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 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
Most benefits under Canada’s COVID-19 Economic Response Plan (the Plan) ended prior to 2022. The remaining benefits ended on May 7, 2022. Therefore, federal administered expenses related to these benefits decreased considerably in 2022 to 2023. Additionally, redeterminations of benefit recipients’ eligibility accentuated the reduction in these administered federal expenses.
Impact of inflation on financial results
During fiscal year 2022 to 2023, the global economy experienced a protracted period of much higher inflation. This has impacted prices, wages, earnings, and interest rates in Canada, and thus impacts the CRA’s administered revenues and expenses.
To ease the burden on Canadians, the Government of Canada introduced a one-time payment doubling the Goods and Services Tax (GST) credit, the one-time top-up to the Canada Housing Benefit, the Canada Dental Benefit, and the GST Grocery Rebate, which are reflected in the 2022 to 2023 financial statements.
Revenues administered for the Government of Canada ($ millions)
Table 1: Revenues administered for the Government of Canada in 2023 and 2022 (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 2023 are 207,894 and in 2022 are 198,428, the difference is 9,466, and the percentage difference is 4.8%
- Income tax revenues for corporations: in 2023 are 93,945 and in 2022 are 78,816, the difference is 15,129, and the percentage difference is 19.2%
- Income tax revenues for non-resident tax withholdings: in 2023 are 13,187 and in 2022 are 10,789, the difference is 2,398, and the percentage difference is 22.2%
- Total income tax revenues: in 2023 are 315,026 and in 2022 are 288,033, the difference is 26,993, and the percentage difference is 9.4%
Other taxes, duties, and charges
- Goods and services tax: in 2023 is 16,387 and in 2022 is 21,583, the difference is (5,196), and the percentage difference is (24.1%)
- Energy taxes: in 2023 are 5,568 and in 2022 are 5,333, the difference is 235, and the percentage difference is 4.4%
- Other excise taxes and duties: in 2023 are 4,027 and in 2022 are 3,885, the difference is 142, and the percentage difference is 3.7%
- Cannabis duties: in 2023 are 227 and in 2022 are 160, the difference is 67, and the percentage difference is 41.9%
- Other administered revenues: in 2023 are 895 and in 2022 are 413, the difference is 482, and the percentage difference is 116.7%
- Total other taxes, duties, and charges: in 2023 are 27,104 and in 2022 are 31,374, the difference is (4,270), and the percentage difference is (13.6%)
- Employment insurance premiums: in 2023 are 27,422 and in 2022 are 24,305, the difference is 3,117, and the percentage difference is 12.8%
- Fuel charge proceeds: in 2023 are 7,740 and in 2022 are 6,106, the difference is 1,634, and the percentage difference is 26.8%
- Interest, penalties, and other revenues: in 2023 are 10,567 and in 2022 are 5,670, the difference is 4,897, and the percentage difference is 86.4%
Revenues administered for the Government of Canada: in 2023 are 387,859 and in 2022 are 355,488, the difference is 32,371, and the percentage difference is 9.1%.
Revenues administered for the Government of Canada were $387,859 million in 2022 to 2023, $32,371 million higher than in 2021 to 2022. The increase in revenues is mainly due to economic growth.
Individuals and Trusts income tax
Individuals and Trusts income tax revenues increased by $9,466 million or 4.8%. The increase stems from the growth in employment and wages and self-employment earnings, partially offset by the increase in the federal personal amount tax credit.
Corporations income tax
Corporations income tax revenues increased by $15,129 million or 19.2%. The increase reflects the cumulative growth in corporate earnings, particularly in the resource sector. This was partly offset by lower earnings in the financial sector and by the expiry of flagship programs of the Plan delivering taxable benefits to businesses.
Non-resident tax withholdings
Non-resident tax withholdings revenues increased by $2,398 million or 22.2%. The increase is due to higher dividend payouts to non-resident shareholders, mainly in the financial sector. Dividend payout growth stems from strong corporate earnings and the November 2021 lifting of dividend payout restrictions applicable to financial institutions since March 2020.
Goods and services tax (GST) revenues
GST revenues decreased by $5,196 million or 24.1%. The decrease reflects the one-time doubling of the GST credit ($2.2 billion), the GST Grocery Rebate ($2.2 billion), and the impact of the increase in input tax credits claimed by importers, which reduced revenues in 2022 to 2023. This was partially offset by the growth in retail sales and higher revenues in the service sector.
Energy taxes
Energy taxes revenues increased by $235 million or 4.4%. The increase reflects higher motive fuel consumption due to the easing of travel restrictions.
Other excise taxes and duties
Other excise taxes and duties revenues increased by $142 million or 3.7%. The increase reflects the implementation of an excise tax on vaping products on October 1, 2022, and higher duty rates on alcoholic products and tobacco.
