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Income in Canada



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Notes and definitions


This section reviews the definitions of the main income concepts and their components. In order to highlight the relationships between them, this section is organized according to the “Classification of income”, described above.

Classification of income

Market income
      Wages,salaries and commission
      Self-employment income
   Investment income
   Retirement pensions
   Other income
(plus) Government transfers
   Child tax benefits
      Child tax benefits
      Universal child care benefit
   Canada Pension Plan/Quebec Pension Plan benefits
   Old Age Security and Guaranteed Income Supplement/Spouse's Allowance
   Employment Insurance benefits
   Social assistance
   Workers' compensation
   GST/HST Credit
   Provincial/territorial tax credits
   Other government transfers
(equals) Total Income
(minus) Income tax
(equals) After-tax Income

The concept of income

There are several important inclusions and exclusions in the concept of income:

  1. The concept of income covers income received while a resident of Canada or as relevant for income tax purposes in Canada . This excludes some, but not all, foreign income.
  2. Retirement income received as a regular pension or annuity during retirement is included, while cash withdrawals from private pension plans, including Registered Retirement Savings Plans (RRSPs), prior to retirement, are excluded.
  3. Realized capital gains from financial investments are excluded.
  4. In the Canadian System of National Accounts (CSNA) and the present income classification, taxes on capital gains are included in income taxes, as are taxes on RRSP withdrawals. Both capital gains (the taxable portion thereof) and RRSP withdrawals figure in the calculation of taxes, but are not part of total income in the CSNA or in SLID's Classification of income.
  5. SLID's classification of income includes all refundable tax credits and benefits, including those that are not considered for income tax purposes, such as child tax benefits, the Goods and Services Tax Credit/Harmonized Sales Tax Credit, and other provincial or territorial tax credits. There are other smaller differences between SLID's total income and total income defined for tax purposes (see Other income and Other government transfers).
  6. Contributions to Employment Insurance and the Canada and Quebec Pension Plans, both federal programs, are not included in income taxes, nor are they deducted from income to arrive at after-tax income. However, the CSNA recently revised its definition of taxes on production to include these payroll taxes, in accordance with international recommendations on national accounting.

Market income

Market income is the sum of earnings (from employment and net self-employment), net investment income, (private) retirement income, and the items under “Other income”. It is equivalent to total income minus government transfers. It is also called income before taxes and transfers.


This includes earnings from both paid employment (wages and salaries) and self-employment.

Wages, salaries and commissions

These are gross earnings from all jobs held as an employee, before payroll deductions such as income taxes, employment insurance contributions or pension plan contributions, etc. Wages and salaries include the earnings of owners of incorporated businesses, although some amounts may instead be reported as investment income. Commission income received by salespersons as well as occasional earnings for baby-sitting, for delivering papers, for cleaning, etc. are included. Overtime pay is included.

Military personnel living in barracks are not part of the target population in SLID.

Self-employment income

This is net self-employment income after deduction of expenses. Negative amounts (losses) are accepted. It includes income received from self-employment, in partnership in an unincorporated business, or in independent professional practice. Income from roomers and boarders (excluding that received from relatives) is included. Note that because of the various inclusions, receipt of self-employment income does not necessarily mean the person held a job.

Self-employment income is subdivided into farm self-employment income and non-farm self-employment income. Farm self-employment income is reported by individuals who operate their own or a rented farm, either on own account or in partnership. Included are money receipts from the sale of farm products as well as related supplementary and assistance payments from governments. Income in kind is excluded.

Investment income

This includes interest received on bonds, deposits and savings certificates from Canadian or foreign sources, dividends received from Canadian and foreign corporate stocks, cash dividends received from insurance policies, net rental income from real estate and farms, interest received on loans and mortgages, regular income from an estate or trust fund and other investment income. Realized capital gains from the sale of assets are excluded. Negative amounts are accepted.

Retirement pensions

This is retirement pensions from all private sources, primarily employer pension plans. Amounts may be received in various forms such as annuities, superannuation or RRIFs (Registered Retirement Income Funds). Withdrawals from RRSPs (Registered Retirement Savings Plans) are not included in retirement pensions. However, they are taken into account as necessary for the estimation of certain government transfers and taxes. For data obtained from administrative records, income withdrawn from RRSPs before the age of 65 is treated as RRSP withdrawals, and income withdrawn from RRSPs at ages 65 or older is treated as retirement pensions. Retirement pensions may also be called pension income.

