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Ontario|Tax LawGeneral Rules 169 Overview of the Canadian tax system The government collects taxes as a source of revenue to pay for social and economic programs. Tax laws are set by both the federal and provincial governments, although tax collection is generally controlled by the federal government through Canada Revenue Agency.
- Income Tax Act
The main law for taxing income is the Income Tax Act, which sets out both rules for individuals and business structures. The Income Tax Act usually undergoes important changes every year when the federal government sets its annual budget. These changes will affect how much tax you pay from year to year.
- Types of tax
In addition to the Income Tax Act, there are also other laws that cover the taxation of importing, exporting, sale of goods and services, and property. Canada is also a signatory to a host of international treaties with other countries that govern the taxation of individuals and businesses doing business or earning income internationally.
- Self-assessment tax system
The Canadian tax system relies on self-assessment by tax payers. Each tax payer is responsible for reporting their total income and determining their total tax owing. Canada Revenue Agency enforces the tax law by performing a number of audits on individuals and businesses each year. If Canada Revenue Agency finds that someone made an error in calculating or reporting the tax they owe, they are reassessed, and if the error was deliberate, a penalty is levied. If someone is found to be evading the law, they may be prosecuted by the Department of Justice for tax evasion or a criminal offence.
If you have questions about your taxes, you should consult a tax lawyer, a tax accountant or a tax filing service.
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