Major classification variables
The following variables are used in one or more of the tables in this publication:
Taxable or non-taxable classification
A return is considered taxable when the sum of net federal tax, net provincial tax, CPP contributions payable on self-employment earnings, EI premiums payable on self-employment earnings, and social benefit repayment amounts was at least $2 and non-taxable when this sum was less than $2.
Some returns are classified as taxable even when the return showed a total income less than the allowable basic personal amount of $10,527. This happened for:
- Individuals subject to the alternative minimum tax;
- Returns filed by certain non-residents for income earned in Canada that's not subject to personal amounts;
- Individuals who resided in Canada for only part of a tax year (these individuals paid tax on the income they earned during their period of residence in Canada, and as a result they are entitled to tax credits only for that period).
- Individuals who had CPP or EI contributions payable on self-employment earnings.
- Individuals who had to repay social benefits.
It is possible for individuals classified in the upper income ranges to use a variety of deductions and tax credits to achieve a non-taxable status. Among the deductions that can be used are: carrying charges (such as interest paid to earn investment income); business or farm losses of previous years; and allowable business investment losses. Tax filers can also use non-refundable tax credits - such as charitable donations, gifts to Canada or a province or territory, or dividend and foreign tax credits - to reduce their tax to zero.
Income classification
The income classes presented in the tables are based on the total income assessed. This corresponds to line 150 of the return and includes:
- employment income
- pension income
- investment income
- self-employment income
- income from certain other sources
- non-taxable income
Total income assessed may differ from the true economic income presented in other publications because it does not include certain non-taxable income and it may include grossed-up income such as income from eligible dividends which is the value plus 41%.
A detailed list of other forms of non-taxable incomes can be found in Item 30: Total income assessed.
Major source of income classification
Taxfilers do not report their type of work or occupation. These classification statistics are based on the major source of income classification as determined from the largest source of gross income.
For example, if a taxfiler earned a salary but received more income from investments, this taxfiler was classified as an investor, not as an employee.
For self-employment income, the gross income was used to determine the major source of income. In cases where the gross income was not available, the filer's net self-employment income was multiplied by a factor to arrive at an estimated gross income. This estimated gross income was only used to determine the largest source of income.
This list describes the majority of taxfilers who make up each of the nine major income classifications we use:
- Employment - taxfilers employed by a business, institution, school, federal or provincial Crown corporation, or some form of government body.
- Farming - self-employed taxfilers who earned their major source of income from farming.
- Fishing - self-employed taxfilers whose major source of income is from fishing as boat owners or crew members or from fishing from shore.
- Professional income - self-employed taxfilers whose major source of income is professional fees (including accountants, doctors and surgeons, dentists, lawyers and notaries, engineers and architects, as well as entertainers, artists, etc.).
Professionals who earn most of their income in the form of salaries are classified as employees. As a result, the number of professionals shown in the publication may be less than the number shown in professional directories. - Sales - taxfilers whose major source of earnings is commission income from self-employment.
- Business proprietorship or partnership - taxfilers whose major source of income is business income.
- Investment - taxfilers whose major source of income is interest, taxable dividends from Canadian corporations, taxable capital gains, and other investment income.
- Pension - taxfilers whose major source of income is pension or split pension income.
- Benefit - taxfilers whose major source of income is employment insurance, social assistance payments, Universal Child Care Benefits, workers' compensation benefits, and net federal supplements.
- Other - taxfilers whose major source of income is alimony, RRSP income, registered disability savings plan income or other unspecified income.
Age and Sex classification
The taxfiler's age is determined using the reported year of birth on page 1 of the return. Individuals with no reported date of birth are included in the total.
The sex of the taxfiler is determined from information on file with the Agency (information provided by the Social Insurance Registry). Individuals with no reported sex are included in the total.
Provincial or territorial classification
Province or territory of residence - used in tables 5 and 5A - refers to the province or territory in which the taxfiler resided on December 31, 2011, as indicated in the T1 General Income Tax and Benefit Return.
Province or territory of taxation - used in Table 1 - refers to the province or territory in which provincial or territorial tax is payable. It is possible for a taxfiler to reside in one province or territory of Canada, but all or part of their income for the year was earned and can be allocated to a permanent establishment outside that province or territory, or outside Canada. Such individuals are referred to as "multiple jurisdictional" filers. In Table 1, multiple jurisdiction filers are assigned to the province in which they have allocated the highest percentage of their net income. In cases where it is not possible to determine to which province they have allocated the highest percentage of their net income, they are assigned to their province of residence as indicated on page 1 of the T1 General Income Tax and Benefit return.
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