Other income

This sub-total includes all items of market income not included elsewhere. Among them are support payments received (also called alimony and child support). The coverage of other items depends at least to some extent on the method of income data collection, whether from administrative income tax records or by interview. Those items which are included on line 130 of the T1 tax return are well covered. These include, but are not restricted to, retirement allowances (severance pay/termination benefits), scholarships, lump-sum payments from pensions and deferred profit-sharing plans received when leaving a plan, the taxable amount of death benefits other than those from CPP or QPP, and supplementary unemployment benefits not included in wages and salaries.

Government transfers

Government transfers include all direct payments from federal, provincial and municipal governments to individuals or families. See the table Classification of income for a list of the government transfers identified separately in the latest reference year. It should be noted that many features of the tax system also carry out social policy functions but are not government transfers per se. The tax system uses deductions and non-refundable tax credits, for example, to reduce the amount of tax payable, without providing a direct income.

Child tax benefits

Federal child tax benefits began in 1993 and replaced both the federal Family Allowances and the Child Tax Credit. Several provincial and territorial programs have since been introduced, in addition to Quebec family allowances which already existed before 1993. To be eligible, a person must have the primary responsibility for the care and upbringing of one or more children under the age of 18. Most benefits are calculated by setting a maximum amount per family or per child and reducing that total by a certain percentage of the family's net income.

The programs which were explicitly accounted for in the data were the federal basic benefit and National Child Benefit Supplement (together called the Canada Child Tax Benefit, began in 1998), the Newfoundland and Labrador Child Benefit (began in 1999), the Nova Scotia Child Benefit (began in 1998), the New Brunswick Child Tax Benefit (began in 1997), the New Brunswick Working Income Supplement (began in 1997), the Quebec Allocation familiale (began in 1981), the Quebec Allocation à la naissance (began in 1998), the Ontario Child Care Supplement for Working Families (began in 1998), the Saskatchewan Child Benefit (began in 1998), the Alberta Family Employment Tax Credit (began in 1997), the BC Family Bonus (began in 1996), and the BC Earned Income Benefit (began in 1998). Benefits from these programs are non-taxable. Effective July 2007, the Canada Child Tax Benefit under 7 supplement within Canada Child Tax Benefit program will cease to exist and will no longer be paid. This supplement will also only be paid for children who are six years of age between July 2006 and June 2007. In addition, as of July 2006, the Saskatchewan Child Benefit was fully phased out and replaced by the full federal increases to the National Child Benefit Supplement.

In July 2006 a new Child Benefit program was introduced at the federal level. The Universal Child Care Benefit for children under 6 was introduced in the second half of 2006. Unlike the other child tax benefits, this benefit is taxable and is available to all families with children under 6 year of age regardless of their income. Famillies can receive $100 per month for each eligible child. This new benefit has been added to the Child Tax Benefits data.

Old Age Security (OAS)

The Old Age Security (OAS) pension is targeted to Canadian residents aged 65 and over. OAS recipients who have little or no other income may also receive the federal Guaranteed Income Supplement (GIS); and their spouses, if aged 60 to 64 (and not yet eligible for OAS and GIS themselves), receive the Spouse's Allowance.

Canada Pension Plan (CPP) and Quebec Pension Plan (QPP)

The CPP and QPP are compulsory contributory social insurance programs that provide a source of retirement income and protect workers and their families against loss of income due to disability or death

Employment Insurance

Employment Insurance is a federal program which includes the following types of benefits: regular unemployment benefits, sickness benefits, maternity and parental benefits, and benefits for persons taking approved training courses or participating in job creation or job-sharing projects. To qualify, the claimant must have ceased receiving employment income and have worked a minimum number of weeks or hours of insurable employment over the preceding period.

Social assistance

Workers' compensation is provided to protect all full-time and part-time employees from loss of salary due to work accidents or occupational diseases and help them to pay their medical expenses and other costs.

Workers’ compensation

Workers’ compensation is provided to protect all full-time and part-time employees from loss of salary due to work accidents or occupational diseases and help them to pay their medical expenses and other costs.

