Economic and Social Reports: Insights from newly landed immigrants with employment income in Canada
Statistics Canada | Statistique Canada
Canada's National Statistical Agency / Organisme statistique national du Canada
Abstract
This study assesses the degree to which immigrant couples who landed in Canada with young children from 2016 to 2019 received the Canada child benefit (CCB) in the year following landing. The study shows that newly landed permanent resident couples with some employment income in the year following landing were much more likely than other permanent resident couples to receive the CCB that year. Newly landed couples without employment income but with a T1 income tax form filed by a spouse were less likely to receive the CCB than their counterparts with employment income, but their CCB take-up rate was markedly higher than that of couples with no T1 or T4 records. Compositional effects do not explain these differences. The study also shows that if non-recipient families with no employment income had received the CCB, their low-income rates would have fallen by 1 to 2?percentage points, from a baseline rate of 61%.
Authors
Tahsin Mehdi, Ping Ching Winnie Chan, René Morissette and Rubab Arim are with the Social Analysis and Modelling Division, Analytical Studies and Modelling Branch, at Statistics Canada. Ying Gai and Jason Raymond are with the Strategic Research and Performance Division, Research and Innovation Lab, Service, Innovation and Integration Branch, at the Canada Revenue Agency.
Acknowledgments
This study was funded by the Canada Revenue Agency. The authors would like to thank Li Xue, Feng Hou, Adamou Yacouba Abdou, Pedro Lucas Chagas Mendonca and Christine Laporte from Statistics Canada, and Libbie Wallace and Chris Brassard from the Canada Revenue Agency for their helpful and constructive comments.
Introduction
The Office of the Auditor General of Canada (2022) has called for an examination of the degree to which Canada’s hard-to-reach populations receive the government benefits they are entitled to. Studying this question is challenging for a variety of reasons. First, some individuals may not satisfy the residency criterion for receiving specific benefits if they temporarily reside abroad during a given year. This might be the case for highly skilled immigrants who have spells of residence outside the country (henceforth, temporary international emigration) (Qiu, Hou and Crossman, 2021; Bérard-Chagnon et al., 2024). Second, although take-up rates are commonly estimated using the population of tax filers—under the rationale that tax-filing is a prerequisite for receiving most benefits—some individuals, such as newly landed immigrants, may be entitled to specific benefits initially without having to file T1?income tax forms. This might happen with the Canada child benefit (CCB). However, to continue receiving subsequent entitlements, individuals must file their T1?tax forms.
This study tackles these two challenges for a specific population and a specific government benefit: it assesses the degree to which newly landed permanent resident couples (married or common-law) with children younger than 18 receive the CCB shortly after landing. The study aims to improve the measurement of CCB take-up among this group in two ways.
It builds on the databases used by Mehdi et al. (2023)—the Longitudinal Immigration Database (IMDB) and T1 personal master file (T1PMF)—to examine the tax-filing behaviour of newly landed immigrants by adding monthly CCB files and the annual T4 Statement of Remuneration Paid into the analysis. As will be shown below, integrating the CCB files yields a more precise measurement of the number of CCB recipients among these couples than is feasible with the IMDB and T1?files.
The study addresses concerns regarding temporary international emigration by identifying couples where at least one spouse received paid employment income in Canada in a given year, as measured by a worker’s province of employment on T4?records. Along with their counterparts where at least one spouse filed T1?income tax forms, these couples are presumably less likely than others to have resided abroad temporarily in a given year. The study compares the take-up rates of the CCB for these groups with those of other newly landed couples where neither spouse filed a T1 or appeared on the T4?files in the year following landing. These two strategies will help improve knowledge of CCB take-up for newly landed immigrant families.
This study answers the following research questions:
Data and samples
The study builds on the databases used by Mehdi et al. (2023)—the IMDB and T1PMF—to examine the tax-filing behaviour of newly landed immigrants by adding monthly CCB files and the annual T4 Statement of Remuneration Paid into the analysis. Integrating the CCB files yields a more precise measurement of the number of CCB recipients among these couples than is feasible with the IMDB and T1 files.
