Taxation in Canada: Difference between revisions

{{shortShort description|OverviewCanadian oftax taxation in Canadacodes}}

'''Taxation inIn [[Canada''']], [[taxation]] is a prerogative shared between the federal government and the various provincial and territorial legislatures.

{{seeSee also|Section 125 of the Constitution Act, 1867}}

|row1-1-text=Creation of Departments<ref group=a>Established by Order in Council on {{date|1867-7-1}} July 1867, and given statutory basis in 1868.</ref>

|row1-2-text=Creation of Department of Customs and Inland Revenue<ref group=a>Order in Council of {{date|1918-5-18}} May 1918, pursuant to the ''Public Service Rearrangement and Transfer of Duties Act''.</ref>

|caption=Timeline of Canadian federal tax administration<br/>{{reflistReflist|group=a|3}}

The [[Parliament of Canada]] entered the field with the passage of the ''Business Profits War Tax Act, 1916''<ref>S.C. 1916, c. 11</ref> (essentially a tax on larger businesses, chargeable on any accounting periods ending after 1914 and before 1918).<ref>{{cite journal|last=Breadner|first=R.W.|date=1919|title=THE CANADIAN BUSINESS PROFITS AND INCOME WAR TAX ACTS: I. The Business Profits War Tax Act|journal=The Bulletin of the National Tax Association|publisher=[[National Tax Association]]|volume=4|issue=4|pages=93–97|doi=10.1086/bullnattax41785272|jstor=41785272|s2cid=232212092|doi-access=free}}</ref> It was replaced in 1917 by the ''Income War Tax Act, 1917''<ref>SC 1917, Chap. 28</ref> (covering personal and corporate income earned from 1917 onwards).<ref>{{cite book|last= Pontifex|first= Brian|title= The Income War Tax Act, 1917, with explanations by the Minister of Finance and Instructions from the Finance Department|url= https://archive.org/stream/canadianincometa00pontrich#page/n3/mode/2up|location= Toronto|publisher= Carswell|date= 1917|access-date= 2016-04-08|archive-url= https://web.archive.org/web/20160122072519/http://www.archive.org/stream/canadianincometa00pontrich#page/n3/mode/2up|archive-date= 2016-01-22|url-status= live}}</ref> Similar taxes were imposed by the provinces in the following years.<ref name = "Aspects" />

{{reflistReflist|group=it|2}}

:* 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]].<ref>{{Cite canlaw|short title =An Act to establish a more equal and just system of Assessment in the several Townships, Villages, Towns and Cities in Upper Canada|abbr =S.Prov.C.|year =1850|chapter =67|section = 4|link= https://books.google.ca/books?id=CFQ1AQAAMAAJ&lpg=PA1421&ots=aqLUC2aenl&pg=PA1388#v=onepage&f=false}}</ref> The personal property limitation was removed with the passage of the ''Assessment Act'' in 1904.<ref>{{Cite canlaw|short title =The Assessment Act|abbr =S.O.|year =1904|chapter =23|section = 5|link= https://archive.org/stream/statutesofprovin1904onta#page/106/mode/2up}}</ref> By 1936, some 200 councils ranging in size from [[Toronto]] to [[Blenheim, Ontario|Blenheim Township]] were collecting such taxes.<ref>{{cite book |author= Robert B. Bryce|title= Maturing in Hard Times: Canada's Department of Finance Through the Great Depression|url= https://books.google.com/books?id=y2XU2UzE-vUC&pg=PA267|year= 1986|publisher= Institute of Public Administration of Canada|isbn= 0-7735-0555-5|page= 267}}</ref> [[Toronto]] levied personal income taxes until 1936, and corporate income taxes until 1944.<ref>{{cite magazine|title = Letter|author = [[John Sewell]]|author-link = John Sewell|url = http://walrusmagazine.com/article.php?ref=2011.04-letters&page=|magazine = [[The Walrus]]|date = April 2011|access-date = 2013-03-18|archive-url = https://web.archive.org/web/20130516120547/http://walrusmagazine.com/article.php?ref=2011.04-letters&page=|archive-date = 2013-05-16|url-status = live}}</ref>

Federal and provincial income tax rates are shown at [http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html Canada Revenue Agency's website].

