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 (CRA) for the Government of Canada, provinces, territories, First Nations (FN), and other government organizations. Revenues and expenses are recorded on an accrual basis.
Tax revenues
The CRA 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
https://www.canada.ca/en/department-finance/services/publications/annual-financial-report.html.
Impact of Canada's COVID-19 Economic Response Plan on financial results
In March 2020, the World Health Organization classified the outbreak of the COVID-19 disease as a global pandemic. Since then, the Government of Canada announced a series of tax and economic measures under Canada’s COVID‑19 Economic Response Plan (the Plan) to support the Canadian economy during the COVID‑19 global pandemic. The Plan is designed to help stabilize the Canadian economy. It includes measures to assist individuals and businesses through direct transfers, tax deferrals, and measures to ensure businesses continue to have access to credit. These measures have had a significant impact on the CRA’s Administered activities 2020 to 2021 and 2021 to 2022 financial statements. In 2021 to 2022, several of these measures ended and a few more targeted measures were introduced. The new measures are listed below and amounts paid during the year for all measures are presented in Table 4.
For Individuals:
Canada Worker Lockdown Benefit: This program provides income support to employed and self-employed individuals who were unable to work due to a COVID-19 lockdown. The program started on October 24, 2021 and ended on May 7, 2022.
For Businesses:
Canada Recovery Hiring Program: This program is available to employers who saw a reduction in revenue during the COVID-19 pandemic and may have been eligible for a subsidy to cover part of wages due to employees. The program started on October 24, 2021 and ended on May 7, 2022.
Tourism and Hospitality Recovery Program: This program was available to Canadian businesses, non-profit organizations, or charities who saw a reduction in revenue during the COVID-19 pandemic and may have been eligible for a wage subsidy, a rent subsidy, or both. The program started on October 24, 2021 and ended on May 7, 2022.
Hardest-Hit Business Recovery Program: This program is available to Canadian businesses, non-profit organizations, or charities who have seen a drop in revenue during the COVID-19 pandemic and may be eligible for a wage subsidy, a rent subsidy, or both. The program started on October 24, 2021 and ended on May 7, 2022.
Revenues administered for the Government of Canada ($ millions)
| Table 1 | 2022 | 2021 | + (-) | % |
|---|---|---|---|---|
| Income tax revenues | ||||
| Individuals and Trusts | 198,428 | 174,770 | 23,658 | 13.5% |
| Corporations | 78,816 | 54,112 | 24,704 | 45.7% |
| Non-resident tax withholdings | 10,789 | 8,107 | 2,682 | 33.1% |
| 288,033 | 236,989 | 51,044 | 21.5% | |
| Other taxes, duties, and charges | ||||
| Goods and services tax revenues | 21,583 | 12,870 | 8,713 | 67.7% |
| Energy taxes | 5,333 | 4,868 | 465 | 9.6% |
| Other excise taxes and duties | 3,885 | 3,983 | (98) | (2.5%) |
| Cannabis duties | 160 | 109 | 51 | 46.8% |
| Air travellers security charge | 413 | 11 | 402 | 3,654.5% |
| 31,374 | 21,841 | 9,533 | 43.6% | |
| Employment insurance premiums | 24,305 | 22,908 | 1,397 | 6.1% |
| Fuel Charge Proceeds | 6,106 | 4,219 | 1,887 | 44.7% |
| Interest, penalties, and other revenues | 5,670 | 3,765 | 1,905 | 50.6% |
| Revenues administered for the Government of Canada | 355,488 | 289,722 | 65,766 | 22.7% |
Revenues administered for the Government of Canada were $355,488 million in 2021 to 2022, $65,766 million higher than in 2020 to 2021. The increase in revenues is mainly due to the economic recovery.
Individuals and Trusts income tax
Individuals and Trusts income tax revenues increased by $23,658 million or 13.5%. The increase reflects better labour market conditions due to the economic recovery. The effect of growth in employment and wages, along with the rise in self-employment earnings and income from capital gains, amplified revenues. As a result, as individuals’ income increased, it was subject to a higher tax bracket. The increase was partially offset by the gradual elimination of the Plan’s taxable benefits to individuals.
