The 2003-2006 revisions of the Income and Expenditure Accounts

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Revised estimates of the Income and Expenditure Accounts (IEA) covering the period 2003 to 2006 have been released along with those for the first quarter of 2007. These revised estimates incorporate the most current source data and seasonal patterns. In addition to the standard four year revision, the expenditure-based gross domestic product (GDP) and associated components have been converted from a 1997 reference year to a 2002 reference year for its volume and price estimates.

Revision schedule

The annual revision process is integrated within the Canadian System of National Accounts, with revised estimates of the National Income and Expenditure Accounts (catalogue no. 13-001), Financial Flow Accounts (catalogue no. 13-014), and Canada's Balance of International Payments (catalogue no. 67-001), are compiled and released together. For example, updated estimates of detailed financial transactions underlying GDP are harmonized with revised estimates of sector incomes and outlays. In addition, revised estimates of the National Balance Sheet Accounts (catalogue no. 13-214), are released about two weeks later, based largely on the updated sources of financial and capital transactions as well as on estimates of capital gains/losses implicit in the stock estimates.

The integration of GDP estimates by component occurs through compiling Input-Output Tables in current prices for the first two years of the four year revision period. These data are released in the fall of each year when the full provincial Input-Output Accounts are completed. Corresponding revisions to the monthly estimates of real gross domestic product by industry are released in September. Industry-based estimates are integrated annually, at the time of the first quarter with the income and expenditure based measures of GDP. Revisions to the more recent two years of the four year revision cycle arise due to updated sub-annual and annual sources of information.

Statistical revisions are carried out regularly in the Canadian System of National Accounts in order to incorporate the most current information from censuses, annual surveys, taxation statistics, public accounts, etc. In principle, the revision schedule for the IEA is as follows: the first estimate for a given quarter is released approximately 60 days after the end of the reference quarter; this estimate is revised when estimates for subsequent quarters of the same calendar year are released; thereafter, the estimates are open for revision only once a year for the next four years, at the time of the release of the first quarter estimates. For example, the estimates for the first quarter of 2003 were first released in May 2003. The first revision to these estimates occurred when the second quarter estimates were released in August 2003, further revisions occurred when the third and fourth quarter 2003 estimates were released. These estimates were revised again in each of the next four years, with the last of these revisions occurring with this release.

Limited revisions are sometimes carried out for periods further back than four years and historical revisions are conducted periodically, roughly once every 10 years. Historical revisions provide an occasion to improve estimation methods, eliminate statistical breaks resulting from more limited revisions and introduce conceptual changes into the system. The most recent historical revision was completed in December 1997. Documentation related to this revision can be found at Historical revision of the National Economic and Financial Accounts: review.

The policy of revising the estimates of previous years only once a year is adhered to throughout the System of National Accounts. The period open for revision, however, varies from one set of accounts to the other. Thus, the standard revision is four years in the Income and Expenditure Accounts and the Balance of Payments. The standard revision in the Input-Output Accounts covers one year—the first year of the four years of revision in the Income and Expenditure Accounts and the balance of payments statistics. The revision of the Financial Flow Accounts usually parallels that of the National Balance Sheet Accounts and may occasionally cover more than four years in order to harmonize the flows with the revised stocks.

Income and Expenditure Accounts revisions

With the May 2002 release, additional conceptual changes were implemented within the National Income and Expenditure Accounts and carried back to 1981. These included classification changes to licences and registrations, land transfer taxes, and spectrum charges and the incorporation of 1996 census results in farm inventories. Documentation related to these conceptual changes can be found at Latest Developments in the Canadian Economic Accounts. No conceptual changes have been made to the Income and Expenditure Accounts this year.

Canadian Economic Accounts re-referencing

Impact of the revisions on gross domestic product (GDP)

The current revisions to gross domestic product (GDP) result from the inclusion of the most current estimates from data sources, including survey results, administrative data and public accounts. Revised 2003 and preliminary 2004 Input-Output data are incorporated for the first two years of the four-year revision period. New benchmark information is incorporated for the more recent periods. Other series are revised due to applying existing or updated projectors to the new levels received from the Input-Output Accounts.

As can be seen in Table 3, the revision results in minimal adjustment to the level of GDP at current prices on an annual basis for 2003 and has left the level for 2004 practically unchanged. The levels for 2005 and 2006 are revised up by $3.7 and $7.0 billion, respectively. The downward revision of $233 million to GDP in 2003 is a result of revisions to the 2003 Input-Output Tables. This is the last time 2003 will be revised in a normal revision schedule as it is now fully reconciled with the revised and final Input-Output Accounts. Chart 1 compares the value of the previous estimate to the revised estimate of nominal GDP on a quarterly basis.