Goods and Services Tax/Harmonized Sales Tax credit

Introduced in conjunction with the Goods and Services Tax in 1990, it is intended to offset the GST/HST for lower income families and individuals. In Nova Scotia , New Brunswick, and Newfoundland and Labrador, it is called the Harmonized Sales Tax Credit because the administration of the tax is combined with the provincial sales tax. Included are the federal Relief for Heating Expenses paid in 2001 and the Federal Energy Cost Benefit paid in 2006.

Provincial/territorial tax credits

Included here are refundable tax credits other than those for children (included with child tax benefits). Some are designed to help low income individuals and families to pay property taxes, education taxes, rent and living expenses, and so on. Provincial sales tax credits such as the Quebec Sales Tax Credit and the Newfoundland and Labrador HST Credit are included. The Quebec abatement, although refundable, is not included here but rather with income taxes. Included is the Alberta Resource Rebate paid in 2006.

Other government transfers

This includes government transfers not included elsewhere, mainly any other non-taxable transfers. In SLID, these amounts are included with “Other income”. This is partly because the coverage of any transfers not taxed through the income tax system is low. There may be under-reporting of these transfers, which are mainly collected using an open question in SLID interviews. Nonetheless, the types of transfers which have come under this heading include: training program payments not reported elsewhere, the Veteran's pension, pensions to the blind and the disabled, regular payments from provincial automobile insurance plans (excluding lump-sum payments), and benefits for fishing industry employees.

Total income

Total income refers to income from all sources including government transfers before deduction of federal and provincial income taxes. It may also be called income before tax (but after transfers). All sources of income are identified as belonging to either market income or government transfers.

Income tax

Income tax is the sum of federal and provincial income taxes payable (accrued) for the taxation year. Income taxes include taxes on income, capital gains and RRSP withdrawals, after taking into account exemptions, deductions, non-refundable tax credits, and the refundable Quebec abatement. The data are either taken directly from administrative records or estimated based on aggregate data from administrative records, as this yields better results than the amounts reported by interview.

After-tax income

After-tax income is total income, which includes government transfers, less income tax. It may also be called income after tax. Some of the government transfers listed above are not taxable and are allocated to only one family member, depending on age, income, or gender. These include social assistance, child tax benefits, and seniors benefit. When looking at person-level data, users should be aware that these transfers are not equally divided amongst family members.



In general terms a dwelling is defined as a set of living quarters. A private dwelling is a separate set of living quarters with a private access. A collective dwelling may be institutional, communal or commercial in nature. Of the different types of collective dwellings, SLID covers only communal dwellings.


A household is defined as a person or group of persons residing in a dwelling. SLID defines households and families according to the living arrangements on December 31 of the reference year. Residents of Canada are also defined at those points in time.


Adults are defined in SLID as individuals 16 or older as of December 31st of the reference year.

Family income

Family income is the sum of income of each adult in the family as defined above. Household income is likewise the sum of incomes of all adults in the household. Family and household membership is defined at a particular point in time, while income is based on the entire calendar year. The family members or “composition” may have changed during the reference year, but no adjustment is made to family income to reflect this change.

Economic family type

“Economic family type” refers to either economic families or unattached individuals. An economic family is defined as a group of two or more persons who live in the same dwelling and are related to each other by blood, marriage, common law or adoption. An unattached individual is a person living either alone or with others to whom he or she is unrelated, such as roommates or a lodger. See Family classification for more detailed groupings.

Census family type

“Census family type” refers to either census families or persons not in census families. The term “census family” corresponds to what is commonly referred to as a “nuclear family” or “immediate family”. In general, it consists of a married couple or common-law couple with or without children, or a lone-parent with a child or children. Furthermore, each child does not have his or her own spouse or child living in the household. A “child” of a parent in a census family must be under the age of 25 and there must be a parent-child relationship (guardian relationships such as aunt or uncle are not sufficient).

Persons “not in census families” are those living alone, living with unrelated individuals, or living with relatives but not in a husband-wife or parent-unmarried child (including guardianship-child) relationship.

By definition, all persons who are members of a census family are also members of the same economic family.

See Family classification for more detailed groupings.