Corporations income tax
Corporations income tax revenues increased by $24,704 million or 45.7%. The increase reflects the strong growth in corporate earnings, especially in the financial, resource, and manufacturing sectors. This growth was partially offset by the expiry of flagship programs of the Plan delivering taxable COVID-19 benefits to businesses.
Non-resident tax withholdings
Non-resident tax withholdings revenues increased by $2,682 million or 33.1%. The increase is due to higher dividend payouts to non-resident shareholders, mainly in the finance and insurance sector, along with prior-year reassessments. Dividend payout growth stems from strong corporate earnings and the lifting of financial institutions' March 2020 dividend payout restrictions.
Goods and services tax (GST) revenues
GST revenues increased by $8,713 million or 67.7%. The increase reflects improved retail sales due to the economic recovery and a one-time $5,400 million goods and services tax credit payment in April 2020.
Energy taxes
Energy taxes revenues increased by $465 million or 9.6%. Higher revenues resulted from the increase in motive fuel consumption due to the easing of travel restrictions.
Other excise taxes and duties
Other excise taxes and duties revenues decreased by $98 million or 2.5%. The decrease reflects lower tobacco production, offset in part by higher duty rates on alcoholic beverages and tobacco and a one-time additional tobacco inventory tax in April 2021.
Cannabis duties
Cannabis duties revenues increased by $51 million or 46.8%. Revenues reflect the increase in cannabis sales in 2021 to 2022.
Air travellers security charge
Air travellers security charge revenues increased by $402 million or 3,654.5%. The increase is due to higher levels of passenger traffic as travel restrictions eased in 2021 to 2022. Revenues are at 50% of pre-pandemic levels.
Employment insurance premiums
Employment insurance premiums revenues increased by $1,397 million or 6.1%. The increase reflects better labour market conditions due to the economic recovery. Higher employment and wages led to higher premiums.
Fuel Charge Proceeds
Fuel charge proceeds increased by $1,887 million or 44.7%. The growth is mainly due to the legislative increase in the excess emissions charge rate over the last two years.
Interest, penalties, and other revenues
Interest, penalties, and other revenues increased by $1,905 million or 50.6%. The increase is due to higher arrears balances, higher individual penalties and higher corporations' interest and penalties. Payment deferral measures under the Plan waived interest and penalties for a significant part of 2020 to 2021. In 2021 to 2022, deferral measures were more targeted than the previous year, which contributed to the increase.
Pension contributions, interest, and penalties administered for the Canada Pension Plan ($ millions)
| Table 2 | 2022 | 2021 | + (-) | % |
|---|---|---|---|---|
| Pension contributions, interest, and penalties administered for the Canada Pension Plan |
64,737 | 55,425 | 9,312 | 16.8% |
Pension contributions, interest and penalties administered for the Canada Pension Plan increased by $9,312 million or 16.8%. The increase reflects better labour market conditions due to the economic recovery and the impact of the Canada Pension Plan enhancement rate increase. Higher employment and wages led to higher revenues.
Figure 1 – Direct federal tax revenues
Direct federal tax revenues represent amounts collected by the CRA directly from taxpayers. They include income tax revenues, revenues from non-resident tax withholdings, employment insurance premiums, Canada Pension Plan contributions, and interest, penalties and other revenues.
2022 Direct federal tax revenues
2021 Direct federal tax revenues
As shown in Figure 1, the distribution of direct federal tax revenues remained generally stable in 2021 to 2022.
Figure 2 – Indirect federal tax and other revenues
Indirect federal tax revenues represent amounts collected by the CRA indirectly from taxpayers through the tax they pay on products and services they purchase. They include revenues from goods and services tax, energy taxes, other excise taxes and duties, cannabis duties, air travellers security charge, and fuel charge proceeds.
2022 Indirect federal tax revenues
2021 Indirect federal tax revenues
As shown in Figure 2, the distribution of indirect federal tax and other revenues reflected higher goods and services tax, lower energy taxes, and lower other excise taxes and duties in 2021 to 2022.
