Taxation in Canada is a prerogative that is shared between the federal government and various provincial and territorial legislatures. Under the Constitution Act, 1867 , the power of taxation is held in the Canadian Parliament under s. 91 (3) to:
The provincial legislature has a more limited authority under ss. 92 (2) and 92 (9) for:
In turn, the provincial legislature has authorized the city council to levy certain types of taxes, such as property taxes.
The power of taxation is limited by ss. 53 and 54 (both extended to a province of 90), and 125, which states:
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The nature of taxation power in Canada
Since 1930 the Supreme Canadian Supreme Court at Lawson v. Tree Interior Fruit and Vegetable Direction Committee , taxation is held to consist of the following characteristics:
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- it can be enforced by law;
- imposed under the legislative authority;
- collected by a public body; and
- is intended for public purposes.
In order for the tax to be legally enforceable, it must meet the requirements of s. 53 of the Constitution Act, 1867 , but the authority for such imposition can be delegated within certain limits. Major J is recorded in Re Eurig Estate :
In my view, the underlying reason s. 53 somewhat wider. The provision codifies the principle of no tax without a representative, by requiring any draft law that imposes taxes to derive from the legislature. My Interpretation of s. 53 does not prohibit Parliament or the legislature from releasing control over the details and mechanisms of taxation in legal delegations such as Lieutenant Governor at the Council. Instead, he prohibited not only the Senate, but also other bodies other than the legislature directly elected, from imposing a tax on his own accord.
This is supported by Iacobucci J at Ontario English Catholic Teachers' Assn. v. Ontario (Attorney General) , and he further stated:
The tax imposition delegate is constitutional if clear and unambiguous language is used in creating delegates. The animating principle is that only the legislature can impose a new tax ab initio . But if the legislature expressly and explicitly approves the taxation by the delegated body or individual, then the principle requirement "no taxation without representation" will be fulfilled. In such situations, the delegated authority is not used to impose a completely new tax, but only to impose a tax already approved by the legislature. Thus the democratic principle is maintained in two ways. First, laws explicitly delegate tax imposition must be approved by the legislature. Second, the government enacted the legislation of the permanent delegation to be ultimately accountable to the electorate in the next general election.
Tax vs. regulatory fees
At Westbank First Nation v. British Columbia Hydro and Power Authority, the SCC states that government levies will become the core and substance of the tax if it is "unrelated to the shape of the regulatory scheme." The tests for regulatory fees set at Westbank require:
In 620 Connaught Ltd. v. Canada (Attorney General) , the Westbank framework is eligible to request "the relationship between the cost and the scheme itself." This has resulted in a situation where coercion can be characterized as neither valid regulatory content nor a valid tax. In ConfÃÆ' Â © ÃÆ' Â © ration des syndicats nationaux v. Canada (Attorney-General) , a funding scheme for employment insurance intended to be self-financing instead generates a significant surplus that is not used to reduce EI premiums in accordance with the law. It is therefore held to contravene the federal unemployment insurance force under s. 91 (2A) and thus is not a legitimate regulatory expense, and there is no clear authority in any given year to fix such excess tariffs, so that is not a valid tax.
Direct/indirect taxes
The question of whether the tax is a "direct tax collection" (and thus falls within the jurisdiction of the province) is summarized by the Justice Committee of the Advisory Council at the Attorney General for Quebec v Reed, where Lord Selborne states:
The question whether it is direct or indirect taxes can not depend on specific events that may vary in certain cases; but the best rule of thumb is to look at payment times; and if at that moment the highest event is uncertain, then, as it appears to their Lord, can not, in this view, be called direct taxing in the sense of [s. 92 (2)]...
