Welcome to the fourth annual Total Tax Contribution (TTC) survey of Business Council of Canada members. Eighty-seven of Canada's largest businesses provided tax data for the 2015 fiscal year demonstrating the significant contribution these large businesses make to public finances. This year's survey also includes information on the role large Canadian firms play in the economy through employment) capital investment and expenditure on research and development (R&D)
2015 was a challenging year for the Canadian economy, as falling natural resource prices led to weak GDP growth. The survey highlights that even in challenging times, large businesses make significant contributions to Canadian public finances.
The participating companies are significant taxpayers- $63.8 billion. The survey found that they bore $24.6 billion in taxes, collected $33.1 billion on behalf of their employees and customers, and paid another $6.1 billion in royalties and other fees. Federal corporate tax made up $5.5 billion of this total, representing 14% of total federal corporate tax collected in Canada.
Corporate income tax is only one of 68 different taxes, fees and royalties large Canadian companies pay to the three levels of government. For every dollar paid in corporate income tax, companies surveyed paid another $1.59 in other business taxes and $0.63 in other payments to government. An additional $3.48 is contributed through taxes collected from customers and employees. All told, the survey found that large companies collectively contribute more money to governments in taxes and other payments than they earn in aftertax profits.
Consistent with previous years, the survey illustrates the complexity of the tax system. Complying with both federal and provincial taxes requires companies to employ, on average, 18 full-time equivalent staff.
Tax payments represent only one component of the significant contributions made by these companies to Canada. The participating businesses employ over a million people, make major capital investments and drive innovation through spending on R&D.
Ensuring the success of large businesses is essential to growing the middle class and increasing prosperity for Canadians by creating well-paying jobs. In 2015, survey participants provided jobs for over 1 million people, paying an average wage of $69,434 - well above the median Canadian wage of $63,430.
These jobs generate valuable tax revenue for the government: among the participating companies, an average of $25,101 was paid for every employee in the form of employment taxes.
This year's survey also collected data on capital investment and R&D. Capital investment in plant, equipment and machinery helps to boost productivity which in turn helps the economy to grow. Survey participants made capital investments of $37 billion in 2015, 21% of total capital spending by the private sector that year.
The survey reinforces that R&D in Canada is driven by large businesses with the capacity to invest. While large businesses make up approximately 0.3 percent of all employer businesses in Canada, they account for over 50% of all R&D spending. According to the survey, participating companies contributed $1.5 billion in R&D in 2015.
PwC thanks the Business Council of Canada for their continued support of this survey.
Peter van Dijk, PwC Canada
Andrew Packman, PwC UK
Business Council of Canada
The Business Council of Canada is a not‑for‑profit, non‑partisan organization composed of the CEOs of Canada’s leading enterprises. The Council engages in an active program of research, consultation and advocacy on issues of national importance to the economic and social fabric of Canada.
Member CEOs and entrepreneurs represent all sectors of the Canadian economy. The companies they lead collectively administer $8.7 trillion in assets, have annual revenues in excess of $1.1 trillion, and are responsible for the vast majority of Canada’s exports, business investment, private‑sector research and development, and employer-sponsored education and training.
PwC Canada helps organizations and individuals create the value they’re looking for. More than 6,700 partners and staff in offices across the country are committed to delivering quality in assurance, tax, consulting and deals services. PwC Canada is a member of the PwC network of firms with more than 236,000 people in 158 countries.
Total Tax Contribution
The Total Tax Contribution methodology identifies taxes borne and taxes collected. Taxes borne by a company are a cost to the company and reflected in its financial results, e.g. federal and provincial corporate income (profit) tax and irrecoverable sales taxes.
Taxes collected are those generated by a company’s operations, but which do not affect its results, e.g. payroll taxes withheld from employees and remitted and GST/HST collected from customers and remitted.
We identified 68 business taxes and other payments to governments in this survey under the Total Tax Contribution methodology. Taxes are categorized into five tax bases, i.e. profit taxes, production taxes, employment taxes, property taxes and environmental taxes.