View source for Taxation in Canada

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{{Taxation by country}}
{{Taxation}}
In [[Canada]], [[taxation]] is a legislative power shared between the federal government and the various provincial and territorial legislatures.

==Constitutional authority==

Under the ''[[Constitution Act, 1867]]'', taxation powers are vested in the [[Parliament of Canada]] under s. 91(3) for:

{{centered pull quote|
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:

{{centered pull quote|
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.
}}

The provinces also have a taxation power relating to provincial natural resources, set out in s. 92A of the ''Constitution Act, 1867'':

{{centered pull quote|'''92A'''(4) In each province, the legislature may make laws in relation to the raising of money by any mode or system of taxation in respect of{{indent|5}}(a) non-renewable natural resources and forestry resources in the province and the primary production therefrom, and{{indent|5}}(b) sites and facilities in the province for the generation of electrical energy and the production therefrom,}}

{{centered pull quote|whether or not such production is exported in whole or in part from the province, but such laws may not authorize or provide for taxation that differentiates between production exported to another part of Canada and production not exported from the province.}}

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:

{{centered pull quote|
'''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==
{{See also|Section 125 of the Constitution Act, 1867}}
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:<ref>{{cite CanLII|litigants=Lawson v. Interior Tree Fruit and Vegetables Committee of Direction|link=|year=1930|court=scc|num=2|format=canlii|pinpoint=|parallelcite={1931} SCR 357|date=1930-02-16|courtname=|juris=}}</ref>

:* 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. [[John C. Major|Major J]] noted in ''Re Eurig Estate'':<ref>{{cite journal|year=1999|title=''Eurig Estate'': Another Day, Another Tax|url=http://www.ctf.ca/ctfweb/Documents/PDF/1999ctj/1999CTJ5_LeBreux.pdf|journal=Canadian Tax Journal|publisher=[[Canadian Tax Foundation]]|volume=47|issue=5|pages=1126{{endash}}1163|author=Paul LeBreux|access-date=12 April 2013|archive-url=https://web.archive.org/web/20160305172139/http://ctf.ca/ctfweb/documents/pdf/1999ctj/1999ctj5_lebreux.pdf|archive-date=5 March 2016|url-status=live}}</ref>

{{quotation|
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.<ref>{{cite CanLII|litigants=Re Eurig Estate|link=|year=1998|court=scc|num=801|format=canlii|pinpoint=par. 30|parallelcite=[1998] 2 SCR 565|date=1998-10-22|courtname=|juris=}}</ref>}}

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

{{quotation|
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.<ref>{{cite CanLII|litigants=Ontario English Catholic Teachers' Assn. v. Ontario (Attorney General)|link=|year=2001|court=scc|num=15|format=|pinpoint=par. 74|parallelcite=[2001] 1 SCR 470|date=2001-03-08|courtname=|juris=}}</ref>}}

===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."<ref>{{cite CanLII|litigants=Westbank First Nation v. British Columbia Hydro and Power Authority|link=|year=1999|court=scc|num=655|format=canlii|pinpoint=par. 43|parallelcite=[1999] 3 SCR 134|date=1999-09-10|courtname=|juris=}}</ref> 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.<ref>''Westbank First Nation'', par. 44</ref>

In ''620 Connaught Ltd. v. Canada (Attorney General)'', the ''Westbank'' framework was qualified to require "a relationship between the charge and the scheme itself."<ref>{{cite CanLII|litigants=620 Connaught Ltd. v. Canada (Attorney General)|link=|year=2008|court=scc|num=7|format=|pinpoint=par. 27|parallelcite=[2008] 1 SCR 131|date=2008-02-29|courtname=|juris=}}</ref> 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.<ref>{{cite CanLII|litigants=Confédération des syndicats nationaux v. Canada (Attorney General)|link=|year=2008|court=scc|num=68|format=|pinpoint=|parallelcite=[2008] 3 SCR 511|date= 2008-12-11|courtname=|juris=}}</ref>

===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'',<ref>{{cite BAILII|litigants=The Attorney General for Quebec v Reed|link=|court=UKPC|year=1884|num=44|format=1|parallelcite=[1883] 10 AC 141|date=26 November 1884|courtname=[[Judicial Committee of the Privy Council|P.C.]]|juris=Canada}}</ref> where [[Roundell Palmer, 1st Earl of Selborne|Lord Selborne]] stated:

{{quotation|
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 [[Ivan Rand|Rand J]] in ''Canadian Pacific Railway Co. v. Attorney General for Saskatchewan'' in these words:<ref>{{cite CanLII|litigants=Canadian Pacific Railway Co. v. Attorney General for Saskatchewan|link=|year=1952|court=scc|num=39|format=canlii|pinpoint=pp. 251{{endash}}252|parallelcite=[1952] 2 SCR 231|date=1952-06-30|courtname=|juris=}}</ref>

{{quotation|
In ''Esquimalt'',<ref>{{cite BAILII|litigants=Attorney-General for British Columbia v. Esquimalt and Nanaimo Railway Company and others|link=|court=UKPC|year=1949|num=48|format=1|parallelcite=[1950] AC 87|date=2 November 1949|courtname=[[Judicial Committee of the Privy Council|P.C.]]|juris=Canada}}</ref> [[Wilfred Greene, 1st Baron Greene|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,{{sfn|Magnet|1978|p=500}} or to extraprovincial persons conducting economic activity within the province{{sfn|Magnet|1978|pp=500{{endash}}501}}
:* they may not be levied on goods destined for export{{sfn|Magnet|1978|p=506}}
:* they must not impede the flow of interprovincial trade{{sfn|Magnet|1978|p=506}}

===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.<ref>{{cite CanLII|litigants=Allard Contractors Ltd. v. Coquitlam (District)|link=|year=1993|court=scc|num=45|format=canlii|pinpoint=|parallelcite=[1993] 4 SCR 371|date=1993-11-18|courtname=|juris=}}</ref>
:* in ''[[obiter dictum|obiter]]'', [[Gérard La Forest|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.<ref>{{cite book |author= G.V. La Forest|author-link= Gérard La Forest|title= The Allocation of Taxing Power Under the Canadian Constitution|url= https://archive.org/details/allocationoftaxi0000lafo|url-access= registration|edition= 2nd|year= 1981|publisher= [[Canadian Tax Foundation]]|location= Toronto|isbn= 0-88808006-9|page= [https://archive.org/details/allocationoftaxi0000lafo/page/159 159]}}</ref>

==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 (Canada)|Goods and Services Tax]] (GST) rate, with respect to the provinces that have implemented it.

