The Daily — High-income Canadians and capital gains, 2021 (2024)

Released:2023-11-10

Incomes of the top1% of tax filers rose9.4% to $579,100in2021. This occurred in the context of COVID-19pandemic restrictions easing, many government benefit programs winding down, the labour market recovering, and the Canadian house prices and stock market indexes increasing in2021.

Recovery produces uneven income gains in2021

According to data based on the tax filings of individuals, the average total income of the top1%, excluding capital gains, rose by9.4% to $579,100in2021. Filers in the top0.1% saw their average total income increase by17.4% to $2,086,100, while those in the top0.01% saw their average total income increase25.7% to $7,731,400. These increases more than offset the small declines observed in the top ranks of income earners in2020.

In contrast, filers in the bottom half of the distribution saw their average total income decline $1,400from2020to $21,100in2021. This decrease was due in part to the lowering or ending of government transfers.

Accordingly, the share of total income earned by the top1%, a commonly used measure of income inequality, rose from2020to2021. In2021, the top1% of tax filers received10.4% of aggregated income earned by tax filers, up from9.4% in2020and the highest level posted since2015.

In2021, wages and salaries drove increased incomes for the top income earners. People in the top1% saw their average wage and salary income rise by12.0%, while those in the top0.1% saw an increase of24.6% and those in the top0.01% saw an increase of34.5%.

Dividend income is also an important component of total income for the highest income groups. In2021, these top groups saw large increases in dividend income, which returned this item to its pre-pandemic level. Filers in the top1% received an average dividend income of $90,200(+12.9% compared with2020), those in the top0.1% received $429,500on average (+19.2% compared with2020) and those in the top0.01% received $2,009,700on average (+26.0% compared with2020).

Women continue to increase their representation at the top

Women's representation in the top income groups continued to rise in2021, continuing this long-standing trend. Overall, women composed26.1% of the top1% of income tax filers, up from25.4% in2020. The share of women in the top1% has been increasing steadily since this series started in1982, when the share was11.4%.

Capital gains rise sharply in2021

Income estimates, including those reported above, normally exclude capital gains, which are the net realizations from the sale of an asset or other property. However, for the study of top incomes, it is common to also examine income with capital gains added in.

Looking first at patterns in capital gains received, the amounts received in capital gains rose sharply in2021. That year,12.2% of tax filers received capital gains, which had an average value of $37,600. Capital gains values tend to be skewed, with a small proportion of tax filers receiving relatively large capital gains. For example,5% of capital gains recipients received $131,100or more in2021. These figures are all much higher than those in2019and2020. For example, in2020, average capital gains were $29,300.

In2021, the increase in capital gains was in line with the values seen in the housing and stock markets, which rose in2021and peaked at historically high levels in early2022. Large increases in realized capital gains were also seen in the United States in2021.

Considering income including capital gains, average income for the top1% was $811,800in2021, up20.5% from2020. In2021, the average income for the top0.1% was $3,230,000, up27.6%, and that for the top0.01% was $12,542,100, up30.0%. These levels of income including capital gains were much higher than they were at any other point in the past40years, accounting for inflation. The previous peak was in2007, when the top1% made on average $712,000.

The share of income including capital gains in the top1% also rose sharply in2021, reaching13.4% that year, compared with11.5% in2020.

Products

The Longitudinal Administrative Data Dictionary (Catalogue number12-585-X) contains a description for each of the income and demographic variables in the Longitudinal Administrative Databank (LAD), including name, acronym, definition, source, historical availability and historical continuity.

Derived from the LAD, data tables for1982to2021on Canadian tax filers with high incomes (11-10-0055-01 and 11-10-0056-01), the low-income dynamics (11-10-0024-01, 11-10-0025-01 and 11-10-0026-01), the family income mobility of Canadian tax filers (11-10-0059-01 and 11-10-0061-01), and effective tax rates (11-10-0054-01 and 11-10-0058-01) are now available for various provinces and selected census metropolitan areas.

The Income, pensions, spending and wealth portal, which is accessible from the Subjects module of the Statistics Canada website, provides users with a single point of access to a wide variety of information related to revenue, pensions, spending and wealth.

Contact information

For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; [email protected]) or Media Relations ([email protected]).