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Income in Canada


2003 income: an overview

  • After-tax family income remained virtually unchanged for the second year in a row in 2003. After five consecutive years of strong growth, average after-tax income reached a plateau in recent years for almost every type of family in Canada.
  • The three main components of after-tax income -- market income, government transfers and personal income taxes -- all remained more or less stable.
  • Average after-tax income for families of two people or more edged down slightly to an estimated $59,900 from $60,400 in 2002, after adjusting for inflation. This slight decline is not considered statistically significant.
  • In contrast, between 1996 and 2001, after-tax income for these families grew at an average annual rate of 3.2%.
  • For single-parent families headed by women, average after-tax income held steady at about $30,000. Between 1996 and 2001, their income gains were among the strongest primarily because of rising employment rates among single mothers.
  • An estimated 726,000 families were living in low income in 2003, 8.4% of the total. This rate was down slightly from 8.6% in 2002 and well below the peak of 12.1% in 1996.
  • An estimated 843,000 children aged 17 and under, or 12.4% of the total, were living in low-income families in 2003, compared with more than 1.3 million in 1996. The rate was unchanged from 2002, but well below the peak of 18.6% in 1996.

Main components all hold relatively steady

  • The three main components of after-tax income - market income, transfers from governments and personal income taxes - were all relatively unchanged from 2002.
  • Market income is the sum of paid employment and self-employment earnings, and income from investments and pensions, and represents the lion's share of family income, particularly for non-elderly families. In 2003, market income for families of two people or more reached $64,900, approximately the same level as the previous year.
  • Families of two or more people paid an estimated $12,800 on average in personal income taxes in 2003, a marginal $200 less than in 2002 (after adjusting for inflation).
  • Government transfers cover a range of programs such as Employment Insurance (EI), Old Age Security, child tax benefits and so on. The amounts received by the average family remained unchanged from 2002, at an estimated $7,800. In 1996, average transfers amounted to $8,300 per family.
  • The number of families receiving EI benefits remained constant in 2003 after rising 19% during the previous two years. Most of this gain was related to expanded benefits that became effective at the end of 2000 for people seeking parental leave. In 2003, average EI benefits paid to receiving families remained unchanged from previous year at $6,100.

After-tax income unchanged for female single-parents

  • On average, the after-tax income for the estimated 541,000 single-parent families headed by women remained unchanged at $30,000 in 2003, mainly as the result of their market income, which held steady at $23,800.
  • This stability follows a strong average gain of 52% in market income for female lone-parent families between 1996 and 2001, equivalent to an annual growth rate of 8.7%. This was one of the largest increases among the various types of families.
  • About 82% of women in these families had earnings in 2003, the same as the year before, but well above the corresponding figure of 62% in 1996.
  • The low-income rate for female lone-parent families in 2003 was about four times the average for all families. Of the 541,000 female lone-parent families in 2003, about 38% or 208,000 were living in low income. This proportion was stable from 39% in 2002.

Seniors: Growth of after-tax income for senior families

  • Average after-tax income of senior families in which the major income earner was aged 65 or over remained unchanged at $43,800 in 2003. However, this was a 10% gain from 1996 primarily as a result of an increase in their market income.
  • In 2003, senior families received on average an estimated $20,900 in government transfers, accounting for 42% of their total income before taxes.
  • Seniors living on their own had an average after-tax income of $23,000 in 2003.
  • The low income rate among seniors has continued its downward trend since the early 1980s. In 2003, 6.8% of seniors were living below Statistics Canada's low-income cut-off, down from 21.3% in 1980 and 9.8% in 1996.
  • The low-income rate for unattached senior women was 19% in 2003, compared with 15% for their single male counterparts.

Unattached individuals: Moderate gain in market income

  • Unattached individuals recorded the biggest gain in market income of any group in 2003. On average, these people earned $25,600 from employment, investments and pensions, up 4.1% from $24,600 in 2002.
  • However, this increase did not translate into an equivalent gain in after-tax income. That is because government transfers to this group declined, while their personal income taxes went up. In fact, they paid $5,300 on average in personal income taxes in 2003, compared with $4,900 the year before.
  • As a result, after-tax income for unattached individuals rose insignificantly from $25,300 to $25,600.
  • In 2003, some 29% of these individuals were living in low income, virtually the same rate as the year before. However, this rate was substantially below the 37% in 1996.

Income inequality: Government transfers and taxes helped reduce disparities

  • One measure of income inequality is the ratio of income received by the 20% of families with the highest after-tax income compared with the 20% of families with the lowest after-tax income.
  • In 2003, for market income, this ratio was about 12.9 to 1.0. That is, the 20% of families with the highest after-tax income received about $12.90 in market income for every $1.00 received by the 20% of families with the lowest after-tax income.
  • However, taxes and transfers moderate the differences between the quintiles of the income distribution. After taxes and transfers, the one-fifth of families with the highest after-tax income received $5.50 for every $1.00 received by the one-fifth with the lowest.
  • Among unattached people, the one-fifth with the highest after-tax income received $21.60 in market income for every $1.00 received by the 20% with the lowest after-tax income. After taxes and transfers, this ratio fell to $8.40 for every $1.00.

Provinces: After-tax income remained stable

  • In general, average after-tax income for families of two people or more did not change significantly in any province between 2002 and 2003.
  • As in previous years, average after-tax income was highest among families in Ontario at $66,500, followed by those in Alberta who averaged $64,900. They were the only two provinces in which the levels were above the national average of $59,900.
  • After-tax income was lowest among families in Newfoundland and Labrador at $47,100.
  • In 2003, families of two or more people in Newfoundland and Labrador received, on average, government transfers estimated at $11,800, the highest in Canada and well above the national average of $7,800.
  • The low-income rate among families was lowest in Prince Edward Island at 3.7%, and highest in British Columbia at 11.6%, compared with the national average of 8.4%.

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Date Modified: 2005-05-12 Important Notices