Annual Report to Parliament 2014-2015

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 on behalf of the Government of Canada, provinces, territories, First Nations, and other government organizations. Revenues and expenses are recognized 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 revenues reported in the Public Accounts of Canada. For further information on revenues collected by the Government of Canada as a whole, please refer to the Annual Financial Report of the Government of Canada, available at www.fin.gc.ca/purl/afr-eng.asp.

Revenues Administered on Behalf of the Government of Canada
Federal Administered Revenues (in thousands of dollars)   2015 2014 +(-)  %
Income tax revenues        
Individuals and trusts 135,810,323 130,894,581 4,915,742 3.8%
Corporations 39,446,519 36,587,157 2,859,362 7.8%
Non-resident tax withholdings 6,216,306 6,404,440 (188,134) (2.9%)
  181,473,148 173,886,178 7,586,970 4.4%
Other taxes, duties, and charges        
Goods and services tax 10,310,612 11,493,496 (1,182,884) (10.3%)
Energy taxes 5,469,039 5,425,949 43,090 0.8%
Other excise taxes and duties 3,530,554 3,359,545 171,009 5.1%
Miscellaneous charges 691,002 714,727 (23,725) (3.3%)
  20,001,207 20,993,717 (992,510) (4.7%)
Employment insurance premiums 22,962,274 22,160,249 802,025 3.6%
Interest, penalties, and other revenues 4,508,971 5,267,408 (758,437) (14.4%)
  27,471,245 27,427,657 43,588 0.2%
Revenues Administered on behalf of the Government of Canada 228,945,600 222,307,552 6,638,048 3.0%

Revenues were $228.9 billion in 2015, approximately $6.6 billion higher than in 2014. Administered revenues increased as a result of sustained growth in individuals and trusts and corporations income tax revenues, partly offset by a reduction in goods and services tax (GST) revenues, and interest, penalties, and other revenues.

Individuals and trusts income tax

Individuals and trusts income tax revenues increased by $4,915.7 million or 3.8%. The increase reflects the growth in employment and wages, offset in part by the impact of the Family Tax Cut.

Corporations income tax

Corporations income tax revenues increased by $2,859.4 million or 7.8%. The increase reflects economic growth and strong corporate earnings.

Non-resident tax withholdings

Non-resident tax withholdings revenues decreased by $188.1 million or 2.9%. The decrease reflects a large one-time transaction in fiscal year 2014.

Goods and services tax

GST revenues decreased by $1,182.9 million or 10.3%. The decrease is due to higher input tax credits as a result of an increase in the value of commercial importations due to a lower Canadian dollar. This was offset in part by the growth in retail sales.

Energy taxes

Energy taxes increased by $43.0 million or 0.8%. The increase is attributable to slightly higher gasoline and diesel fuel consumption.

Other excise taxes and duties

Other excise taxes and duties increased by $171.0 million or 5.1%. The increase reflects higher tobacco duty revenues due to higher duty rates, as well as higher beer duty revenues.

Miscellaneous charges

Miscellaneous charges decreased by $23.7 million or 3.3%. The decrease is due to lower Softwood Lumber Export Charge revenues as a result of the increase in the price of lumber. This was offset in part by higher Air Traveller Security Charge revenues.

Employment insurance premiums

Employment insurance premiums increased by $802.0 million or 3.6%. The increase results from the growth in employment and wages.

Interest, penalties, and other revenues

Interest, penalties, and other revenues decreased by $758.4 million or 14.4%. The decrease results from large corporate tax reassessments in fiscal year 2014, as well as a slight decrease in the average prescribed interest rate during the year.

Figure 1 – Direct tax revenues

chart described in the table below
Figure 1 – Direct tax revenues
Legend 2015 2014
Individuals and trusts 74.8% 75.3%
Corporations 21.7% 21.0%
Non-residents 3.5% 3.7%

As shown in Figure 1, the distribution of direct tax revenues remained stable in 2015.

Figure 2 – Indirect tax revenues

chart described in the table below
Figure 2 – Indirect tax revenues
Legend 2015 2014
Goods and services tax 51.6% 54.7%
Energy taxes 27.3% 25.8%
Other excise taxes and duties 17.7% 16.0%
Miscellaneous charges 3.4% 3.5%

As shown in Figure 2, the proportion of goods and services tax declined, and the proportion of energy taxes and other excise taxes and duties increased in 2015.

