Financial Statements Discussion and Analysis – Administered Activities (unaudited)

Introduction

The Financial Statements – Administered Activities reflect the total assets and liabilities, tax and non-tax revenues, expenses and recoveries, and cash flows administered by the Canada Revenue Agency for the Government of Canada, provinces, territories, First Nations, and other government organizations. Revenues and expenses are recorded on an accrual basis.

Tax revenues

The Canada Revenue Agency collects the majority of federal tax revenues. Other agencies and departments, such as the Canada Border Services Agency, account for the balance of total federal tax revenues reported in the Public Accounts of Canada. For further information on the Government of Canada’s total revenues, please refer to the Annual Financial Report of the Government of Canada, available at www.fin.gc.ca/purl/afr-eng.asp.

Revenues administered for the Government of Canada ($ millions)

Revenues administered for the Government of Canada image description

Revenues administered for the Government of Canada in 2019 and 2018 (in millions of dollars)

The table also shows the difference in the revenue numbers between the two years, and the percentage difference.

Income tax revenues

  • Income tax revenues for individuals and trusts: in 2019 are 163,835 and in 2018 are 153,668, the difference is 10,167, and the percentage difference is 6.6%
  • Income tax revenues for corporations: in 2019 are 50,368 and in 2018 are 47,805, the difference is 2,563, and the percentage difference is 5.4%
  • Income tax revenues for non-resident tax withholdings: in 2019 are 9,370 and in 2018 are 7,845, the difference is 1,525, and the percentage difference is 19.4%
  • Total income tax revenues: in 2019 are 223,573 and in 2018 are 209,318, the difference is 14,255, and the percentage difference is 6.8%

Other taxes, duties, and charges

  • Goods and services tax: in 2019 is 13,758 and in 2018 is 13,928, the difference is (170), and the percentage difference is (1.2%)
  • Energy taxes: in 2019 are 5,766 and in 2018 are 5,671, the difference is 95, and the percentage difference is 1.7%
  • Other excise taxes and duties: in 2019 are 3,904 and in 2018 are 3,708, the difference is 196, and the percentage difference is 5.3%
  • Air travellers security charge: in 2019 is 872 and in 2018 is 823, the difference is 49, and the percentage difference is 6.0%
  • Cannabis duties: in 2019 are 18 and in 2018 are zero, the difference is 18, and the percentage difference is zero.
  • Total other taxes, duties, and charges: in 2019 are 24,318 and in 2018 are 24,130, the difference is 188, and the percentage difference is 0.8%
  • Employment insurance premiums: in 2019 are 22,698 and in 2018 are 21,533, the difference is 1,165, and the percentage difference is 5.4%
  • Interest, penalties, and other revenues: in 2019 are 6,083 and in 2018 are 4,310, the difference is 1,773, and the percentage difference is 41.1%

Revenues administered for the Government of Canada: in 2019 are 276,672 and in 2018 are 259,291, the difference is 17,381, and the percentage difference is 6.7%

Revenues administered for the Government of Canada were $276,672 million in 2019, $17,381 million higher than in 2018. The increase in revenues is mainly due to sustained economic growth.

Individuals and trusts income tax

Individuals and trusts income tax revenues increased by $10,167 million or 6.6%. The increase is in line with the growth in taxable income largely due to higher employment and wages, and to a lesser extent, to federal tax measures announced in Budget 2018 and Budget 2019.

Corporations income tax

Corporations income tax revenues increased by $2,563 million or 5.4%. The increase is due to strong corporate earnings driven by sustained economic growth, in particular from the financial sector and from the small and medium enterprise sector. This was offset in part by changes in accounting estimates that impacted the current fiscal year.

Non-resident tax withholdings

Non-resident tax withholdings revenues increased by $1,525 million or 19.4%. The increase is due to the growth in investment income paid to non-residents as a result of strong corporate earnings.

Goods and services tax (GST)

GST revenues decreased by $170 million or 1.2%. Gross GST revenues increased due to the growth in retail sales, but the larger growth in input tax credits from importations caused an overall reduction in GST revenues.

Energy taxes

Energy taxes revenues increased by $95 million or 1.7%. The increase reflects the growth in motive fuel consumption during the year.

Other excise taxes and duties

Other excise taxes and duties revenues increased by $196 million or 5.3%. The growth reflects the increase of duty rates on alcoholic beverages and tobacco as well as an increase in tobacco consumption.

Air travellers security charge

Air travellers security charge revenues increased by $49 million or 6.0%. The increase is due to higher air passenger traffic.