The IMDB includes the annual Immigrant Landing File containing a record of all immigrants who landed in Canada from 1980 onward (Evra and Prokopenko, 2022). The T1PMF is an annual dataset consisting of the T1?individual income tax return records of Canadian tax filers who submitted their returns before an assessment date. The T4 Statement of Remuneration Paid is an annual tax form issued to employees by their employer. It identifies a worker’s province of employment and enumerates paid employment income earned, as well as deductions such as pension and employment insurance contributions. The CCB file is a monthly record of all CCB recipients and their children, available from March 2017 onward. CCB payments are reassessed every July based on the information reported on the T1?income tax return from the previous tax year. Combining the T4?Statement of Remuneration Paid with the IMDB and T1?files creates a more inclusive sample of potential CCB recipients residing in Canada because it captures couples who did not file T1?income tax returns but still received paid employment income in Canada, as indicated by a worker’s province of employment. Because an income registry (independent of international emigration and tax-filing) before and after landing is not available, this study cannot assess the degree to which the rates of non-receipt of the CCB for various groups reflect income levels that are too high (ineligibility) or truly reflect non-receipt of the CCB by fully eligible families.
The study focuses exclusively on permanent resident couples, where both spouses were aged 25 to 64 at landing, who landed together from 2016 to 2019 with at least one child younger than 18 at the time of landing. The sample excludes couples where at least one spouse held temporary resident status in Canada prior to landing as a permanent resident. Including this subgroup would introduce many challenges to the analyses because some of them already received the CCB before becoming permanent residents. Moreover, retroactive CCB payments could further complicate analyses. From 2016 to 2019, over 200,000 immigrant couples landed in Canada; in 90% of cases, both spouses were aged 25 to 64 in the year of landing. Those aged 25 to 64 are more likely to be employed and therefore more likely to be residing in Canada, which is a criterion for accessing many benefits. Of these over 200,000 immigrant couples, more than half had a child younger than 18 at the time of landing, and in nearly 100% of those cases, both spouses were aged 25 to 64 at the time of landing. In around one-third of these couples, at least one spouse held temporary resident status in Canada prior to landing as a permanent resident. The study selects the two-thirds of couples who had no prior history in Canada. These couples represent about 30% of the over 200,000 couples who landed in Canada from 2016 to 2019. Henceforth, any references to couples should be understood to mean permanent resident couples with no prior history in Canada, where both spouses were aged 25 to 64 at landing and who had at least one child younger than 18 in the year of landing. This restriction excludes the Canadian Experience Class from analyses because everyone admitted through that immigration class held temporary resident status to gain Canadian work experience prior to landing as permanent residents. However, the Canadian Experience Class represented less than 7% of all immigrant couples who landed from 2016 to 2019 with children younger than 18.
CCB payments can be issued retroactively. As a result, it is possible that a newly landed family will not receive its payment shortly after landing but will receive it at some point in the future. In fact, considering the subgroup of couples where both spouses were aged 25 to 64 at landing and who landed from 2017 to 2019 with a child younger than 18 for at least 24 months following landing, around 60% received their first CCB payment within the first 4 months of landing (Chart?1).
For some newly landed families, government transfers such as the CCB might be an important source of income in the short term. Hence, one concern is whether eligible families receive the CCB in a timely manner, if they receive it at all. To shed light on this issue, the study assesses whether couples who landed in year t received the CCB in year t?+ 1.
Chart?2 highlights the strength of using CCB files to precisely measure the number of couples who received the CCB in a given year. It focuses on couples who landed in 2019 and compares the percentage of couples where both spouses filed T1 income tax forms in 2020 with the percentage of couples who received the CCB in 2021. For most dimensions considered, the percentage of couples who received the CCB in 2021 exceeds the percentage of couples who filed income tax forms in 2020. Overall, 82% of these couples filed income tax forms in 2020 but 84% received the CCB in 2021. Hence, focusing on tax-filing in the year following landing slightly underestimates the degree to which newly landed couples receive the CCB in the following year. This is possibly because some of them filed their T1 forms late or applied for the CCB but did not file T1 forms that year.
Most newly landed couples file a T1 or receive paid employment income in Canada in the year following landing
This study partitions newly landed couples into four groups defined by their tax-filing status and their receipt of employment income in the year following landing: (1) couples where at least one spouse had paid employment income on their T1 or T4?records but no self-employment income; (2) couples where at least one spouse had self-employment income on their T1?tax records, regardless of whether they received paid employment income; (3) couples where at least one spouse filed a T1 income tax form but had no employment income; and (4) couples where neither spouse filed a T1?income tax form or had T4?records. The first two groups are most likely to reside in Canada because at least one of the spouses has an employment record, as indicated by their employment income reported on the T1 or T4. The third group is likely to reside in Canada, given that people were registered in the income tax system shortly after landing, but less so than the first two groups because the third group does not have a known employment history in Canada. The fourth group is least likely to reside in Canada because people have no income tax record or paid employment income in Canada.