Table 1 Selected components, current revision
millions of current dollars
Gross domestic product
Income components
Wages, salaries and supplementary labour income

Corporation profits before taxes


Interest and miscellaneous investment income


Capital consumption allowances


Government business enterprise profits before taxes


Inventory valuation adjustment

Taxes less subsidies, on factors of production
Taxes less subsidies, on products
Expenditure components
Personal expenditure on consumer goods and services
Government current expenditure on goods and services
Business investment in residential structures
Business investment in non-residential structures
Business investment in machinery and equipment
Business investment in inventories
Exports of goods and services
Imports of goods and services

Chart 1 Gross domestic product
Chart 1 Gross domestic product

As can be seen in Table 1, the upward revisions in 2005 and 2006 stem mainly from large upward revisions to wages and salaries and supplementary labour income as well as to non-residential business investment in 2005, which were carried forward into 2006 based largely on the preliminary survey estimates. On a quarterly basis, current dollar GDP was revised down for all quarters in 2003 and 2004 except for the third and fourth quarters of 2003 and the second quarter of 2004. In contrast, in 2005 and 2006 GDP was revised up in all quarters.

Chart 2 Growth rates of real GDP, annual
Chart 2 Growth rates of real GDP, annual

Estimates of annual real GDP growth remained practically unchanged for 2003 and 2006. It was revised up 0.1% in 2003, down 0.2% in 2004, up by 0.2% in 2005 and up 0.1% in 2006.

Viewed from a historical perspective over two decades the revisions to the annual growth rate of current dollar GDP for 2003 falls in the low range of revisions. The cumulative revision to the growth rate (as shown in Table 4) is measured by taking the difference between the current growth rate and the initial growth rate. For 2003, there is no cumulative revision, while the cumulative revisions for 2004, 2005 and 2006 are higher at 0.3%, 0.4% and 0.3%, respectively. The cumulative revision to the 2004, 2005 and 2006 growth rate is large by historical standards.

Revisions to the estimates of quarterly real GDP growth are minor in 2003 and 2004. The largest portion of the 2003 annual revisions occurs in the second quarter which is revised up by 0.2%. In 2004, the first quarter is revised down 0.3%. In 2005, upward revisions are applied to all quarters except for the first quarter which is revised down by 0.2%. For 2006, downward revisions were recorded for the first (-0.1%), second (-0.1%) and third (-0.2%) quarter.

Chart 3 Growth rates of real GDP, quarterly
Chart 3 Growth rates of real GDP, quarterly

Table 2 provides a history of the revisions to GDP for the period 1993-2006. As noted earlier, each annual estimate is subjected to four different annual revision cycles as well as periodic historical revision processes. Table 2 provides the published level and growth rate of GDP for a given year for each of these revision cycles. The largest revisions to GDP occur with the third revision cycle, in which the Income and Expenditure Accounts are benchmarked to the Input-Output Tables. The average upward revision to GDP is +0.2 percentage points and the average downward revision is -0.4 percentage points following the first revision cycle. This changes to +0.5 and a -0.3 with the second, and +0.7 and -0.4 with the Input-Output benchmarking process (the third and fourth revision cycle combined).

Except for 2006, the implicit chained price index for GDP had marginal revisions. In 2003, growth is revised down 0.1, in 2004 and 2005 it is revised up 0.2. In 2006 it is revised up by 0.3. These price indexes are now re-referenced to 2002=100 and for the period 2003 to 2006 incorporate both revisions due to re-weighting within the GDP component elemental indexes and the incorporation of new price deflators, particularly for investment and trade.

Revisions to income aggregates

Table 5 Revisions to income aggregates at current prices

Estimates of wages, salaries and supplementary labour income are revised upward in 2004, 2005 and 2006. The revision in 2004 is due to an updated 2004 T4 supplementary tax file received from the Canada Revenue Agency (CRA). The largest upward revisions to wages and salaries occur in Nova Scotia, New Brunswick, and Ontario. Supplementary labour income is also revised upward with actual data on employers' contributions to pensions available for 2004. Local government pension plans and private business pension plans have higher contributions than expected.

Revisions in 2005 are the result of the incorporation of data from tax files as well as other benchmark sources. Upward revisions are carried forward into 2006 for both wages and salaries and supplementary labour income.