Revenues Administered on Behalf of Provincial and Territorial Governments, First Nations, and the Canada Pension Plan
Provincial and Territorial Governments,
First Nations, and Canada Pension Plan (in thousands of dollars)
2015 2014 +(-) %
Income Tax – individuals and trusts 62,206,617 58,438,947 3,767,670 6.4%
Income Tax – corporations 15,869,127 13,424,320 2,444,807 18.2%
Provincial portion of harmonized sales tax 23,515,772 22,224,003 1,291,769 5.8%
Other revenues 568,300 207,966 360,334 173.3%
Revenues administered on behalf of provincial and territorial governments and First Nations 102,159,816 94,295,236 7,864,580 8.3%
Pension contributions, interest and penalties administered on behalf of the Canada Pension Plan 45,158,794 43,264,617 1,894,177 4.4%

Provincial, territorial, and First Nations revenues were $102.2 billion in 2015, approximately $7.9 billion higher than in 2014. Canada Pension Plan pension contributions and other revenues were $45.2 billion in 2015, $1.9 billion more than in 2014.

Income tax revenues – Individuals and trusts

Individuals and trusts income tax revenues increased by $3,767.7 million, or 6.4%. The increase reflects the growth in employment and wages, along with various provincial legislative changes.

Income tax revenues – Corporations

Corporations income tax revenues increased by $2,444.8 million or 18.2%. The increase reflects economic growth and strong corporate earnings, as well as the impact of low accrued revenue estimates in 2014.

Provincial portion of harmonized sales tax (HST)

Provincial HST revenues increased by $1,291.8 million or 5.8%, which reflects the growth in retail sales.

Other revenues

Other revenues increased by $360.3 million or 173.3%. The increase is due to the growth in Quebec Selected Listed Financial Institutions revenues.

Figure 3 – Revenues administered on behalf of the provincial and territorial governments and First Nations

chart described in the table below
Figure 3 – Revenues administered on behalf of the provincial and territorial governments and First Nations
Legend 2015 2014
Income tax – Individuals and trusts 60.9% 62.0%
Income tax – Corporations 15.5% 14.2%
Harmonized sales tax 23.0% 23.6%
Other revenues 0.6% 0.2%

As shown in Figure 3, the distribution of revenues administered on behalf of the provincial and territorial governments and First Nations changed moderately in 2015.

Pension contributions, interest and penalties administered on behalf of the Canada Pension Plan

Canada Pension Plan pension contributions and other revenues rose by $1,894.2 million or 4.4%. The increase reflects the growth in employment and wages.

Expenses and Recoveries Administered on Behalf of the Government of Canada and Provincial and Territorial Governments
Administered expenses and recoveries (in thousands of dollars) 2015 2014 +(-) %
Federal administered expenses 21,907,484 20,494,844 1,412,640 6.9%
Federal administered recoveries (1,685,179) (1,555,325) (129,854) 8.3%
Net expenses and recoveries administered for the Government of Canada 20,222,305 18,939,519 1,282,786 6.8%
Provincial and territorial administered expenses 5,055,688 4,644,599 411,089 8.9%
Provision for doubtful accounts administered for the Canada Pension Plan 113,056 83,519 29,537 35.4%
Total net administered expenses and recoveries 25,391,049 23,667,637 1,723,412 7.3%

Net federal expenses and recoveries were $20.2 billion in 2015, $1.3 billion higher than in 2014. Provincial and territorial expenses were $5.1 billion, $411.1 million higher than in 2014.

Federal administered expenses

Federal administered expenses increased by $1,412.6 million or 6.9%. The increase is mostly due to the implementation of the enhanced Universal Child Care Benefit included in Budget 2015.

Federal administered recoveries

Federal administered recoveries rose by $129.9 million or 8.3% due to higher Old Age Security (OAS) recoveries. This increase reflects a higher number of OAS benefit recipients and a growth in taxable income.

Expenses administered for provinces and territories

Expenses administered for provinces and territories increased by $411.1 million or 8.9%. The increase is due to higher production services tax credits and indexation of entitlements.

Provision for doubtful accounts administered for the Canada Pension Plan

The provision for doubtful accounts administered for the Canada Pension Plan increased by $29.5 million or 35.4%. This increase was due to the growth in the allowance for doubtful accounts.

Figure 4 – Expenses and recoveries administered on behalf of the Government of Canada and provincial and territorial governments

chart described in the table below
Figure 4 – Expenses and recoveries administered on behalf of the Government of Canada and provincial and territorial governments
Legend 2015 2014
Federal net administered expenses and recoveries 79.6% 80.0%
Provincial and territorial administered expenses 20.4% 20.0%

As shown in Figure 4, the distribution of expenses and recoveries administered on behalf of the Government of Canada and the provincial and territorial governments remained stable in 2015.

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