"Indirect taxes" has been summarized by Rand J at Canadian Pacific Railway Co. v. Attorney General for Saskatchewan with these words:
In Esqualt , Lord Greene... speaks of a "fundamental difference" between an owner's "economic tendency" to try to shift the tax incidence and "pass on" the tax that is considered a hallmark of indirect taxation. In relation to commodities in commerce, I take this to lie in an approved conception of economists of the accusations that fall into the category of accumulated items: and the question is, what taxes, through intentions and expectations, should be included in the goods? If the taxes related or related, directly or indirectly, to commodity units or their prices, are levied when commodities are being produced or marketed, the taxes tend to stick as unit or transaction expenses are presented to the market. However, in many ways this may be "intended" or "expected" to continue, it is now resolved that they should be treated as such.
When the definition of "direct tax collection" is read by s. 92 (2) the requirement that it be levied "within the Province", has been held that:
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- provincial taxes must be binding on persons, property or transactions located in the province, or to persons outside the province conducting economic activities within the province
- they may not be imposed on goods destined for export
- they should not block the flow of trade between provinces
Licensing fees and setting fees
Allard Contractors Ltd. v. Coquitlam (District) states that:
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- the provincial legislature may impose an indirect fee, in which it may be supported in addition or adhesive to a valid regulatory scheme under the head of provincial power.
- in obiter , the observation of La Forest J was quoted with the consent. 92 (9) (together with provincial powers over property rights and civil rights and local or personal matters) makes it possible to obtain license fees even if they are indirect taxation.
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Administration
Federal taxes are collected by the Canadian Revenue Agency (CRA). Under the tax collection agreement, CRA collects and sends to the province:
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- the provincial personal income tax on behalf of all provinces except Quebec, through an integrated tax return system.
- corporate taxes on behalf of all provinces except Quebec and Alberta.
- portion of the harmonized Sales Tax which exceeds the Federal Goods and Services Tax rate (GST), in respect of the province that has applied it.
Agence du Revenu du QuÃÆ' Â © bec collects GST in Quebec on behalf of the federal government, and sends it to Ottawa.
Income tax
The Canadian Parliament enters the field with a share of the Business Income Tax Act, 1916 (basically a tax on a larger business, is charged at each accounting period ending after 1914 and before 1918). It was replaced in 1917 by the Income Tax Act of War, 1917 (covering personal and corporate income gained from 1917 onwards). Similar taxes are imposed by provinces in subsequent years.
City income taxes also exist in certain cities, but such taxation powers are gradually abolished because the provinces set up their own collections, and none survived the Second World War, as a consequence of the War of Time War Rent Agreement.
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- From 1850, the municipal councils in Ontario have the authority to levy a tax on income, in which the amount is greater than the personal value of the taxpayer. The limitations of private property were removed with the passage of the Assessment Act in 1904. In 1936, about 200 councils ranging from Toronto to Blenheim Township collected the tax. Toronto collected personal income tax until 1936, and corporate income tax until 1944.
- From 1855 to 1870, and again from 1939, income taxes were levied on residents of Quebec City. In 1935, the city income tax was levied on the income of individuals or doing business in Montreal and the municipalities of the Metropolitan Commission of Montreal. Similar income taxes were also imposed on Sherbrooke from 1886 to 1912, at Sorel from 1889, and Hull from 1893.
- In Prince Edward Island, Summerside had income tax from 1870 to 1880, and Charlottetown imposed it from 1880 to 1888.
- While Nova Scotia allowed the city's revenue tax in 1835, Halifax was the first municipality to levy taxes in 1849.
- New Brunswick allowed the collection of income taxes in 1831. However, serious enforcement did not begin until 1849, but it was not until 1908 when all the municipalities in the Province were asked to take it.
Personal income tax
The federal and provincial governments have imposed income taxes on individuals, and this is the most significant source of income for the government accounting rate of over 45% of tax revenues. The federal government collects most income taxes with provinces that charge a slightly lower percentage, except in Quebec. Income taxes across Canada are progressive with high-income residents paying a higher percentage than low income.
Where income is earned in the form of capital gains, only half of the profits are included in income for tax purposes; the other half is not taxed.
Settlements and legal losses are generally not taxable, even in circumstances where damages (other than unpaid wages) arise as a result of breach of contract in the employment relationship.
