http://www.statcan.ca/english/research/75F0002MIE/75F0002MIE2006004.pdf

Low Income Cut-offs for 2005

Abstract
Low income cut-offs (LICOs) are income thresholds, determined by analysing
family expenditure
data, below which families will devote a larger share of income to the
necessities of food, shelter
and clothing than the average family would. To reflect differences in the
costs of necessities
among different community and family sizes, LICOs are defined for five
categories of community
size and seven of family size.

Low income Measures (LIMs), on the other hand, are strictly relative
measures of low income, set
at 50% of adjusted median family income. These measures are categorized
according to the
number of adults and children present in families, reflecting the economies
of scale inherent in
family size and composition. This publication incorporates a detailed
description of the methods
used to arrive at both measurements. It also explains how base years are
defined and how LICOs
are updated using the Consumer Price Index.

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