Definition

16. Percentage of economic families in low income before tax

Refers to the percentage of economic families in private households in low income. Excludes families in Yukon Territory, NWT, Nunavut and on Indian reserves. Income status before tax - Refers to the position of an economic family or a person 15 years of age and over not in an economic family in relation to Statistics Canada's low income before tax cut-offs (LICOs).

Measures of low income known as low income (before tax) cut-offs (LICOs) were first introduced in Canada in 1968 based on 1961 Census income data and 1959 family expenditure patterns. At that time, expenditure patterns indicated that Canadian families spent about 50% of their total income on food, shelter and clothing. It was arbitrarily estimated that families spending 70% or more of their income (20 percentage points more than the average) on these basic necessities would be in 'straitened' circumstances. With this assumption, low income cut-off points were set for five different sizes of families.

Subsequent to these initial cut-offs, revised low income before tax cut-offs were established based on national family expenditure data from 1969, 1978, 1986 and 1992. The initial LICOs were based upon the total income, before tax, of families and persons 15 years and over not in economic families.

Prevalence of low income (before or after tax) can also be derived for census families, persons not in census families and the population in private households. See Low Income Statistics for Census Families and Households, Staff Report no. 1991-1, Labour and Household Surveys Analysis Division, Statistics Canada.

Prevalence of low income rates are calculated from rounded counts of low income persons or families and the total number of persons or families. These counts have been rounded independently of the rounded counts shown in the table; thus, there may be a small difference between the rate shown and one derived from the counts shown. Users are advised to interpret prevalence of low income rates based upon small counts with caution.

Since its initial publication, Statistics Canada has clearly and consistently emphasized that the LICOs are not measures of poverty. Rather, LICOs reflect a consistent and well-defined methodology that identifies those who are substantially worse-off than average. These measures have enabled Statistics Canada to report important trends, such as the changing composition of those below the LICOs over time.

Low income before tax cut-offs (LICOs) - Income levels at which families or persons not in economic families spend 20% more than average of their before tax income on food, shelter and clothing.

For additional information, please refer to the 2006 Census Dictionary, Catalogue no. 92-566-XWE.

For information on various low income concepts and adjusted family income from the Survey of Labour and Income Dynamics (SLID) see also 'Low income cut-offs for 2005 and low income measures for 2004,' Income Research Paper Series (Catalogue no. 75F0002MIE2006004).

Canadian censuses were conducted in 1996, 2001 and 2006. Income data from these censuses relate to the calendar year prior to the census year, i.e., 1995, 2000 and 2005, respectively. For additional information, please refer to the 2006 Census Dictionary, Catalogue no. 92-566-XWE.