Taxation in Canada

Taxation in Canada is a prerogative shared between the federal government and the various provincial and territorial legislatures. Under the Constitution Act, 1867, taxation powers are vested in the Parliament of Canada under s. 91(3) for:

3. The raising of Money by any Mode or System of Taxation.

The provincial legislatures have a more restricted authority under ss. 92(2) and 92(9) for:

2. Direct Taxation within the Province in order to the raising of a Revenue for Provincial Purposes.

...

9. Shop, Saloon, Tavern, Auctioneer, and other Licences in order to the raising of a Revenue for Provincial, Local, or Municipal Purposes.

In turn, the provincial legislatures have authorized municipal councils to levy specific types of direct tax, such as property tax.

The powers of taxation are circumscribed by ss. 53 and 54 (both extended to the provinces by s. 90), and 125, which state:

'53. Bills for appropriating any Part of the Public Revenue, or for imposing any Tax or Impost, shall originate in the House of Commons.

54. It shall not be lawful for the House of Commons to adopt or pass any Vote, Resolution, Address, or Bill for the Appropriation of any Part of the Public Revenue, or of any Tax or Impost, to any Purpose that has not been first recommended to that House by Message of the Governor General in the Session in which such Vote, Resolution, Address, or Bill is proposed.

...

125. No Lands or Property belonging to Canada or any Province shall be liable to Taxation.

Nature of the taxation power in Canada

Since the 1930 Supreme Court of Canada ruling in Lawson v. Interior Tree Fruit and Vegetables Committee of Direction, taxation is held to consist of the following characteristics:[1]

  • it is enforceable by law;
  • imposed under the authority of the legislature;
  • levied by a public body; and
  • intended for a public purpose.

In order for a tax to be validly imposed, it must meet the requirements of s. 53 of the Constitution Act, 1867, but the authority for such imposition may be delegated within certain limits. Major J noted in Re Eurig Estate:[2]

In my view, the rationale underlying s. 53 is somewhat broader. The provision codifies the principle of no taxation without representation, by requiring any bill that imposes a tax to originate with the legislature. My interpretation of s. 53 does not prohibit Parliament or the legislatures from vesting any control over the details and mechanism of taxation in statutory delegates such as the Lieutenant Governor in Council. Rather, it prohibits not only the Senate, but also any other body other than the directly elected legislature, from imposing a tax on its own accord.[3]

This was endorsed by Iacobucci J in Ontario English Catholic Teachers' Assn. v. Ontario (Attorney General), and he further stated:

The delegation of the imposition of a tax is constitutional if express and unambiguous language is used in making the delegation. The animating principle is that only the legislature can impose a new tax ab initio. But if the legislature expressly and clearly authorizes the imposition of a tax by a delegated body or individual, then the requirements of the principle of “no taxation without representation” will be met. In such a situation, the delegated authority is not being used to impose a completely new tax, but only to impose a tax that has been approved by the legislature. The democratic principle is thereby preserved in two ways. First, the legislation expressly delegating the imposition of a tax must be approved by the legislature. Second, the government enacting the delegating legislation remains ultimately accountable to the electorate at the next general election.[4]

Taxation vs regulatory charge

In Westbank First Nation v. British Columbia Hydro and Power Authority, the SCC declared that a government levy would be in pith and substance a tax if it was "unconnected to any form of a regulatory scheme."[5] The test for a regulatory fee set out in Westbank requires:

  • a complete, complex and detailed code of regulation;
  • a regulatory purpose which seeks to affect some behaviour;
  • the presence of actual or properly estimated costs of the regulation; and
  • a relationship between the person being regulated and the regulation, where the person being regulated either benefits from, or causes the need for, the regulation.[6]

In 620 Connaught Ltd. v. Canada (Attorney General), the Westbank framework was qualified to require "a relationship between the charge and the scheme itself."[7] This has resulted in situations where an imposition can be characterized as neither a valid regulatory charge nor a valid tax. In Confédération des syndicats nationaux v. Canada (Attorney General), a funding scheme for employment insurance that was intended to be self-financing instead generated significant surpluses that were not used to reduce EI premiums in accordance with the legislation. It was therefore held to be contrary to the federal unemployment insurance power under s. 91(2A) and thus not a valid regulatory charge, and there was no clear authority in certain years for setting such excess rates, so it was not a valid tax.[8]

Direct vs indirect taxation

The question of whether a tax is "direct taxation" (and thus falling within provincial jurisdiction) was summarized by the Judicial Committee of the Privy Council in The Attorney General for Quebec v Reed,[9] where Lord Selborne stated:

The question whether it is a direct or indirect tax cannot depend on those special events which may vary in particular cases; but the best general rule is to look to the time of payment; and if at the time the ultimate incidence is uncertain, then, as it appears to their Lordships, it cannot, in this view, be called direct taxation within the meaning of [s. 92(2)]...

"Indirect taxation" has been summarized by Rand J in Canadian Pacific Railway Co. v. Attorney General for Saskatchewan in these words:[10]

In Esquimalt,[11] Lord Greene ... speaks of the "fundamental difference" between the "economic tendency" of an owner to try to shift the incidence of a tax and the "passing on" of the tax regarded as the hallmark of an indirect tax. In relation to commodities in commerce, I take this to lie in the agreed conceptions of economists of charges which fall into the category of accumulating items: and the question is, what taxes, through intention and expectation, are to be included in those items? If the tax is related or relateable, directly or indirectly, to a unit of the commodity or its price, imposed when the commodity is in course of being manufactured or marketed, then the tax tends to cling as a burden to the unit or the transaction presented to the market. However much, in any case, these may be actually "intended" or "expected" to be passed on, it is now settled that they are to be so treated.

