Major classification variables

The following variables are used in one or more of the tables in this publication:

Taxable or non-taxable classification

A tax 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:

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:

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 the description for 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 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:

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. Individuals with no reported sex are included in the total.

Provincial or territorial classification

Province or territory of residence - used in table 5 - 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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