T1 Family File, Final Estimates, 2016
Section 1 - The data

Data Source

The data are derived primarily from income tax returns. For the most part, tax returns were filed in the spring of the year following the reference year. The mailing address at the time of filing is the basis for the geographic information in the tables.

The T1 Family File (T1FF) approximates the total Canadian population. It contains information on sources of income (from the tax filers) and some demographic indicators (derived from both the tax filers and the non-filers). We have divided the T1FF data into three themes:

Data Vintage

The data are taken from tax records, and are the current data from tax returns filed for the year noted on the tables. For example, 2016 income records are taken from 2016 tax returns filed in the spring of 2017, with data released during the summer of 2018. Data are released on an annual basis.

Data Quality

The data appearing in the tables are taken directly from the T1 Family File (T1FF), built from the income tax and the Canada Child Tax Benefit records. Information on income is obtained from the tax filers, for both themselves and their non-filing spouses. Demographic information is derived from tax filers and non-filing spouses and/or children, such as the estimates of the "number of persons" and "total tax filers and dependants".

In 2016, about 75.0% of Canadians (of all ages) filed tax returns (see Table A).

Most children do not file because they have low or no income. Improvements have been made to the process of identifying children. For example, the introduction of the Universal Child Care Benefit program in 2006, and subsequently the Canadian Child Benefit in 2016, has allowed the identification of more children under the age of six. These changes have resulted in improved coverage of children in the T1FF data compared to the official Statistics Canada population estimates. The impact of these changes is most notable in the counts and median total income of lone-parent families although it is not possible to distinguish the precise impact of the improvements separately from normal year-to-year change.

Some elderly Canadians receiving only Old Age Security (OAS) pension and Guaranteed Income Supplement (GIS) do not file because they have low or no taxable income. However, with the introduction of the federal sales tax (FST) credit in 1986 and the goods and services tax (GST) credit in 1989, the percentage of the elderly population filing tax returns has increased. In 2016, 94.9% filed tax returns, up from 75% in 1989 (when comparing tax filers aged 65 years or more with the 65 years or more population estimate counts to July 1, 2017, available from Statistics Canada’s website PID table 17-10-0005-01).The introduction of the FST and GST credits has also resulted in more low-income families filing tax returns.

The initial population used to develop the estimated population counts comprise all tax filers for the reference year and represents almost three-quarter of the Canadian population. Tax filers from the same census family including children are matched using common links (e.g., same name, same address). When there are indications that one or several members of a census family are missing (for instance children), those members are imputed. The remaining tax filers who have not been matched in the census family formation process become non-census family persons. The resulting population counts approximate the total Canadian population.

The Income Statistics Division’s population estimates compare well with estimates obtained through other sources. For example, coverage rates by age from the data tables, compared to the official population estimates, are:

Beginning in 1992, “Total income” and “family total income” were changed to include income of non-filing spouses reported on the tax filer's income tax return. This increased the population of lower income individuals, subsequently lowering the median total income of the population. This also caused an increase in total census family income as well as an increase in median census family income for 1992. Starting with 2001 data, wage and salary income of non-filing spouses can be identified, in some cases, from T4 earnings statements.

When compared to other sources, T1FF median Census family income at the Canada level has been a few percentage points below. In 2016 there was a 3.5% difference in the median Census family income at the Canada level between T1FF and the Canadian Income Survey (CIS) (Table C).

As for the T1FF median income for individuals, when compared at the Canada level, it has been just a bit lower. In 2016 there was an 8.04% difference in the median income for individuals at the Canada level between T1FF and the CIS (Table D).

The table below shows the coverage of government transfers at the individual level for 2016.

Confidentiality and Rounding

All data are subject to the confidentiality procedures of rounding and suppression.

To protect the confidentiality of Canadians, counts and amounts are rounded. Rounding may increase, decrease, or cause no change to counts and amounts. Rounding can affect the results obtained from calculations. For example, when calculating percentages from rounded data, results may be distorted as both the numerator and denominator have been rounded. The distortion can be greatest with small numbers.

Starting with the 2007 data, all aggregate amounts are rounded to the nearest $5,000 dollars. Also as of 2007, median incomes in the data tables are rounded to the nearest ten dollars (prior to 2007 they were rounded to the nearest hundred dollars).