The [[Revenu Québec|Agence du Revenu du Québec]] collects the GST in Quebec on behalf of the federal government, and remits it to Ottawa.
{{Simple Horizontal timeline
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|to=2050
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|row1=note
|row1-1-at=1867
|row1-1-text=Creation of Departments<ref group=a>Established by Order in Council on 1 July 1867, and given statutory basis in 1868.</ref>
|row1-2-at=1918
|row1-2-text=Creation of Department of Customs and Inland Revenue<ref group=a>Order in Council of 18 May 1918, pursuant to the ''Public Service Rearrangement and Transfer of Duties Act''.</ref>
|row1-3-at=1999
|row1-3-text=Creation of Canada Customs and Revenue Agency<ref group=a>{{cite web|url=http://laws.justice.gc.ca/eng/acts/C-10.11/index.html|title=Consolidated federal laws of canada, Canada Revenue Agency Act|first=Legislative Services|last=Branch|website=laws.justice.gc.ca|access-date=3 April 2018|archive-url=https://web.archive.org/web/20160812060428/http://www.laws.justice.gc.ca/eng/acts/C%2D10.11/index.html|archive-date=12 August 2016|url-status=live}}</ref>

|row2=note
|row2-1-at=1892
|row2-1-text=Substitution of Commissioners for Ministers<ref group=a>SC 50-51 Vict., c. 11</ref>

|row3=note
|row3-1-at=1897
|row3-1-text=Restoration of Ministers<ref group=a>SC 60-61 Vict., c. 18</ref>
|row3-2-at=1921
|row3-2-text=Renaming to Department of Customs and Excise<ref group=a>SC 11-12 Geo. V, c. 26</ref>
|row3-3-at=2005
|row3-3-text=CCRA renamed as CRA<ref name = "CBSA" group=a>{{cite web|url=http://laws.justice.gc.ca/eng/acts/C-1.4/index.html|title=Consolidated federal laws of canada, Canada Border Services Agency Act|first=Legislative Services|last=Branch|website=laws.justice.gc.ca|access-date=3 April 2018|archive-url=https://web.archive.org/web/20160814085155/http://www.laws.justice.gc.ca/eng/acts/C%2D1.4/index.html|archive-date=14 August 2016|url-status=live}}</ref>

|row4=note
|row4-1-at=1927
|row4-1-text=Adoption of present name of department<ref group=a>SC 17 Geo. V, c. 34</ref>
|row4-3-at=2005
|row4-3-text=Transfer of border services to separate agency<ref name = "CBSA" group=a />

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|row5-style=styleDefault
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|row5-1-to=1918
|row5-1-text= Department of Customs<ref group=a>SC 31 Vict., c. 43</ref>
|row5-1-border=;border-left:1px solid #000000;border-right:1px solid #000000;border-bottom:1px solid #000000;
|row5-2-to=1921
|row5-2-style=stylerow1
|row5-3-to=1927
|row5-3-style=stylerow1
|row5-4-to=1999
|row5-4-text=[[Minister of National Revenue (Canada)|Department of National Revenue]]
|row5-4-texttop=2.1em;
|row5-4-style=stylerow1
|row5-5-to=2050
|row5-5-style=stylerow1
|row5-5-text=[[Canada Revenue Agency]]

|row6=timeline
|row6-style=styleDefault
|row6-1-to=1918
|row6-1-text= Department of Inland Revenue<ref group=a>SC 31 Vict., c. 49</ref>
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|row6-2-to=1921
|row6-3-to=1927
|row6-4-to=1999
|row6-5-to=2005
|row6-6-to=2050
|row6-6-text=[[Canada Border Services Agency]]
|row6-6-border=;border-top:1px solid #000000;border-right:1px solid #000000;

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

==Income taxes==
{{main article|Income taxes in Canada}}
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" />