Major income earner

This characteristic is important for the derivation of detailed family types (see Family classification). For each household and family, the major income earner is the person with the highest income before tax, with one exception: a child living in the same census family as his/her parent(s) cannot be identified as the major income earner of the census family (this does not apply to economic families).

For persons with negative total income before tax, the absolute value of their income is used, to reflect the fact that negative incomes generally arise from losses “earned” in the market-place which are not meant to be sustained. In the rare situations where two persons have exactly the same income, the older person is the major income earner.

Family classification

SLID uses the major income earner to classify families.

Table B. Classification of family types

Economic families (or Census families), 2 persons or more
   Elderly families
      Married couples
      Other elderly families
   Non-elderly families
      Married couples without children
         No earner
         One earner
         Two earners
      Two-parent families with children
         No earner
         One earner
         Two earners
         Three or more earners
      Married couples with other relatives
      Lone-parent families
         Male lone-parent families
         Female lone-parent families
            No earner
            One earner
            Two or more earners
      Other non-elderly families
Unattached individuals (or Persons not in census families)
   Elderly male
   Elderly female
   Non-elderly male
   Non-elderly female

Elderly family

The major income earner is aged 65 or over.

Non-elderly family

The major income earner is under age 65.

Married couples/spouses

Married couples, including legally married, common-law and same-sex relationships, where one of the spouses is the major income earner.


A child or children (by birth, adopted, step, or foster) of the major income earner under age 18. Other relatives may also be in the family.

Lone-parent family

Includes at least one child as defined above. Families where the parent is 65 years or older are excluded.


A person related to the major income earner by blood, marriage, adoption or common-law.

Other relative

A person in the economic family who is not the major income earner nor his/her spouse or child under age 18.

Analytical concepts

Current dollars versus constant dollars

“Current dollars” are what we usually mean when we refer to a currency in the current time period. The term “constant dollars” refers to dollars of several years expressed in terms of their value (“purchasing power”) in a single year, called the base year. This type of adjustment is done to eliminate the impact of widespread price changes.

Current dollars are converted to constant dollars using an index of price movements. The most widely used index for household or family incomes, provided that no specific uses of the income are identified, is the Consumer Price Index (CPI), which reflects average spending patterns by consumers in Canada.

The following table shows the annual rates of the Consumer Price Index. To convert current dollars of any year to constant dollars, divide them by the index of that year and multiply them by the index of the base year you choose (remember that the numerator contains the index value of the year you want to move to). For example, using this index, $10,000 in 1997 would be 10,553 in 2000 constant dollars ($10,000 × 95.4/ 90.4 = $10,553.

Consumer price index, annual rates, 2002=100: Part 1
Year 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989
Annual rates 31.1 33.6 36.6 40.0 44.0 49.5 54.9 58.1 60.6 63.0 65.6 68.5 71.2 74.8

Consumer price index, annual rates, 2002=100: Part 2
  1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
  78.4 82.8 84.0 85.6 85.7 87.6 88.9 90.4 91.3 92.9 95.4 97.8 100.0 102.8 104.7 107.0 109.1 111.5

Earner/Income recipient

An earner is a person who received income from employment (wages and salaries) and/or self-employment during the reference year. The term income recipient is generally used for someone who received a positive (or negative) amount of income of any given type.

Mean income (average income)

The mean or average income is computed as the total or "aggregate" income divided by the number of units in the population. It offers a convenient way of tracking aggregate income while adjusting for changes in the size of the population.

There are two drawbacks to using average income for analysis. First, since everyone's income is counted, the mean is sensitive to extreme values: unusually high income values will have a large impact on the estimate of the mean income, while unusually low ones, i.e. highly negative values, will drive it down. (See also Recipients versus non-recipients and Negative values.) Secondly, it does not give any insight into the allocation of income across members of the population. To examine allocation of income, measures such as Percentiles or Gini coefficients may be used.

Recipients versus non-recipients (zero values)

For every table showing average incomes, it must be kept in mind whether non-recipients of that type of income are included or excluded from the population. In the case of total family income, the difference from including or excluding units with zero income is small since there are very few such families. However, if one is interested in the average amount of individual self-employment earnings, the value will be quite different if one includes those persons who were not self-employed.