When the definition of "direct taxation" is read with s. 92(2)'s requirement that it be levied "within the Province", it has been held that:

  • provincial taxes must fasten onto provincially located persons, property or transactions,[12] or to extraprovincial persons conducting economic activity within the province[13]
  • they may not be levied on goods destined for export[14]
  • they must not impede the flow of interprovincial trade[14]

Licensing fees and regulatory charges

Allard Contractors Ltd. v. Coquitlam (District) held that:

  • provincial legislatures may charge a fee that is of an indirect nature, where it is supportable as ancillary or adhesive to a valid regulatory scheme under a provincial head of power.[15]
  • in obiter, La Forest J's observation was cited with approval that s. 92(9) (together with the provincial powers over property and civil rights and matters of a local or private nature) allows for the levying of license fees even if they constitute indirect taxation.[16]

Administration

Federal taxes are collected by the Canada Revenue Agency (CRA). Under tax collection agreements, the CRA collects and remits to the provinces:

  • provincial personal income taxes on behalf of all provinces except Quebec, through a system of unified tax returns.
  • corporate taxes on behalf of all provinces except Quebec and Alberta.
  • that portion of the Harmonized Sales Tax that is in excess of the federal Goods and Services Tax (GST) rate, with respect to the provinces that have implemented it.

The Agence du Revenu du Québec collects the GST in Quebec on behalf of the federal government, and remits it to Ottawa.

  1. ^ Established by Order in Council on 1 July 1867, and given statutory basis in 1868.
  2. ^ Order in Council of 18 May 1918, pursuant to the Public Service Rearrangement and Transfer of Duties Act.
  3. ^ Branch, Legislative Services. "Consolidated federal laws of canada, Canada Revenue Agency Act". laws.justice.gc.ca. Retrieved 3 April 2018.
  4. ^ SC 50-51 Vict., c. 11
  5. ^ SC 60-61 Vict., c. 18
  6. ^ SC 11-12 Geo. V, c. 26
  7. ^ a b Branch, Legislative Services. "Consolidated federal laws of canada, Canada Border Services Agency Act". laws.justice.gc.ca. Retrieved 3 April 2018.
  8. ^ SC 17 Geo. V, c. 34
  9. ^ SC 31 Vict., c. 43
  10. ^ SC 31 Vict., c. 49

Income taxes

The Parliament of Canada entered the field with the passage of the Business Profits War Tax Act, 1916[17] (essentially a tax on larger businesses, chargeable on any accounting periods ending after 1914 and before 1918).[18] It was replaced in 1917 by the Income War Tax Act, 1917[19] (covering personal and corporate income earned from 1917 onwards).[20] Similar taxes were imposed by the provinces in the following years.[21]

Province Introduction of personal income tax Introduction of corporate income tax Tax collection assumed by federal government Personal tax collection resumed by province Corporate tax collection resumed by province Corporate tax collection resumed by federal government
British Columbia 1876 1901 1941[it 1]
Alberta 1932[it 2] 1932[it 2] 1941[it 1] 1981
Saskatchewan 1932 1932 1941[it 1]
Manitoba 1923 1924 1938[it 3]
Ontario 1936[it 4] 1932[it 5] 1936[it 6] 1947 2009[it 7]
Québec 1939 1932 1940[it 8] 1954 1947
New Brunswick 1941[it 1]
Nova Scotia 1941[it 1]
Prince Edward Island 1894 1894 1938[it 9]
Newfoundland and Labrador 1949
  1. ^ a b c d e introduced under the Wartime Tax Rental Agreement
  2. ^ a b "The Income Tax Act, SA 1932, c. 5". Retrieved 2013-03-18.
  3. ^ SM 1937, c. 43; SM 1937–38, c. 39
  4. ^ SO 1936, c. 1
  5. ^ SO 1932, c. 8
  6. ^ SO 1936, c. 1, s. 76, subsequently authorized by Order in Council P.C. 1081 of May 14, 1937
  7. ^ "Ontario transitional tax debits and credits". Canada Revenue Agency. Retrieved 2013-03-17.
  8. ^ SQ 1940, c. 16
  9. ^ SPEI 1937, c. 18; SPEI 1938, c. 10

Municipal income taxes existed as well in certain municipalities, but such taxation powers were gradually abolished as the provinces established their own collection régimes, and none survived the Second World War, as a consequence of the Wartime Tax Rental Agreements.

  • From 1850, municipal councils in Ontario possessed authority to levy taxes on income, where such amount was greater than the value of a taxpayer's personal property.[22] The personal property limitation was removed with the passage of the Assessment Act in 1904.[23] By 1936, some 200 councils ranging in size from Toronto to Blenheim Township were collecting such taxes.[24] Toronto levied personal income taxes until 1936, and corporate income taxes until 1944.[25]
  • From 1855 to 1870, and once more from 1939,[26] income tax was imposed on residents of Quebec City.[27] In 1935, a municipal income tax was imposed on the income of individuals resident or doing business in Montreal and the municipalities of the Montreal Metropolitan Commission.[28] Similar income taxes were also imposed in Sherbrooke from 1886 to 1912, in Sorel from 1889, and Hull from 1893.[27]
  • In Prince Edward Island, Summerside had an income tax from 1870 to 1880, and Charlottetown imposed one from 1880 to 1888.[29]
  • While Nova Scotia permitted municipal income tax in 1835, Halifax was the first municipality to levy one in 1849.[29]
  • New Brunswick allowed the collection of income taxes in 1831.[30] However, serious enforcement did not begin until 1849, but it was only in 1908 when all municipalities in the province were required to collect it.[29]

Personal income taxes

Both the federal and provincial governments have imposed income taxes on individuals, and these are the most significant sources of revenue for those levels of government accounting for over 45% of tax revenue. The federal government charges the bulk of income taxes with the provinces charging a somewhat lower percentage, except in Quebec. Income taxes throughout Canada are progressive with the high income residents paying a higher percentage than the low income.[31]

Where income is earned in the form of a capital gain, only half of the gain is included in income for tax purposes; the other half is not taxed.

Settlements and legal damages are generally not taxable, even in circumstances where damages (other than unpaid wages) arise as a result of breach of contract in an employment relationship.[32]

Federal and provincial income tax rates are shown at Canada Revenue Agency's website.