{{seeSee also|Income trust}}

If you are a nonNon-residentresidents of Canada and you havewith taxable earnings in Canada (e.g. rental income and property disposition income) you will beare 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.<ref>{{cite web|url=http://matthewgustavson.ca/blog/nonresident.html|archive-url=https://web.archive.org/web/20141011211215/http://matthewgustavson.ca/blog/nonresident.html|url-status=dead|archive-date=11 October 2014|title=Non-Resident Renting Your Place at Big White? - Matthew Gustavson|date=29 July 2013|website=matthewgustavson.ca|access-date=3 April 2018}}</ref>

|Employers Health Tax <ref>{{Cite web|lastlast1=Finance|firstfirst1=Ministry of|last2=Division|first2=Revenue|title=Employer Health Tax - Province of British Columbia|url=https://www2.gov.bc.ca/gov/content/taxes/employer-health-tax|access-date=2020-11-19|website=www2.gov.bc.ca}}</ref>

{{seeSee also|Sales taxes in Canada}}

| 1964<ref group="a">originally a Revenue Tax charged on a select list of supplies, replaced by a more general retail sales tax in 1967 - {{cite book|url=https://archive.org/stream/reporttaxation03onta#page/212/mode/2up|title=Ontario Committee on Taxation|year=1967 |volume=III|pages=212{{endash}}213|access-date=2016-02-26|archive-url=https://web.archive.org/web/20160312085228/httphttps://archive.org/stream/reporttaxation03onta#page/212/mode/2up|archive-date=2016-03-12|url-status=live}}</ref>|| 5% || 7% || || || ||

{{reflistReflist|group=a|2}}

{{reflistReflist|group=b|2}}

{{seeSee also|Motor fuel taxes in Canada}}

Both the federal and provincial governments impose [[excise tax]]es on [[Elasticity (economics)|inelastic]] goods such as [[cigarette]]s, [[gasoline]], [[Alcohol (drug)|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 tax]]es. 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<ref group=g>{{cite book|title = Report of the Ontario Committee on Taxation|year = 1967|volume = III|page = 249|url = https://archive.org/stream/reporttaxation03onta#page/248/mode/2up|access-date = 2016-02-26|archive-url = https://web.archive.org/web/20160312085228/httphttps://archive.org/stream/reporttaxation03onta#page/248/mode/2up|archive-date = 2016-03-12|url-status = live}}</ref>

{{reflistReflist|group=g|2}}

Some exceptions apply, such as selling one's primary residence which may be exempt from taxation.<ref>{{cite web|url=http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/127/rsdnc/dspsng/menu-eng.html|title=CRA|work=cra-arc.gc.ca|date=27 November 2019 }}</ref> Capital gains made by investments in a [[Tax-Free Savings Account]] (TFSA) are not taxed.

{{seeSee also|History of wealth taxes in Canada}}

There are two main types of property taxes: the annual tax and land transfer tax.

The municipal level of government is funded largely by property taxes on residential, industrial and commercial properties; when the municipal council determines the financial budget for the year, they predict an expected revenue that needs to be funded by property tax for municipal services and decide a municipal tax rate that will allow them to achieve the revenue amount. The annual property tax is usually a percentage of the taxable assessed value of the property which is commonly determined by the assessment service provider of the municipality. The annual property tax for any province contains at least two elements: the municipal rate and the education rate. The combination of municipal and education tax portions along with any base taxes or other special taxes determines the full amount of the tax. These taxes account for about ten percent of total taxation in Canada.

:* beneficiaries are taxed on amounts paid from [[Registered Retirement Savings Plan]]s and [[Registeredregistered Retirementretirement Incomeincome Fundfund]]s, but certain rollover reliefs are available<ref>{{cite web |title = Amounts paid from an RRSP or RRIF upon the death of an annuitant |url = http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/trnsfrrng/dth-eng.html |access-date = 2013-04-10 |archive-url = https://web.archive.org/web/20130514002014/http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/trnsfrrng/dth-eng.html |archive-date = 2013-05-14 |url-status = live }}</ref>

* {{cite book |last= Lewis|first= David|author-link= David Lewis (Canadian politician)|others = Introduction by [[Eric Kierans]]|year= 1972|title= Louder Voices: The Corporate Welfare Bums|url= https://books.google.com/books?id=M30-aZWLRi0C|location= Toronto|publisher= James Lewis & Samuel|isbn= 0-88862-031-4}} (Largely concerns corporate taxation, including income taxes, and subsidies in Canada.)