Negative values

Negative income amounts can arise in two ways: net losses from self-employment (expenses exceed receipts), or net investment losses (losses exceed gains). As with zero values, negative values can have a large impact on results. In general, the published income tables treat negative values no differently than positive values, but there are a few exceptions: for the calculation of both Gini coefficients and the low income gap, negative values are converted to zeroes; and in the derivation of the major income earner of a family or household, the absolute value is used instead (see Major income earner).


Income percentiles, like quintiles and deciles, are a convenient way of categorizing units of a given population from lowest income to highest income for the purposes of drawing conclusions about the relative situation of people at either end or in the middle of the scale. Rather than using fixed income ranges, as in a typical distribution of income, it is the fraction of each population group that is fixed.

First, all the units of the population, whether individuals or families, are ranked from lowest to highest by the value of their income of a specified type, such as after-tax income. Then the ranked population is divided into five groups of equal numbers of units, called quintiles. Analogously, dividing the population ranked by income into ten groups, each comprising the same number of units, produces deciles.

Most analyses should be carried out on the people of different percentiles within one population distribution. Care should be taken in making comparisons between percentiles that resulted from different distributions, because any difference in either the population or the income concept used to rank units could have a large effect. It is probable that both the income ranges represented by each percentile and the people making up each percentile will be different.

Median income

The median income is the value for which half of the units in the population have lower incomes and half has higher incomes. To derive the median value of income, units are ranked from lowest to highest according to their income and then separated into two equal-sized groups. The value that separates these groups is the median income (50th percentile).

Because the median corresponds exactly to the midpoint of the income distribution, it is not, contrary to the mean, affected by extreme income values. This is a useful feature of the median, as it allows one to abstract from unusually high values held by relatively few people.

Since income distributions are typically skewed to the left – that is, concentrated at the low end of the income scale – median income is usually lower than mean income.

Implicit rate of government transfers or taxes

The implicit rate of government transfers or taxes is a way of showing the relative importance of transfers received or taxes paid for different families or individuals. This concept is similar, but not identical, to the effective rate of taxation. For a given individual or family, the effective rate is the amount of transfers/taxes expressed as a percentage of their market income, total income, or after-tax income. The implicit rate for a given population is the average (or aggregate) amount of transfers/taxes expressed as a percentage of their average (or aggregate) income.

Family size adjustment (equivalence scale)

When comparing family incomes to study such things as income adequacy or socio-economic status, one often wants to take family size and composition into account—the income amount itself is not sufficient to understand a family’s financial well-being without knowing how many people are sharing it. In general, two approaches have been used to help with the analysis of family income. One is to produce data by detailed family types, so that within a given family type, differences in family size are not significant. In fact, many income measures have been crossed by detailed family types in the published tables. The other way to take into account family size and composition is to adjust the income amount by an adjustment factor.

The simplest method is to use per capita income, that is, to divide the family income by the family size. A limitation of per capita income, however, is that it tends to underestimate economic well-being for larger families as compared to smaller families. This is due to the fact that it assumes equal living costs for each member of the family, but some costs, primarily those related to shelter, decrease proportionately with family size (they may also be lower for children than for adults). For example, the shelter costs for an adult married couple with no children are arguably not much more than those for an adult living alone.

To take such economies of scale into account, it is common to use an “equivalence scale” to adjust family incomes. Instead of implicitly assuming equal costs for additional family members as the per capita approach does, the equivalence scale is a set of decreasing factors assigned to the first member, the second member, and so on. The adjusted income amount for the family is obtained by dividing the family’s income by the sum of the factors assigned to each member.

There is no single equivalence scale in use in Canada. The one used in the published income tables and in concepts such as the low income measure (LIM) has, however, achieved a high degree of acceptance. In this equivalence scale, the factors are as follows:

  1. the oldest person in the family receives a factor of 1.0;
  2. the second oldest person in the family receives a factor of 0.4;
  3. all other family members aged 16 and over each receive a factor of 0.4; and
  4. all other family members under age 16 receive a factor of 0.3.

Other equivalence scales in use include:

OECD scale (Organization for Economic Cooperation and Development)

  1. the oldest person in the family receives a factor of 1.0;
  2. all other family members aged 15 and over each receive a factor of 0.5;
  3. all other family members under age 15 receive a factor of 0.3.