Personal income tax can be deferred in a Registered Retirement Savings Plan (RRSP) (which may include mutual funds and other financial instruments) that are intended to help individuals save for their retirement. Tax-Free Savings Accounts allow people to hold financial instruments without taxation on the income earned.

Corporate taxes

Companies and corporations pay tax on profit income and on capital. These make up a relatively small portion of total tax revenue. Tax is paid on corporate income at the corporate level before it is distributed to individual shareholders as dividends. A tax credit is provided to individuals who receive dividend to reflect the tax paid at the corporate level. This credit does not eliminate double taxation of this income completely, however, resulting in a higher level of tax on dividend income than other types of income. (Where income is earned in the form of a capital gain, only half of the gain is included in income for tax purposes; the other half is not taxed.)

Corporations may deduct the cost of capital following capital cost allowance regulations. The Supreme Court of Canada has interpreted the Capital Cost Allowance in a fairly broad manner, allowing deductions on property which was owned for a very brief period of time,[33] and property which is leased back to the vendor from which it originated.[34]

Starting in 2002, several large companies converted into "income trusts" in order to reduce or eliminate their income tax payments, making the trust sector the fastest-growing in Canada as of 2005. Conversions were largely halted on October 31, 2006, when Finance Minister Jim Flaherty announced that new income trusts would be subject to a tax system similar to that of corporations, and that these rules would apply to existing income trusts after 2011.

Capital tax is a tax charged on a corporation's taxable capital. Taxable capital is the amount determined under Part 1.3 of the Income Tax Act (Canada) plus accumulated other comprehensive income.

On January 1, 2006, capital tax was eliminated at the federal level. Some provinces continued to charge corporate capital taxes, but effective July 1, 2012, provinces have stopped levying corporation capital taxes. In Ontario the corporate capital tax was eliminated July 1, 2010 for all corporations, although it was eliminated effective January 1, 2007, for Ontario corporations primarily engaged in manufacturing or resource activities. In British Columbia the corporate capital tax was eliminated as of April 1, 2010.

From 1932[35] until 1951,[36] Canadian companies were able to file consolidated tax returns, but this was repealed with the introduction of the business loss carryover rules.[37] In 2010, the Department of Finance launched consultations to investigate whether corporate taxation on a group basis should be reintroduced.[37] As no consensus was reached in such consultations, it was announced in the 2013 Budget that moving to a formal system of corporate group taxation was not a priority at this time.[38]

International taxation

Canadian residents and corporations pay income taxes based on their world-wide income. Canadians are in principle protected against double taxation receiving income from certain countries which gave agreements with Canada through the foreign tax credit, which allows taxpayers to deduct from their Canadian income tax otherwise payable from the income tax paid in other countries. A citizen who is currently not a resident of Canada may petition the CRA to change her or his status so that income from outside Canada is not taxed.

If you are a non-resident of Canada and you have taxable earnings in Canada (e.g. rental income and property disposition income) you will be required to pay Canadian income tax on these amounts. Rents paid to non-residents are subject to a 25% withholding tax on the “gross rents”, which is required to be withheld and remitted to Canada Revenue Agency (“CRA”) by the payer (i.e. the Canadian agent of the non-resident, or if there is no agent, the renter of the property) each time rental receipts are paid or credited to the account of the non-resident by the payer. If the payer does not remit the required withholding taxes by the 15th day following the month of payment to the non-resident, the payer will be subject to penalties and interest on the unpaid amounts.[39]

Payroll taxes

Employers are required to remit various types of payroll taxes to the different jurisdictions they operate in:

Jurisdiction Type
Federal
Ontario Employer Health Tax[40]
Quebec
All provinces Workers' compensation premiums

Consumption taxes

Sales taxes

The federal government levies a value-added tax of 5%, called the Goods and Services Tax (GST), and, in five provinces, the Harmonized Sales Tax (HST). The provinces of British Columbia, Saskatchewan, and Manitoba levy a retail sales tax, and Quebec levies its own value-added tax, which is called the Quebec Sales Tax. The province of Alberta and the territories of Nunavut, Yukon, and Northwest Territories do not levy sales taxes of their own.

Retail sales taxes were introduced in the various provinces on these dates:[45][21][46]

Evolution of sales tax régimes by jurisdiction
Province Introduction of RST Initial RST rate Last RST rate RST repealed Conversion to HST Conversion to QST Reversion to RST
British Columbia 1948 3% 7% 2010 2013
Alberta 1936[a 1] 2% 2% 1937[a 2]
Saskatchewan[a 3] 1937 2% 6%
Manitoba 1964[a 4] 5% 8%
Ontario[a 5] 1961 3% 8% 2010
Québec 1940[a 6] 2% 9.5% 2012
New Brunswick 1950 4% 11% 1997
Nova Scotia 1959 3% 11% 1997
Prince Edward Island[a 7] 1960 4% 10% 2013
Newfoundland and Labrador 1950 3% 12% 1997
  1. ^ "Ultimate Purchasers Tax Act, SA 1936, c. 7". Retrieved 2013-03-17.
  2. ^ "An Act to amend the Ultimate Purchasers Tax Act, SA 1937 (2nd Session), c. 6". Retrieved 2013-03-17.
  3. ^ "Taxation". Encyclopedia of Saskatchewan. Retrieved 2013-03-17.
  4. ^ originally a Revenue Tax charged on a select list of supplies, replaced by a more general retail sales tax in 1967 - Ontario Committee on Taxation. III. pp. 212–213.
  5. ^ "Retail Sales Tax". Ministry of Finance (Ontario). Archived from the original on 2013-03-19. Retrieved 2013-03-17.
  6. ^ Quebec municipalities, beginning with Montreal in 1935 (SQ 1935, ch. 112), levied their own sales tax at the rate of 2%, which continued until 1964.
  7. ^ "Revenue Tax Rate History". Department of Finance, Energy and Municipal Affairs (PEI). Archived from the original on 2013-04-12. Retrieved 2013-03-17.

