Whose Income is It?

In 1966, the Carter Commission recommended that the income tax system should consider the family (spouse and minor children) as the basic unit for determining tax liability. Canada did not accept the recommendation for various political reasons. As a result, the general rule in Canadian income tax law is that each individual member of the family is a separate taxpayer, has an independent status, and is liable for tax on his or her personal income. This has contributed to much of the complexity in the personal income tax system.

The question: “whose income is it?” actually has two answers. For commercial purposes, income belongs to the person who owns it as a matter of personal property law. Under the Constitution, this is determined according to provincial law. For federal tax purposes, however, an individual may be taxable on income that he or she does not own in a commercial sense but to whom the income is “attributed”.

The individual income tax structure is “progressive”, which refers to the individual tax rates in section 117, rather than the quality of the tax system. For example, the basic federal rate structure for 2019 is as follows:

Tax Brackets % Rates
Up to $47,630 15.00
$47,631–95,259 20.50
$95,260–147,667 26.00
$147,668–210,371 29.00
$210,372 and over 33.00

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Professor Vern Krishna, CM, QC, FCPA is Counsel, Tax Chambers LLP (Toronto)