Cannabis duties
Cannabis duties revenues increased by $67 million or 41.9%. Revenue growth reflects higher cannabis sales.
Other administered revenues
Other administered revenues increased by $482 million or 116.7%. The increase is due to the easing of travel restrictions which led to an increase in air travellers security charge revenues, as well as the introduction of the luxury tax in September 2022.
Employment insurance premiums
Employment insurance (EI) premiums revenues increased by $3,117 million or 12.8%. The increase stems from the growth in employment and wages, a higher insurable earnings threshold, and a higher The EI rate in 2023.
Fuel Charge Proceeds
Fuel charge proceeds increased by $1,634 million or 26.8%. The growth aligns with the legislative increase in the excess emissions charge rate.
Interest, penalties, and other revenues
Interest, penalties, and other revenues increased by $4,897 million or 86.4%. The increase reflects the aggregate impact of a three percentage point increase in prescribed interest rates, higher revenues from large compliance files, higher penalties, and the expiry of deferral measures for individuals.
Pension contributions, interest, and penalties administered for the Canada Pension Plan ($ millions)
Table 2: Pension contributions, interest, and penalties administered for the Canada Pension Plan ($ millions) in 2022 and 2023 (in millions of dollars).
The table also shows the difference in the revenue numbers between the two years, and the percentage difference.
Pension contributions, interest, and penalties administered for the Canada Pension Plan
- Pension contributions, interest, and penalties administered for the Canada Pension Plan: in 2023 is 74,994 and in 2022 is 64,737, the difference is 10,257, and the percentage difference is 15.8%
Pension contributions, interest and penalties administered for the Canada Pension Plan (CPP) increased by $10,257 million or 15.8%. The increase stems from the growth in employment and wages, a higher pensionable earnings threshold, and the impact of the CPP enhancement rate increase.
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, EI premiums, CPP contributions, and interest, penalties and other revenues.
2023 Direct federal tax revenues
2022 Direct federal tax revenues
Figure 1: total percentage of Direct Tax Revenues for 2023 and 2022 broken down by Income tax-individuals and trusts, Income tax-corporations, non-resident tax withholdings, employment insurance premiums, Canada Pension Plan, and Interest, penalties, and other revenues.
2023 Direct tax revenues
2022-2023: total percentage is 67%, total is $428.0 million.
- Income tax-individuals and trusts is 49%
- Income tax-corporations is 22%
- Non-resident tax withholdings are 3%
- Employment insurance premiums are 6%
- Canada Pension Plan are 18%
- Interest, penalties, and other revenues are 2%
2022 Direct Tax Revenues
2022-2023: total percentage is 66%, total is $382.7 million.
- Income tax-individuals and trusts is 52%.
- Income tax-corporations is 21%.
- Non-resident tax withholdings are 3%.
- Employment insurance premiums are 6%
- Canada Pension Plan are 17%
- Interest, penalties, and other revenues are 1%
As shown in Figure 1, the distribution of direct federal tax revenues remained generally stable in 2022 to 2023. The increase in Corporations’ revenues has reduced the proportion of revenues for Individuals and Trusts by 3%.
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, other administered revenues, and fuel charge proceeds.
2023 Indirect federal tax revenues
2022 Indirect federal tax revenues
Figure 2: total percentage of Indirect Tax Revenues for 2023 and 2022 broken down by Goods and services tax, energy taxes, Other excise taxes and duties, Other administered revenues, Cannabis duties, and Fuel Charge proceeds.
2023 Indirect tax revenues
2022-2023: total percentage is 5%, total is $34.8 million.
- Goods and services tax is 47%
- Energy taxes are 16%
- Other excise taxes and duties are 11%
- Other administered revenues are 1%
- Cannabis duties are 3%
- Fuel charge proceeds are 22%
2022 Indirect tax revenues
2021-2022: total percentage is 6%, total is $37.5 million.
- Goods and services tax is 58%
- Energy taxes are 14%
- Other excise taxes and duties are 10%
- Other administered revenues are 1%
- Cannabis duties are 1%
- Fuel charge proceeds are 16%
As shown in Figure 2, the distribution of indirect federal tax and other revenues reflected lower GST and higher fuel charge proceeds in 2022 to 2023.
Revenues administered for provincial and territorial governments and FN ($ millions)
Table 3: Revenues administered for provincial and territorial governments and FN in 2022 and 2023 (in millions of dollars).
The table also shows the difference in the revenue numbers between the two years, and the percentage difference.
