The Evolution of Administrative Data Use for the Canadian Business Register (BR) IAOS Conference Gaétan St-Louis October 2008

October 14, 2008 Statistics Canada Statistique Canada 2 Summary  Introduction  The role of the Business Register (BR)  A look at the past  Creation of the first Central BR  Limitations of administrative data  Introduction of the Business Number (BN)  Today’s BR  Looking to the future  Conclusion

October 14, 2008 Statistics Canada Statistique Canada 3 Introduction In this presentation, I will focus upon the evolving use of administrative data in the development and maintenance of the Canadian Business Register and its many benefits to the statistical program.

October 14, 2008 Statistics Canada Statistique Canada 4 Role of the Business Register (BR)  Develop and maintain a register of all businesses in Canada (~2.3 million businesses)  Provide business survey programs with: Survey frames Browse, extraction and updating capabilities  Measure respondent burden  Disseminate business demographic data

October 14, 2008 Statistics Canada Statistique Canada 5 A look at the past Early 1970’s An attempt was made to create a central Business Register based upon administrative data in order to supply frames to all business surveys The result The BR relied primarily upon a single administrative source, the PD account files Very few business surveys used the BR Separate frame files for specific surveys or groups of surveys in various divisions The treatment of administrative data was decentralised and limited

October 14, 2008 Statistics Canada Statistique Canada 6 The creation of the first central BR In 1984, the business survey redesign project was launched for completion by 1988 One of the major objectives was to increase the use of administrative data There was an initial attempt to integrate and link different administrative data files into a Central Frame Data Base (CFDB) Not possible due to Canadian tax practices and the fact that these files did not carry common identifiers This forced Statistics Canada to maintain two alternate views of the business universe: the PD account view and the income tax view

October 14, 2008 Statistics Canada Statistique Canada 7 The creation of the first central BR (continued) Central Frame Data Base (CFDB) Integrated Portion (IP) Includes large businesses T1 Unincorporated Data Payroll Deduction (PD) Data T2 Incorporated Data IP – Units fully linked and classified NIP – Units not linked nor are all the units classified Threshold Out of scope for surveys Income tax alternate frame Payroll deduction alternate frame

October 14, 2008 Statistics Canada Statistique Canada 8 Limitations of administrative data The PD frame A good source of births due to monthly remittances All PD accounts were assigned an industrial classification code Used by Sub-Annual surveys However Employers could open multiple PD accounts for a single legal entity resulting in duplication on the frame Survey programs needed to manage duplication of PD’s in order to eliminate potential bias Required development of a ratio model to derive the Gross Business Income (GBI) and the number of employees

October 14, 2008 Statistics Canada Statistique Canada 9 Limitations of administrative data (continued) The income tax frame Contained a one-to-one correspondence with the legal unit which eliminated the problem of duplication Contained employer and non-employer businesses which reduced the under-coverage for self-employed businesses Included an exact size measure for business income Used by annual surveys However Income tax returns are filed long after many business events and therefore a poor source for birthing units compared to PD accounts Only a sample of the income tax frame was assigned an industrial classification code A two phase sample design was adopted to overcome the missing industrial classification

October 14, 2008 Statistics Canada Statistique Canada 10 Introduction of the Business Number (BN) In 1995, the Canada Revenue Agency (CRA) introduced the Business Number (BN) system A federal government initiative to simplify the way businesses dealt with government Based upon the concept of one business, one number The BN is composed of 9 numeric digits and a radical of 6 digits The 9-digit BN registration number identifies a unique business The two letters identify the type of account The last four digits identify the account number The BN made the Goods and Services Tax (GST) usable to BRD It supplied the Register with an earlier size indicator in terms of sales for employer and non-employer businesses It was also an excellent, early source of birthing units on the frame

October 14, 2008 Statistics Canada Statistique Canada 11 Introduction of the BN (continued) The introduction of the BN increased our ability to link multiple taxation administrative data files In 1998, Statistics Canada proceeded with a massive conversion of the BR frame to the BN It was now possible to link the PD account frame data with the BN data Income tax data and the GST data complemented information on the frame and increased coverage for the non-employers The Program to Improve Provincial Economic Statistics (PIPES) brought in additional surveys and forced the BR to cover smaller units in order to accurately measure smaller provincial economies

October 14, 2008 Statistics Canada Statistique Canada 12 Introduction of the BN (continued) Central Frame Data Base (CFDB) Integrated Portion (IP) Includes large businesses BN Data Payroll Deduction (PD) Data GST Data T2 Data IP – Units fully linked and classified NIP – Units fully linked and classified Threshold Out of scope for surveys BN data below threshold or with no indication of economic activities or unclassified

October 14, 2008 Statistics Canada Statistique Canada 13 Introduction of the BN (continued) The BN registrant files became: The source to identify new businesses To create and update tombstone information However, the BN registration system is not able to systematically identify businesses that have ceased operations Statistics Canada needed to develop a method to identify inactive businesses In order to fully exploit the administrative data on the BR and meet the requirements of survey programs, it was necessary to rethink the conceptual framework of the BR.

October 14, 2008 Statistics Canada Statistique Canada 14 Today’s BR In 2005, it was recognized that with the limitations of the BR environment It was not possible to meet the clients’ changing needs The computer environment was outdated Work methods did not reflect the changes that Statistics Canada had undergone There were limitations on the level of integration of administrative data  Automation of processes using administrative data was limited  Size variables on the frame were still predominantly driven by a model  GST sales & T2 business income were only assigned to BNs with no PD accounts

October 14, 2008 Statistics Canada Statistique Canada 15 Today’s BR (continued) The BR redesign was initiated in April 2005 and completed in January 2008 It uses the BN as its basis in order to identify businesses on the frame The BN file from CRA is used to create and update tombstone data and to identify potential new businesses All BNs are assigned an industrial classification code by Statistics Canada Other administrative sources such as T1, T2, GST and PD are used to complement the BN data

October 14, 2008 Statistics Canada Statistique Canada 16 Today’s BR (continued) Administrative data are: Used to automatically maintain and update the tombstone data Used to automatically generate size information of legal units (BNs) for all businesses on the frame Used as the first phase of the profiling of complex businesses The new model of the BR makes it possible for administrative data to replace survey data for complex businesses

October 14, 2008 Statistics Canada Statistique Canada 17 Today’s BR (continued) Business Register (BR) Complex Businesses 22,000 Alive and active Businesses Simple Businesses 2,300,000 Alive and Active Businesses Statistical Delineation BNs without an economic activity and/or classification code are Out of scope for surveys The BR integrates the: BN Data Payroll Deduction (PD) Data T1 Unincorporated Data T2 Incorporated Data GST Data Inactive/Dead/unclassified BNs 6,000,000 BNs

October 14, 2008 Statistics Canada Statistique Canada 18 Looking to the future Further work with our partners remains to be completed in order to use administrative data more efficiently to maintain a central Business Register: Unincorporated business (T1) data link to BN Identification of non-active BNs Quality of industrial activity description at registration time

October 14, 2008 Statistics Canada Statistique Canada 19 Conclusion Standardising practices among departments and programs lead to the creation of the BN. This was a huge step forward in the use of administrative data and allows the Register to be more efficiently maintained and significantly improve its coherence. The usage of administrative data has helped to reduce respondent burden through the replacement of survey data, improve the quality of estimates and harmonize the business survey program. Administrative data are now playing an important role in the survey cycle and specifically in the maintenance of a central BR.