The first three groups of couples represented 87% to 92% of couples who landed from 2016 to 2019 (i.e., at least one spouse filed a T1 or had a T4?record in the year following landing) (Table?1-1 and 1-1).
There is a strong correlation between couples’ propensity to file a T1 and their propensity to receive paid employment income in Canada (results not presented on Table?1-1 and 1-2). For couples where at least one spouse filed a T1 in the year following landing, more than three-quarters also had a spouse who appeared on T4?records during that year. By contrast, for couples where neither spouse filed a T1?tax form in the year following landing, less than 5% had a spouse who was included in T4?records during that year.
For nearly all couples where the principal applicant was a refugee, at least one spouse filed a T1 or received paid employment income in the year following landing (Table?1-1 and 1-2). Although refugee couples were less likely than other couples to be found on T4?records in the year following landing, refugee couples were more likely to have a spouse file a T1 than other immigration classes. For 79% to 84% of Federal Skilled Worker Program (FSWP) couples who landed from 2016 to 2019, at least one spouse filed a T1?income tax return or received paid employment income in the year following landing. These rates were lower than the rates observed for other immigration classes.
For almost all couples where the principal applicant had a high school education at most in the year of landing, at least one spouse filed a T1 or received paid employment income in the year following landing. Lower-educated couples were generally less likely to appear on T4?records than more highly educated couples but were more likely to have a spouse file a T1 in the year following landing. Of couples where the principal applicant had a graduate degree, 82% to 87% filed a T1 or received paid employment income in the year following landing. These rates were lower than the rates for couples with less educated principal applicants in the year of landing.
Differences in the percentage of couples where at least one spouse filed a T1 or had a T4?record could be indicative of who is more likely to reside in Canada. For example, highly educated immigrants or highly skilled workers could be inherently more mobile and prone to international emigration, while refugees—a relatively immobile group—are probably more likely to reside in Canada, at least in the short term (Bérard-Chagnon et al., 2024).
Newly landed couples who file a T1 or receive paid employment income in Canada in the year following landing are more likely to receive the Canada child benefit than other newly landed couples
In the year following landing, 79% to 85% of couples received the CCB, depending on the landing year considered. However, these take-up rates mask considerable variation between different groups of couples. Take-up rates of more than 90% were observed among those with some employment income (who are the most likely to satisfy residency criteria for the CCB and who represent more than four-fifths of all newly landed couples with children). Meanwhile, rates of about 70% were observed among the group where a spouse filed a T1 but had no employment income, and rates of less than 10% were observed among the group with no T1 or T4 presence (who are most likely to reside abroad temporarily and who represent 8% to 13% of all couples, depending on the landing year considered) (Table?2).
Considering the couples who are most likely to reside in Canada (i.e., the groups with some employment income), CCB take-up rates were highest for refugees and lowest for FSWP couples among the top three immigration classes (provincial programs, FSWP and refugees) (Chart?3). Nearly all couples where the principal applicant was a refugee received the CCB in the year following landing, while the take-up rate was 82% to 92% for couples where the principal applicant was from the FSWP and about 93% for couples where the principal applicant was admitted through a provincial program. The relatively higher take-up rates for refugees might also be explained by a greater propensity to use settlement services (Statistics Canada, 2022). But as mentioned earlier, this could also be related to greater mobility among highly skilled workers, who are more prone to international emigration, compared with refugees, who are less likely to move abroad shortly after landing.
Another way to disaggregate data is to compare couples with paid employment income (i.e., who have T4?records) with other couples. Couples with paid employment income in Canada are probably more likely to reside in Canada than other couples because the former group has a known employment history in Canada. Of all couples considered in this study, 62% to 70% received paid employment income in the year following landing. CCB take-up rates in the year following landing ranged from 93% to 95% for couples with paid employment income, while these rates ranged from 48% to 68% for other couples who did not receive paid employment income in Canada (Table?3).
Most of the differences in Canada child benefit take-up rates persist after controlling for landing characteristics
Multivariate analysis is needed to ascertain whether the observed differences from the descriptive analysis remain robust when controlling for other landing characteristics. Logistic regressions were used to model CCB take-up status in the year following landing (1 if the couple received the CCB in the year following landing and 0 otherwise) as a function of tax-filing status and receipt of employment income in the year following landing; the number of children in the family; the age group of the youngest child; and the age group of the principal applicant, along with their education at landing, official language skills, country of citizenship and destination province (territories were excluded because of low sample size). For each covariate, a baseline model was estimated without incorporating any of the remaining covariates. The average partial effects from these baseline models were then compared with those of the model incorporating the other covariates.