{| class="wikitable"
|-
! Province
! width="75" |Introduction of personal income tax
! width="75" |Introduction of corporate income tax
! width="75" |Tax collection assumed by federal government
! width="75" |Personal tax collection resumed by province
! width="75" |Corporate tax collection resumed by province
! width="75" |Corporate tax collection resumed by federal government
|-
| [[British Columbia]]
|  1876||1901 ||1941<ref name = "WTRA" group=it>introduced under the Wartime Tax Rental Agreement</ref> || || ||
|-
| [[Alberta]]
|  1932<ref name="SA1932c5" group=it>{{Cite web|title = ''The Income Tax Act'', SA 1932, c. 5|url = http://www.ourfutureourpast.ca/law/page.aspx?id=2893017|archive-url = https://archive.today/20130410034823/http://www.ourfutureourpast.ca/law/page.aspx?id=2893017|url-status = dead|archive-date = 2013-04-10|access-date = 2013-03-18}}</ref>||1932<ref name = "SA1932c5" group=it /> ||1941<ref name = "WTRA" group=it /> || || 1981 ||
|-
| [[Saskatchewan]]
|  1932||1932 ||1941<ref name = "WTRA" group=it /> || || ||
|-
| [[Manitoba]]
| 1923 ||1924 ||1938<ref group=it>SM 1937, c. 43; SM 1937{{endash}}38, c. 39</ref> || || ||
|-
| [[Ontario]]
|  1936<ref group=it>SO 1936, c. 1</ref>||1932<ref group=it>SO 1932, c. 8</ref> ||1936<ref group=it>SO 1936, c. 1, s. 76, subsequently authorized by [[Order in Council]] P.C. 1081 of May 14, 1937</ref> || ||1947 ||2009<ref group=it>{{Cite web|title = Ontario transitional tax debits and credits|url = http://www.cra-arc.gc.ca/tx/bsnss/tpcs/crprtns/prv/on/trnstx-eng.html|publisher = [[Canada Revenue Agency]]|access-date = 2013-03-17|archive-url = https://web.archive.org/web/20130514004806/http://www.cra-arc.gc.ca/tx/bsnss/tpcs/crprtns/prv/on/trnstx-eng.html|archive-date = 2013-05-14|url-status = live}}</ref>
|-
| [[Québec]]
|  1939||1932 ||1940<ref group=it>{{Cite canlaw|short title  =Loi de l'impôt de Québec sur le revenu|abbr =SQ|year =1940|chapter =16|link=https://www.bibliotheque.assnat.qc.ca/DepotNumerique_v2/AffichageFichier.aspx?idf=119284}}</ref> ||1954<ref group=it>{{Cite canlaw|short title  =Provincial Income Tax Act|abbr =SQ|year =1953-54|chapter =17|link=https://www.bibliotheque.assnat.qc.ca/DepotNumerique_v2/AffichageFichier.aspx?idf=115580}}</ref> ||1947<ref group=it>{{Cite canlaw|short title  =Corporation Tax Act|abbr =SQ|year =1947|chapter =33|link=https://www.bibliotheque.assnat.qc.ca/DepotNumerique_v2/AffichageFichier.aspx?idf=118436}}</ref> ||
|-
| [[New Brunswick]]
|  || ||1941<ref name = "WTRA" group=it /> || || ||
|-
| [[Nova Scotia]]
|  || ||1941<ref name = "WTRA" group=it /> || || ||
|-
| [[Prince Edward Island]]
|  1894||1894 ||1938<ref group=it>SPEI 1937, c. 18; SPEI 1938, c. 10</ref> || || ||
|-
| [[Newfoundland and Labrador]]
|  || ||1949 || || ||
|}
{{Reflist|group=it|2}}

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]].<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>
:* From 1855 to 1870, and once more from 1939,<ref>SQ 1939, ch. 102</ref> income tax was imposed on residents of [[Quebec City]].{{sfn|Gillespie|1995|p= 263}} 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]].<ref>{{cite news|url=https://news.google.com/newspapers?nid=1946&dat=19350430&id=7QUuAAAAIBAJ&pg=6178,3642362|title=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|date=30 April 1935|newspaper=[[Montreal Gazette]]|access-date=22 March 2013|archive-url=https://web.archive.org/web/20160312083153/https://news.google.com/newspapers?nid=1946&dat=19350430&id=7QUuAAAAIBAJ&sjid=8JgFAAAAIBAJ&pg=6178,3642362|archive-date=12 March 2016|url-status=live}}, by virtue of SQ 1934, ch. 112</ref> Similar income taxes were also imposed in [[Sherbrooke]] from 1886 to 1912, in [[Sorel-Tracy|Sorel]] from 1889, and [[Hull, Quebec|Hull]] from 1893.{{sfn|Gillespie|1995|p=263}}
:* In Prince Edward Island, [[Summerside, Prince Edward Island|Summerside]] had an income tax from 1870 to 1880, and [[Charlottetown]] imposed one from 1880 to 1888.{{sfn|Gillespie|1995|p=262}}
:* While Nova Scotia permitted municipal income tax in 1835, [[Halifax (former city)|Halifax]] was the first municipality to levy one in 1849.{{sfn|Gillespie|1995|p=262}}
:* New Brunswick allowed the collection of income taxes in 1831.<ref>{{cite book|editor1-last= Dickerson|editor1-first= M.O.|editor2-last= Drabek|editor2-first= S.|editor3-last= Woods|editor3-first= J.T.|last= Johnson|first= J.A.|date= 1974|title= Problems of Change in Urban Government|chapter= Methods of Curbing Local Government Financial Problems: Implications for Urban Government in Canada|chapter-url= https://books.google.com/books?id=WdcHAAAAMAAJ&pg=PA162|location= Waterloo|publisher= Wilfrid Laurier University Press|page= [https://archive.org/details/problemsofchange0000banf/page/162 162]|isbn= 0-88920-089-0|url= https://archive.org/details/problemsofchange0000banf/page/162}}</ref> 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.{{sfn|Gillespie|1995|p=262}}

===Personal income taxes===
{{Update|section|date=May 2025|reason=No information on the Ontario Health Premium}}
Both the federal and provincial governments have imposed [[income tax]]es 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 taxation|progressive]] with the high income residents paying a higher percentage than the low income.<ref>{{cite web|url=http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/prvncl/09-eng.html|title=Alberta - Canada.ca|first=Canada Revenue|last=Agency|website=www.cra-arc.gc.ca|access-date=3 April 2018|archive-url=https://web.archive.org/web/20170624220411/http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/prvncl/09-eng.html|archive-date=24 June 2017|url-status=live}}</ref>

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.<ref>{{cite web |title = Schwartz v. Canada, [1996] 1 S.C.R. 254 |url = http://www.taxcases.ca/schwartz-v-canada-1996-1-s-c-r-254/ |access-date = 2013-08-19 |archive-url = https://web.archive.org/web/20150510094041/http://www.taxcases.ca/schwartz-v-canada-1996-1-s-c-r-254/ |archive-date = 2015-05-10 |url-status = live }}</ref>

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 Account]]s allow people to hold financial instruments without taxation on the income earned.

