T2 Corporate Income Statistics - Analysis

Highlights

The total number of corporate tax filers increased 2.9% per year on average from 2000 to 2003. The total number of corporate tax filers declined slightly between 2003 and 2004 since the data in this publication is as of June 30, 2006.

The total net federal tax (total Part I tax plus related federal taxes such as the capital tax[Footnote 1] , non-resident tax and dividend taxes less applicable federal credits) rose to $29.4 billion in 2004 compared to $24.9 billion in 2000.

Larger corporations (those with total assets greater than $15 million or who paid the capital tax) accounted for 81.3% of net income for tax purposes during the 2000 to 2004 period and on average paid 82.7% of the total net federal tax but constituted only 6.4% of the total number of corporations.

The percentage of Canadian corporations that pay net federal taxes increased slightly from 36% to 39% during the 2000 to 2004 period[Footnote 2].

The number of corporate tax filers grows annually

In Figure I, the total number of corporate tax filers increased 2.9% per year on average from 2000 to 2003. Since the data in this publication is as of June 30, 2006, the 2004 data is somewhat incomplete. Because of this, the total number of corporate tax filers is seen as declining slightly between 2003 and 2004. In spite of this decline, the overall trend from 2000 to 2004 increased. In the next release of this publication, the 2004 data will be more complete and the number of corporate tax filers for 2004 should increase.

Figure I: Total number of corporate tax filers, 2000-2004

Total net federal tax rises in 2003 and 2004

Figure II shows the level of the corporate tax base (taxable income), the associated Part I tax (the basic corporate income tax) and total net federal tax (total Part I tax plus related taxes such as the federal capital tax, non-resident tax and dividend taxes less applicable federal credits) over the period 2000-2004. In 2001 and 2002, growth in taxable income was relatively flat, while that of the Part I tax declined slightly. Total net federal tax declined slightly in 2001 and was flat in 2002.

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

Afterwards, the total net federal tax increased 11.8% in 2003 and 11.4% in 2004, rising to $29.4 billion. Similarly, both taxable income and Part I tax also registered significant percentage increases for 2003 and 2004. Taxable income rose 12.5% and 19.6%, while Part I tax rose 9.5% and 15.2% in these same years. In addition, as would be expected, a similar trend is observed in corporate net income, which grew 46.9% to $224.9 billion in 2004 (see data table 19).

Distribution of the tax base by industry[Footnote 3]

The increase in the tax base (taxable income) from 2000 to 2004 was widespread among all industrial groups. In terms of shares of the tax base, corporations in both the oil and gas industry and in trade each recorded a two percentage point increase in their share of the total taxable income. As the tax base growth slowed in manufacturing, that industry showed a seven percentage point decrease in its share of taxable income (see Figure III).

Figure III: Taxable income, by industry share (%) – 2000 and 2004

Other includes: Agriculture Forestry, Fishing and Hunting (2%), Mining (1%), Public Utilities (1%), Transportation and Warehousing (2%), Information and Cultural Industries (4%), Management of Companies and Enterprises (4%), and Uncoded (1%).

Other includes: Agriculture Forestry, Fishing and Hunting (2%), Mining (1%), Public Utilities (2%), Transportation and Warehousing (2%), Information and Cultural Industries (2%), Management of Companies and Enterprises (5%), and Uncoded (1%).

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

Size of corporations

The data suggested that for the 2000 to 2004 period, the number of smaller Canadian Controlled Private Corporations (CCPCs) was growing at a slightly faster pace than their larger counterparts. Larger corporations (those with total assets greater than $15 million or who paid the capital tax) on average accounted for 82.7% of the total net federal tax but constituted on average 6.4% of the total number of corporations.

Table I: Share (%) of number of corporations, taxable income and total net federal tax, by size, 2000 and 2004

Larger CCPCs and non-CCPCs are corporations with total assets greater than $15 million or who paid the capital tax (or large corporation tax).

Contribution by industry

Table II provides the average contribution by industry in terms of the number of tax filers, taxable income, and the total net federal tax over the 2000-2004 tax years. Although the manufacturing industry represents only 5.0% of total tax filers, it reported the highest share (21.7%) of the taxable income and the highest share (21.6%) of the total net federal tax. The other finance and insurance industry reported the second highest share (20.0%) of the total net federal tax, and the second highest share (18.8%) of taxable income, with 15.8% of the total tax filers. The other key industry is services. It contributed the highest share (30.4%) of the corporate tax filers but came third with its 13.2% share of the taxable income.

Table II: Percentage contribution by industry of counts, taxable income and the total net federal tax (five-year average: 2000-2004)

Totals may not add due to rounding.

The proportion of taxable corporations increases slightly

The percentage of Canadian corporations that pay net federal taxes increased slightly from 36% to 39% during the 2000 to 2004 period (see Table III). 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.

Table III: Taxable vs. non-taxable corporate tax filers - 2000 to 2004

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 1st, 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]

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:

2008-11-03