Current sales tax rates

Current sales tax rates by jurisdiction[b 1]
Province HST GST PST Total Tax
British Columbia 5% 7% 12%
Alberta 5% 5%
Saskatchewan 5% 6% 11%
Manitoba 5% 8% 13%
Ontario 13% 13%
Québec 5% 9.975%[b 2] 14.975%
New Brunswick 15% 15%
Nova Scotia 15% 15%
Prince Edward Island 15% 15%
Newfoundland and Labrador 15% 15%
  1. ^ "GST/HST rates".
  2. ^ "Tables of GST and QST Rates". Archived from the original on 2013-05-15. Retrieved 2013-04-03.

Excise taxes

Both the federal and provincial governments impose excise taxes on inelastic goods such as cigarettes, gasoline, alcohol, and for vehicle air conditioners. Canada has some of the highest rates of taxes on cigarettes and alcohol in the world, constituting a substantial share of the retail total price of cigarettes and alcohol paid by consumers. These are sometimes referred to as sin taxes. It is generally accepted that higher prices help deter consumption of these items, which increase health care costs stemming from their use.

The vehicle air conditioner tax is currently set at $100 per air conditioning unit.

Year for introduction of taxes on motor fuels[g 1]
Jurisdiction Fuel tax Carbon tax Local fuel tax
Federal 1975[g 2][g 3]
British Columbia 1923 2008[g 4]
1999 (Metro Vancouver)
2010 (Capital Regional District)
Alberta 1922 2017 [47]
Saskatchewan 1928
Manitoba 1923
Ontario 1925[g 5] 2017 [48]
Quebec 1924 2007[g 6]
1996 (Montreal Metropolitan Community)
New Brunswick 1926
Nova Scotia 1926
Prince Edward Island 1924
Newfoundland before Confederation
  1. ^ Report of the Ontario Committee on Taxation. III. 1967. p. 249.
  2. ^ During 1941–1947, there had been a temporary excise tax in effect.
  3. ^ "Partial Text of Tax and Tariff Proposals made in Ilsley Budget". Ottawa Citizen. 30 April 1941.
  4. ^ Carbon Tax Act, SBC 2008, c. 40
  5. ^ The Gasoline Tax Act, SO 1925, c. 28
  6. ^ An Act respecting the implementation of the Québec Energy Strategy and amending various legislative provisions, 2006, c. 46

At the federal level, Canada has imposed other excise taxes in the past:

  • From 1915 to 1953, on the issue of cheques and other commercial paper.[49]
  • From 1920 to 1927, on advances of money[50]
  • From 1920 to 1953, on the transfer of securities.[51] Initially applying to shares,[52] it was extended to cover bonds and related items in 1922.[53]
  • From 1923 to 1926, on the issue of receipts.[54]

Wealth taxes

Property taxes

The municipal level of government is funded largely by property taxes on residential, industrial and commercial properties. These account for about ten percent of total taxation in Canada. There are two types. The first is an annual tax levied on the value of the property (land plus buildings). The second is a land transfer tax levied on the sale price of properties everywhere except Alberta, Saskatchewan and rural Nova Scotia.

Gift tax

Gift tax was first imposed by the Parliament of Canada in 1935 as part of the Income War Tax Act.[55] It was repealed at the end of 1971, but rules governing the tax on capital gains that then came into effect include gifts as deemed dispositions made at fair market value,[56] that come within their scope.

Estate tax

Estate taxes have been held to be valid "direct taxation within the province,"[57] but they cannot be charged where property is left outside the province to beneficiaries who are neither resident nor domiciled in the province.[58][59] Succession duties were in effect in the various provinces at the following times:[60]

Province Introduced Repealed
Ontario 1892 1979
Quebec 1892 1986
New Brunswick 1892 1974
Nova Scotia 1892 1974
Manitoba 1893 1977
Prince Edward Island 1894 1971
British Columbia 1894 1977
Saskatchewan 1905 1977
Alberta 1905 1947
Newfoundland before Confederation 1974

Estate taxes, which were not subject to the territorial limitations that affected provincial taxation, were first introduced at the federal level under the Dominion Succession Duty Act in 1941,[61] which was later replaced by the Estate Tax Act in 1958.[62] The latter was repealed at the end of 1971. From 1947 to 1971, there was a complicated set of federal-provincial revenue-sharing arrangements, where:[60]

  • In Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, and Manitoba, the federal government collected estate taxes at full rates, but remitted 75% of the revenues derived from each of those provinces;
  • In Alberta and Saskatchewan, the federal government collected estate taxes at full rates, but remitted 75% of the revenues derived from each of those provinces, which was rebated back to the estate;
  • In British Columbia, the federal government collected estate taxes at only 25% of the full rate, and the province continued to levy its own succession duty;
  • In Ontario and Quebec, the federal government collected estate taxes at only 50% of the full rate, and remitted 50% of such collections to such provinces, and the provinces continued to levy their own succession duties.

Upon the repeal of the federal estate tax in 1972, the income tax régime was altered to incorporate consequences arising from the death of a taxpayer, which may result in tax being owed:

  • the property of an estate is said to have incurred a "deemed disposition" at fair market value, thus triggering liability for capital gains and other inclusions into income[63]
  • certain deductions and deferrals are available with respect to capital gains[64]
  • several options are available for applying any outstanding net capital losses[65]
  • income earned or accrued up to the date of death is taxed on the final tax return of the deceased at normal tax rates, but there are several additional optional tax returns that may be filed as well for certain types of income[66]
  • income earned after the date of death is to be declared on a separate return filed by the trust for the estate[67]
  • beneficiaries are taxed on amounts paid from Registered Retirement Savings Plans and Registered Retirement Income Funds, but certain rollover reliefs are available[68]