===Corporate taxes===
{{main|Corporate tax in Canada}}
Companies and corporations pay [[Corporate tax in Canada|corporate tax]] on profit income and on [[Capital (economics)|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 [[dividend]]s. 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|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,<ref>{{cite web |title = Hickman Motors Ltd. v. Canada, [1997] 2 S.C.R. 336 |url = http://www.taxcases.ca/hickman-motors-ltd-v-canada-1997-2-s-c-r-336/ |access-date = 2013-08-19 |archive-url = https://web.archive.org/web/20150510083835/http://www.taxcases.ca/hickman-motors-ltd-v-canada-1997-2-s-c-r-336/ |archive-date = 2015-05-10 |url-status = live }}</ref> and property which is leased back to the vendor from which it originated.<ref>{{cite web |title = Canada Trustco Mortgage Co. v. Canada, [2005] 2 S.C.R. 601 |url = http://www.taxcases.ca/canada-trustco-mortgage-co-v-canada-2005-2-s-c-r-601/ |access-date = 2013-08-19 |archive-url = https://web.archive.org/web/20150510090802/http://www.taxcases.ca/canada-trustco-mortgage-co-v-canada-2005-2-s-c-r-601/ |archive-date = 2015-05-10 |url-status = live }}</ref>

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 [[income trust#Canada|fastest-growing in Canada]] {{As of|2005|lc=on}}. 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.

{{See also|Income trust}}
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<ref>SC 1932-33, c. 41, section 13, subsequently replaced by SC 1948, c. 52, section 75</ref> until 1951,<ref>SC 1951, c. 51, section 26</ref> Canadian companies were able to file [[Tax consolidation|consolidated tax returns]], but this was repealed with the introduction of the business loss carryover rules.<ref name = "Donnelly" /> In 2010, the [[Department of Finance Canada|Department of Finance]] launched consultations to investigate whether corporate taxation on a group basis should be reintroduced.<ref name="Donnelly">{{cite journal|year=2011|title=Group Relief for Canadian Corporate Taxpayers–At Last?|url=http://www.ctf.ca/ctfweb/CMDownload.aspx?ContentKey=7ed7a57b-c844-4080-a3f1-16e9449f222a&ContentItemKey=3aa60752-6875-4824-b01d-a7dc22915331|journal=Canadian Tax Journal|publisher=[[Canadian Tax Foundation]]|volume=59|issue=2|pages=239{{endash}}263|author1=Maureen Donnelly|author2=Allister W. Young|access-date=16 March 2013|archive-url=https://web.archive.org/web/20160304040348/http://www.ctf.ca/ctfweb/CMDownload.aspx?ContentKey=7ed7a57b-c844-4080-a3f1-16e9449f222a&ContentItemKey=3aa60752-6875-4824-b01d-a7dc22915331|archive-date=4 March 2016|url-status=live}}</ref> 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.<ref>{{cite web|title = Budget Briefing 2013|url = http://www.osler.com/NewsResources/Budget-Briefing-2013/|publisher = [[Osler, Hoskin & Harcourt]]|date = 21 March 2013|access-date = 8 April 2013|archive-url = https://web.archive.org/web/20150501171841/http://www.osler.com/NewsResources/Budget-Briefing-2013/|archive-date = 1 May 2015|url-status = live}}</ref>

===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.

Non-residents of Canada with taxable earnings in Canada (e.g. rental income and property disposition income) are 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>

===Payroll taxes===

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

{| class="wikitable"
|-
! Jurisdiction !! Type
|-valign="top"
|Federal
|
* [[Canada Pension Plan]]
* [[Employment Insurance]]
|-valign="top"
|Ontario
|Employer Health Tax<ref>{{Cite web|title = Employer Health Tax|url = http://www.fin.gov.on.ca/en/tax/eht/|access-date = 2013-04-03|archive-url = https://web.archive.org/web/20130404145246/http://www.fin.gov.on.ca/en/tax/eht/|archive-date = 2013-04-04|url-status = live}}</ref>
|-valign="top"
|Quebec
|
* [[Quebec Pension Plan]]<ref>{{Cite web   |title = Contributions to the Québec Pension Plan (QPP)   |url = http://www.revenuquebec.ca/en/entreprise/retenues/methode_calcul/rrq_employe.aspx   |access-date = 2013-04-03   |archive-url = https://web.archive.org/web/20130515153445/http://www.revenuquebec.ca/en/entreprise/retenues/methode_calcul/rrq_employe.aspx   |archive-date = 2013-05-15   |url-status = dead   }}</ref>
* Quebec Parental Insurance Plan<ref>{{Cite web |title = Québec Parental Insurance Plan (QPIP) Premiums |url = http://www.revenuquebec.ca/en/entreprise/retenues/methode_calcul/rqap_employeur.aspx |access-date = 2013-04-03 |archive-url = https://web.archive.org/web/20130515135143/http://www.revenuquebec.ca/en/entreprise/retenues/methode_calcul/rqap_employeur.aspx |archive-date = 2013-05-15 |url-status = dead }}</ref>
* Workforce Skills Development and Recognition Fund<ref>{{Cite web|title = Contribution to the Workforce Skills Development and Recognition Fund|url = http://www.revenuquebec.ca/en/entreprise/retenues/methode_calcul/formation.aspx|access-date = 2013-04-03|archive-url = https://web.archive.org/web/20130512073046/http://www.revenuquebec.ca/en/entreprise/retenues/methode_calcul/formation.aspx|archive-date = 2013-05-12|url-status = dead}}</ref>
* Compensation Tax<ref>{{Cite web  |title = Compensation Tax for a Financial Institution That Is Not a Corporation  |url = http://www.revenuquebec.ca/en/entreprise/retenues/methode_calcul/taxe_compensatoire.aspx  |access-date = 2013-04-03  |archive-url = https://web.archive.org/web/20130512073056/http://www.revenuquebec.ca/en/entreprise/retenues/methode_calcul/taxe_compensatoire.aspx  |archive-date = 2013-05-12  |url-status = dead  }}</ref>
|-
|BC
|Employers Health Tax <ref>{{Cite web|last1=Finance|first1=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>
|-valign="top"
|All provinces
|[[Workers' compensation]] premiums
|}

