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 30^th.

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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