Federal and provincial income tax rates are displayed on the Canadian Income Agency website.
Personal income tax may be postponed in the Registered Retirement Savings Plan (RRSP) (which may include mutual funds and other financial instruments) intended to help individuals save for their retirement. The Free Savings Account allows a person to hold a financial instrument without tax on the income earned.
Corporate tax
Firms and companies pay tax on income and capital gains. This is a relatively small part of total tax revenue. Taxes are paid on corporate earnings at the enterprise level before being distributed to individual shareholders as dividends. Tax credits are granted to individuals who receive dividends to reflect taxes paid at the enterprise level. This credit does not remove the double tax of this income entirely, however, resulting in a higher tax rate on dividend income than any other kind of income. (Where income is earned in the form of capital gain, only half of the profit is included in income for tax purposes; the other half is not taxed.)
Corporations can reduce capital costs following capital expenditure regulation rules. The Supreme Court of Canada has interpreted Capital Expenditure Benefits in a fairly broad manner, enabling the cutting of property held for a very short period of time, and property being leased back to the vendor where it came from.
Starting in 2002, several large companies turned into "earnings trust" to reduce or eliminate their income tax payments, making the trust sector grow fastest in Canada in 2005. Conversion was largely discontinued on October 31, 2006, when Finance Minister Jim Flaherty announced that trust the new revenue will be subject to a tax system similar to the company, and that this rule will apply to existing revenue trusts after 2011.
Capital tax is a tax imposed on a company's taxable capital. Taxable capital is the amount specified under Section 1.3 of the Income Tax Act (Canada) plus the accumulation of other comprehensive income.
On January 1, 2006, the capital tax was abolished at the federal level. Some provinces continue to burden the company's capital tax, but effective July 1, 2012, the province has stopped taking the company's capital tax. In Ontario the company's capital tax abolished July 1, 2010 for all companies, although it was effectively removed January 1, 2007, for Ontario companies primarily engaged in manufacturing or resource activities. In British Columbia, corporate taxes have been eliminated on April 1, 2010.
From 1932 to 1951, Canadian companies could file a consolidated tax refund, but this was repealed by the introduction of business loss rules. In 2010, the Ministry of Finance launched a consultation to investigate whether corporate taxation on a group basis should be reintroduced. Since no consensus has been reached in such consultations, it was announced in Budget 2013 that moving to the formal system of corporate taxation is not a priority at the moment.
International taxation
Canadian residents and companies pay income tax based on their income worldwide. Canada is principally protected against double taxation receipts that receive revenues from certain countries which provide agreements with Canada through foreign tax credits, allowing taxpayers to withhold from their Canadian income tax if not paid out of the income tax paid in other countries. Citizens who are not currently resident of Canada may petition CRA to change its status so that income from outside Canada is not taxed.
If you are not a resident of Canada and you have a taxable income in Canada (such as rental income and income disposition property), you will be required to pay Canada income tax on this amount. Rents paid to non-residents are subject to a 25% withholding tax on "gross rent", which must be withheld and sent to the Canadian Revenue Agency ("CRA") by the payer (ie, a non-resident Canadian agent). resident, or if there is no agent, tenant property) whenever the rental receipt is paid or credited to the non-resident account by the payer. If the payer does not send the withholding tax requested prior to the 15th day after the month of payment to the non-resident, the payer shall be liable to the penalty and interest on the unpaid amount.
Payroll tax
Employers are required to submit different types of payroll taxes to the various jurisdictions in which they operate:
Consumption tax
Sales tax
The federal government imposes a 5% value-added tax, called Goods and Services Tax (GST), and, in five provinces, Harmonized Sales Tax (HST). Provinces of British Columbia, Saskatchewan and Manitoba charge retail sales tax, and Quebec imposed its own value-added tax, called Quebec Sales Tax. The Provinces of Alberta and the Nunavut, Yukon and Northwest Territories do not charge their own sales taxes.
