Financial and taxation statistics for enterprises, 2021

Annual statistics on net income before taxes in this release are expressed in current dollars.

The Financial and Taxation Statistics for Enterprises Survey represents the activities of all corporations in Canada, except government business enterprises. This survey reports data on balance sheets, income statements, and the reconciliation of accounting income and taxable income.

An enterprise can be a single corporation or a family of corporations under common ownership or control, for which consolidated financial statements are produced.

Survey changes

The following changes were introduced to the survey starting with reference year 2020.

1. New content was implemented in reference year 2020 to align the survey with new accounting standards adopted by corporations.
2. New industrial breakdowns, which allow for more granularity in the dissemination of data, were implemented. As a result, some industry groupings were merged, others were split and some remained the same as before.
3. A more automated imputation strategy was implemented to streamline the process.

Analytical focus change

Up to reference year 2019, the Financial and Taxation Statistics for Enterprises Survey focused its analysis primarily on operating profits and losses to track the financial performance of enterprises. Operating profits are profits an enterprise earns from its core business operations and are the difference between operating revenues and operating expenses.

As of reference year 2020, the survey's analytical focus has changed from operating profits to net income before taxes. There are several reasons for this change. First, the response rate for the cost of goods sold variable, which is a major determinant of operating profits, has declined over time. Moreover, the accounts used by financial and non-financial industries differed because of the nature of their activities, with some enterprises no longer reporting operating profits in their financial statements.

Second, changes to accounting standards in 2006 (new financial instrument standards) and in 2011 (adoption of the International Financial Reporting Standards) included the introduction of gains and losses in asset revaluations. These changes further complicated the calculation of operating profits.

Lastly, the survey, being an economy-wide program, required concepts with a certain degree of comparability among enterprises and industries for assessing and comparing their financial performance.

Net income before taxes is income earned from an enterprise's normal activities. It is a more inclusive measure, and its calculations are standardized between enterprises and industries.

Revisions and backcasting

The release of the Financial and Taxation Statistics for Enterprises Survey for the reference year 2021 includes revised estimates for 2020. This release includes backcasted estimates for the reference periods starting from the reference year 2010 up to 2019.

The backcasted estimates are derived from a process of reconciliation to ensure that the annual series are consistent with the levels of a set of information from surveyed and administrative sources, and by applying the year-to-year movement of historical Financial and Taxation Statistics for Enterprises Survey estimates.

Changes in the data from previously released estimates may be because of a number of reasons, including survey population updates, industry reclassifications and revisions to the data.

While considerable effort is made to ensure high standards throughout the reconciliation process, the resulting estimates are inevitably subject to a certain degree of error. Users are therefore encouraged to use caution when making historical comparisons.

Provincial estimates

To produce province-level estimates of the financial variables, data that are available at the statistical enterprise level are allocated to the business's various establishments and locations.

The information used to derive the allocation factors comes in general from two main sources: profile variables on the Business Register; and administrative data from the Canada Revenue Agency T4 Supplemental file, which provides the distribution of salaries by province and territory. Together, these data are used to compile two sets of factors: revenue factors and employment factors. They show, respectively, the share of the enterprise's total revenue or employment belonging to each of its operating entities.

The provincial estimates were allocated using the employment allocation factors, which were found to produce more stable estimates than the revenue allocation factors.

Since the data are not collected at the provincial or regional level, users are encouraged to use caution when interpreting the provincial estimates.

Employment data

The employment variable is derived from the Canadian Productivity Accounts that produce annual data on jobs. The number of jobs provided represents those from the corporate sector and has been aggregated to align with the Financial and Taxation Statistics industry groupings. The corporate sector combines the business establishments of the North American Industry Classification System codes 11 to 81, with the exception of owner-occupied dwellings industry. The corporate sector also excludes self-employed jobs, the government sector and household sector.