Square root of family size (this is a close approximation to the LIM equivalence scale, particularly for families with 6 members or less).

Gini coefficient

The Gini coefficient measures the degree of inequality in the income distribution. Gini coefficients are published for market income, total income and after-tax income, and are used to compare the uniformity of income allocation between different income concepts, across different populations or within the same population over time.

Values of the Gini coefficient can range from 0 to 1. A value of zero indicates income is equally divided among the population with all units receiving exactly the same amount of income. At the opposite extreme, a Gini coefficient of 1 denotes a perfectly unequal distribution where one unit possesses all of the income in the economy. A decrease in the value of the Gini coefficient can, by and large, be interpreted as reflecting a decrease in inequality, and vice versa. As a rough rule of thumb when using data from SLID at the Canada level: an absolute difference of 0.01 or less between two Gini coefficients is considered statistically significant.

Low income definitions

Low Income Cut-offs (LICOs)?

Low income cut-offs (LICOs) are established using data from the Survey of Household Spending. They convey the income level at which a family may be in straitened circumstances because it has to spend a greater proportion of its income on necessities than the average family of similar size. Specifically, the threshold is defined as the income below which a family is likely to spend 20 percentage points more of its income on food, shelter and clothing than the average family. There are separate cut-offs for seven sizes of family - from unattached individuals to families of seven or more persons - and for five community sizes - from rural areas to urban areas with a population of more than 500,000.

The first step in the production of a set of low income cut-offs is to calculate the average proportion of income that a family spends on food, shelter and clothing. The 1992 Family Expenditure Survey found that, on average, families spend 43% of their after-tax income (and 35% of their total “before-tax” income) on these necessities. Then, 20 percentage points are added, giving 63% of after-tax income. This is done on the grounds that a family spending more than this proportion of its income on necessities is significantly worse off than the average family. The final step is to look at the distribution of income by expenditure and determine, using a regression line, the level of income at which a family tends to spend 20 percentage points more than the average on the necessities of food, shelter and clothing.

Rebasing and indexing the LICOs

Over time, Canadian families have spent a smaller percentage of their income on the necessities of food, shelter and clothing. This relationship between families’ income and spending is associated with a specific point in time, i.e. the year of the expenditure survey used to derive the cut-offs. That particular year is referred to as the base year for the set of cut-offs.

After having calculated LICOs in the base year, cut-offs for other years are obtained by applying the corresponding Consumer Price Index (CPI) inflation rate to the cut-offs from the base year – the process of indexing the LICOs.

Low income rate and low income gap

To determine whether a person (or family) is in low income, the appropriate LICO (given the family size and community size) is compared to the income of the person’s economic family. If the economic family income is below the cut-off, all individuals in that family are considered to be in low income. In other words, “persons in low income” should be interpreted as persons who are part of low income families, including persons living alone whose income is below the cut-off. Similarly, “children in low income” means children who are living in low income families. Overall, the low income rate for persons can then be calculated as the number of persons in low income divided by the total population. The same can be done for families and various sub-groups of the population; for example, low income rates by age, sex, province or family types.

The low income gap is the amount that the family income falls short of the relevant low income cut-off. For example, a family with an income of $15,000 and a low income cut-off of $20,000 would have a low income gap of $5,000. In percentage terms this gap would be 25%. The average gap for a given population, whether expressed in dollar or percentage terms, is the average of these values as calculated for each unit. For the calculation of this low income gap, negative incomes are treated as zero.

Use of after-tax and before-tax LICOs

Statistics Canada produces two sets of low income cut-offs and their corresponding rates—those based on total income (i.e., income including government transfers, before the deduction of income taxes) and those based on after-tax income. Derivation of before-tax versus after-tax low income cut-offs are each done independently. There is no simple relationship, such as the average amount of taxes payable, to distinguish the two types of cut-offs.

Although both sets of low income cut-offs continue to be available, Statistics Canada prefers the use of the after-tax LICOs. The before-tax rates only partly reflect the entire redistributive impact of Canada's tax/transfer system. It is therefore logical that the low income rate is higher on a before-tax basis than on an after-tax basis.