See also

Further reading

References

  1. ^ Lawson v. Interior Tree Fruit and Vegetables Committee of Direction 1930 CanLII 2, {1931} SCR 357 (16 February 1930)
  2. ^ Paul LeBreux (1999). "Eurig Estate: Another Day, Another Tax" (PDF). Canadian Tax Journal. Canadian Tax Foundation. 47 (5): 1126–1163. Retrieved 12 April 2013.
  3. ^ Re Eurig Estate 1998 CanLII 801 at par. 30, [1998] 2 SCR 565 (22 October 1998)
  4. ^ Ontario English Catholic Teachers' Assn. v. Ontario (Attorney General) 2001 SCC 15 at par. 74, [2001] 1 SCR 470 (8 March 2001)
  5. ^ Westbank First Nation v. British Columbia Hydro and Power Authority 1999 CanLII 655 at par. 43, [1999] 3 SCR 134 (10 September 1999)
  6. ^ Westbank First Nation, par. 44
  7. ^ 620 Connaught Ltd. v. Canada (Attorney General) 2008 SCC 7 at par. 27, [2008] 1 SCR 131 (29 February 2008)
  8. ^ Confédération des syndicats nationaux v. Canada (Attorney General) 2008 SCC 68, [2008] 3 SCR 511 (11 December 2008)
  9. ^ The Attorney General for Quebec v Reed [1884] UKPC 44, [1883] 10 AC 141 (26 November 1884), P.C. (on appeal from Canada)
  10. ^ Canadian Pacific Railway Co. v. Attorney General for Saskatchewan 1952 CanLII 39 at pp. 251–252, [1952] 2 SCR 231 (30 June 1952)
  11. ^ Attorney-General for British Columbia v. Esquimalt and Nanaimo Railway Company and others [1949] UKPC 48, [1950] AC 87 (2 November 1949), P.C. (on appeal from Canada)
  12. ^ Magnet 1978, p. 500.
  13. ^ Magnet 1978, pp. 500–501.
  14. ^ a b Magnet 1978, p. 506.
  15. ^ Allard Contractors Ltd. v. Coquitlam (District) 1993 CanLII 45, [1993] 4 SCR 371 (18 November 1993)
  16. ^ G.V. La Forest (1981). The Allocation of Taxing Power Under the Canadian Constitution (2nd ed.). Toronto: Canadian Tax Foundation. p. 159. ISBN 0-88808006-9.
  17. ^ S.C. 1916, c. 11
  18. ^ Breadner, R.W. (1919). "THE CANADIAN BUSINESS PROFITS AND INCOME WAR TAX ACTS: I. The Business Profits War Tax Act". The Bulletin of the National Tax Association. National Tax Association. 4 (4): 93–97. JSTOR 41785272.
  19. ^ SC 1917, Chap. 28
  20. ^ Pontifex, Brian (1917). The Income War Tax Act, 1917, with explanations by the Minister of Finance and Instructions from the Finance Department. Toronto: Carswell.
  21. ^ a b Breton, Albert (2000-06-05). Selected aspects of the power to tax in the Canadian federation, 1876–1997. ISBN 9780521771337. Retrieved 2013-03-17.
  22. ^ An Act to establish a more equal and just system of Assessment in the several Townships, Villages, Towns and Cities in Upper Canada, S.Prov.C. 1850, c. 67, s. 4
  23. ^ The Assessment Act, S.O. 1904, c. 23, s. 5
  24. ^ Robert B. Bryce (1986). Maturing in Hard Times: Canada's Department of Finance Through the Great Depression. Institute of Public Administration of Canada. p. 267. ISBN 0-7735-0555-5.
  25. ^ John Sewell (April 2011). "Letter". The Walrus. Retrieved 2013-03-18.
  26. ^ SQ 1939, ch. 102
  27. ^ a b Gillespie 1995, p. 263.
  28. ^ "Public Notice: City of Montreal Bylaw No. 1337 - By-Law to impose an Income Tax in the Territory of the City of Montreal and of Certain Municipalities under the control of the Montreal Metropolitan Commission". Montreal Gazette. 30 April 1935. Retrieved 22 March 2013., by virtue of SQ 1934, ch. 112
  29. ^ a b c Gillespie 1995, p. 262.
  30. ^ Johnson, J.A. (1974). "Methods of Curbing Local Government Financial Problems: Implications for Urban Government in Canada". In Dickerson, M.O.; Drabek, S.; Woods, J.T. (eds.). Problems of Change in Urban Government. Waterloo: Wilfrid Laurier University Press. p. 162. ISBN 0-88920-089-0.
  31. ^ Agency, Canada Revenue. "Alberta - Canada.ca". www.cra-arc.gc.ca. Retrieved 3 April 2018.
  32. ^ "Schwartz v. Canada, [1996] 1 S.C.R. 254".
  33. ^ "Hickman Motors Ltd. v. Canada, [1997] 2 S.C.R. 336".
  34. ^ "Canada Trustco Mortgage Co. v. Canada, [2005] 2 S.C.R. 601".
  35. ^ SC 1932-33, c. 41, section 13, subsequently replaced by SC 1948, c. 52, section 75
  36. ^ SC 1951, c. 51, section 26
  37. ^ a b Maureen Donnelly; Allister W. Young (2011). "Group Relief for Canadian Corporate Taxpayers–At Last?". Canadian Tax Journal. Canadian Tax Foundation. 59 (2): 239–263. Retrieved 16 March 2013.
  38. ^ "Budget Briefing 2013". Osler, Hoskin & Harcourt. 21 March 2013. Retrieved 8 April 2013.
  39. ^ "Non-Resident Renting Your Place at Big White? - Matthew Gustavson". matthewgustavson.ca. 29 July 2013. Archived from the original on 11 October 2014. Retrieved 3 April 2018.
  40. ^ "Employer Health Tax".
  41. ^ "Contributions to the Québec Pension Plan (QPP)". Archived from the original on 2013-05-15. Retrieved 2013-04-03.
  42. ^ "Québec Parental Insurance Plan (QPIP) Premiums". Archived from the original on 2013-05-15. Retrieved 2013-04-03.
  43. ^ "Contribution to the Workforce Skills Development and Recognition Fund". Archived from the original on 2013-05-12. Retrieved 2013-04-03.
  44. ^ "Compensation Tax for a Financial Institution That Is Not a Corporation". Archived from the original on 2013-05-12. Retrieved 2013-04-03.
  45. ^ Satya Poddar; Morley English (1995). "Fifty Years of Canadian Commodity Taxation: Key Events and Lessons for the Future" (PDF). Canadian Tax Journal. Canadian Tax Foundation. 43 (5): 1096–1119. Retrieved 17 March 2013.
  46. ^ Albert John Robinson (1973). Public Finance in Canada: Selected Readings. p. 262. ISBN 9780458910106. Retrieved 17 March 2013.
  47. ^ "Here's how Alberta's carbon tax works and how it will affect your wallet". edmontonjournal.com. 2 January 2017. Retrieved 3 April 2018.
  48. ^ "The cost of carbon pricing in Ontario and Alberta - Macleans.ca". macleans.ca. 4 January 2017. Retrieved 3 April 2018.
  49. ^ Christopher D. Ryan. "Canada's Excise Tax on Cheques and other Types of Commercial Paper, 1915-1953" (PDF).
  50. ^ Christopher D. Ryan. "Canada's Excise Tax on Advances of Money, 1920-1927" (PDF).
  51. ^ Christopher D. Ryan. "Canada's Excise Tax on Transfers of Stocks and Bonds, 1920-1953" (PDF).
  52. ^ SC 1920, c. 71
  53. ^ SC 1922, c. 47
  54. ^ Christopher D. Ryan. "Canada's Excise Tax on Receipts, 1923-1926" (PDF).
  55. ^ An Act to amend the Income War Tax Act, S.C. 1935, c. 40, s. 14
  56. ^ Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, s. 69(1)
  57. ^ Attorney General of British Columbia v. Canada Trust Co. et al. 1980 CanLII 221, [1980] 2 SCR 466 (27 June 1980), Supreme Court (Canada)
  58. ^ Charles S. Cotton and another v The King [1913] UKPC 56, [1914] AC 176; (1913), 15 DLR 283 (PC) (11 November 1913), P.C. (on appeal from Canada)
  59. ^ The Provincial Treasurer of Alberta and another v Clara E. Kerr and another [1933] UKPC 57, [1933] AC 710; [1933] 4 DLR 81 (PC) (27 July 1933), P.C. (on appeal from Alberta)
  60. ^ a b Wolfe D. Goodman (1995). "Death Taxes in Canada, in the Past and in the Possible Future" (PDF). Canadian Tax Journal. Canadian Tax Foundation. 43 (5): 1360–1376. Retrieved 16 March 2013.
  61. ^ The Dominion Succession Duty Act, S.C. 1940-41, c. 14
  62. ^ Estate Tax Act, S.C. 1958, c. 29
  63. ^ "Deemed disposition of property".
  64. ^ "T4037 - Capital Gains".
  65. ^ "Net capital losses".
  66. ^ "Returns for the year of death".
  67. ^ "Income reported on the T3 Trust Income Tax and Information Return".
  68. ^ "Amounts paid from an RRSP or RRIF upon the death of an annuitant".