Since 1990, data cells represent counts of 15 or greater, and are rounded to a base of 10. For example, a cell count of 15 would be rounded to 20 and a cell count of 24 would be rounded to 20.

For 1988 and 1989 data, all counts are 25 or greater and they are rounded to the nearest 25. Reported amounts are rounded to the nearest thousand dollars.

For data up to and including 1987, all counts are randomly rounded to a base of 5, and reported amounts are unrounded, but are adjusted according to the rounding of the counts.

In the data tables:

• Medians, and average amount are rounded to the nearest ten dollars;
• Percentages, ratios and indexes are published with one decimal and calculated on rounded data; therefore, the sum of percentages might not equal 100% in the case of small counts.

Suppressed Data

To maintain confidentiality, data cells have been suppressed whenever:

• areas comprise less than 100 tax filers;
• cells represent less than 15 observations;
• cells were dominated by a single observation;
• cells for median income were based on a rounded count of less than 20 observations.

Suppressed data may occur:

a) within one area:

• when amounts for one of the income categories is suppressed, a second category must also be suppressed to avoid disclosure of confidential data by subtraction (called residual disclosure) (see Table F);
• when amounts for one of the gender categories is suppressed, the other gender category must also be suppressed to avoid residual disclosure (see Table F);
• when amounts for one of the age group category is suppressed, another age group must also be suppressed to avoid residual disclosure.

b) between areas:

• when a variable amount in one area is suppressed, that variable amount is also suppressed in another area to prevent disclosure by subtraction.

Census Family Low Income Measures

Census Family Low Income Measures (CFLIMs) are relative measures of low income. They represent a fixed percentage (50%) of adjusted median census family income, where adjusted indicates a consideration of family needs.

The adjustment factor used in calculating the CFLIMs reflects the precept that family needs increase with census family size. A person is considered to be in low income when their adjusted family income is below the CFLIM threshold associated with their census family type and size.

For 2018 (tax data 2016), the T1 Family File (T1FF) is releasing data using CFLIM based on two methodologies. In this document, the methodology that has been used in the past is referred to as the former methodology, while the new methodology is referred to as the updated methodology.

The updated methodology was introduced to ensure that T1FF data is more comparable with other Statistics Canada Low Income Measure data (i.e. such as that published by the 2016 Census of Population and the Canadian Income Survey). As such, and in accordance with the current standard for analysing the low income situation of individuals, T1FF will produce only a Census Family After-Tax LIM (CFLIM-AT) and exclude the former before-tax measure.

A more detailed paper regarding the differences in LIMs related data between the Census and T1FF is available through the Income Research Paper series, catalogue no. 75F0002M, “Low Income Measure: Comparison of Two Data Sources, T1 Family File and 2016 Census of Population”, 2018. Regarding the specific changes to the T1FF CFLIM methodology and their impact, see catalogue no. 75F0002M, “Methodology Changes: Census Family Low Income Measure based on the T1 Family File”, 2018.

While data tables for both methodologies are presented in this document, the former methodology will not be part of the next T1FF release in 2019 (tax data 2017).

Census Family Low Income Measures: Common Components, Former and Updated Methodologies

In the T1FF data, the CFLIMs are calculated according to census families. Here are the key components behind the calculation of the CFLIMs, which are common to both the former and the updated methodologies.

1. For each census family, determine the adjustment factor used to calculate adjusted family income. The updated methodology uses the square root of the family size, while the former methodology uses a predetermined factor based on a combination of family type, family composition and family size.
2. For each census family, calculate an adjusted family income by dividing their family income by their adjustment factor calculated at step 1. For persons not in census families, for whom the adjustment factor is 1.0, the adjusted family income is equal to the individual’s income.
3. Determine the median adjusted family income. For the updated methodology, adjusted family income is applied to each individual, so that the median is the adjusted family income where 50% of individuals have a smaller adjusted family income and 50% have a higher adjusted family income. With the former methodology, the median is the adjusted family income where 50% of the families (including persons not in census families) have a smaller adjusted family income and 50% have a higher one.
4. The CFLIM threshold for a family of size one is 50% of the median adjusted family income. The CFLIM thresholds for other census family types are equal to this value multiplied by the corresponding adjustment factor.
5. Persons in low income are those whose adjusted family income is below the CFLIM threshold. Those whose adjusted family income is equal to or above the CFLIM threshold are not considered in low income.
6. This process is repeated annually. Thus, the CFLIMs for each year are derived from the reported incomes of that year.