==Consumption taxes==

===Sales taxes===
{{See also|Sales taxes in Canada}}
The federal government levies a [[value-added tax]] of 5%, called the [[Goods and Services Tax (Canada)|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:<ref>{{cite journal|year=1995|title=Fifty Years of Canadian Commodity Taxation: Key Events and Lessons for the Future|url=http://www.ctf.ca/ctfweb/Documents/PDF/1995ctj/1995CTJ5_04_Poddar.pdf|journal=Canadian Tax Journal|publisher=[[Canadian Tax Foundation]]|volume=43|issue=5|pages=1096{{endash}}1119|author1=Satya Poddar|author2=Morley English|access-date=17 March 2013|archive-url=https://web.archive.org/web/20140714153908/http://www.ctf.ca/ctfweb/Documents/PDF/1995ctj/1995CTJ5_04_Poddar.pdf|archive-date=14 July 2014|url-status=live}}</ref><ref name="Aspects">{{Cite book|url=https://books.google.com/books?id=EOdE2AzfyPsC&pg=PA161|title=Selected aspects of the power to tax in the Canadian federation, 1876{{endash}}1997|access-date=2013-03-17|isbn=9780521771337|last1=Breton|first1=Albert|date=2000-06-05|publisher=Cambridge University Press }}</ref><ref>{{Cite book|url = https://books.google.com/books?id=WJEOAAAAQAAJ&pg=PA262|title = Public Finance in Canada: Selected Readings|page = 262|author = Albert John Robinson|access-date=17 March 2013|isbn = 9780458910106|year = 1973| publisher=Methuen }}</ref>

{| class="wikitable"
|+ Evolution of sales tax régimes by jurisdiction
|-
! Province
! width="75" |Introduction of PST
! width="75" |Initial PST rate
! width="75" |Last PST rate
! width="75" |PST repealed
! width="75" |Conversion to HST
! width="75" |Conversion to QST
! width="75" |Reversion to PST
|-
| [[British Columbia]]
| 1948 ||3% ||7% || || 2010|| || 2013
|-
| [[Alberta]]
| 1936<ref group=a>{{Cite web|title = ''Ultimate Purchasers Tax Act'', SA 1936, c. 7|url = http://www.ourfutureourpast.ca/law/page.aspx?id=2912389|archive-url = https://archive.today/20130410033108/http://www.ourfutureourpast.ca/law/page.aspx?id=2912389|url-status = dead|archive-date = 2013-04-10|access-date = 2013-03-17}}</ref> ||2% ||2% ||1937<ref group=a>{{Cite web|title = ''An Act to amend the Ultimate Purchasers Tax Act'', SA 1937 (2nd Session), c. 6|url = http://www.ourfutureourpast.ca/law/page.aspx?id=2968591|archive-url = https://archive.today/20130410032715/http://www.ourfutureourpast.ca/law/page.aspx?id=2968591|url-status = dead|archive-date = 2013-04-10|access-date = 2013-03-17}}</ref> || || || 
|-
| [[Saskatchewan]]<ref group=a>{{Cite web|title = Taxation|url = http://esask.uregina.ca/entry/taxation.html|publisher = Encyclopedia of Saskatchewan|access-date = 2013-03-17|archive-url = https://web.archive.org/web/20130525114808/http://esask.uregina.ca/entry/taxation.html|archive-date = 2013-05-25|url-status = live}}</ref>
| 1937 || 2% ||6% || || || ||
|-
| [[Manitoba]]
| 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/https://archive.org/stream/reporttaxation03onta#page/212/mode/2up|archive-date=2016-03-12|url-status=live}}</ref>|| 5% || 7% || || || ||
|-
| [[Ontario]]<ref group=a>{{Cite web|title = Retail Sales Tax|url = http://www.fin.gov.on.ca/en/tax/rst/rates.html|publisher = Ministry of Finance (Ontario)|access-date = 2013-03-17|archive-url = https://web.archive.org/web/20130319064948/http://www.fin.gov.on.ca/en/tax/rst/rates.html|archive-date = 2013-03-19|url-status = dead}}</ref>
|1961||3% ||8% || ||2010 || || 
|-
| [[Québec]]
| 1940<ref group=a>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.</ref>||2% ||9.5% || || || 2012 || 
|-
| [[New Brunswick]]
| 1950||4% ||11% || ||1997 || || 
|-
| [[Nova Scotia]]
| 1959||3% ||11% || ||1997 || ||

|-
| [[Prince Edward Island]]<ref group=a>{{Cite web|title = Revenue Tax Rate History|url = http://www.taxandland.pe.ca/index.php3?number=1005085&lang=E|publisher = Department of Finance, Energy and Municipal Affairs (PEI)|access-date = 2013-03-17|archive-url = https://web.archive.org/web/20130412171245/http://www.taxandland.pe.ca/index.php3?number=1005085&lang=E|archive-date = 2013-04-12|url-status = dead}}</ref>
| 1960||4% ||10% || || 2013 ||  || 
|-
| [[Newfoundland and Labrador]]
| 1950||3% ||12% || ||1997 || || 
|}
{{Reflist|group=a|2}}

====Current sales tax rates====
{| class="wikitable"
|+ Current sales tax rates by jurisdiction<ref group=b>{{Cite web |title = GST/HST rates |url = http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/rts-eng.html |access-date = 2013-04-03 |archive-url = https://web.archive.org/web/20130402063242/http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/rts-eng.html |archive-date = 2013-04-02 |url-status = live }}</ref>
|-
! Province
! width="75" |HST
! width="75" |GST
! width="75" |PST
! width="75" |Total Tax
|-
| [[British Columbia]]
| || 5% || 7% || 12%
|-
| [[Alberta]]
| || 5% || || 5%
|-
| [[Saskatchewan]]
| || 5% || 6% || 11%
|-
| [[Manitoba]]
| || 5% || 7% || 12%
|-
| [[Ontario]]
|13%|| || || 13%
|-
| [[Québec]]
| || 5% || 9.975%<ref group=b>{{Cite web  |title = Tables of GST and QST Rates  |url = http://www.revenuquebec.ca/en/entreprise/taxes/tvq_tps/historique-taux-tps-tvq.aspx  |access-date = 2013-04-03  |archive-url = https://web.archive.org/web/20130515154436/http://www.revenuquebec.ca/en/entreprise/taxes/tvq_tps/historique-taux-tps-tvq.aspx  |archive-date = 2013-05-15  |url-status = dead  }}</ref> || 14.975%
|-
| [[New Brunswick]]
| 15% || || || 15%
|-
| [[Nova Scotia]]
| 14% || || || 14%

|-
| [[Prince Edward Island]]
| 15% || || || 15%
|-
| [[Newfoundland and Labrador]]
| 15% || || || 15%
|}
{{Reflist|group=b|2}}

