7.1 Classification, measurement and concepts

7.4 The classification of personal expenditure on consumer goods and services is based on the international classification of individual consumption by purpose (COICOP). "Purpose" and "function" are used interchangeably and refer to the socio-economic objectives that economic agents aim to achieve through various kinds of outlays such as food, clothing, housing, health and education. Classification of individual consumption by purpose also groups expenditures into four classes: durable goods, semi-durable goods, non-durable goods and services. Goods are tangible products1 that can be stored or inventoried, while services are products that cannot be stored and are consumed at the place and time of their delivery. The distinction between non-durable goods and durable goods is based on whether the goods can be used only once or whether they can be used repeatedly or continuously over a period of considerably more than one year. Semi-durable goods, such as clothing and footwear, differ from durable goods in that their expected lifetime of use, though more than one year, is often significantly shorter.

7.5 Most commodities can be easily assigned to one of the four classes mentioned previously, but some goods and services could be classified to more than one. Multi-purpose commodities are classified according to their predominant purpose. For example, sports shoes suitable for everyday or leisure wear would be classified as footwear and not as recreational equipment. Other commodities are mixed, such as meals consumed outside the home, which include non-durable goods (food and non-alcoholic beverages) and a service. In this case, the full value of the meals is shown as a service. The classification of personal expenditure on consumer goods and services used in the CSNA is presented in Table 7.6.

7.6 Expenditure on goods is recorded at the time the ownership changes whether paid with cash, cheques, credit cards or by redeeming a gift card. On the other hand, expenditure on a service is recorded when the delivery of the service is completed; for example, prepaid airline tickets will only be recorded when the trips are taken.

7.7 Expenditures are measured at market prices, i.e. they include the provincial and federal sales taxes. Note that they also include all taxes embedded in the price before sales taxes, such as excise taxes and environmental taxes. All gratuities paid for the delivery of a service are also included, but the expenditures are net of subsidies on products.

7.8 Personal expenditure includes spending by Canadian residents at home or when they are temporarily abroad, either as tourists (but not for business purposes), as members of the armed forces or as diplomats. All expenditures by foreign residents temporarily in Canada are excluded from personal expenditure but are included in exports of services.2

7.9 Not all outlays by transactors of the persons and unincorporated business sector are included in personal expenditure. As mentioned in paragraph 7.2, business expenditures of unincorporated businesses are excluded. Similarly, in the CSNA, non-profit institutions and other associations of individuals are treated as businesses with respect to their capital expenditure, but as households with respect to their current expenditure. Therefore, their spending on goods and services is measured by their current expenditure net of revenues from the sale of goods and services, which are mostly food, and alcoholic and non-alcoholic beverages.

7.10 The purchase of a house by a household is considered as an acquisition of an asset,3 as if the purchaser were an unincorporated business. However, the distinction between personal expenditure and capital expenditure is often difficult to make for expenditures pertaining to a house. Improvements such as major renovations, reconstruction or enlargement, which bring about significant changes in some of the characteristics of an existing house and therefore extends the previously expected service life well beyond ordinary maintenance and repairs, are also considered as capital expenditure. On the other hand, ordinary repairs and maintenance that must be undertaken regularly in order to maintain a house in working order over its expected service life are considered as personal expenditure, for example, replacing defective parts with new parts of the same kind.

7.11 Hospital and medical care premiums and the purchase of marriage licenses, motor vehicle licenses and permits and other miscellaneous licenses and permits such as hunting and fishing permits, as well as various fines and penalties are treated as transfer payments to the government sector and therefore not personal expenditure. The above noted household payments are de facto taxes since no good or service is received in return.

7.12 Fees paid directly by households for certain services provided by government, mostly related to education and health, are included in personal expenditure. Current expenditure incurred by government units on individual consumption of goods and services provided to households as a social transfer in kind is included in household actual final consumption.

7.13 For some services, the value of the purchases included in personal expenditure does not always equal the full value of the outlay, but rather an amount reflecting the value of the service consumed by households. For example, the value of the service "games of chance" purchased by households is assumed to be equal to the amounts wagered less the prizes awarded.