External links

Bill 28 (British Columbia)

Bill 28, the Miscellaneous Statutes (Housing Priority Initiatives) Amendment Act, 2016, came into force on August 2, 2016. The law was introduced after calls urging the British Columbia provincial government to intervene in the housing market and curb foreign investment that was seen as a major contributor to the rapid rise in home prices.

The Act has four parts:

Vacancy tax: Amendments to the Vancouver Charter to enable the City of Vancouver to impose a municipal vacancy tax on vacant residential property

Foreign-buyers tax: Amendments to the Property Transfer Tax Act, imposing an additional property transfer tax of 15% on all residential property purchased by foreign buyers

Amendments to the Real Estate Services Act discontinuing industry self-regulation of the real estate industry

Creating a new Housing Priority Initiatives special account to fund initiatives in respect to housing, rental, access, and support programs with the new tax revenues resulting from this law.

CCH Canadian

CCH Canadian Limited is one of the four operating units of Wolters Kluwer Tax & Accounting. CCH Canadian Ltd. is a provider of solutions in the area of tax, accounting, law, human resources and financial planning.

Canada Child Tax Benefit

The Canada Child Tax Benefit (CCTB) was a tax-free monthly payment available to eligible Canadian families to help with the cost of raising children. The CCTB could incorporate the National Child Benefit (NCB), a monthly benefit for low-income families with children, and the Child Disability Benefit (CDB), a monthly benefit for families caring for children with severe and prolonged mental or physical disabilities.

Canada v GlaxoSmithKline Inc

Canada v GlaxoSmithKline Inc is the first ruling of the Supreme Court of Canada that deals with issues involving transfer pricing and how they are treated under the Income Tax Act of Canada ("ITA").

Canadian Tax Foundation

The Canadian Tax Foundation was founded in 1945 as an independent, non-partisan, non-profit tax research organization under the joint sponsorship of the Canadian Institute of Chartered Accountants and the Canadian Bar Association. It provides a unique forum for lawyers, accountants, academics, and other tax professionals to work together for the betterment of the Canadian tax system and the tax profession in general.

Canadian efile

EFILE is the system used by the Canada Revenue Agency as a means for electronically transmitting tax returns. It became a national program in 1993. EFILE is only available to professional tax preparers and is not to be confused with the publicly available NETFILE. EFILE is a form of Electronic Data Interchange.

Canadian import duties

Canadian import duties is the amount of tax or tariff paid while importing goods into Canada. The Canada Border Services Agency collects the tariff on all imported goods.According to the North American Free Trade Agreement, there is no duty to be paid if the goods are for personal use and "the goods are marked as made in the United States, Canada or Mexico, or the goods are not marked or labelled to indicate that they were made anywhere other than in the United States, Canada or Mexico."Canadians also have to pay the federal goods and services tax and in most provinces provincial sales tax on the imported goods.