Revenues administered for provincial and territorial governments and FN ($ millions)
| Table 3 | 2022 | 2021 | + (-) | % |
|---|---|---|---|---|
| Income tax revenues | ||||
| Individuals and Trusts | 93,131 | 82,416 | 10,715 | 13.0% |
| Corporations | 36,721 | 25,090 | 11,631 | 46.4% |
| 129,852 | 107,506 | 22,346 | 20.8% | |
| Provincial portion of harmonized sales tax | 35,109 | 28,840 | 6,269 | 21.7% |
| Other revenues | 1,188 | 916 | 272 | 29.7% |
| Revenues administered for provincial and territorial governments and FN | 166,149 | 137,262 | 28,887 | 21.0% |
Individuals and Trusts income tax
Individuals and Trusts income tax revenues increased by $10,715 million or 13.0%. The increase reflects better labour market conditions due to the economic recovery. The effect of growth in employment and wages, along with the rise in self-employment earnings and income from capital gains, amplified revenues. As a result, as individuals’ income increased, it was subject to a higher tax bracket. The increase was partially offset by the gradual elimination of the Plan's taxable benefits to individuals and by tax measures announced in provincial budgets.
Corporations income tax
Corporations income tax revenues increased by $11,631 million or 46.4%. The increase reflects the strong growth in corporate earnings, especially in the financial, resource, and manufacturing sectors. This growth was partially offset by the expiry of flagship programs of the Plan delivering taxable COVID-19 benefits to businesses.
Provincial portion of harmonized sales tax (HST)
The provincial portion of HST revenues increased by $6,269 million or 21.7%. The increase reflects improved retail sales due to the economic recovery.
Other revenues
Other revenues increased by $272 million or 29.7%. The increase is mainly attributable to increased cannabis sales and an increase in the Quebec sales tax in respect of selected listed financial institutions.
Figure 3 – Revenues administered for provincial and territorial governments, and FN
2022 Provincial, territorial and FN
2021 Provincial, territorial and FN
As shown in Figure 3, the distribution of provincial and territorial, and FN revenues, generally remained stable in 2021 to 2022.
Expenses and recoveries administered for the Government of Canada ($ millions)
| Table 4 | 2022 | 2021 | + (-) | % |
|---|---|---|---|---|
| Federal administered expenses Transfers to individuals Canada’s COVID-19 Economic Response Plan |
||||
| Canada Emergency Response Benefit | (954) | 43,788 | (44,742) | (102.2%) |
| Canada Recovery Benefit | 13,191 | 14,684 | (1,493) | (10.2%) |
| Canada Recovery Caregiving Benefit | 2,162 | 1,957 | 205 | 10.5% |
| Canada Recovery Sickness Benefit | 939 | 409 | 530 | 129.6% |
| Canada Worker Lockdown Benefit | 910 | - | 910 | N/A |
| Canada Emergency Student Benefit | 41 | 2,880 | (2,839) | (98.6%) |
| 16,289 | 63,718 | (47,429) | (74.4%) | |
| Canada benefit programs for children | 26,226 | 27,372 | (1,146) | (4.2%) |
| Climate action incentive | 3,762 | 4,547 | (785) | (17.3%) |
| Canada workers’ benefit | 2,259 | 1,479 | 780 | 52.7% |
| Children’s special allowances | 372 | 382 | (10) | (2.6%) |
| Refundable tax credits | 308 | 242 | 66 | 27.3% |
| 32,927 | 34,022 | (1,095) | (3.2%) | |
| Total transfers to individuals | 49,216 | 97,740 | (48,524) | (49.6%) |
| Transfers to corporations Canada’s COVID-19 Economic Response Plan |
||||
| Canada Emergency Wage Subsidy | 21,484 | 79,278 | (57,794) | (72.9%) |
| Canada Emergency Rent Subsidy | 3,702 | 4,045 | (343) | (8.5%) |
| Tourism and Hospitality Recovery Program | 2,214 | - | 2,214 | N/A |
| Canada Recovery Hiring Program | 1,068 | - | 1,068 | N/A |
