Corporate Income Statistics - Analysis

Highlights

The number of corporate taxfilers increased by an average of 3.28% per year from 2002 to 2005. The increase for 2006 is smaller because not all the 2006 returns have been received yet. The data in this publication is current as of March 31, 2009.

The total net federal taxes (total Part I tax, plus taxes such as the federal capital tax,[Footnote 1] non-resident tax, and dividend taxes, minus applicable federal credit refunds) rose to $36.1 billion in 2006, compared to $23.7 billion in 2002.

Based on a five-year average, larger corporations (those with total assets greater than $15 million or those with capital tax payable) accounted for 69.7% of taxable income[Footnote 2] and 81.0% of the total net federal taxes, but represented 6.0% of the total number of corporations that were assessed for the period from 2002 to 2006.

The percentage of Canadian corporations that had total net federal taxes payable was consistent during the 2002 to 2005 period (between 34.7% and 36.4%).[Footnote 3] The number for 2006 is expected to be similar as more information becomes available.

Four industries—manufacturing, the two financial industries (deposit accepting and other finance and insurance), and oil and gas—accounted for 54.0% of taxable income and 57.9% of total net federal taxes, but made up only 22.4% of corporate filers.

The number of corporate taxfilers grows annually

In Figure I, the total number of corporate taxfilers increased an average of 3.28% per year from 2002 to 2005. The increase for 2006 is smaller because not all the 2006 returns have been received yet. The data in this publication is current as of March 31, 2009.

Figure I: Total number of taxfilers, 2002 to 2006

Notable increase in total net federal taxes in 2006

Figure II shows the level of the corporate tax base (taxable income[Footnote 2]), Part I tax (the basic corporate income tax), and total net federal taxes (total Part I tax, plus taxes such as the federal capital tax, non-resident tax, and dividend taxes, minus applicable federal credit refunds) over the 2002 to 2006 period. These years showed increases in the levels of taxable income[Footnote 2], Part I tax, and total net federal taxes.

Figure II: Taxable income[Footnote 2], Part I tax, and total net federal taxes

Taxable income[Footnote 2], Part I tax, and total net federal taxes all recorded the strongest increases in 2006, compared to previous years (see Figure II). Taxable income[Footnote 2] increased 8.8% in 2005 and 19.4% in 2006. Part I tax showed increases of 9.2% and 21.1% in those same years, while total net federal taxes increased 7.7% and 17.1% in 2005 and 2006 respectively.

Distribution of the tax base by industry[Footnote 4]

Comparing the distribution of the tax base (taxable income) in 2006 to that of 2002, most industrial groups increased, but manufacturing and the trades did not. The largest increase in the distribution was recorded by the oil and gas industries, while manufacturing registered the largest decrease. See Figure III.

Figure III: Taxable income[Footnote 2] by industry share (%) for 2002 and 2006

Other — This includes agriculture, forestry, fishing and hunting (1.9%), mining (0.9%), public utilities (1.7%), transportation and warehousing (2.6%), information and cultural industries (2.4%), management of companies and enterprises (6.1%), and uncoded (0.2%).

Other — This includes agriculture, forestry, fishing and hunting (1.4%), mining (1.9%), public utilities (0.9%), transportation and warehousing (3.4%), information and cultural industries (1.5%), management of companies and enterprises (6.8%), and uncoded (0.2%).

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

Size of corporations

Table I provides a comparison by size of the corporate filers' counts, taxable income[Footnote 2], and total net federal taxes for 2002 and 2006. The data shows that, for the 2002 to 2006 period, the proportion of larger corporations increased, whereas the percentage of smaller corporations, that were mainly Canadian-controlled private corporations (CCPCs), decreased. Based on a five-year average, larger corporations (those with total assets greater than $15 million or those with capital tax payable) accounted for 69.7% of taxable income[Footnote 2] and 81.0% of total net federal taxes, but represented 6.0% of the total number of corporations.

Table I: Share (%) of Number of Corporations, Taxable Income*, and Total Net Federal Taxes by Size, 2002 and 2006

* Taxable income excludes exempt income.
** Larger corporations are composed of CCPCs and non-CCPCs with total assets greater than $15 million or who paid the capital tax.

Contribution by industry

Table II provides the average contribution by industry in terms of the number of filers, taxable income[Footnote 2], and the total net federal taxes for the 2002 and 2006 tax years. Four industries—manufacturing, the two financial industries (deposit accepting and other finance and insurance), and oil and gas—accounted for 54.0% of taxable income and 57.9% of total net federal taxes, but made up only 22.4% of corporate filers. Although the manufacturing industry represented only 4.8% of total filers, it reported the second highest share for taxable income[Footnote 2] (17.8%) and the second highest share for total net federal taxes (16.3%). The “Other finance and insurance” industry reported the highest share for taxable income[Footnote 2] (19.8%) and the highest share for total net federal taxes (22.0%), with 16.5% of total filers. At the other extreme, services contributed the highest share of corporate filers (31.8%), but came third with its 12.5% share of taxable income[Footnote 2] and fourth with its 8.8% share of total net federal taxes.

Table II: Percentage Contribution by Industry of Counts, Taxable Income*, and Total Net Federal Taxes (five-year average: 2002—2006)

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

Proportion of taxable corporations

The percentage of Canadian corporations that had total net federal taxes payable was consistent (between 34.7% and 36.4%) during the 2002 to 2005 period (see Table III). The number for 2006 is expected to be similar as more 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 taxfilers include non-profit organizations, tax-exempt corporations, and inactive corporations that do not pay corporate taxes.

Table III: Taxable vs. Non-Taxable Corporate Taxfilers — 2002 to 2006

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

Footnotes

[Footnote 1]

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

[Footnote 2]

Taxable income excludes exempt income.

[Footnote 3]

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 tax liabilities. Also, corporate taxfilers include non-profit organizations, tax-exempt corporations, and inactive corporations that do not pay corporate taxes.

[Footnote 4]

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.

Date modified:

2011-07-14