Census learning centre
Income sources and components of total income

Release date: July 13, 2022

Catalogue number: 982000032021010

Hello and welcome to the “Income sources and components of total income” video!

This video provides an understanding of the sources and composition of income. It identifies what is considered income and what sources are excluded from income. It introduces viewers to the components of total income which are, market income and government transfers. It also provides an insight into how other income concepts such as employment income and after-tax income are derived.


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Concept video: Income sources and components of total income - Transcription

(The Statistics Canada symbol and "Canada" wordmark appear on screen with the title: "Concept video: Income sources and components of total income".)

Welcome to the “Income sources and components of total income” video. In this video, we will look at:

  • What is considered income and
  • how various income concepts are constructed.

Let’s start by looking at what we are trying to capture when we measure “total income.”

Total income refers to receipts from all regular and recurring, taxable and non-taxable sources, before income taxes and deductions, during a specified reference period. More details on reference periods can be found in the “Introduction to income data” video available in the census learning centre link above.

The term “total” may imply that it includes all types of income—which is mostly true—but there are a few exceptions. Generally, to determine whether something should be included or excluded, ask yourself if the receipt is expected and if it is recurrent.

Examples of regular and recurring receipts include:

  • Employment income from wages, salaries, tips, commissions and self-employment activities
  • Income from investment and pension sources, such as dividends and interests, payments from annuities, and retirement income funds
  • Income from government sources such as child benefits, employment insurance benefits, Old Age Security benefits, and Canada Pension Plan and Quebec Pension Plan benefits.

Some examples of sources excluded from total income include:

  • Capital gains or losses
  • Social benefits to be repaid
  • Lottery prizes and gambling gains and losses
  • Lump-sum settlements of insurance policies.

Now that we have an idea of what total income consists, let’s see how its components can be classified for more specific analyses.

Components of total income can be classified in two broad classes of income:

  • Market income and
  • Government transfers.

(A figure presents total income as having two main components: (1) market income and (2) government transfers.)

Market income is composed of employment income, investment income, private retirement income and market income not included elsewhere.

(A figure presents market income has having four components: (1) employment income, which is wages, salaries and commissions plus net self-employment income, (2) investment income, (3) private retirement income, and (4) market income not included elsewhere.)

It is also referred to as income before transfers and taxes.

Employment income is what often comes to mind when income is mentioned.

The employment income or earnings variable is derived by summing wages, salaries and commissions; and net self-employment income.

People with employment income are called “earners” or “employment income recipients.”

The other class of income is government transfers.

Government transfers refer to income from all transfer payments received from federal, provincial, territorial or municipal governments.

These transfers include:

  • Old Age Security pension and Guaranteed Income Supplement
  • Retirement, disability and survivor benefits from the Canada Pension Plan and Quebec Pension Plan
  • Employment insurance benefits
  • Child benefits from federal and provincial programs
  • Other government transfers, such as social assistance benefits, workers’ compensation benefits, the Canada Workers Benefit, and the GST/HST credits.

(A figure presents government transfer payments has having five components: (1) Old Age Security pension (OAS) and Guaranteed Income Supplement (GIS), (2) Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) benefits, (3) Employment Insurance (EI) benefits, (4) child benefits and (5) other government transfers.)

The year 2020 saw the introduction and enhancement of several government income support programs in response to the economic impact of the COVID-19 pandemic.

As part of the government transfers, COVID-19 government income support and benefits such as:

  • The Canada Emergency Response Benefit (CERB)
  • The Canada Recovery Benefit (CRB)

are available to study the impact of the pandemic on income.

For more information on COVID-19 benefits, please refer to COVID-19—Emergency and recovery benefits.

To summarize, the two main classes of income are market income and government transfers, and their sum is equal to total income.

Another commonly used income concept is after-tax income.

(A figure shows that total income can also be presented as the sum of after-tax income and income taxes. Income taxes comprises net federal income tax and provincial and territorial income taxes.)

It is derived by deducting federal, provincial and territorial income taxes from total income.

Hence, after-tax income is also referred to as total income less income taxes.

You now have an overview of the basic income concepts and their components.

We encourage you to look at the Census Dictionary to get the full definition and details of each of the income components.

(The words "Thank you for watching the "Income sources and components of total income" video" appear on screen.)

This concludes the “Income sources and components of total income” video.

(The census logo appears with a link, which is also available to view here: Census of Population.)

For more detailed information regarding concepts, variables, methodology, historical comparability and other elements, please refer to Statistics Canada's census pages.

(The "Canada" wordmark appears. ISBN: 978-0-660-43287-8)

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