Retail sales tax introduced in various provinces on this date:
Current sales tax rate
Excise tax
Both the federal and provincial governments impose excise taxes on non-elastic goods such as cigarettes, gasoline, alcohol, and for vehicle air conditioners. Canada has some of the highest tax rates for cigarettes and alcohol in the world, which is an important part of the total retail price of cigarettes and alcohol paid by consumers. This is sometimes referred to as the tax of sin. It is generally accepted that higher prices hinder the consumption of these items that have been considered to increase health care costs stemming from those who use them, although this is a myth. [Source?]
Vehicle air conditioner tax is currently set at $ 100 per air conditioning unit.
At the federal level, Canada has imposed other excise taxes in the past:
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- From 1915 to 1953, on the subject of checks and other commercial papers.
- From 1920 to 1927, on down payment
- From 1920 to 1953, about the transfer of securities. Originally applicable to stocks, it was extended to cover bonds and related items in 1922.
- From 1923 to 1926, on the issue of receipt.
The wealth tax
Property tax
The city government rate is funded largely by property taxes on residential, industrial and commercial properties. This account is about ten percent of total taxation in Canada. There are two types. The first is the annual tax imposed on the value of the property (land plus buildings). The second is a land transfer tax imposed on the sale price of any property except Alberta, Saskatchewan, and rural Nova Scotia.
Gift tax
The prize tax was first enacted by the Canadian Parliament in 1935 as part of the Income Tax Act . It was repealed at the end of 1971, but the rules governing taxes on capital gains which then came into effect include gifts as dispositions deemed to be made at fair market value, which comes within their scope.
Property tax
Plantation taxes have been held to be a legitimate "legally valid tax collection" within the province, but they can not be billed if the property is left outside the province to a non-resident or domiciled beneficiary in the province. The successor tasks are applicable in different provinces at the following times:
Plantation taxes, which are not subject to territorial restrictions affecting provincial taxes, were first introduced at the federal level under the Dominion Succession Liability Act in 1941, subsequently replaced by Estate Estate Tax in 1958. The latter was repealed at the end of 1971. From 1947 to 1971 there was a series of complex federal-provincial revenue-sharing arrangements, in which:
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- In Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, and Manitoba, the federal government collects plantation taxes at full tariffs, but sends 75% of revenues from each of these provinces;
- In Alberta and Saskatchewan, the federal government collects land tax at full tariff, but sends 75% of revenues from each province, which is returned to the property;
- In British Columbia, the federal government collects land tax only 25% of the full tariff, and the province continues to charge its own replacement costs;
- In Ontario and Quebec, the federal government collects land tax at only 50% of the full tariff, and sends 50% of the collection to the provinces, and the provinces continue to collect their own duty of success.
After the revocation of federal land tax in 1972, the income tax rà ©  © gime was changed to include the consequences arising from the death of a taxpayer, which may result in tax payable:
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- estate property is said to have generated "dispositions deemed" at fair market value, thus triggering liabilities for capital gains and other inclusion into revenues
- Certain deductions and holds are available with respect to capital gains
- some options are available for applying extraordinary net capital losses
- any income earned or accrued until the date of death is taxed on the final tax refund of the deceased at a normal tax rate, but there are some additional optional taxes that may be filed as well for certain types of income
- revenues earned after the date of death should be stated on a separate return proposed by trust for the estate
- the beneficiary is taxed on the amount paid from the Registered Retirement Savings Package and the Registered Pension Fund, but certain rollover assistance is available
See also
- Dividend tax
- Focal neutrality
- Goods and Services Tax (Canada) (GST)
- Registered Retirement Pension Plan (RRSP)
- Surrogatum Principle
- Canadian federal budget
Further reading
Caterpie, Irwin (1995). Taxes, Borrowing and Spending: Federal Spending Financing in Canada, 1867-1990 . Carleton University Press. p.Ã, 263. ISBNÃ, 0-88629-153-4.
References
External links
- Department of Finance, Canada
- Canadian Revenue Agency
Source of the article : Wikipedia
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