| Hardest-Hit Business Recovery Program | 526 | - | 526 | N/A |
| 10% Temporary Wage Subsidy for Employers | 807 | 888 | (81) | (9.1%) |
| 29,801 | 84,211 | (54,410) | (64.6%) | |
| Refundable investment tax credit | 1,818 | 1,753 | 65 | 3.7% |
| Film and video tax credits | 539 | 718 | (179) | (24.9%) |
| 2,357 | 2,471 | (114) | (4.6%) | |
| Total transfers to corporations | 32,158 | 86,682 | (54,524) | (62.9%) |
| Other federal expenses | ||||
| Doubtful accounts expense | 5,260 | 5,162 | 98 | 1.9% |
| Interest expense | 529 | 307 | 222 | 72.3% |
| Fuel charge proceeds returned to provinces and territories | 52 | 18 | 34 | 188.9% |
| Total other federal expenses | 5,841 | 5,487 | 354 | 6.5% |
| Total expenses administered for the Government of Canada | 87,215 | 189,909 | (102,694) | (54.1%) |
| Recoveries administered for the Government of Canada | ||||
| Old age security benefits | (2,677) | (2,048) | (629) | 30.7% |
| Employment insurance benefits | (516) | (244) | (272) | 111.5% |
| Canada Recovery Benefit | (665) | (266) | (399) | 150.0% |
| (3,858) | (2,558) | (1,300) | 50.8% | |
| Net expenses and recoveries administered for the Government of Canada | 83,357 | 187,351 | (103,994) | (55.5%) |
Expenses administered for the Government of Canada decreased by $102,694 million or 54.1%. The decrease primarily reflects the end of several measures announced in the Plan, including the Canada Emergency Response Benefit and the Canada Emergency Wage Subsidy.
Recoveries administered for the Government of Canada increased by $1,300 million or 50.8%. The increase reflects better labour market conditions due to the economic recovery and an increase in individual taxable income which resulted in larger clawbacks.
Expenses administered for provincial and territorial governments, and Doubtful accounts expenses administered for the Canada Pension Plan ($ millions)
| Table 5 | 2022 | 2021 | + (-) | % |
|---|---|---|---|---|
| Expenses administered for provincial and territorial governments | ||||
| Transfers to individuals | ||||
| Family benefit programs | 1,814 | 1,767 | 47 | 2.7% |
| Ontario energy and property tax credit | 1,487 | 1,572 | (85) | (5.4%) |
| Provincial and territorial climate action tax credits and rebates | 344 | 819 | (475) | (58.0%) |
| Ontario senior homeowners’ property tax grant | 160 | 258 | (98) | (38.0%) |
| Other property tax credits | 106 | 146 | (40) | (27.4%) |
| Other transfers | 948 | 714 | 234 | 32.8% |
| 4,859 | 5,276 | (417) | (7.9%) | |
| Transfers to corporations | ||||
| Film and television production services tax credits | 1,266 | 1,750 | (484) | (27.7%) |
| Refundable investment tax credits | 637 | 611 | 26 | 4.3% |
| 1,903 | 2,361 | (458) | (19.4%) | |
| Expenses administered for provincial and territorial governments | 6,762 | 7,637 | (875) | (11.5%) |
| Doubtful accounts expense administered for the Canada Pension Plan | 96 | 94 | 2 | 2.1% |
Expenses administered for provincial and territorial governments decreased by $875 million or 11.5%. The decrease reflects the one-time enhanced British Columbia climate action tax credit paid in July 2020, and lower Ontario senior homeowner's property tax credits, partly offset by the implementation of the Ontario jobs training tax credit. Furthermore, the decrease is due to lower British Columbia production services tax credit and Ontario film and television tax credit claims. This was partly offset by higher Ontario investment tax credit claims.
Doubtful accounts expense administered for the Canada Pension Plan increased by $2 million or 2.1%. The increase is due to a higher level of write-offs offset by a lower year-over-year increase in the provisions.
Page details
- Date modified: