Main highlights on Income of families and individuals: Subprovincial data from the T1 Family File, 2021
Released: 2023-08-09
Following 10 consecutive years of growth, the median after-tax income of families decreased to $59,300 (-2.8%) in 2021. This decrease was seen in all provinces and territories, led by Nunavut (-7.7%) and Manitoba (-4.9%). The three largest regional decreases in median family after-tax income occurred in the Windsor (-5.7%), Winnipeg (-5.0%) and Toronto (-4.9%) census metropolitan areas (CMAs).
The decrease in after-tax income was due in large part to the end of several benefits issued by the government in 2020 to financially support Canadians affected by loss of employment income due to the COVID-19 pandemic, which was partially offset by a limited rebound of employment income in 2021. Lower income families were more impacted by the end of government COVID-19 benefits, especially lone-parent families with children under 6 years old. Accordingly, low-income rates and income inequality also rose in 2021.
Increases in market income for lower-income families do not fully offset decreases in government transfers
Grouping families based on their after-tax income being above or below the median, those with income below the median earned 5.3% less in aggregate after-tax income in 2021 than in 2020, while those above the median earned 1.6% more. Breaking this into sources of income, market incomes rose, while government transfers fell for both lower and higher income families.
The increases in market income in 2021 can primarily be attributed to an increase in employment income, which increased by an equal percentage (6.3%) for families with lower and higher incomes. In nominal terms, this was an increase of $9.4 billion in the aggregate for those with lower income and an increase of $65.7 billion for those with higher income.
Simultaneously, the decreases in government transfers from 2020 to 2021 were 13.0% for lower-income families and 19.9% for higher-income families. For those families with lower income, this resulted in $19.2 billion less in aggregate government transfers. For those with higher income, the aggregate decreased by $31.1 billion. The changes in government transfers can be attributed to several factors, with the largest being the decline in COVID-19 benefits, particularly with the virtual disappearance of the Canada Emergency Response Benefit and the Canada Emergency Student Benefit in 2021. This disappearance was partially countered by the continuation of the Canada Recovery Benefit and the temporary changes made to Employment Insurance. Additionally, GST/HST credits returned to previous levels following a one-time increase in 2020, and the Climate Action Incentive was not paid out for 2021, having been replaced with a quarterly program that started payments in July 2022.
Overall, the changes in market income and government transfers when combined with taxes paid resulted in a decrease of $15.1 billion in aggregate after-tax income for families with lower income. In comparison, there was an increase of $16.5 billion in aggregate after-tax income for families with higher income.
After-tax income decreases the most among lone-parent families with at least one child under 6 years old
While overall, the median family after-tax income decreased by 2.8%, the size of the decrease varied across different family types and the ages of any children. Couple families with and without children saw negligible change in their median after-tax income from 2020 to 2021. In contrast, lone-parent families experienced a decrease of 3.9% in median income, and it was more pronounced for lone-parent families where at least one child was aged 0 to 5 years, decreasing 6.8%.
Low-income rates rise in 2021
After a sharp decrease in 2020, the proportion of Canadians living in low income increased 2.2 percentage points to 15.5% in 2021. Nunavut had the largest increase (+6.1 percentage points to 29.1%), while Quebec had the smallest (+1.1 percentage points to 14.3%).
For CMAs, Québec (10.4%), Victoria (11.5%), Saguenay (11.8%) and Guelph (11.8%) have the lowest low-income rates in 2021. The Windsor (19.3%), Toronto (18.6%) and Winnipeg (17.2%) CMAs had the highest rates of low income in 2021.
Low-income rates up for all families, most notably for seniors
Evolution of low-income rates were similar between individuals living in couple families, lone-parent families or outside of a census family. In fact, low-income rates for all family types were above those in 2020.
For 2021, individuals in couple families with children had the lowest low-income rate among all family types, with about 1 in 15 (6.3%) individuals in low income. Following them were individuals in couple families without children, with just over 1 in 10 (11.7%) in low income. About one in three (31.7%) individuals in lone-parent families or persons not in families (34.3%) were in low income.
In 2021, 17.8% of seniors were living in low income, an increase of 4 percentage points over 2020. Adults under 65 years old had a low-income rate of 14.8%, and youth (those under 18 years old) had a low-income rate of 15.6%.
Income inequality rises from 2020 to 2021
With an increase in low-income rates and larger differences between the upper and lower tails of the income distribution, income inequality would be expected to rise. One way to look at this is to explore the Gini coefficient of family after-tax income adjusted for family size. A Gini coefficient will range between 0, where all members of a population have the same income, and 1, where only one person receives all the income of a population.
In Canada, the Gini coefficient for 2021 increased to 0.353 (+0.017) following a drop in 2020. Among the provinces and territories, the adjusted family after-tax income of individuals in Yukon (0.311), New Brunswick (0.313), Prince Edward Island (0.313) and Quebec (0.320) was the most evenly distributed in 2021. Meanwhile, Nunavut (0.409), Ontario (0.369), British Columbia (0.361) and Alberta (0.358) had highest inequality in adjusted family after-tax income.
The three CMAs with the highest levels of income inequality in 2021, as measured by the Gini coefficient, were Toronto (0.407), Calgary (0.386) and Vancouver (0.385). The three CMAs with the lowest levels of income inequality were Saguenay (0.284), Québec (0.293) and Drummondville (0.303). One CMA of note is the combined CMA of Ottawa–Gatineau (0.339), where the Ontario part (0.350) had notably higher inequality than the Quebec part (0.292).
Note to readers
In this release, the term families refers to census families and persons not in a census family. A census family refers to a married or a common-law couple, with or without children at home, or a lone-parent family. Products also include data for persons not in census family. Data for this release are derived from personal income tax returns filed in spring 2022 and are not adjusted on the basis of Statistics Canada's population estimates.
In this release, income has been adjusted for inflation, as measured by the Consumer Price Index, and all dollar amounts are expressed in 2021 dollars.
For additional data related to the product discussed in this release, please refer to the data release of July 12, 2023. Data based on specific government income support programs and benefits for COVID-19 can be found in tables 11-10-0100-01 and 11-10-0101-01.
After-tax income refers to total income less income taxes. Income taxes refer to the sum of federal income taxes, provincial and territorial income taxes, less abatement, where applicable. Total income includes employment income, dividend and interest income, government transfers (taxable and non-taxable), pension income and other income. In accordance with international standards, capital gains are excluded from total income.
This release reports on low-income statistics using the after-tax Census Family Low Income Measure (CFLIM-AT). Individuals are deemed in low income if their adjusted after-tax income falls below 50% of the national median adjusted after-tax income. Adjusted after-tax income is derived by dividing census family income by the square root of census family size and assigning this to all members of the census family. Persons not in census families are treated as census families of size 1. Data based on the CFLIM-AT methodology can be found in tables 11-10-0018-01 and 11-10-0020-01.
Low-income estimates reported in this release differ from those reported in other sources, such as the Census of Population or the Canadian Income Survey (CIS). Reasons for this include differences in the unit of analysis and the data coverage. The low-income measure presented in the census and CIS uses the household unit of analysis (instead of census family), and currently excludes those living in the territories, in collective dwellings and on reserves. Users interested in more details can refer to the paper "Low Income Measure: Comparison of Two Data Sources, T1 Family File and 2016 Census of Population." The census and CIS also produce low-income estimates based on other approaches such as the Market Basket Measure (MBM), which was adopted as Canada's official poverty line in 2019. It is not possible to compute the MBM for the T1 Family File. In addition to income, the MBM relies on data that is obtained through survey questions and not available for this release.
The Gini coefficient is a number between zero and one that measures the relative degree of inequality in the distribution of income. The coefficient would register zero (minimum inequality) for a population in which each person received exactly the same adjusted family income and it would register a coefficient of one (maximum inequality) if one person received all the adjusted family income and the rest received none. Even though a single Gini coefficient value has no simple interpretation, comparisons of the level over time or between populations are very straightforward: the higher the coefficient, the higher the inequality of the distribution.
The median is the point at which half of the observations are higher and half are lower.
The average is the sum of the observations divided by the number of observations.
All data in this release have been tabulated according to the 2021 Standard Geographical Classification used for the 2021 Census.
A census metropolitan area (CMA) is formed by one or more adjacent municipalities centred on a population centre (also known as the core). A CMA must have a total population of at least 100,000, of which 50,000 or more must live in the core.
Products
The Technical Reference Guide for the Annual Income Estimates for Census Families, Individuals and Seniors, T1 Family File, Final Estimates (72-212-X), presents information about the methodology, concepts and data quality for the data available in this release.
The free tables linked to this release are available for Canada, provinces and territories, census metropolitan areas, and census agglomerations. Versions of these tables are also available as a custom service, upon request, for lower levels of geography. The tables are available for Canada, provinces and territories, federal electoral districts, economic regions, census divisions, census subdivisions, census metropolitan areas, census agglomerations, census tracts, and postal-based geographies.
The most recent sub-provincial income information for families and individuals for metropolitan areas can also be explored in an interactive format by visiting the " Income of men and women, sub-provincial regions, T1 Family File: Interactive tool" and the "Sources of family income by family type, sub-provincial regions, T1 Family File: Interactive tool."
The Income, pensions, spending and wealth statistics portal, which is accessible from the Subjects module of the Statistics Canada website, provides users with a single point of access to a wide variety of information related to revenue, pensions, spending and wealth.
Contact information
For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; infostats@statcan.gc.ca) or Media Relations (statcan.mediahotline-ligneinfomedias.statcan@statcan.gc.ca).
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