The top 1% in Canada earn, on average, $512,000. From there, the top 5% in Canada earn, on average, $238,500, and the top 10% in Canada earn, on average, $176,700.
This is according to StatsCan data released in a 2022 report covering Canadian high-income tax filers from 2016 to 2022 (our article will focus strictly on the average incomes only from 2022).
The study of high-income earning Canadians was done using the Longitudinal Administrative Databank (LAD), a research tool using a 20% random sample of Canadian residents who filed a tax return.
Therefore, all data is derived from income numbers reported by individuals on their federal and provincial income tax forms.
In this study, “income” consists of earnings from a job, investments, pensions, spousal support payments, and other taxable income.
If you examine the StatsCan report, you’ll notice that in addition to average income, there’s also a figure called “threshold value.”
But what’s the difference between the two?
In this context, the threshold value represents the minimum income one must earn to be classified in a respective income group, in this case, the top 1% in Canada.
According to the report, you’d need to earn at least $253,900 in 2020 to be considered a top 1% income earner.
In total, 288,400 Canadians fit this bracket based on their tax filing details.
On the other hand, the average income refers to the weighted average of all the country’s top 1% of income earners.
Since the calculation is a weighted average, extreme outliers (both on the low and high end) will skew this figure, which is why it differs substantially from the threshold value of $253,900.
The median income (the middle number in a set of data) for the top 1% in Canada in 2020 was $349,900 compared to the average income of $512,000.
Who Comprises the Top 1%?
So, who makes up the top 1% in Canada? Let’s explore some notable facts about this elite group.
Where the 1% live in Canada
Over 45% of Canada’s 1% reside in Ontario.
This fact isn’t surprising, as Ontario is the most populous province in the country and boasts the most robust economy measured by GDP (gross domestic product).
On the flip side, the territories with a small population have the lowest share of the country’s top 1%.
Here’s a breakdown of where the 1% live according to province and territory:
|Province or Territory||Number of tax filers in the top 1%||Percentage of the national 1%|
|Newfoundland and Labrador||2,645||0.92%|
|Prince Edward Island||605||0.21%|
Here are the top 10 cities in which the 1% live:
|City||Number of tax filers in the top 1%||Percentage of the national 1%|
Once again, it’s not shocking that Toronto, Canada’s most populated city, has the most people in the 1%.
This positive correlation between the number of people with population is consistent with the country’s other major cities for the most part.
Gender, Marital Status and Age
Males constitute 74.6% of the 1%, while females make up 25.4%.
Regarding income, males earned an average of $532,700 (higher than the top 1% average), while females made an average of $451,100.
Both figures indicate a sizable gender gap in earnings in Canada’s top 1%.
A little over eighty percent of those in the 1% are married or in a common-law relationship.
The number is higher for men: 84.8% are married or in a common-law relationship compared to 67.4% for women.
The median age for those in the 1% is 53.
Not surprisingly, the older you are, the more likely you earn a higher income from your career and various investments.
Tax Paid by the 1%
On average, those in the 1% pay $196,000 in federal and provincial income tax.
This amount accounts for 21.10% of all taxes paid by Canadians.
Building Wealth in Canada
- Choose a Well-Paying Career
A solid career with high-earning potential sets the foundation for your wealth-building plan. In Canada, the most lucrative professions are typically those in the medical and tech fields. Careers in law and finance also pay well, as well as upper management roles at large corporations. Of course, you may prefer working for yourself. In that case, you can also start your own business, where your income potential is unlimited.
One of the key pillars of successful wealth building is investing. Therefore, always dedicate a portion of your earnings to a prudent investment portfolio. While you earn a steady income from your career, your investments will work behind the scenes, further growing your wealth. It helps tremendously to begin investing early to take advantage of compound interest and remain consistent with your portfolio contributions, even amid dire market conditions.
- Minimize your Expenses
While you don’t have to eat canned tuna every day and live in someone’s basement, wisely managing your costs will go a long way in helping you accumulate wealth.Whenever possible, strive to live below your means. This discipline is especially essential concerning your home and vehicle, as these two things usually drain the most money from one’s bank accounts. To stay on track, create a budget and review your spending periodically to ensure you’re making progress.
- Avoid Debt as Much as Possible
Debt can be helpful if utilized in business, as you’re borrowing to generate income. However, taking on debt to purchase depreciating assets (like a vehicle), or worse, relying on it to finance your everyday spending, can get you in trouble. The more debt you take on, the more interest charges you’ll be stuck paying – and you risk filing bankruptcy to where you stand to lose significant assets.
Frequently Asked Questions
- What percentage of Canadians make over $100,000 a year?
About 11% of Canadians earn more than $100,000 per year.
- What is the average income of the top 1% in Canada?
The average income of the top 1% in Canada is $512,000.
- What is the average income of the top 5% in Canada?
The average income of the top 5% in Canada is $238,500.