Cannabis duties

Cannabis duties revenues amounted to $18 million. This reflects the legalization of recreational cannabis on October 17, 2018.

Employment insurance premiums

Employment insurance premiums revenues increased by $1,165 million or 5.4%. The increase is due to the growth in employment and wages, as well as a slight increase in employment insurance premium rates.

Interest, penalties, and other revenues

Interest, penalties, and other revenues increased by $1,773 million or 41.1%. The increase reflects higher prescribed interest rates, higher tax receivables, the reversal of large corporations arrears interest in fiscal year 2018, and higher individual omission and compliance penalties.

Figure 1 – Direct tax revenues

Figure 1 – Direct tax revenues image description

Figure 1: total percentage of Direct Tax Revenues for 2019 and 2018 broken down by Income tax-individuals and trusts, Income tax-corporations, and non-resident tax withholdings

2019 Direct tax revenues

  • Income tax-individuals and trusts is 73.3%
  • Income tax-corporations is 22.5%
  • Non-resident tax withholdings are 4.2%

2018 Direct Tax Revenues

  • Income tax-individuals and trusts is 73.4%.
  • Income tax-corporations is 22.8%.
  • Non-resident tax withholdings are 3.8%.

As shown in Figure 1, the distribution of direct tax revenues remained stable in 2019.

Figure 2 – Indirect tax revenues

Figure 2 – Indirect tax revenues image description

Figure 2: total percentage of indirect tax revenues for 2019 and 2018 broken down by goods and services tax, energy taxes, other excise taxes and duties, air travellers security charge, and cannabis duties.

2019 Indirect Tax Revenues

  • Goods and services tax is 56.6%.
  • Energy taxes are 23.7%.
  • Other excise taxes and duties are 16.1%.
  • Air travellers security charge is 3.5%.
  • Cannabis duties is 0.1%.

2018 Indirect Tax Revenues

  • Goods and services tax is 57.7%.
  • Energy taxes are 23.5%.
  • Other excise taxes and duties are 15.4%.
  • Air travellers security charge is 3.4%.

As shown in Figure 2, the distribution of indirect tax revenues remained stable in 2019.

Revenues administered for provincial and territorial governments, and First Nations ($ millions)

Revenues administered for provincial and territorial governments, and First Nations image description

Revenues administered for provincial and territorial governments, and First Nations in 2019 and 2018 (in millions of dollars)

The table also shows the difference in the revenue numbers between the two years, and the percentage difference.

Income tax revenues

  • Income tax revenues for individuals and trusts: in 2019 are 74,382 and in 2018 are 71,152, the difference is 3,230, and the percentage difference is 4.5%
  • Income tax revenues for corporations: in 2019 are 24,871 and in 2018 are 22,308, the difference is 2,563, and the percentage difference is 11.5%
  • Total Income tax revenues: in 2019 are 99,253 and in 2018 are 93,460, the difference is 5,793, and the percentage difference is 6.2%
  • Provincial portion of harmonized sales tax: in 2019 is 29,437 and in 2018 is 28,623, the difference is 814, and the percentage difference is 2.8%
  • Other revenues: in 2019 are 569 and in 2018 are 442, the difference is 127, and the percentage difference is 28.9%

Revenues administered for provincial and territorial governments and First Nations: in 2019 are 129,259 and in 2018 are 122,525, the difference is 6,734, and the percentage difference is 5.5%

Revenues administered for the provincial and territorial governments and First Nations (FN) were $129,259 million in 2019, $6,734 million higher than in 2018. The increase in revenues is mainly due to sustained economic growth.

Individuals and trusts income tax

Individuals and trusts income tax revenues increased by $3,230 million or 4.5%. The increase is in line with the growth in taxable income due to higher employment and wages, and to a lesser extent, to various provincial tax measures announced in Budget 2018 and Budget 2019.

Corporations income tax

Corporations income tax revenues increased by $2,563 million or 11.5%. The increase is due to strong corporate earnings driven by sustained economic growth, particularly in the financial sector and from the small and medium-sized enterprise sector, as well as changes in accounting estimates that impacted the current fiscal year.

Provincial portion of harmonized sales tax (HST)

Provincial HST revenues increased by $814 million or 2.8%. The increase is due to the growth in retail sales, offset in part by the phasing out of Ontario recaptured input tax credits effective July 1, 2018.

Other revenues

Other revenues increased by $127 million or 28.9%. The increase is due mostly to the implementation of cannabis duties beginning on October 17, 2018 and to higher revenues in regards to Quebec sales tax in respect of selected listed financial institutions.

