Canadian Income Tax
is a joint responsibility of the Federal as well as the Provincial or
Territorial Governments. Under the Constitution Act of 1867 taxation is
undertaken by the Canadian government. According to the Supreme Court
ruling of 1930:
- Taxation is enforced by the law of the land
- authorised by the legislature
- implemented by a public body
- to be used for development of the general public
Income
tax forms one of the most important sources of revenue for Canadian
Federal Government as well as the Provinces. In fact the income tax
collected from individuals is many times more than the corporate taxes
generated in the provinces. Canadian Revenue Agency or CRA which is
responsible for the collection of the taxes. It is a Federal government
agency and collects both personal and corporate taxes on behalf of the
provincial and territories.
The tax
payers of Canada have to do the self -assessment of their tax liability
and pay the taxes by a due date to CRA.CRA undertakes the checking of
the tax returns filed by the payers and then would inform them if any
errors are found. If the tax payer is not satisfied and objects to the
review done by the CRA, then the individual can appeal in the Tax Court
and the Federal Court of Canada.
The
individual has to pay taxes on the basis of the amount taxable income
for a particular year. The various means by which a tax payer can pay
the taxes are as follows:
- Tax deduction at source
- Pay through installments
- Income tax return by a due date
- Payment after due date as arrears
There
are certain other deductions from the Income that are done by the
employer such as Pension Plan, Employment insurance, Parental Insurance.
If any
individual has overpaid then he/ she is refunded in their bank accounts
directly after filing their tax return which is usually April 30th.
There is another source of through which the Canadian Government earns revenue which is Non –Resident Tax. According to this the non resident Canadians who
- Those who have stayed in the country for more than 183 days
- those who do not have any residential links with Canada such as a residence, spouse, property, social ties etc
- those who are not considered as resident of a different country as per the tax laws of Canada
- If an individual is factually a resident of Canada and also has a citizenship of another country too with whom Canada has a tax treaty, will be considered as a deemed-non-resident and such an individual will be covered under the Canadian income tax law.
- Also those individuals who have driver’s license, credit card, bank accounts and health insurance schemes are considered to have residential links or ties with Canada.
- Anon-resident individual who earns from sources in income has to pay income tax depending upon what kind of that income is and whether it comes under the tax regime or laws of Canada.
- Income by a non-resident is subject to Part XIII of tax else Part I of tax.
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