7.14 Similarly, the premiums paid for automobile, property, accident and sickness, and life insurance are not considered to be personal expenditure. Only the cost of the service provided is taken into account for personal expenditure. The cost of service is measured by the premiums earned plus the premium supplements4 minus claims due. It is net of claims due in order to avoid double-counting of personal expenditure since expenditures reimbursed by insurance companies are accounted for separately in selected goods and services, such as automobile repair and electronic equipment. The automobile, property, accident and sickness, and life insurance net premiums5 are treated as current transfers from corporations to households. See the section Insurance services for the data sources and estimation methods of personal expenditure on automobile, on property, on accident and sickness, and on life insurance.

7.15 Personal expenditure is net of sales of used goods by households. Hence, interpersonal transactions of used goods, excluding sales taxes, cancel out. For transactions between households through the intermediation of a retailer, only the components which represent new production are included; that is, the cost of parts used to repair and/or refurbish the good plus the value added (profit margin and labour charges). However, the value of used goods purchased by households is included in its entirety if the previous owner belonged to corporations, government business enterprises, unincorporated businesses, governments or non-residents. Sales taxes are always included in full, regardless of the previous ownership. The estimation method for used motor vehicles is outlined in the section Used motor vehicles (net value).

7.16 Selected non-market transactions are included in personal expenditure. Imputations are made to place a market value on some transactions in order to keep personal expenditure invariant to the way certain activities are carried out. Such is the case for rent of owner-occupied dwellings, for financial services indirectly measured when no explicit charges are recorded (such as the portion of bank interest and deposit charges that represent administration costs), for own-account production of food consumed by farmers and for the special treatment of financial leasing of motor vehicles.

7.17 As mentioned in paragraph 7.10, purchases of dwelling units are considered as investment in fixed capital. This capitalization of dwellings requires that personal expenditure include an imputed rent estimate for owner-occupied housing, representing the service yielded by the dwelling. The housing services produced are deemed to be equal in value to the rentals that would be paid on the market for accommodation of the same size, quality and type. Without this imputation, the measure of housing services and of gross domestic product (GDP) would not be invariant to shifts between the owner-occupied dwellings and the renting of residential dwellings. The estimation method for rents is outlined in the section Paid and imputed rents.

7.18 Financial services provided by banks and other financial institutions such as service charges for deposits and loans are paid for indirectly through variations in deposit and borrowing rates. A practical approach in imputing a value for these services is by taking the difference between the property income receipts of financial institutions and the property income paid by them, and adjusting the net interest received for the use of the financial institution's own funds. Note that in the calculation of financial services indirectly measured (FSIM), property income includes only interest. Other financial services such as currency exchange and advice about investments are explicitly charged and can be measured directly. See the section Financial services indirectly measured (FSIM) for the data sources and estimation methods pertaining to personal expenditure on financial services indirectly measured.

7.19 An imputation is also made to personal expenditure for the value of food grown, manufactured and consumed by farmers and the value of goods or services consumed out of income in kind provided to employees in lieu of wages and salaries.

7.20 Finally, rather than consider the periodic payments made for financial leasing of motor vehicles as the purchase of a service, the full value of the vehicle before sales taxes is recorded as personal expenditure on durable goods, as the vehicle is deemed to be purchased and owned by households. However, only the sales taxes applicable to the lease payments are included for the duration of the lease. See the section New cars, vans and trucks for more details.


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1. Although durable goods are more typically viewed as an asset, the only way in which the repeated use of durables by households could be recognized would be to extend the production boundary by postulating that the durables are gradually used up in hypothetical production processes whose outputs consist of services. These services could then be recorded as being acquired by households over a succession of time periods (System of National Accounts 1993, paragraph 9.40). However, by SNA convention, household consumption is measured only by expenditures and acquisitions.

2. Although many data sources underlying the estimates of personal expenditure series include expenditures in Canada by non-residents, these transactions are excluded in the aggregate by means of the travel receipts from non-residents, series J218 (see paragraph 7.26).

3. The full value of a new house and the ownership transfer costs associated with the purchase of an existing house are considered as capital expenditure.

4. Premium supplements represent the income from investments of the insurance technical reserves. Technical reserves are defined as pre-paid premiums and reserves against outstanding claims, both being a form of credit extended by the policyholder to the insurer.

5. Net premiums (or claims) are equal to premiums paid minus the cost of service.