Byrd and Chen's Canadian Tax Principles

Running head: TAXATION
TAXATION
Name of the Student
Name of the University
Author note

1
TAXATION
Table of Contents
Chapter 1....................................................................................................................................2
Chapter 2....................................................................................................................................3
Chapter 3....................................................................................................................................4
Chapter 4....................................................................................................................................5
Chapter 5....................................................................................................................................6
Chapter 6....................................................................................................................................6
Chapter 8....................................................................................................................................7
Chapter 9....................................................................................................................................7
Chapter 10..................................................................................................................................8
Chapter 11..................................................................................................................................9
Chapter 14................................................................................................................................10
Chapter 15................................................................................................................................10
Chapter 16................................................................................................................................11
Chapter 17................................................................................................................................12
Chapter 20................................................................................................................................12
Chapter 21................................................................................................................................13
References................................................................................................................................15

2
TAXATION
Chapter 1
Introduction to federal taxation in Canada
The entities in Canada is governed by two taxable categories one is taxable entities
under the income tax and the taxable entities under GST. Under the income tax the tax
liability of the individuals, corporations and trusts are assessed on the other hand the under
GST the income tax of individuals, corporations, trusts and others are assessed. Under the
federal system tax is imposed on individuals whose income is $20000 @15% federal tax on
the taxable income plus 7% of provincial tax, and the public corporation will be taxable if its
taxable income exceeds $100000 @15% of federal tax and an additional provincial tax of
11% is charged. The federal taxation system helps in bringing stability in the economic
condition of Canada. The main features of this federal taxation are
Equity; it fails to bring equity as the high-income individuals and the corporations does not
have to pay high amount of tax
Balance between sectors
The taxation system is highly dependent on the personal income tax
Complexity
The taxation system of Canada is very complicated
Dependability of revenues
The revenue generation is highly dependent on the resource sector
International competitiveness

3
TAXATION
This taxation system is favourable for corporations and not favourable for the individuals in
comparison to the US taxation system. The basic charging provision of the federal taxation
system is ITA 2(1). In Canada individuals are taxed on the basis of their residential status and
not on the basis of their citizenship status.
Chapter 2
Provision and administration
Individuals has to file the form T1 to pay their tax liability the date of submission of
the tax liability are April 30 of the following year, June 15 of the following year and 6
months after date of death if the assesses died before filling the return. the number of returns
filed in the year 2017 is 28.10 million out of which 24.20 million filled their return
electronically and 3.9 million files in paper mode. Individuals can pay their tax liability in
four equal instalments on march 15 June 15 September 15 and December 15. If the assesses
fails to pay their instalments they have to pay interest of 2% and penalty will be imposed if
the instalment amount is excessive.
The corporations have to file their returns in form T2, if the revenue of any particular
corporation exceeds $1 million then such corporation must file their return electronically. The
return of the corporations must be filed within 6 months after the end of the financial year.
The corporation can pay their tax liability on quarterly basis and they also has to pay interest
in case of any default in payment within the due date. For the trusts the returns are to be filled
in form T3 which should be filed within 90 days after December 31. The individuals and
corporations are entitled to get interest on refunds later of 30 days after return is filed and the
balance due date and for corporations later of 120 days after corporation’s year end and