All else being equal, filing T1 tax forms or having a T4?record was the strongest predictor of CCB take-up (Chart?4). Descriptive evidence indicated that couples where a spouse filed a T1 or received employment income were substantially more likely to receive the CCB in the year following landing. This result holds after controlling for the set of landing characteristics mentioned above. All else being equal, there remains a 55 to 86 percentage point gap in CCB take-up rates between couples with a T1 or T4?record and couples without these records (Table?4). Couples with a T1?tax record but no employment income were 55 to 62 percentage points more likely to receive the CCB in the year following landing, compared with couples with no T1 or T4 records.
All else being equal, refugee couples were 9 to 15?percentage points more likely to receive the CCB in the year following landing, compared with couples from provincial programs. Except for couples who landed in 2016, the CCB take-up rate was 4 to 5?percentage points lower for FSWP couples, compared with couples from provincial programs.
The baseline and controlled average partial effects for all the covariates considered are reported in Table?4.
Missing out on the Canada child benefit may put some newly landed couples at risk of low income
By helping eligible families with the cost of raising children younger than 18, the CCB can play a role in reducing low income. The extent to which it can reduce low income for newly landed couples is difficult to measure because their income prior to landing is not observed. However, low-income rates can still be estimated for a subset of couples where both spouses can be found on T1 records (around three-quarters of the baseline sample). Low income in this study is measured using after-tax family income. For this purpose, the T1 Family File (T1FF), a database similar to the T1PMF but that includes information on tax filers’ census family, is incorporated into the analysis. A family is classified as being in low income if its size-adjusted after-tax family income falls below the low-income line, defined in this study as one-half of the median size-adjusted after-tax family income of the Canadian population.
Considering the subset of couples who did not receive the CCB in the year following landing and had employment income in the T1 or T4 (i.e., those most likely to reside in Canada shortly after landing) for whom T1 records can be found for both spouses on the T1FF , the study shows that the low-income rates of these couples would have fallen slightly if they had received the CCB (Table?5). The reduction in low-income rates was generally uniform across landing characteristics. For the subset of couples who filed T1?tax forms but had no employment income, low-income rates would have fallen to a greater extent. For example, the low-income rate in 2020 for couples who landed in 2019 would have fallen from 61% (without the CCB) to 59% (with the CCB) in 2020. Note that the analysis did not account for other benefits these newly landed couples might have missed out on.
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Concluding remarks
This study offers insights into CCB take-up for permanent resident couples with no prior history in Canada, where both spouses are aged 25 to 64 and have a child younger than 18 at landing. The study focuses on couples who landed from 2016 to 2019 and combines an immigrant landing registry with T1 and T4?tax forms, as well as monthly CCB files, thereby allowing for a comprehensive measurement of CCB take-up.
A key takeaway from this study is that filing T1?tax forms or having a T4 record is the strongest predictor of CCB receipt. In most newly landed couples with children younger than 18, a spouse filed a T1 or received paid employment income in the year following landing. Results indicate that newly landed couples where at least one spouse had employment income in the year following landing were significantly more likely than other couples to receive the CCB that year. Couples where a spouse filed a T1 but had no employment income were less likely to receive the CCB than those with employment income, but their take-up rate was still markedly higher than that of couples with no T1 or T4?record. Compositional differences do not explain this difference in take-up rates. This might indicate that the relatively lower take-up rate for couples with no T1 or T4?record could be attributable to temporary international emigration. Because many benefits—including the CCB—have a residency criterion, focusing on the subgroup that is present in the tax system (i.e., T1 or T4) can minimize concerns regarding international emigration.
Certain subgroups of immigrants, such as refugees, had a relatively higher propensity to file T1?tax forms and receive the CCB. This could be because refugees are more likely to remain in Canada shortly after landing—thus satisfying the residency criterion for the CCB—while other groups, like highly skilled workers, who have a relatively lower presence on T1 or T4 records and lower CCB take-up rates, likely have greater mobility to work abroad temporarily.