Chinese head tax in Canada

The Chinese head tax was a fixed fee charged to each Chinese person entering Canada. The head tax was first levied after the Canadian parliament passed the Chinese Immigration Act of 1885 and was meant to discourage Chinese people from entering Canada after the completion of the Canadian Pacific Railway (CPR). The tax was abolished by the Chinese Immigration Act of 1923, which stopped all Chinese immigration except for that of business people, clergy, educators, students, and other categories.

Goods and services tax (Canada)

The Goods and Services Tax (GST) (French: taxe sur les produits et services, TPS) is a multi-level value added tax introduced in Canada on January 1, 1991, by then-Prime Minister Brian Mulroney and his finance minister Michael Wilson. The GST replaced a hidden 13.5% manufacturers' sales tax (MST); Mulroney claimed the GST was implemented because the MST was hindering the manufacturing sector's ability to export competitively. The introduction of the GST was very controversial. The GST rate is 5%, effective January 1, 2008.

The Goods and Services Tax is defined in law at Part IX of the Excise Tax Act. GST is levied on supplies of goods or services purchased in Canada and includes most products, except certain politically sensitive essentials such as groceries, residential rent, and medical services, and services such as financial services. Businesses that purchase goods and services that are consumed, used or supplied in the course of their "commercial activities" can claim "input tax credits" subject to prescribed documentation requirements (i.e., when they remit to the Canada Revenue Agency the GST they have collected in any given period of time, they are allowed to deduct the amount of GST they paid during that period). This avoids "cascading" (i.e., the application of the GST on the same good or service several times as it passes from business to business on its way to the final consumer). In this way, the tax is essentially borne by the final consumer. This system is not completely effective, as shown by criminals who defrauded the system by claiming GST input credits for non-existent sales by a fictional company. Exported goods are "zero-rated", while individuals with low incomes can receive a GST rebate calculated in conjunction with their income tax.

In 1997, the provinces of Nova Scotia, New Brunswick and Newfoundland (now Newfoundland and Labrador) and the Government of Canada merged their respective sales taxes into the Harmonized Sales Tax (HST). In all Atlantic provinces, the current HST rate is 15%. HST is administered by the Canada Revenue Agency, with revenues divided among participating governments according to a formula. Ontario and British Columbia both harmonized the GST with their provincial sales tax (PST) effective July 1, 2010. However, the British Columbia HST was defeated in an August 2011 mail-in referendum by a 55% majority vote, and was converted to the old GST/PST system effective April 1, 2013. On the same day, Prince Edward Island enacted HST at the rate of 14%. In Ontario, the HST totals 13%, however many of the pre-HST exemptions remain affecting only the provincial portion of the HST (for example, prepared food under $4.00 is not subject to the provincial portion of HST and is only taxed at 5%). On the other hand, some items that were only subjected to the PST are now charged the full HST (i.e., 13%). Although the Government of Ontario has made efforts to provide documentation as to what items are affected and how, this causes some confusion for consumers as they are often not sure what taxes to expect at the checkout. To accommodate these exemptions, many retailers simply display each tax individually as HST 1 and HST 2 (or some variant). The move to HST came about as part of Ontario's 2009 provincial budget. Only three provinces (British Columbia, Manitoba, and Saskatchewan) continue to impose a separate sales tax at the retail level only. Alberta is the exception, not imposing a provincial sales tax.

The three territories of Canada (Yukon, Northwest Territories and Nunavut) do not have territorial sales taxes. The government of Quebec administers both the federal GST and the provincial Quebec Sales Tax (QST). It is the only province to administer the federal tax.

Harmonized sales tax

The harmonized sales tax (HST) is a consumption tax in Canada. It is used in provinces where both the federal goods and services tax (GST) and the regional provincial sales tax (PST) have been combined into a single value added sales tax.

Health Spending Account

Health Spending Accounts (HSA) are Self-insured Private Health Services Plan (PHSP) benefits

arranged by Employers for their Employees residing in Canada. Private Health Services Plans are described in Canada Revenue Agency (CRA) Income Tax Bulletin IT-339R2 "Meaning of PHSP" for Health and Dental Care Expenses described in Income Tax Bulletin IT-519R2 "Medical Expenses".

Health Spending Accounts can be utilized to 1. supplement Insured Private Health Services Plans, or implemented as 2. "stand-alone" plans instead of Insured Private Health Services Plans. Private Health Services Plans (which may take the form of Health Spending Accounts) may form part of a Health and Welfare Trust (see IT-85R2) or Flexible Employee Benefit Program (see IT-529).

Income taxes in Canada

Income taxes in Canada

constitute the majority of the annual revenues of the Government of Canada, and of the governments of the Provinces of Canada. In the fiscal year ending 31 March 2018, the federal government collected just over three times more revenue from personal income taxes than it did from corporate income taxes.Tax collection agreements enable different governments to levy taxes through a single administration and collection agency. The federal government collects personal income taxes on behalf of all provinces and territories. It also collects corporate income taxes on behalf of all provinces and territories except Alberta. Canada's federal income tax system is administered by the Canada Revenue Agency (CRA).

Canadian federal income taxes, both personal and corporate are levied under the provisions of the Income Tax Act. Provincial and territorial income taxes are levied under various provincial statutes.

The Canadian income tax system is a self-assessment regime. Taxpayers assess their tax liability by filing a return with the CRA by the required filing deadline. CRA will then assess the return based on the return filed and on information it has obtained from employers and financial companies, correcting it for obvious errors. A taxpayer who disagrees with CRA's assessment of a particular return may appeal the assessment. The appeal process starts when a taxpayer formally objects to the CRA assessment. The objection must explain, in writing, the reasons for the appeal along with all the related facts. The objection is then reviewed by the appeals branch of CRA. An appealed assessment may either be confirmed, vacated or varied by the CRA. If the assessment is confirmed or varied, the taxpayer may appeal the decision to the Tax Court of Canada and then to the Federal Court of Appeal.

