Census questions on income: New features and important changes

Changes in methodology and response modes introduced in the 2006 Census resulted in improved income data. However, these changes also mean that some comparisons with data from previous censuses are affected. This document describes some of the impacts. More information on this subject will be available in the publication entitled Income and Earnings Reference Guide, 2006 Census, scheduled for release later in 2008.

In 2006, for the first time Canadians had the option of granting permission to retrieve income information directly from their tax records. This reduced respondent burden and improved the quality of the income data. Those who did not select this option were required to provide the income information on the paper form or via the Internet. The tax option was very popular: 82.4% of the population aged 15 and over agreed to the method.

Also introduced in 2006 were changes to the form layout which increased automation of data capture, changes to the processing techniques and new methods for the imputation of incomplete forms.

The combined effect of these changes generally improved the quality of data and provided more precise information on income sources and dollars received. As well, these changes permitted Statistics Canada to release census income after tax and after-tax low income measures for the first time.

There is less rounding in the income distributions from the 2006 Census: be careful in comparing distribution with previous census

Due to the precision of income amounts in tax records, there is less rounding in the data. As well, the large proportion of tax-sourced data has reduced the tendency of counts to cluster around 'round' dollar amounts such as $10,000, $25,000 or $30,000.

Counts are now more evenly spread out, which may cause detailed income distributions to be more variable when compared to data from a previous year on a bracket-by-bracket basis. As a result, comparison of detailed 2006 Census income distributions with data from previous censuses should be done with caution.

Percentage of 'round' employment income amounts for persons 15 years or older with employment income

Individual earnings distributions and statistics are more complete in 2006; comparability of earnings with the previous censuses is better when analysis is restricted to earners who worked full year full time

The second large difference with the new response modes introduced in the 2006 Census is the increased reporting of small amounts. The tax system has built-in reminders and verification mechanisms that together manage to encourage reporting. Therefore, records from tax filers have higher propensity to include small amounts.

This increase in small amounts of income in the 2006 Census increases the number of persons with earnings and modifies the distribution and the calculated statistics. As a result, averages and medians from earlier censuses appear larger when looking at populations for whom small amounts are a frequent occurrence. This change is seen most often in earnings (such as wages and salaries and net income from self-employment) but may also be present in other sources such as employment insurance benefits and investment income.

Full-year, full-time earners are far less subject to this effect as most had accurately reported their earnings in previous censuses, which minimizes the reporting differences over time and by response mode (paper and Internet versus tax records). Statistics Canada recommends comparing the earnings of full-year, full-time workers when possible. For other groups, these comparisons must be done with caution.

High income earners should be defined as $100,000 or more or $150,000 or more

The census shows a larger count of very high income earners (employment income greater than $1,000,000) when compared to administrative data. While this has a very minimal impact on the medians, it increases slightly the average for the whole population. Income shares when distributed by quintiles or percentiles are also affected.

Considering a larger group of high income earners such as all those earning $100,000 or more or those earning $150,000 or more does not present the same issues and the counts at those levels should be considered reliable and comparable from census to census.

Other data sources exist to examine very high income (such as the Longitudinal Administrative Database).

Accuracy of specific income sources

Detailed information on the comparability of income estimates from census to alternate data sources will be available in the publication entitled Income and Earnings Reference Guide, 2006 Census, scheduled for release later in 2008.

One component of income for which growth from census to census is different from other sources is the variable 'other government income.' The estimates from the 2006 Census are in line with alternate data sources. Comparisons with 2001 should be used with caution as this income component was higher in the census in 2001 than in the other sources. This was the case particularly for families without children and persons not in families.

More information about consent to retrieve from tax records

A file provided by the Canada Revenue Agency (CRA) was searched for the records of all people who agreed to retrieve data from tax records. A statistical matching program was developed to compare identifiers present on both files. A sufficient quantity of matching information permitted income data corresponding to the income question in the tax record to be retrieved and added to the census database. At no time was the social insurance number used for any matching or attached to the Census data. The percentage of consenting records found in the database was 89.1%.

Permission rates appear to vary little across the provinces: from a low of 79.2% in British Columbia to 85.9% in Newfoundland and Labrador. The territories had substantially lower consent rates, ranging from 55.3% in the Yukon Territory to 10.8% in Nunavut.

Rate of granting permission to access tax records and matching rate for population 15 years of age and older, 2006 Census