For the first time, the census collected information on the after-tax income of Canadians, that is, total income from all sources minus income tax.
After-tax income more accurately depicts what families have available to spend. The median after-tax income of all economic families in 2005 was $57,178, compared with the median before‑tax income of $66,343.
Based on after-tax income, the income gap between different types of families is smaller than if it is based on before-tax income, because after-tax income reflects the fact that people with higher incomes generally pay taxes at a higher rate.
For example, on an after-tax income basis, lone-parent families headed by women had a median after-tax income that was 49.1% of that received by couples with children, compared with 44.3%, based on before-tax income.
Similarly, the gap between families at the top and bottom of the income scale is smaller, based on after-tax income. If economic families are ranked by their income, families in the top 20% (or top quintile) had a median before-tax income of $143,223, while those in the bottom 20% had $24,379. Thus, before tax, the median income of the top quintile was 5.9 times higher than that of the lowest quintile.
The proportion of the income that is paid in taxes ranged from 2.8% in the bottom quintile, to 13.6% in the middle quintile and to 24.2% in the top quintile.
As a result, when the ranking was done based on families' after-tax income, the median after-tax income of the top quintile was $115,007, compared with $23,852 for the lowest quintile, an income ratio of 4.8.
Median before-tax and after-tax income of economic families by family type, Canada, 2005