Within the System of National Accounts, surplus is defined as the income corporations obtain from their own production facilities — value added at basic prices less compensation of employees less taxes on production payable plus subsidies received. It represents the last balancing item in the Input-Output Tables and is calculated for each industry. As part of the annual benchmarking to the Input-Output Tables, estimates of surplus are produced by incorporating the latest annual business and institutional surveys as well as various administrative data into the Input-Output framework. Once these benchmark estimates of surplus are derived, the revisions are incorporated into the Income and Expenditure Accounts. In the Income and Expenditure Accounts, surplus includes the following income components: corporation profits before taxes, government business enterprise profits before taxes, interest and miscellaneous investment income, inventory valuation adjustment, and capital consumption allowances. Surplus is only significantly revised in 2004 (-$3,489 million), mostly offsetting the upward revision to wages, salaries and supplementary labour income. Table 1 shows the revisions to surplus for 2003 to 2006 as well as how the revision is distributed among its various income components.

Estimates of corporation profits before taxes are revised down in 2003, 2004 and 2006 by $320 million, $2,172 million and $1,479 respectively, while 2005 is virtually unchanged. The revisions in 2003 and 2004 reflect the benchmarking to the Input-Output Accounts which take into account the latest annual business survey data as well as updated annual corporate income tax returns for 2004. In 2004, the addition of a special pension payment to supplementary labour income in order to reduce corporate pension liabilities and the upward revision to wages and salaries create a significant offsetting downward revision to corporate profits. New estimates from the preliminary Financial and Taxation Statistics for Enterprises including the General Index of Financial Information (GIFI) schedules are incorporated for 2005. These new estimates result in significant upward revision to the 2005 growth rate for corporation profits before taxes, from 10.6% to the revised 11.9%. The 2006 estimates are projected using revised estimates from the Quarterly Financial Statistics for Enterprises.

Interest and miscellaneous investment income is revised upward in all four years. In 2003 the upward revision is $310 million, in 2004 it is $25 million, in 2005 it is $667 million, and in 2006 it is $1,892 million. Revisions to this series reflect new and revised interest payment and receipt information from businesses.

Capital consumption allowances (CCA) is revised downward in all four years: $448 million, $1,584 million, $984 million and $755 million in 2003, 2004, 2005 and 2006 respectively. Updated annual corporate income tax returns, together with additional depreciation estimates from the Investment and Capital Stock Division's perpetual inventory model have led to these downward revisions.

Accrued net income of farm operators from farm production is revised upward in 2003 mainly due to small revisions in program payments and farm operating expenses. Revisions to 2004 cash receipts for special crops and 2005 cash receipts for cattle have a negative effect on net farm income. In addition, a downward revision in program payments and an upward revision in farm operating expenses magnify the revision of 2005 net farm income. Despite a slight upward revision in 2006, accrued net farm income remained at a low level during the year.

Net income of non-farm unincorporated business, including rent is revised slightly upwards in 2003 and 2004 reflecting the annual benchmarking to the Input-Output Accounts by industry. Incorporating the most recent tax data from CRA (Canada Revenue Agency) results in a downward revision of $864 million in 2005. A large portion of this revision can be attributed to an increasing number of professionals (doctors, dentists, lawyers and accountants) who are incorporating their businesses. Revisions to 2005 are carried through to 2006.

The estimate of taxes on factors of production, less subsidies is revised downward in 2003 by $11 million and by $101 in 2004. It is revised upward in 2005 by $445 million and in 2006 by $1,070 million. Local property taxes account for most of the revision. Taxes on products, less subsidies are slightly revised downward in 2003 and 2006 by $21 million and $68 million respectively. They are revised upward in 2004 by $373 million and in 2005 by $439 million. Revisions to both series incorporate new public accounts and other financial information for the different government sub-sectors.

Revisions to expenditure aggregates at current prices

Table 6 Revisions to expenditure aggregates at current prices

Personal expenditure on consumer goods and services is revised upward by $64 million in 2003, $532 million in 2004, $321 million in 2005 and $1,692 million in 2006. In 2003 and 2004, revisions reflect benchmarking to Input-Output Accounts, with durable goods accounting for the majority of the upward revision, specifically spending on used motor vehicles. Nevertheless, important downward revisions are recorded in all four years for non-durable goods, specifically tobacco products and food and non-alcoholic beverages. For 2005 and 2006, the overall revision to personal expenditure on consumer goods and services is amplified by upward revision to services, specifically telecommunications, accommodation and meals outside the home.

Personal expenditure on services is revised upward using results from the Survey of Household Spending for 2005, as well as surveys of service industries. Both the quarterly retail commodity data, up to 2006, and the annual Retail Trade for 2005, released in March 2007, are incorporated into the personal expenditure estimates on consumer goods.

