Total income of person

Status: This standard was approved as a departmental standard on March 21, 2016.

Definition

Total income refers to the sum of certain incomes (in cash and, in some circumstances, in kind) of the statistical unit during a specified reference period. The components used to calculate total income vary between:

- Statistical units of social statistical programs such as persons, private households, census families and economic families;

- Statistical units of business statistical programs such as enterprises, companies, establishments and locations; and

- Statistical units of farm statistical programs such as farm operator and farm family.

Person refers to an individual and is the unit of analysis for most social statistics programmes.

Usage

When the mean, median or percentages are calculated for income, the units without income may be either included or excluded based on the analytic purpose. The units included in the calculation should be specified.

Derivation

In the context of persons, total income refers to receipts from certain sources, before income taxes and deductions, during a specified reference period. The monetary receipts included are those that tend to be of a regular and recurring nature. Receipts that are included as income are:

- employment income from wages, salaries, tips, commissions and net income from self-employment (for both unincorporated farm and non-farm activities)

- income from investment sources, such as dividends and interest on bonds, accounts, guaranteed investment certificates (GICs) and mutual funds

- income from employer and personal pension sources, such as private pensions and payments from annuities and registered retirement income funds (RRIFs)

- other regular cash income, such as child support payments received, spousal support payments (alimony) received and scholarships

- income from government sources, such as social assistance, child benefits, Employment Insurance benefits, Old Age Security benefits, Canada Pension Plan and Quebec Pension Plan benefits and disability income.

Receipts excluded from this income definition are:

- one-time receipts, such as lottery winnings, gambling winnings, cash inheritances, lump sum insurance settlements and tax-free savings account (TFSA) or registered retirement savings plan (RRSP) withdrawals

- capital gains because they are not by their nature regular and recurring. It is further assumed that they are more relevant to the concept of wealth than the concept of income

- employer's contributions to registered pension plans, Canada Pension Plan, Quebec Pension Plan and Employment Insurance

- voluntary inter-household transfers, imputed rent, goods and services produced for barter, and goods produced for own consumption.

Data on total income can be collected directly or derived from its components. The following shows the components of income.

Components of income

1 - Market income

1.1 - Employment income
1.1.1 - Wages, salaries and commissions
1.1.2 - Net self-employment income

1.2 - Investment income

1.3 - Private retirement income

1.4 - Market income not included elsewhere

2 - Government transfers

2.1 - Old Age Security pension (OAS) and Guaranteed Income Supplement (GIS)
2.1.1 - Old Age Security pension (OAS)
2.1.2 - Guaranteed Income Supplement (GIS) and spousal allowance

2.2 - Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) benefits
2.2.1 - Retirement benefits
2.2.2 - Disability benefits
2.2.3 - Survivor benefits

2.3 - Employment Insurance (EI) benefits
2.3.1 - Regular benefits
2.3.2 - Other benefits

2.4 - Child benefits
2.4.1 - Basic Canada Child Tax Benefit (CCTB)
2.4.2 - National Child Benefit Supplement (NCBS)
2.4.3 - Universal Child Care Benefit (UCCB)
2.4.4 - Provincial and territorial child benefits

2.5 - Social assistance benefits

2.6 - Workers' compensation benefits

2.7 - Working Income Tax Benefit (WITB)

2.8 - Goods and Services Tax (GST) credit and Harmonized Sales Tax (HST) credit

2.9 - Government transfers not included elsewhere

Conformity to relevant internationally recognized standards

This standard generally conforms to the recommendations for censuses contained in the United Nations' "Principles and Recommendations for Population and Housing Censuses, Revision 2", 2008. In its definition of income, the UN includes both income in cash and in kind. However, it observes that the collection of reliable data on income is extremely difficult and that "the inclusion of non-cash income further compounds the difficulties." Accordingly, it does not recommend that income information be collected on censuses, but acknowledges that, "depending on the national requirements, countries may nonetheless wish to obtain limited information on cash income." It is this cash income that is the focus of the current standard. The UN Principles goes on to specify that cash income should include: wages and salaries of employees, income of members from producers' cooperatives, income of employers and own-account workers operating business and unincorporated enterprises, interest, dividends, rent, social security benefits, pensions and life insurance annuity benefits as well as social security, pension fund contributions and direct taxes withheld from employees' salaries. All of these sources have been included in this standard. The UN does not recommend a particular classification for income but does note in Principles that, due to the assumed approximate nature of the responses (due to the complexity of the question), "it is usually appropriate to use broad income or earnings size-classes." Such broad classes have been used in this standard.

This standard also conforms in general approach to the definition of income proposed in the "Canberra Group Handbook on Household Income Statistics, Second edition", but is not entirely compatible with these recommendations in its specific inclusions. As recommended by the Canberra Group, income is defined: to include only receipts that are recurrent (excluding large and unexpected, typically one-time, receipts); to include components which contribute to current economic well-being but not those, such as employer contributions to pension funds, related to future well-being; and to exclude considerations, such as capital gains or losses, that relate to the maintenance of net worth. The Canberra recommendations present two lists of the components of income, one reflecting an ideal definition of income and the other an operational definition that could be more easily applied. All sources of income listed in this standard are included on both these lists. However, there are some items in the ideal list that are not in the standard. These are: 1) non-cash income, specifically, imputed income from self-employment (goods and services produced for barter, less cost of inputs, and goods produced for own consumption, less cost of inputs); 2) employers' social insurance contributions; 3) net value of owner-occupied housing services (imputed rent); and 4) voluntary transfers from other households. The ideal list includes "current transfers from other households" while this standard lists only two specific types of such transfers: child support payments and spousal support payments (alimony). The Canberra Group recognizes that countries may choose not to collect and publish all items in the conceptual list and, therefore, the standard for total income can differ between countries.

Finally, this standard can be compared to the definition of income presented in the "Conference of European Statisticians Recommendations for the 2010 Censuses of Population and Housing", 2006. All sources of income identified in that document are included in this standard; however, the document differs in defining income as including both income in cash and in kind.

Measurements

  • 'Amount of income' is expressed in Canadian dollars. The data presentation should specify any adjustments made, including whether the unit of measure is current dollars or constant dollars. Amount of income can range from the lowest negative number on the file to the maximum positive number on the file. October 15, 2012 to current

Classifications

Additional information

In order to reduce response burden, many social statistics programs at Statistics Canada now gather information on the income components from administrative records from Canada Revenue Agency (CRA) to derive total income. The total income concept presented in this definition does not correspond exactly to the total income on line 150 of the T1 Income Tax and Benefit Return used by CRA for tax purposes. Certain non-taxable income may not be captured by this latter measure. For example, most child benefits are not included because they are non-taxable, but they are included in total income in this definition. Capital gains, on the other hand, are treated as income for tax purposes, but are excluded from total income in this definition.

See:

Relation to previous version

  • Total income of person March 21, 2016 to current

    This is an update of 'Total income of person'. The definition of total income and the classification has been modified and a list of the components of income has been added.

  • Total income of person October 15, 2012 to March 20, 2016

    This standard was replaced by a new departmental standard on March 21, 2016.

Date modified: