Low-income status of private household
Status: This standard was approved as a departmental standard on March 21, 2016.
Low-income status refers to the income situation of the statistical unit in relation to a specific low-income line in a reference year. Statistical units with income that is below the low-income line are considered to be in low income.
Private household refers to a person or group of persons who occupy the same dwelling and do not have a usual place of residence elsewhere in Canada or abroad. The household universe is divided into two sub-universes on the basis of whether the household is occupying a collective dwelling or a private dwelling. The latter is a private household.
The prevalence of low income is the number or percentage of private households in low income.
Beyond the prevalence of low income, various low-income indicators can be derived and used to capture the depth of low income.
The low-income gap measures by how many dollars an income falls below a low-income line. The low-income gap ratio expresses the low-income gap as a proportion of the applicable low-income line.
Statistics such as average and median of the gap and gap ratio provide measures of depth of low income for the low-income population.
For those who are not in low income, the gap and gap ratio would have a value of zero. For those who are in low income with no or negative income, the gap is set to be the amount specified by the applicable low-income line. The gap ratio indicator would thus be equal to 1.
Low-income status for private households is typically measured using two low-income concepts. For more information on these concepts, refer to the Measurements section.
Conformity to relevant internationally recognized standards
There are no relevant internationally recognized standards.
- 'Low-income measure, after-tax (LIM-AT)' refers to a fixed percentage (50%) of median adjusted after-tax income of private households. The household after-tax income is adjusted by an equivalence scale to take economies of scale into account. This adjustment for different household sizes reflects the fact that a household's needs increase, but at a decreasing rate, as the number of members increases. March 21, 2016 to current
- 'Low-income measure, before-tax (LIM-BT)' refers to a fixed percentage (50%) of median adjusted total income of private households. The household total income is adjusted by an equivalence scale to take economies of scale into account. This adjustment for different household sizes reflects the fact that a household's needs increase, but at a decreasing rate, as the number of members increases. March 21, 2016 to current
- Classification of low-income status March 21, 2016 to current
Statistics Canada publishes several low-income lines with which low-income status can be computed. See "Low Income Lines: What they are and how they are created" and "Low Income in Canada - A Multi-line and Multi-index Perspective" from the Income Research Paper Series for detailed definitions and discussions of each line.
In 2018, the Government of Canada released "Opportunity for All - Canada's First Poverty Reduction Strategy". Based on the recommendation of this strategy, the government designated the Market Basket Measure of low income as Canada's official poverty line under the Poverty Reduction Act in 2019, and set poverty reduction targets for 2020 and 2030 that aligned with the United Nations Sustainable Development Goals to end poverty.
Both LIM-AT and LIM-BT are currently available for on-reserve geographies and in the territories. Statistics Canada defines income in the same way on and off reserve, which provides a common conceptual base upon which income comparisons can be made. However, income statistics explicitly exclude certain sources of income, such as the value of food produced for own consumption, and the value of subsidized housing. The importance of these exclusions can differ from region to region, and they may be more important to the on-reserve (and territorial) than the off-reserve populations. Likewise, although tax-exempt income earned on reserve is included in the income concept, and captured through the T1, T4 and other government-provided slips, Statistics Canada is unable to measure all tax-exempt income on reserve. Finally it should be noted that differences in cost of living across different geographies are not accounted for in the LIM-AT or the LIM-BT.
Relation to previous version
- Low-income status of private household March 21, 2016 to current
This is the current standard.