===Excise taxes===
{{See also|Motor fuel taxes in Canada}}
The federal government imposes [[excise tax]]es on [[Elasticity (economics)|inelastic]] goods such as [[cigarette]]s, [[gasoline]], [[Alcohol (drug)|alcohol]], and for vehicle [[air conditioners]]. Provincial governments impose sales taxes on these goods, payable by the purchaser at retail. Canada has some of the highest rates of taxes on cigarettes and alcohol in the world,{{cn|date=August 2025}} 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{{cn|date=August 2025}} 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.{{cn|date=August 2025}}

{| class="wikitable"
|+ 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/https://archive.org/stream/reporttaxation03onta#page/248/mode/2up|archive-date = 2016-03-12|url-status = live}}</ref>
|-
! Jurisdiction !! Fuel tax !! [[Carbon tax]] !! Local fuel tax
|-
|Federal
|1975<ref group=g>During 1941{{endash}}1947, there had been a temporary excise tax in effect.</ref><ref group=g>{{cite news|title = Partial Text of Tax and Tariff Proposals made in Ilsley Budget|date = 30 April 1941|newspaper = [[Ottawa Citizen]]}}</ref>
|
|
|- valign = "top"
|British Columbia
|1923
|2008<ref group=g>''Carbon Tax Act'', SBC 2008, c. 40</ref>
|
: 1999 ([[Metro Vancouver]])
: 2010 ([[Capital Regional District]])
|-
|Alberta
|1922
|2017 <ref>{{cite web|url=https://edmontonjournal.com/news/local-news/heres-how-albertas-carbon-tax-works-and-how-it-will-affect-your-wallet|title=Here's how Alberta's carbon tax works and how it will affect your wallet|date=2 January 2017|website=edmontonjournal.com|access-date=3 April 2018|archive-url=https://web.archive.org/web/20180404205155/http://edmontonjournal.com/news/local-news/heres-how-albertas-carbon-tax-works-and-how-it-will-affect-your-wallet|archive-date=4 April 2018|url-status=live}}</ref>
|
|-
|Saskatchewan
|1928
|
|
|-
|Manitoba
|1923
|
|
|-
|Ontario
|1925<ref group=g>''The Gasoline Tax Act'', SO 1925, c. 28</ref>
|2017 <ref>{{cite web|url=http://www.macleans.ca/economy/economicanalysis/what-carbon-prices-in-alberta-and-ontario-will-cost-the-average-household-and-why/|title=The cost of carbon pricing in Ontario and Alberta - Macleans.ca|date=4 January 2017|website=macleans.ca|access-date=3 April 2018|archive-url=https://web.archive.org/web/20180415060934/http://www.macleans.ca/economy/economicanalysis/what-carbon-prices-in-alberta-and-ontario-will-cost-the-average-household-and-why/|archive-date=15 April 2018|url-status=live}}</ref>
|
|-
|Quebec
|1924
|2007<ref group=g>''An Act respecting the implementation of the Québec Energy Strategy and amending various legislative provisions'', 2006, c. 46</ref>
|
:1996 ([[Montreal Metropolitan Community]])
|-
|New Brunswick
|1926
|
|
|-
|Nova Scotia
|1926
|
|
|-
|Prince Edward Island
|1924
|
|
|-
|Newfoundland
|before Confederation<ref>Newfoundland was not part of Canada [[1948_Newfoundland_referendums|until 1949]].</ref>
|
|
|}
{{Reflist|group=g|2}}

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.<ref>{{cite web|author = Christopher D. Ryan|title = Canada's Excise Tax on Cheques and other Types of Commercial Paper, 1915-1953|url = http://www.esjvandam.com/Cheque%20Tax.pdf|access-date = 2013-04-05|archive-url = https://web.archive.org/web/20130515224644/http://www.esjvandam.com/Cheque%20Tax.pdf|archive-date = 2013-05-15|url-status = live}}</ref>
:* From 1920 to 1927, on advances of money<ref>{{cite web|author = Christopher D. Ryan|title = Canada's Excise Tax on Advances of Money, 1920-1927|url = http://www.esjvandam.com/Advances%20Tax.pdf|access-date = 2013-04-05|archive-url = https://web.archive.org/web/20130515212622/http://www.esjvandam.com/Advances%20Tax.pdf|archive-date = 2013-05-15|url-status = live}}</ref>
:* From 1920 to 1953, on the transfer of securities.<ref>{{cite web|author = Christopher D. Ryan|title = Canada's Excise Tax on Transfers of Stocks and Bonds, 1920-1953|url = http://www.esjvandam.com/Stock%20Transfer%20Tax.pdf|access-date = 2013-04-05|archive-url = https://web.archive.org/web/20130323034335/http://www.esjvandam.com/Stock%20Transfer%20Tax.pdf|archive-date = 2013-03-23|url-status = live}}</ref> Initially applying to shares,<ref>SC 1920, c. 71</ref> it was extended to cover bonds and related items in 1922.<ref>SC 1922, c. 47</ref>
:* From 1923 to 1926, on the issue of receipts.<ref>{{cite web|author = Christopher D. Ryan|title = Canada's Excise Tax on Receipts, 1923-1926|url = http://www.esjvandam.com/Receipt%20Tax.pdf|access-date = 2013-04-05|archive-url = https://web.archive.org/web/20130515230406/http://www.esjvandam.com/Receipt%20Tax.pdf|archive-date = 2013-05-15|url-status = live}}</ref>

==Capital gains tax==
A [[Capital gains tax]] was first introduced in Canada by [[Pierre Trudeau]] and his finance minister [[Edgar Benson]] in the [[1971 Canadian federal budget]].<ref name=":LeaderPost">{{Cite web|date= 19 June 1971 |title=The Leader-Post|url=https://news.google.com/newspapers?nid=w9EjUEod0xMC&dat=19710619&printsec=frontpage&hl=fr|access-date=2020-06-17|website=news.google.com}}</ref>

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.

Since the [[2013 Canadian federal budget|2013 budget]], interest can no longer be claimed as a capital gain. The formula is the same for capital losses and these can be carried forward indefinitely to offset future years' capital gains; capital losses not used in the current year can also be carried back to the previous three tax years to offset capital gains tax paid in those years.

If one's income is primarily derived from capital gains then it may not qualify for the 50% multiplier and will instead be taxed at the full income tax rate.<ref>{{Cite news|url=https://turbotax.intuit.ca/tips/how-to-calculate-capital-gains-when-day-trading-in-canada-6251|title=How to Calculate Capital Gains When Day Trading in Canada {{!}} 2018 TurboTax® Canada Tips|date=30 August 2016|work=2018 TurboTax® Canada Tips|access-date=9 April 2018|language=en-CA}}</ref><ref>{{Cite news|url=https://www.hrblock.ca/report-online-trading-income/|title=How should I report my online trading income? - H&R Block|date=27 January 2017|work=H&R Block|access-date=9 April 2018|language=en-US}}</ref> CRA has a number of criteria to determine whether this will be the case.

For corporations as for individuals, 50% of realized capital gains are taxable. The net taxable capital gains (which can be calculated as 50% of total capital gains minus 50% of total capital losses) are subject to income tax at normal
corporate tax rates. If more than 50% of a small business's income is derived from specified investment business activities (which include income from capital gains) they are not permitted to claim the small business deduction.

Capital gains earned on income in a [[Registered Retirement Savings Plan]] are not taxed at the time the gain is realized (i.e. when the holder sells a stock that has appreciated inside of their RRSP) but they are taxed when the funds are withdrawn from the registered plan (usually after being converted to a Registered Income Fund at the age of 71.) These gains are then taxed at the individual's full marginal rate.

Capital gains earned on income in a TFSA are not taxed at the time the gain is realized. Any money withdrawn from a TFSA, including capital gains, are also not taxed.

Unrealized capital gains are not taxed.

=== Capital Gains on a Primary Residence ===
Primary residences are exempt from capital gains. Any gains from selling a primary residence will not be considered a capital gain for taxation purposes.<ref name=":0">{{Cite web|last=Agency|first=Canada Revenue|date=2013-01-08|title=Income Tax Folio S1-F3-C2, Principal Residence|url=https://www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-1-individuals/folio-3-family-unit-issues/income-tax-folio-s1-f3-c2-principal-residence.html|access-date=2020-07-07|website=aem}}</ref> Any losses are also not considered, and cannot be used to offset previous, current, or future capital gains.

If a property is designated as a primary residence for only a part of the time held, the exemption will only apply to any price appreciation or loss during the time it was a primary residence.<ref name=":0" /> Usually, any price appreciation or loss at the time of sale will be divided evenly across the time the property was held. The price appreciation or loss during the time the property was not a primary residence will be subject to treatment as capital gains.

==Wealth taxes==
{{See also|History of wealth taxes in Canada}}

===Property taxes===

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

'''Annual Property 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.

'''Land Transfer Tax'''

Land transfer tax is due upon the closing of a transfer of property and is calculated based on the market value of the property at a marginal tax rate, although exceptions are determined on a provincial level. Toronto has the highest land transfer tax rates in Canada as it levies an additional land transfer tax equal in value to the Ontario land transfer tax. Alberta and Saskatchewan do not charge land transfer tax. To provide relief for the high costs of land transfer tax, some provinces provide rebates for first-time home buyers:

:* In BC and Ontario, a First Time Home Buyers’ Program is offered to refund a portion of the land transfer tax 
:* In Prince Edward Island, all qualifying first-time home buyers are exempt from paying the tax entirely
:* In Montreal, the Montreal Home Ownership Program provides a lump-sum subsidy for purchasing a first home

===Gift tax===
[[Gift tax]] was first imposed by the Parliament of Canada in 1935 as part of the ''Income War Tax Act''.<ref>{{Cite canlaw|short title  =An Act to amend the Income War Tax Act|abbr =S.C.|year =1935|chapter =40|section =14|link=https://archive.org/stream/actsofparl1935v01cana#page/222/mode/2up}}</ref> 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,<ref>{{Cite canlaw|short title  =Income Tax Act|abbr =R.S.C.|year =1985 (5th Supp.)|chapter =1|section =69|subsection =1|link=http://laws-lois.justice.gc.ca/eng/acts/I-3.3/section-69.html}}</ref> that come within their scope.

===Estate tax===

Estate taxes have been held to be valid "direct taxation within the province,"<ref>{{cite CanLII|litigants=Attorney General of British Columbia v. Canada Trust Co. et al.|link=|year=1980|court=scc|num=221|format=canlii|pinpoint=|parallelcite=[1980] 2 SCR 466|date=1980-06-27|courtname=auto|juris=}}</ref> but they cannot be charged where property is left outside the province to beneficiaries who are neither resident nor domiciled in the province.<ref>{{cite BAILII|litigants=Charles S. Cotton and another v The King|link=|court=UKPC|format=1|year=1913|num=56|parallelcite=[1914] AC 176; (1913), 15 DLR 283 (PC)|date=11 November 1913|courtname=[[Judicial Committee of the Privy Council|P.C.]]|juris=Canada}}</ref><ref>{{cite BAILII|litigants=The Provincial Treasurer of Alberta and another v Clara E. Kerr and another|link=|court=UKPC|format=1|year=1933|num=57|parallelcite=[1933] AC 710; [1933] 4 DLR 81 (PC)|date=27 July 1933|courtname=[[Judicial Committee of the Privy Council|P.C.]]|juris=Alberta}}</ref> Succession duties were in effect in the various provinces at the following times:<ref name="CTJ43-5">{{cite journal|year=1995|title=Death Taxes in Canada, in the Past and in the Possible Future|url=http://www.ctf.ca/ctfweb/Documents/PDF/1995ctj/1995CTJ5_16_Goodman.pdf|journal=Canadian Tax Journal|publisher=[[Canadian Tax Foundation]]|volume=43|issue=5|pages=1360{{endash}}1376|author=Wolfe D. Goodman|access-date=16 March 2013|archive-url=https://web.archive.org/web/20140223012150/http://www.ctf.ca/ctfweb/Documents/PDF/1995ctj/1995CTJ5_16_Goodman.pdf|archive-date=23 February 2014|url-status=live}}</ref>