Low Income Measures (LIM)

For the purpose of making international comparisons, the LIM is the most commonly used low income measure. Unlike the low income cut-offs, which are derived from an expenditure survey and then compared to an income survey, the LIMs are both derived and applied using a single income survey. The LIM is a fixed percentage (50%) of median adjusted family income, where “adjusted” indicates that family needs are taken into account. See the paragraph Family size adjustment (equivalence scale) for more information.

The LIMs are calculated three times; using market income, before-tax income, and after-tax income. They do not require updating using an inflation index because they are calculated using an annual survey of family income.

Market Basket Measure (MBM)

Social Development Canada (formerly Human Resources Development Canada) has collaborated with the provincial and territorial ministries of social services to develop the Market Basket Measure (MBM) of low income. The approach is to cost out a basket of necessary goods and services including food, shelter, clothing and transportation, and a multiplier to cover other essentials. The results define thresholds that represent levels of income needed to cover the cost of the basket.

The same argument that can be made for using after-tax low income rates can be made for using after-tax income to compare to the MBM thresholds. That is, a measure of well-being should take into account what is actually available to spend. The income concept that is used for comparisons with the MBM thresholds goes even further than after-tax income by also subtracting from total income other non-discretionary expenses such as support payments, work-related child care costs and employee contributions to pension plans and to Employment Insurance.

Statistics Canada collects the data necessary to produce rates based on Social Development Canada's Market Basket Measure.

Comparisons between data up to 1995 and data since 1996

Starting with reference year 1996, the Survey of Labour and Income Dynamics (SLID) replaced the annual Survey of Consumer Finances (SCF) as the official source of family income in Canada. This means that estimates of Income in Canada and Income Trends in Canada up to and including 1995 are drawn from SCF (last conducted for reference year 1997), and estimates for 1996 and onwards are drawn from the SLID (which was introduced in 1993).

The Survey of Labour and Income Dynamics (SLID) database expanded with the edition of the reference year 2006 to include micro-data from the cross-sectional Survey of Consumer finance (SCF) from 1976 to 1997 inclusive.

Some of the SCF information is now available through the SLID entities database. This will permit users to access a longer period of historical data from a unique database. Users still have the choice of using the SCF historical files, if it better suits their needs.

Data from SCF were adapted as much as possible to SLID concepts variables. Most of the income variables as well as others, such as demographic information, were converted in this edition. Other SCF data will be transformed and added to the SLID database in the future.

When SLID was originally created, every attempt was made to minimize and monitor these differences between the two income surveys, while nonetheless making some important improvements in survey practices. Before replacing the SCF series with SLID, a study was done on the overlapping reference years, particularly the years 1996 and 1997. The results of the study are contained in a research paper, A Comparison of the Results of the Survey of Labour and Income Dynamics (SLID) and the Survey of Consumer Finances (SCF) 1993-1997: Update (75F0002MIE1999007). All ISD research papers are available free of charge.

In short, it was found that the two surveys told essentially the same story for all of the main income concepts. Nonetheless, analysis of some data trends reveals a “break” as a result of the change in survey. Such a break would represent a change in the data which is attributable to the two surveys having different samples and different methods rather than a true change in the characteristics of the population. Users are advised to take note of the following survey differences which are known to exist and to have had an impact on the data trends at some detailed levels.

Better coverage of small income amounts

One notable improvement that occurred as a result of new survey techniques introduced in SLID is better coverage of small income amounts received by respondents. It has been observed in surveys conducted by questionnaire that respondents tend to forget or neglect small income amounts they received in the past. This means an underestimation of income in general. The use of administrative income tax files in SLID for approximately 80% of sample respondents means that there is considerably better coverage of non-zero amounts of income, and in general, a greater number of recipients of most kinds of income.

Detailed family types

Following the SCF conversion into SLID concepts, the standard published “detailed family types” for economic families are now derived with reference to the “major income earner”. Nonetheless, differences between the two surveys persist.

The preference given to older members following the head of family concept was preserved during the conversion of SCF. The major income earner was determined from the couple comprised of the head of the family and his spouse.

Younger adults are much more likely to qualify as major income earners in SLID than they did in SCF. As a result, we see significant decreases in the number of “other elderly families” and “married couples with other relatives”, and a large increase in the number of “other non-elderly families”. (See the section “Family definitions” for the precise definitions of family types.)