Census Family Low Income Measure: Updated Methodology

The Census Family After-Tax LIM (CFLIM-AT), included in the T1FF Individual Table 13 (PID table 11-10-0018-01) and T1FF Family Table 20 (PID table 11-10-0009-01), is a relative measure of low income. Although introduced in April 2018 with 2015 tax data, data tables for CFLIM-AT include data as far back as tax year 2004. New statistics have also been introduced in T1FF Individual Table 13: “Percentage of individual and of families below the CFLIM-AT” and the “Average income gap-ratio of individuals based on adjusted family income” (see Glossary for more detailed definitions).

These statistics provide additional perspective on the situation of people living in low income. Other data previously available in T1FF Family Tables 17 and 18 (PID table 11-10-0015-01) which did not focus specifically on low-income can now be found in T1FF Family Table 19 (PID table 11-10-0017-01). This includes the count of families according to family type, the count of persons by age groups in these family types, and the before-tax and after-tax median family income.

To summarize, three factors have been modified in the updated methodology, as follows:

• CFLIM thresholds exclusively using after-tax income amounts are used to produce T1FF standard LIM tables.
• The adjustment factor for the family income is based on the square root of the family size.
• Adjusted family income is assigned at the individual level to calculate the median adjusted family income, not at the family level.

Table G outlines the After-Tax Census Family Low Income Measures (CFLIM-AT) thresholds for the tax year 2016.

Example: The CFLIM-AT for any census family size can be calculated by multiplying $20,424 by the square root of the family size. For example, the after-tax CFLIM for a family of 4 is $40,848. This is calculated by multiplying $20,424 by 2 (square root of 4).

Census Family Low Income Measure: Former Methodology

The Census Family Low-Income Measures (CFLIMs) included in the T1FF Family Tables 17 and 18 (PID table 11-10-0015-01) are relative measures of low income. All data is available for Census Family Low Income Measure After Tax (CFLIM-AT) starting with 1997 income data, and starting with 1995 income data for Census Family Low Income Measure Before-Tax (CFLIM-BT).

Three factors within the CFLIM former methodology differ from the updated methodology:

• CFLIM thresholds using both before-tax income and after-tax income amounts are used to produce T1FF standard LIM tables.
• To calculate the adjusted family size of the census family, the first adult is counted as 1.0. Each additional adult and each child 16 years of age and over is counted as 0.4. Each child less than 16 years of age is counted as 0.3 (except in a lone-parent family where the first child is counted as 0.4). Each person not in a census family is counted as 1.0.
• The adjusted family income is assigned to each family, and the median used to determine the CFLIM thresholds, are calculated at the family level. This means that in the case of median adjusted census family income, 50% of families have a smaller adjusted census family income and 50% have a higher one.

Tables H and I outline the before-tax and after-tax CFLIMs thresholds for 2016 according to the former methodology. Both tables have the same format. Low-income census families and low-income persons not in census families are those whose (census family) incomes are below the CFLIM threshold for their census family type.

Example: The 2016 CFLIM-BT for a person not in a census family is $20,862 and the 2016 CFLIM-BT for a lone-parent family with two children 15 years of age and under is $35,465.

The CFLIM-BT for any census family size can be calculated by multiplying $20,862 by the appropriate adjusted census family factor for a specific census family size. For example, the CFLIM-BT for a couple family with two children over the age of 15 is $41,724. This is calculated by multiplying $20,862 by 2.2 (where the factor of 2.2 = 1 + 0.4 + 0.4 + 0.4).

Example: The 2016 CFLIM-AT for a person not in a census family is $18,452 and the 2016 CFLIM-AT for a lone-parent family with two children 15 years of age and under is $31,368.

The CFLIM-AT for any census family size can be calculated by multiplying $18,452 by the appropriate adjusted census family factor for a specific census family size. For example, the CFLIM-AT for a couple family with two children over the age of 15 is $40,594. This is calculated by multiplying $18,452 by 2.2 (where the factor of 2.2 = 1 + 0.4 + 0.4 + 0.4).

Other Low-Income Statistics

LIM statistics are also available from the Census and the Canadian Income Survey (CIS). In those data sources, LIMs are derived according to the household. These two other sources of low income statistics include additional measures of low income such as the Low Income Cut-Offs (LICOs) and the Market Basket Measures (MBMs).