Processing Methodology of Tax Data at Statistics Canada Authors: François Brisebois, Richard Laroche and Rossana Manriquez (Statistics Canada) Presenter: Danielle Laroche (Statistics Canada) May 2011

13/02/2016 Statistics Canada Statistique Canada 2 Outline  Tax data at Statistics Canada  Processing of tax data Define each source presented Overview of processing steps Current challenges

13/02/2016 Statistics Canada Statistique Canada 3 Tax Data at Statistics Canada  StatCan has access to all tax data through a signed agreement with the Canada Revenue Agency (CRA)  Used in several surveys Primary use: as a direct replacement for collected units (or through a model) Secondary use: auxiliary information used for the purpose of survey design, E&I, data confrontation, etc.

13/02/2016 Statistics Canada Statistique Canada 4 Tax Data at Statistics Canada  Three sources discussed: Business tax  Two sources: T1 form, T2 form  Annual data Individual consumption tax  Goods and Services Tax (GST)  Monthly data  Focus of the paper is on the processing of these three sources

13/02/2016 Statistics Canada Statistique Canada 5 Processing of Tax Data  At the CRA Only minimal editing is performed for the context of statistical use  At Statistics Canada Centralized processing (in the Tax Data Division) Thorough process Ultimate products: tax data files made available to survey programs

13/02/2016 Statistics Canada Statistique Canada 6 T1 – Definition  The T1 form is the main form filled out annually by all Canadians to report their income tax  Business surveys are interested in income earned from self-employment (unincorporated businesses) Farming, Fishing, Rental, Professional, Commission, Business 85% are filled out electronically (available); the remaining 15% are reported on paper (not available)

13/02/2016 Statistics Canada Statistique Canada 7 T1 – Processing  Two files Assessed Record File: two variables for everyone  Used as a starting point for the imputation of detailed variables not available for non-electronic filers “T1 data”: detailed variables for electronic reports only  Identification of partnerships  Balancing edits  Imputation of missing records  Derived variables (using standardized financial statements)

13/02/2016 Statistics Canada Statistique Canada 8 T2 – Definition  Corporate tax returns Filled out annually Flexible reporting period Only 8 fields are mandatory, but many others are of interest to StatCan survey programs

13/02/2016 Statistics Canada Statistique Canada 9 T2 – Processing  Edits: balancing, invalid or inconsistent, outliers  Imputation: deterministic, missing tax data  Generic to detail allocation Block composed of one generic field and detail fields Goal is to allocate reported generic amounts to detail fields when it has not been done Groups of “detail respondents” are formed; their distribution is used to impute “generic respondents”  Derived variables (standardized financial statements)

13/02/2016 Statistics Canada Statistique Canada 10 T1 & T2 – Challenges  Explore other sources to improve processing  Reporting on data quality Variance due to imputation  Harmonise the processing with the few remaining programs having their own system

13/02/2016 Statistics Canada Statistique Canada 11 GST – Definition  Tax levied on final consumption of products and services (VAT)  Collected and remitted by businesses with revenues over $30K Remitting frequency depends on business size  Two main variables: Sales Tax collected

13/02/2016 Statistics Canada Statistique Canada 12 GST – Processing  Monthly file sent from CRA, 7 weeks after reference month  Complex steps: E&I  Missing, inconsistencies, outliers Calendarization  Break non-monthly transactions into monthly values, taking into account seasonal patterns Allocation  From high-level reporting units to detailed level units (from enterprise to establishment levels)

13/02/2016 Statistics Canada Statistique Canada 13 GST – Challenges  Complexities from the fact that (recent) historical data are reprocessed every month Only 70% of the expected data are received on time Annual and quarterly remitters are “extrapolated” until reported data are received  Fine-tuning the methodology

13/02/2016 Statistics Canada Statistique Canada 14 Conclusion  Centralizing and enhancing the processing methodology has increased tax data quality Which in turn has encouraged a greater use  Increased use by survey programs, with strong support by management  Possibility of using more tax data? Options are being examined in the context of a project to integrate business surveys

13/02/2016 Statistics Canada Statistique Canada 15 Thank you  For more information,  Pour plus d’information, please contact the authors:veuillez contacter les auteurs: François Brisebois, Richard Laroche, Rossana Manriquez,