Inheritance tax

An inheritance tax is a tax paid by a person who inherits money or property of a person who has died, whereas an estate tax is a levy on the estate (money and property) of a person who has died.International tax law distinguishes between an estate tax and an inheritance tax—an estate tax is assessed on the assets of the deceased, while an inheritance tax is assessed on the legacies received by the estate's beneficiaries. However, this distinction is not always observed; for example, the UK's "inheritance tax" is a tax on the assets of the deceased, and strictly speaking is therefore an estate tax.

For historical reasons, the term death duty is still used colloquially (though not legally) in the UK and some Commonwealth countries.

Municipal Property Assessment Corporation

The Municipal Property Assessment Corporation, or MPAC, administers property assessments and appeals of assessment in the Province of Ontario MPAC determines the assessed value for all properties across the province of Ontario, Canada. This is provided in the form of an Assessment Roll, which is delivered to municipalities throughout the province on the second Tuesday in December. Municipalities then take the assessment roll, and calculate property taxes for each individual property in their jurisdiction. MPAC complains that tax payers often confuse MPAC's role as an assessment agency for taxes; MPAC responds that they only provide assessments. Municipalities set the tax rates, and distribute the tax burden based on the assessed values provided by MPAC.

The head office is located in Pickering, Ontario. MPAC, formerly known as OPAC (Ontario Property Assessment Corporation), was created on December 31, 1997, as a method to create accurate and equitable assessments across Ontario. MPAC came into existence with the MPAC Act, and administers the Assessment Act, both part of Ontario provincial legislation. On December 31, 1998, the Government of Ontario transferred responsibility for property assessment from the Ministry of Finance to the Ontario Property Assessment Corporation, an independent body established by the Ontario Property Assessment Corporation Act, 1997.According to MPAC:

"Every municipality in Ontario is a member of MPAC, a non-share capital, not-for-profit corporation whose main responsibility is to provide its customers - property owners, tenants, municipalities, and government and business stakeholders - with consistent and accurate property assessments.

MPAC is accountable to the public through a 15-member Board of Directors. Eight members of the Board are municipal representatives; five members represent property taxpayers; and two members represent provincial interests. The Minister of Finance appoints all members of the Board.

MPAC administers a uniform, province-wide property assessment system based on current value assessment in accordance with the provisions of the Assessment Act. It provides municipalities with a range of services, including the preparation of annual assessment rolls used by municipalities to calculate property taxes.

Municipal enumerations are also conducted by MPAC in order to prepare a Preliminary List of Electors for each municipality and school board during an election year. Today, MPAC is responsible for the assessment of nearly 4.7 million properties in the province."

Prior to the creation of MPAC, municipalities in Ontario had discretion on how they chose to assess properties. This created inequity across the province, as similar properties across the province had separate values.

In 2008, MPAC sent out approximately 4.7 million property assessment notices, advising properties of their assessment value. The current values are based on a January 1, 2008, valuation date.

Revenue stamps of Canada

Canada issued revenue stamps from 1864 to 2005. In addition to national issues, the provinces of Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland, Nova Scotia, Ontario, Prince Edward Island, Quebec (Lower Canada), Saskatchewan and Yukon as well as Cape Breton, Halifax, Morden, Saskatoon and Winnipeg also had their own stamps.

Sales taxes in Canada

In Canada, there are two types of sales taxes levied. These are :

Provincial sales taxes (PST), levied by the provinces.

Goods and Services Tax (GST)/Harmonized Sales Tax (HST), a value-added tax levied by the federal government. The GST applies nationally. The HST includes the provincial portion of the sales tax but is administered by the CRA and is applied under the same legislation as the GST. The HST is in effect in Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island.Every province except Alberta has implemented either a provincial sales tax or the Harmonized Sales Tax. The federal GST rate is 5 percent, effective January 1, 2008.

The territories of Yukon, Northwest Territories, and Nunavut have no territorial sales taxes, so only the GST is collected. The three northern jurisdictions are heavily subsidized by the federal government, and its residents receive some additional tax concessions due to the high cost of living in the north.

Scientific Research and Experimental Development Tax Credit Program

The Canadian Scientific Research and Experimental Development Tax Incentive Program (SRED or SR&ED) provides support in the form of tax credits and/or refunds, to corporations, partnerships or individuals who conduct scientific research or experimental development in Canada.

Tax Court of Canada

The Tax Court of Canada (TCC; French: Cour canadienne de l'impôt), established in 1983 by the Tax Court of Canada Act, is a federal superior court which deals with matters involving companies or individuals and tax issues with the Government of Canada.

Tax return (Canada)

A Canadian tax return consists of the reporting the sum of the previous year's (January to December) taxable income, tax credits, and other information relating to those two items. The result of filing a return with the federal government can result in either a refund (money owed to the person or corporation filing the return), or an amount due to be paid. There is a penalty for not filing a tax return.Normally, Canadian individual tax returns for any specific year must be filed

by April 30 of the following year. There is no provision for generally extending this deadline, but there are a few exceptions.

Tax returns for self-employed individuals and their spouses must be filed by June 15 of the following year. However, any Goods and Services Tax/Harmonized Sales Tax owing for the period is due April 30.

Tax returns for deceased individuals must be filed by the normal filing deadline or 6 months after the date of death, whichever comes later. Example: Mary dies on January 30, 2004; her 2003 return is due on July 30, 2004 (six months later) and her 2004 return is due on April 30, 2005 (normal filing deadline). This provision is also extended to the surviving spouse.

Tax returns for non-residents electing to file under section 217 are due June 30 of the following year.

By virtue of the Interpretation Act the due date of all individual returns is moved to the next business day when the normal due date falls on a Sunday or Holiday. Although ministerial orders are also used to apply this to Saturday due dates, it is not a legal requirement.

The Federal Finance Minister may extend the deadline in cases of emergency situations such as floods, etc.Canadian federal tax returns are filed with the Canada Revenue Agency (CRA).

In addition, the return plays a role in voter registration by including a checkbox asking if the signee if they are willing to have their personal contact information included on a national voter registry which is accessible by Elections Canada and its provincial equivalents.

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