The federal government collects personal income taxes on behalf of all provinces and territories.
The appeal process starts when a taxpayer formally objects to the CRA assessment, on prescribed form T400A.
The Liberal Party considered the probable need to introduce an income tax if their negotiation of a free trade agreement with the United States in the early 20th century succeeded, but the Conservatives defeated the Liberals in 1911 by opposing free trade.
Then Canadian Finance Minister Sir Thomas White's new "Income War Tax Act" bill went into Committee of the Whole on July 25, 1917 but faced resistance.
With the election of the Liberal government of Prime Minister William Lyon Mackenzie King, much of the National Policy was dismantled, and income tax has remained in place ever since.
The constitutional authority for the various provincial income taxes is found in section 92 paragraph 2 of the Constitution Act, 1867, which assigns to the legislature of each province the power of "Direct Taxation within the Province in order to the raising of a Revenue for Provincial Purposes".
The courts have held that "an income tax is the most typical form of direct taxation".
After the calendar year, Canadian residents file a T1 Tax and Benefit Return[5] for individuals.
It is due April 30, or June 15 for self-employed individuals and their spouses, or common-law partners.
Personal income tax may be collected through various means: Employers may also deduct Canada Pension Plan/Quebec Pension Plan (CPP/QPP) contributions, Employment Insurance (EI) and Provincial Parental Insurance (PPIP) premiums from their employees' gross pay.
Certain deductions are allowed in determining "net income", such as deductions for contributions to Registered Retirement Savings Plans, union and professional dues, child care expenses, and business investment losses.
Net income is used for determining several income-tested social benefits provided by the federal and provincial/territorial governments.
Non-refundable tax credits are then deducted from tax payable before credits for various items such as a basic personal amount, dependents, Canada/Quebec Pension Plan contributions, Employment Insurance premiums, disabilities, tuition and education and medical expenses.
This mechanism is designed to provide equal benefit to taxpayers regardless of the rate at which they pay tax.
This means that they are not allowed to provide or ignore federal deductions in calculating the income on which provincial tax is based.
Information on provincial rates can be found on the Canada Revenue Agency's website.
If it was earned in more than one province, it is allocated based on a formula in the Income Tax Regulations.
To maintain simplicity for taxpayers, however, Quebec parallels many aspects of and uses many definitions found in the federal tax system.
Quebec chooses to receive part of its health and social transfers in tax points instead of cash.
Corporate income taxes are collected by the CRA for all provinces and territories except Quebec and Alberta.
In practice, these provinces rarely deviate from the federal tax base in order to maintain simplicity for taxpayers.