4 February 1997 External T.I. 9638635 - WITHHOLDING TAX ON SALARY

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Whether or not the withholding of tax from a taxpayer's salary is unconstitutional.

Position:

Withholding of tax does not infringe upon a taxpayer's rights.

Reasons:

To conclude otherwise would render the source deduction provisions of the Act nugatory.

			February 4, 1997

	Windsor Tax Services Office	Technical Review and
	Business Window Section	  Remissions Section
	Ms Janet Ciurysek	Jacques E. Grisé
			957-2059
			963863

Withholding Tax on Salary

This is in reply to your fax of November 19, 1996 concerning the TD1, Personal Tax Credit Return, of XXXXXXXXXX brought to your attention by his employer, XXXXXXXXXX.

XXXXXXXXXX entered claim code "E" in box A on page 2 of the TD1 return filed with his employer. By using claim code E, XXXXXXXXXX has effectively certified that his total income for the year will be less than the total personal credits to which he is entitled. He did not give any details of the credits he is claiming and entered "N/A" on the "total of credits" line of his TD1. His claim not to have withholding of tax on his salary seems to be based on the natural rights of the individual, the "Rule of Law" in the Constitution and the Income Tax Act. He refers to subsection 1(a) of the Canadian Bill or Rights and section 26 and subsection 52(1) of the Canadian Charter of Rights and Freedoms as support for his contention that no withholding tax should be made from his salary.

Presumably the return was sent to the Windsor Tax Services Office on the basis of the instructions in the 1995-1996 Employers' Guide to Payroll Deductions which on page 4-2 states: "It is a serious offence to knowingly accept a TD1 form that contains false or deceptive statements. If you think a TD1 form contains incorrect information, contact your tax services office or tax centre".

Subsection 153(1) of the Income Tax Act requires every person paying at any time in a taxation year salary or wages or other remuneration to deduct or withhold therefrom such amount as is determined in accordance with prescribed rules. The prescribed rules are those set out in Part I of the Income Tax Regulations. In our view, subsection 153(1) of the Act and Part I of the Income Tax Regulations do not infringe upon the rights of XXXXXXXXXX or deprive him of his property without due process of law.

We suggest you confirm to XXXXXXXXXX that withholding tax is exigible from XXXXXXXXXX salary. It seems that claim code 1 should be used to determine the amount of withholding since XXXXXXXXXX has not provided any information on his TD1 that would entitle him to a credit beyond the one based on the basic personal amount.

Please call Jacques Grisé should you wish to discuss the above.

John F. Oulton
Section Chief
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch