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A Fair Policy Is Included Into the Canadian Taxation System

The Canadian taxation system is recognized as an average among Organization for Economic Co-operation and Development (OPED) countries. Around 70 percent of the government’s income comes from taxation and rest from traffic, fees and several investments. The Federal and Provincial governments of Canada impose taxes upon all tax-paying entities in order to fulfill several public sector needs. Here the government has tried to give a neutral, fair, efficient and equitable system to the citizens.

There is a flat tax rate that is applied to all taxpayers, regardless to their consumption or income levels. There is only 6% Goods and Sales Tax. One can find here a progressive taxation that is based in the principle of ‘higher income levels are required to pay more than those living with lower income levels’. Therefore tax rate increases with the increment of taxpayer’s income.

The three departments like Department of Finance, the Department of Justice and the Canada Revenue Agency possess a unique place in the system of income tax law. The Department of Finance is assigned to draft the tax legislation and tax policies according to the targets of Canada’s taxation system. While the Department of Justice handles the cases of income tax. And the Canada Revenue Agency is responsible for the administration and enforcement of the Income Tax Act. The Tax Court of Canada deals with the tax appeals, though applicants can go to the Federal Court of Appeal for further appeal. The Federal Parliament has the authority to levy tax from Section 91(3) of the Constitution Act, 1867, which states that the Federal government may raise money “by any mode or system of taxation”.

The Section 92 (2) of the Constitution Act, 1967, grants power to the Provincial Legislatures by which they can impose direct tax for the purpose of raising revenue for provincial. Under the Canadian taxation system we have Income Tax Act that is recognized as the primary source of tax law in Canada. In this country the purview of tax payable people includes the residency rather than citizenship. Under residency it involves individual or corporate tax liability of a taxpayer. The Income Tax Act divides all taxpayers into residents, non-residents and part year residents. According to the resource, the Canada Revenue Agency categorizes its income. Some of the common categories of sources are office, business, employment, and capital gains. Canadian taxation system includes the taxpayer’s total taxable income into all categories of income.