The CCB can play a role in low-income reduction for newly landed couples who may not have adequate financial resources shortly after landing. The extent to which the CCB can alleviate low income depends on couples’ income sources. One limitation was that this study could not assess the degree to which the rates of non-receipt of the CCB for various groups reflect income levels that are too high (ineligibility) or truly reflect non-receipt of the CCB by fully eligible families. This is because an income registry (independent of international emigration and tax-filing) before and after landing is not available; however, the study sheds light on groups more likely to satisfy the CCB residency criterion. Building a profile of immigrants more likely to reside in Canada shortly after landing and examining differences in take-up within this group, as was done in this study, may help inform outreach efforts.
References
Abdulla, R. & Laporte, C. (2023). Who might be missing out by not filing taxes? Insights from the 2021 Census. Unpublished manuscript. Ottawa: Statistics Canada.
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Bérard-Chagnon, J., Hallman, S., Dionne, M.-A., Tang, J. & St-Jean, B. (2024). Emigration of immigrants: Results from the Longitudinal Immigration Database. Demographic Documents. Statistics Canada Catalogue no.?91F0015M. Ottawa: Statistics Canada. https://www150.statcan.gc.ca/n1/pub/91f0015m/91f0015m2024002-eng.htm
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Notes
Note
Canada child benefit: www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4114/canada-child-benefit.html.
Note
Newly landed immigrants with children younger than 18 who fill form?RC66SCH and whose income in the two years preceding landing does not exceed certain thresholds will be entitled to the CCB, regardless of whether they filed T1?income tax returns shortly after landing. However, income tax-filing becomes a prerequisite for subsequent CCB entitlements. In the case of eligible couples, both spouses must file T1 income tax returns to receive subsequent payments. Among couples with children younger than 18 who landed from 2016 to 2019, for around 2% of those who received the CCB in the year following landing, neither spouse appeared on T1or T4 files in the landing year.
Note
Abdulla and Laporte (2023) examine benefit take-up more broadly by combining the 2021 Census of Population with T1?income tax returns. While the census offers a rich set of dimensions to analyze, it is not a population registry and, therefore, might miss some recent immigrants (Bérard-Chagnon, Hallman and Caron, 2019). By contrast, the IMDB is a population registry of immigrants.
Note
The CCB payment amount depends on family income, the number of children younger than 18, their ages and their disability status.
Note
While this study focuses on permanent residents, future research could separately analyze temporary residents who may also be entitled to certain benefits.
Note
In approximately 85% of couples with children younger than 18 who landed from 2016 to 2019, at least one spouse filed a T1 in the year of landing. Income information reported on the T1 was used to further refine the sample by excluding couples whose family income exceeded certain thresholds, beyond which families are not entitled to the CCB. These exclusions represented less than 1% of couples with children younger than 18.
Note
To extend the potential CCB eligibility period for the sample of newly landed couples, the study focuses on those who had a child younger than 18 at least up to the end of July of the year following landing. This represents almost all cases.
Note
Considering couples who landed from 2016 to 2019 who did not file T1 tax forms or appear on T4?records in the year following landing and did not receive the CCB, 47% did end up receiving the CCB eventually, after the first two years following landing. For couples who did not receive the CCB but where at least one spouse filed a T1 or received paid employment income in the year following landing, 62% eventually received the CCB.
Note
The family class and economic classes other than the FSWP and provincial programs had lower take-up rates than FSWP couples, but those classes did not represent a sizable segment of couples.
Note
The average partial effects multiplied by 100 indicate the percentage point difference in the CCB take-up rate relative to a reference group.
Note
After-tax family income is adjusted by dividing it by the square root of family size. Low income is usually measured at the individual level but using after-tax household income (adjusted for household size). Household information is not available from tax data. The household is a broader concept than the census family (which is what is available from the T1FF ), so low-income rates presented in this study might be overestimated to a certain extent. For example, if a newly landed family temporarily lives with a relative already residing in Canada, they will appear as separate census families on the tax data, even though they would be considered one household. The relative’s income would not be counted as part of the newly landed census family’s income, but it would be counted as part of the household income (unobserved on tax data). The low-income lines for census families were estimated as $21,100 in 2017, $21,800 in 2018, $22,400 in 2019 and $23,900 in 2020, in nominal dollars. The national low-income rates for census families were around 22% from 2017 to 2019 and 18% in 2020.
Note
CCB take-up rates were examined across the income distribution using the adjusted after-tax family incomes of couples with employment income. The take-up rates were close to or over 95% for the bottom three-quarters of the distribution, using income thresholds based on the full T1FF population for 2017, 2018, 2019 and 2020.