Revenues administered for provincial and territorial governments and FN
Income tax revenues
- Income tax revenues for individuals and trusts: in 2023 are 98,079 and in 2022 are 93,131, the difference is 4,948, and the percentage difference is 5.3%
- Income tax revenues for corporations: in 2023 are 39,043 and in 2022 are 36,721, the difference is 2,322, and the percentage difference is 6.3%
- Total income tax revenues: in 2023 are 137,122 and in 2022 are 129,852, the difference is 7,270, and the percentage difference is 5.6%
- Provincial portion of harmonized sales tax revenues: in 2023 are 38,599 and in 2022 are 35,109, the difference is 3,490, and the percentage difference is 9.9%
- Other revenues: in 2023 are 1,386 and in 2022 are 1,188, the difference is 198, and the percentage difference is 16.7%
Total revenues administered for provincial and territorial governments and FN: in 2023 are 177,107 and in 2022 are 166,149, the difference is 10,958, and the percentage difference is 6.6%.
Individuals and Trusts income tax
Individuals and Trusts income tax revenues increased by $4,948 million or 5.3%. The increase stems largely from the growth in employment and wages and self-employment earnings, partially offset by measures announced in provincial budgets.
Corporations income tax
Corporations income tax revenues increased by $2,322 million or 6.3%. The increase reflects the cumulative growth in corporate earnings. This was partially offset by lower earnings in the financial sector and the expiry of flagship programs of the Plan delivering taxable benefits to businesses.
Provincial portion of harmonized sales tax (HST)
The provincial portion of HST revenues increased by $3,490 million or 9.9%. The increase reflects the growth in retail sales and higher revenues in the service sector.
Other revenues
Other revenues increased by $198 million or 16.7%. Revenues reflect higher cannabis sales.
Figure 3 – Revenues administered for provincial and territorial governments, and FN
2023 Provincial, territorial and FN
2022 Provincial, territorial and FN
Figure 3: total percentage of provincial and territorial governments and FN for 2023 and 2022 broken down by Income tax- individuals and trusts, Income tax- corporations, Harmonized sales tax, and Other revenues.
2023 Provincial, territorial, and FN revenues
2022-2023: total percentage is 28%, total is $177.1 million.
- Income tax- individuals and trust is 55%
- Income tax- corporations is 22%
- Harmonized sales tax is 22%
- Other revenues are 1%
2022 Provincial, territorial, and FN revenues
2021-2022: total percentage is 28%, total is $166.1 million.
- Income tax- individuals and trust is 56%
- Income tax- corporations is 22%
- Harmonized sales tax is 21%
- Other revenues are 1%
As shown in Figure 3, the distribution of provincial and territorial, and FN revenues, generally remained stable in 2022 to 2023.
Expenses and recoveries administered for the Government of Canada ($ millions)
Table 4: Expenses and recoveries administered for the Government of Canada in 2022 and 2023 (in millions of dollars).
The table also shows the difference in the expense and recovery numbers between the two years, and the percentage difference.
Transfers to individuals
- Canada’s COVID-19 Economic Response Plan: in 2023 is (3,395) and in 2022 is 16,289, the difference is (19,684), and the percentage difference is (120.8%)
- Canada benefit programs for children: in 2023 is 24,555 and in 2022 is 26,226, the difference is (1,671), and the percentage difference is (6.4%)
- Climate action incentive: in 2023 is 6,872 and in 2022 is 3,762, the difference is 3,110, and the percentage difference is 82.7%
- Canada workers’ benefit: in 2023 is 3,203 and in 2022 is 2,259, the difference is 944, and the percentage difference is 41.8%
- Children’s special allowances: in 2023 is 368 and in 2022 is 372, the difference is (4), and the percentage difference is (1.1%)
- Refundable tax credits: in 2023 is 416 and in 2022 is 308, the difference is 108, and the percentage difference is 35.1%
- Canada dental benefit: in 2023 is 157 and in 2022 is 0, the difference is 157, and the percentage difference is not applicable
- Canada housing benefit: in 2023 is 387 and in 2022 is 0, the difference is 387, and the percentage difference is not applicable
Total transfers to individuals: in 2023 is 32,563 and in 2022 is 49,216, the difference is (16,653), and the percentage difference is (33.8%).
Transfers to corporations
- Canada’s COVID-19 Economic Response Plan: in 2023 is 728 and in 2022 is 29,801, the difference is (29,073), and the percentage difference is (97.6%)
- Refundable investment tax credit: in 2023 is 2,052 and in 2022 is 1,818, the difference is 234, and the percentage difference is 12.9%
- Film and video tax credits: in 2023 is 864 and in 2022 is 539, the difference is 325, and the percentage difference is 60.3%
- Farmers fuel charge tax credit: in 2023 is 82 and in 2022 is 0, the difference is 82, and the percentage difference is not applicable.
Total transfers to corporations: in 2023 is 3,726 and in 2022 is 32,158, the difference is (28,432), and the percentage difference is (88.4%).