Real personal expenditure on consumer goods and services is calculated using the Consumer Price Index (CPI) of goods and services updated to the 2005 basket.

Government current expenditure on goods and services is revised downward by $976 million in 2003, $911 million in 2004, $1,592 million in 2005 and $2,861 million in 2006. These revisions reflect new data from the federal government's accounting system and provincial public accounts as well as the latest local government information. Survey results for 2004 from the Canadian Institute for Health Information (CIHI) and the Culture, Tourism and the Centre for Education Statistics are also incorporated and carried forward to 2006.

Current dollar investment in residential structures is revised downward slightly for the years 2003 and 2004, while the years 2005 and 2006 are revised upward. Revisions are based on administrative data and results from the 2005 Survey of Household Spending and the Survey of Real Estate Agents and Brokers.

Business plant and equipment is revised up all years with the exception of 2004. Business investment in non-residential construction posts upward revisions for all years while machinery and equipment records downward revisions in all years except 2003, in current dollars. Revisions to both series reflect benchmarking to the Input-Output Accounts as well as the incorporation of the latest estimates from the Private and Public Investment Survey. The greater increase in investment in non-residential structures in 2005 and 2006 was largely due to revised estimates of investment by the mining and oil and gas extraction industries.

Revisions to investment in inventories reflect the incorporation of new information on natural gas storage movements as well as information coming from the latest annual surveys. Revisions to 2003 and 2004 also reflect the results of the commodity balancing process that is integral to the development of the Input-Output Accounts, to which the Income and Expenditure Accounts are benchmarked.

Merchandise exports are revised up slightly for 2003 but down over the period 2004 to 2006. This was caused by revisions to the value of exports (+$169 million in 2003, - $58 million in 2004, - $1.3 billion in 2005 and - $2.9 billion in 2006) as well as an upward revision to the growth in the price of exports in 2004 and 2006. The downward revision in value is largely due to a revaluation of the adjustment included for under reporting of exports to non-US destinations (see note below). The upward price revision is primarily due to the rebasing to 2002=100 and the selection of new price deflators, which is included with the first quarter 2007 release. Merchandise imports recorded limited current dollar revisions. However with the rebasing process, revised prices were incorporated over the entire period. Growth in volumes was revised down in 2003 and up in 2004 with only marginal changes to growth in 2005 and 2006.

The value of service exports and imports are revised up for 2003 to 2006. These revisions are primarily driven by the incorporation of newly received survey data for Canada's trade in commercial services. On the price side, the rebasing to 2002=100 resulted in higher price growth for exports for 2003 to 2006 while import prices remained fairly stable.

The rebasing exercise for services and merchandise trade involved a reselection of commodity baskets and prices to better represent the current content of Canada's international imports and exports.

Under reporting of non-US exports

The existence of under reporting in the customs data for exports to non-US destinations has been known for many years. A series of studies undertaken from the late 1990s into this century by the International Trade Division (ITD) of Statistics Canada in cooperation with the Canada Border Services Agency (CBSA - formerly Canada Customs) demonstrated that the under reporting had grown substantially. As a result, the Balance of Payment (BOP) adjustment for under reporting was significantly increased reaching a maximum of 24% of total non-US exports in 2000.

Over the last few years CBSA and Statistics Canada (STC) have undertaken projects to improve the reporting of these transactions. STC and CBSA have jointly implemented a system of on line reporting that is available for non-US exports and the utilization of this system has expanded rapidly since its introduction. In addition, CBSA has strengthened regulations that require goods to be declared prior to export and has increased its efforts to enforce the regulations, in part through the use of its administrative monetary penalty system (AMPS). In addition, CBSA has entered into agreements with most large marine and air carriers whereby the carriers will not load the cargo unless the proper documentation has been filed by the exporter.

A study conducted in the fall of 2006 indicated that these compliance efforts have been successful and that under reporting has decreased. Therefore, with this annual revision, the BOP adjustment for under reporting of exports to non-US destinations has been reduced to reflect this improved reporting. Specifically, the BOP adjustment has been reduced by $500 million in 2004, $1.5 billion in 2005 and by $2.5 billion in 2006. The estimate for under reporting is now 15% of total exports to non-US countries, down from 24% in 2000.


  1. Selected components (current revisions)
  2. Revisions to gross domestic product, historical perspective
  3. Revisions to gross domestic product
  4. Revisions to gross domestic product (growth rates)
  5. Revisions to income aggregates at current prices
  6. Revisions to expenditure aggregates at current prices