Impact of the conversion on the published estimates in Income Trends in Canada and Income in Canada

The historical series now extends to years 1976 to 1979, as well as the years included in previous versions, 1980 to the last reference year of SLID.

The change in family concepts resulting from the transition from SCF to SLID has not affected data produced for the entire population of families consisting of two or more persons. However, for some of the detailed family types, the estimated number of families underwent a one-time increase or decrease.

Shift from elderly families to non-elderly families

The previous definition always gave husbands the status of head of family rather than wives, with the major income earner concept there is no distinction by sex, and it is possible for the wife to qualify. Since it still holds that wives are on average younger than husbands at least for older couples, this has caused a shift from elderly families to non-elderly families.

Shift from other families (other than elderly families) to lone-parent families

In the original SCF, in order for a family to be classified as lone-parent, not only the family head had to be without a spouse and have at least one child below 18 years old, but no other family member could be present and all children had to be singles. By other family member we mean a parent, a grand-child or a child’s spouse of the family head. Following the conversion, these families were classified as lone-parent families and thus explain that some of the “other non-elderly families” shifted to lone-parent families.

Shift from two-parent families with children to married couples with other relatives

Children of guardians are not considered “children” in the classification of the SLID economic family type variable. In other words, older relatives are not treated as de facto parents when there is no direct parent identified. This transformation explains the shift from two-parent families with children to married couples with other relatives.

Less full year full time workers

In SLID, working full year means working 52 weeks compared to 50 weeks for SCF. For this reason, after the conversion there were less full year full time workers and their average earnings increased.

Job characteristics

Job characteristics in SCF were defined based on the job involving the greatest number of usual hours worked during the reference week of the Labour Force Survey (LFS). If the respondent had not worked during the reference week , the job characteristics were defined by the most recent job within the last year (for the 1996 and 1997 reference years) or the last five years (for the 1976 to 1995 reference years). With the conversion of SCF, job characteristics were kept only if the respondent had worked during the reference year. This change explains that some respondents no longer have job characteristics information, such as occupation and industry, if they had not worked.

Goods and Services Tax (GST) and Harmonized Sales Tax (HST) Credits from 1987 to 1989

With the conversion of SCF, amounts for the Federal Sales Tax Credits from 1987 to 1990 were moved from provincial and territorial tax credits to Goods and Services Tax (GST) and Harmonized Sales Tax (HST) Credits. This explains that a value is found for GST and HST between 1987 and 1989.

Impact of the conversion on the micro-data base and on the extraction tool SLIDRET

Some of the SCF information is now available through the SLID entities database. This will permit users to access a longer period of historical data from a unique database. Users still have the choice of using the SCF historical files, if it better suits their needs. Since SLID data starts with reference year 1993, there are five years of overlap between the two surveys where users have to specify which survey they intend to be using when accessing micro-data through the extraction tool – SLIDRET (see SLIDRET User’s manual – cross-sectional section).

For a complete list of the variables available using SLID concepts from SCF, see Survey of Labour and Income Dynamics (SLID) - A Survey Overview section Notes and Definitions – Comparisons between data up to 1995 and data since 1996.

Comparisons with previous editions

Data from different editions are not directly comparable. Every edition has some modifications done on data. The modification which is applied every year is the expression of all dollar amounts in constant dollars of the latest reference year. (See “Current dollars versus constant dollars”.)

Periodically, the weights are updated to reflect the availability of new population benchmarks provided by a new census. The most recent multi-year weight revision for the Survey of Labour and Income Dynamics and the Survey of Consumer Finance occurred with the release of data for 2003, when the population projections based on the 2001 Census of Population were incorporated.

The improvements to survey weights during the 2000 and 2003 historical revisions were part of a comprehensive project at Statistics Canada regarding the weighting strategies in the main annual surveys on income, expenditures, and wealth. Weights are typically adjusted using population benchmarks by province, age and sex. Since the 2000 weight revision, the weights in SLID also respect population benchmarks by household size and economic family size.

Since the 2003 revision, the weights from 1990 to the current period include adjustments based on the annual T4 file from Canada Revenue Agency (CRA), which is a compilation of employer remittances for the purposes of payroll taxes. For more, please refer to the free research paper, Survey of Labour and Income Dynamics: 2003 historical revision, Statistics Canada.