Figure 3 – Revenues administered for provincial and territorial governments and First Nations

Figure 3 – Revenues administered for the provincial and  territorial governments and First Nations image description

Figure 3: Revenues administered for the provincial and territorial governments and First Nations, broken down by income tax - individuals and trusts, income tax - corporations, harmonized sales tax, and other revenues

2019 Provincial, territorial and FN

  • Income tax-individuals and trusts is 57.5%.
  • Income tax-corporations is 19.2%.
  • Harmonized sales tax is 22.8%.
  • Other revenues are 0.5%.

2018 Provincial, territorial and FN

  • Income tax-individuals and trusts is 58.1%.
  • Income tax-corporations is 18.2%.
  • Harmonized sales tax is 23.4%.
  • Other revenues are 0.3%.

As shown in Figure 3, the distribution of provincial, territorial, and First Nations revenues remained stable in 2019.

Pension contributions, interest, and penalties administered for the Canada Pension Plan ($ millions)

Pension contributions, interest, and penalties administered for the Canada Pension Plan image description

Pension contributions, interest, and penalties administered for the Canada Pension Plan in 2019 and 2018 (in millions of dollars)

The table also shows the difference between the amounts for the two years, and the percentage difference.

The total amounts, in millions of dollars, for pension contributions, interest, and penalties administered for the Canada Pension Plan: in 2019 are 51,288 and in 2018 are 48,515, the difference is 2,773, and the percentage difference is 5.7%

Pension contributions, interest and penalties administered for the Canada Pension Plan increased by $2,773 million or 5.7%. The increase is due to the growth in employment and wages, and to some extent to the enhancement of the Canada Pension Plan on January 1, 2019.

Expenses and recoveries administered for the Government of Canada ($ millions)

Expenses and recoveries administered for the Government of Canada image description

Expenses and recoveries administered for the Government of Canada in 2019 and 2018 (in millions of dollars)

The table also shows the difference between the expenses and recoveries for the two years, and the percentage difference.

  • Federal administered expenses: in 2019 are 32,825 and in 2018 are 30,789, the difference is 2,036, and the percentage difference is 6.6%
  • Federal administered recoveries: in 2019 are (2,192) and in 2018 are (2,078), the difference is (114), and the percentage difference is 5.5%

Net expenses and recoveries administered for the Government of Canada: in 2019 are 30,633 and in 2018 are 28,711, the difference is 1,922, and the percentage difference is 6.7%

Net expenses and recoveries administered for the Government of Canada

Expenses administered for the Government of Canada increased by $2,036 million or 6.6%. The increase reflects the implementation of the climate action incentive payments on January 1, 2019 and the indexation of Canada child benefit basic entitlements. Also, the increase was due to higher doubtful accounts and write-offs, as well as higher interest expense due to higher prescribed interest rates and an increase in accounts payable.

Recoveries administered for the Government of Canada increased by $114 million or 5.5%. The increase is due to a higher basic entitlement for old age security as well as a higher number of recipients.

Expenses administered for provincial and territorial governments and doubtful accounts expense administered for the Canada Pension Plan ($ millions)

Expenses administered for provincial and territorial governments and doubtful accounts expense administered for the Canada Pension Plan image description

Expenses administered for provincial and territorial governments and doubtful accounts expense administered for the Canada Pension Plan in 2019 and 2018 (in millions of dollars)

The table also shows the difference between the expenses for the two years, and the percentage difference.

Expenses administered for provincial and territorial governments: in 2019 are 6,652 and in 2018 are 6,306, the difference is 346, and the percentage difference is 5.5%

Doubtful accounts expense administered for the Canada Pension Plan: in 2019 is 103 and in 2018 is 79, the difference is 24, and the percentage difference is 30.4%

Expenses administered for provinces, territories, and the Canada Pension Plan: in 2019 is 6,755 and in 2018 is 6,385, the difference is 370, and the percentage difference is 5.8%

Expenses administered for provincial and territorial governments and doubtful accounts expense administered for the Canada Pension Plan

Expenses administered for provincial and territorial governments increased by $346 million or 5.5%. The increase is due to higher Alberta climate leadership adjustment rebates and higher British Columbia production services tax credits, offset in part by lower Ontario production services tax credits.

Doubtful accounts expense administered for the Canada Pension Plan increased by $24 million or 30.4% resulting from a higher level of doubtful accounts and higher write-offs.

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