4]

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 with its main activity.

Date modified:

2009-06-19