Other federal expenses
- Doubtful accounts expense: in 2023 is 6,110 and in 2022 is 5,260, the difference is 850, and the percentage difference is 16.2%
- Interest expense: in 2023 is 576 and in 2022 is 529, the difference is 47, and the percentage difference is 8.9%
- Fuel charge proceeds returned to provinces and territories: in 2023 is 41 and in 2022 is 52, the difference is (11), and the percentage difference is (21.2%)
Total other federal expenses: in 2023 is 6,727 and in 2022 is 5,841, the difference is 886, and the percentage difference is 15.2%.
Total expenses administered for the Government of Canada: in 2023 are 43,016 and in 2022 are 87,215, the difference is (44,199), and the percentage difference is (50.7%).
Recoveries administered for the Government of Canada
- Old age security benefits: in 2023 is (2,658) and in 2022 is (2,677), the difference is 19, and the percentage difference is (0.7%)
- Employment insurance benefits: in 2023 is (269) and in 2022 is (516), the difference is 247, and the percentage difference is (47.9%)
- Canada Recovery Benefit: in 2023 is (151) and in 2022 is (665), the difference is 514, and the percentage difference is (77.3%)
- Total recoveries administered for the Government of Canada: in 2023 is (3,078) and in 2022 is (3,858), the difference is 780, and the percentage difference is (20.2%)
Total net expenses and recoveries administered for the Government of Canada: in 2023 are 39,938 and in 2022 are 83,357, the difference is (43,419), and the percentage difference is (52.1%).
Expenses administered for the Government of Canada decreased by $44,199 million or 50.7%. The decrease primarily reflects the end of several measures announced in the Plan, as well as the end of the Canada child benefit young child supplement payments. It also reflects post-payment verification activities conducted on various individual COVID-19 programs. This was offset in part by an increase in climate action incentive payments.
Recoveries administered for the Government of Canada decreased by $780 million or 20.2%. Recoveries declined due to lower amounts of benefits paid. The Canada Recovery Benefit expired in October 2021, and EI benefit payments tend to decrease with the rise in employment.
Expenses administered for provincial and territorial governments, and Doubtful accounts expenses administered for the Canada Pension Plan ($ millions)
Table 5: Expenses administered for provincial and territorial governments in 2022 and 2023 (in millions of dollars).
The table also shows the difference in the expenses administered for provincial and territorial governments, and Doubtful accounts expenses administered for the Canada Pension Plan numbers between the two years, and the percentage difference.
Transfers to individuals
- Family benefit programs: in 2023 is 1,864 and in 2022 is 1,814, the difference is 50, and the percentage difference is 2.8%
- Ontario energy and property tax credit: in 2023 is 1,526 and in 2022 is 1,487, the difference is 39, and the percentage difference is 2.6%
- Provincial and territorial climate action tax credits and rebates: in 2023 is 1,215 and in 2022 is 344, the difference is 871, and the percentage difference is 253.2%
- Ontario senior homeowners’ property tax grant: in 2023 is 187 and in 2022 is 160, the difference is 27, and the percentage difference is 16.9%
- Other property tax credits: in 2023 is 25 and in 2022 is 106, the difference is (81), and the percentage difference is (76.4%)
- Other transfers: in 2023 is 1,371 and in 2022 is 948, the difference is 423, and the percentage difference is 44.6%
Total transfers to individuals: in 2023 is 6,188 and in 2022 is 4,859, the difference is 1,329, and the percentage difference is 27.4%.
Transfers to corporations
- Film and television production services tax credits: in 2023 is 1,972 and in 2022 is 1,266, the difference is 706, and the percentage difference is 55.8%
- Refundable investment tax credits: in 2023 is 792 and in 2022 is 637, the difference is 155, and the percentage difference is 24.3%
- Total transfers to corporations: in 2023 is 2,764 and in 2022 is 1,903, the difference is 861, and the percentage difference is 45.2%
Total Expenses administered for provincial and territorial governments: in 2023 are 8,952 and in 2022 are 6,762, the difference is 2,190, and the percentage difference is 32.4%.
Doubtful accounts expense administered for the Canada Pension Plan: in 2023 is 148 and in 2022 is 96, the difference is 52, and the percentage difference is 54.2%.
Expenses administered for provincial and territorial governments increased by $2,190 million or 32.4%. The increase reflects enhanced quarterly payments issued under the British Columbia Climate Action Tax Credit program and the implementation of new programs such as the Ontario Staycation Tax Credit, the Ontario Seniors Care at Home Tax Credit and the Manitoba Renters Tax Credit. The increase is also due to higher British Columbia and Ontario production services tax credits, Ontario and British Columbia film and television tax credits, and Ontario investment tax credit claims.
Doubtful accounts expense administered for the CPP increased by $52 million or 54.2%. The increase reflects a higher CPP share of bad debt expenses due to the impact of the CPP enhancement.
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