{| class="wikitable"
|-
! 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,<ref>{{Cite canlaw|short title  =The Dominion Succession Duty Act|abbr =S.C.|year =1940-41|chapter = 14|link= https://archive.org/stream/actsofparl194041v01cana#page/58/mode/2up}}</ref> which was later replaced by the ''Estate Tax Act'' in 1958.<ref>{{Cite canlaw|short title  =Estate Tax Act|abbr =S.C.|year =1958|chapter =29|link =https://archive.org/stream/actsofparl1958v01cana#page/190/mode/2up}}</ref> 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:<ref name = "CTJ43-5" />

:* 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 tax#Canada|capital gains]] and other inclusions into income<ref>{{cite web |title = Deemed disposition of property |url = http://www.cra-arc.gc.ca/tx/ndvdls/lf-vnts/dth/dmd/menu-eng.html |access-date = 2009-06-28 |archive-url = https://web.archive.org/web/20110513230756/http://www.cra-arc.gc.ca/tx/ndvdls/lf-vnts/dth/dmd/menu-eng.html |archive-date = 2011-05-13 |url-status = live }}</ref>
:* certain deductions and deferrals are available with respect to capital gains<ref>{{cite web  |title = T4037 - Capital Gains  |url = http://www.cra-arc.gc.ca/E/pub/tg/t4037/t4037-e.html  |access-date = 2013-04-10  |archive-url = https://web.archive.org/web/20130513221205/http://www.cra-arc.gc.ca/E/pub/tg/t4037/t4037-e.html  |archive-date = 2013-05-13  |url-status = live  }}</ref>
:* several options are available for applying any outstanding net capital losses<ref>{{cite web |title = Net capital losses |url = http://www.cra-arc.gc.ca/tx/ndvdls/lf-vnts/dth/nt/menu-eng.html |access-date = 2013-04-10 |archive-url = https://web.archive.org/web/20130513211750/http://www.cra-arc.gc.ca/tx/ndvdls/lf-vnts/dth/nt/menu-eng.html |archive-date = 2013-05-13 |url-status = live }}</ref>
:* income earned or accrued up to the date of death is taxed on the final [[Tax return (Canada)|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<ref>{{cite web  |title = Returns for the year of death  |url = http://www.cra-arc.gc.ca/tx/ndvdls/lf-vnts/dth/chrt1-eng.html  |access-date = 2013-04-10  |archive-url = https://web.archive.org/web/20130514002501/http://www.cra-arc.gc.ca/tx/ndvdls/lf-vnts/dth/chrt1-eng.html  |archive-date = 2013-05-14  |url-status = live  }}</ref>
:* income earned after the date of death is to be declared on a separate return filed by the trust for the estate<ref>{{cite web  |title = Income reported on the T3 Trust Income Tax and Information Return  |url = http://www.cra-arc.gc.ca/tx/ndvdls/lf-vnts/dth/chrt2-eng.html  |access-date = 2013-04-10  |archive-url = https://web.archive.org/web/20130514002459/http://www.cra-arc.gc.ca/tx/ndvdls/lf-vnts/dth/chrt2-eng.html  |archive-date = 2013-05-14  |url-status = live  }}</ref>
:* beneficiaries are taxed on amounts paid from [[Registered Retirement Savings Plan]]s and [[registered retirement income fund]]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>

==See also==

*[[Dividend tax]]
*[[Fiscal neutrality]]
*[[Goods and Services Tax (Canada)]] (GST)
*[[Registered Retirement Savings Plan]] (RRSP)
*[[Surrogatum|Surrogatum Principle]]
*[[Canadian federal budget]]
*[[Digital Services Tax Act (Canada)|Digital services tax]] in Canada

==Further reading==
* {{cite book |last= Gillespie|first= Irwin|date= 1995|title= Tax, Borrow and Spend: Financing Federal Spending in Canada, 1867-1990|url= https://books.google.com/books?id=7AmvAwAAQBAJ&pg=PA263|publisher= Carleton University Press|page= 263|isbn= 0-88629-153-4}}
* {{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.)
* {{cite journal|first= Joseph Eliot|last= Magnet|year= 1978|title= The Constitutional Distribution of Taxation Powers in Canada|journal= [[Ottawa Law Review]]|volume= 10|issue= 3|pages= 473{{endash}}534|publisher= [[University of Ottawa]]|url= http://www.rdo-olr.uottawa.ca/index2.php?option=com_sobi2&sobi2Task=dd_download&fid=886&Itemid=842|access-date= 8 April 2013}}{{Dead link|date=August 2018 |bot=InternetArchiveBot |fix-attempted=yes }}

==References==
{{Reflist|30em}}

==External links==
{{Wikiquote|Tax}}
*[http://www.fin.gc.ca/fin-eng.html The Department of Finance, Canada] {{Webarchive|url=https://web.archive.org/web/20080430023526/http://www.fin.gc.ca/fin-eng.html |date=2008-04-30 }}
*[http://www.cra-arc.gc.ca/menu-e.html Canada Revenue Agency]

{{Canada topics}}
{{North America in topic|Taxation in}}
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{{DEFAULTSORT:Taxation In Canada}}
[[Category:Taxation in Canada| ]]