12 February 1998 Ministerial Letter 9M18638 - CONSTITUTIONALITY OF ITA

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.

XXXXXXXXXX

Dear XXXXXXXXXX:

The Honourable Herb Dhaliwal, Minister of National Revenue, has asked me to respond to your letter of October 29, 1997, concerning the statutory authority relating to the taxing powers of the Government of Canada. I apologize for the delay in replying.

Pursuant to section 91 of the Constitution Act, 1867, the federal government has the power to make laws in relation to “the raising of money by any mode or system of taxation”. Several recent court decisions, including Reference Re Goods and Services Tax [1992] 2 Canada Supreme Court Reports 445, Kasvand v. The Queen [1995] 95 Dominion Tax Cases 5618 and Hoffman v. The Queen [1996] Canadian GST and Commodity Tax Cases 6144 have confirmed that the Income Tax Act and the Goods and Services Tax provisions of the Excise Tax Act are within the constitutional powers granted to Parliament.

Section 2 of the Income Tax Act is the statutory provision that compels every person resident in Canada who has taxable income to pay income tax. Section 3 of that Act is the statutory provision that establishes the statutory rules for computing a taxpayer’s income for a taxation year. Section 150 of the Income Tax Act provides that a person who has tax payable, or has a taxable capital gain or has disposed of capital property in a taxation year, is required to file an income tax return, in the prescribed form and containing the prescribed information, in respect of that year on or before the dates specified in that section. Therefore, the Income Tax Act establishes a statutory duty on taxpayers to compute, complete the prescribed information return and remit to the Receiver General for Canada any income tax owing.

Part IX of the Excise Tax Act provides the statutory framework relating to the Goods and Services Tax (“GST”) and Harmonized Sales Tax (“HST”). Section 165 of the Excise Tax Act compels every recipient of a taxable supply made in Canada to pay the GST at 7% in respect of such taxable supply or the HST at 15%. Although the legal liability for payment of GST and HST is that of the purchaser, the supplier is generally required, by virtue of section 221 of the Excise Tax Act, to collect the GST or HST on behalf of the Crown and pursuant to section 228 of the Excise Tax Act to remit the GST or HST to the Receiver General. Similarly, sections 212, 212.1, 218 and 218.1 of the Excise Tax Act require any importer of goods or recipient of imported services or intangible property to pay the GST or HST in respect of such supplies. The GST or HST on goods imported into Canada is collected by Canada Customs under the authority of the Customs Act. With respect to imported services and intangible property, the recipient of the taxable supply is required, pursuant to section 219 of the Excise Tax Act, to pay any tax owing to the Receiver General.

I trust that my comments will be of assistance to you.

			Yours sincerely,

				Denis Lefebvre
			Assistant Deputy Minister
			Policy and Legislation Branch

T. Harris
957-2114
February 12, 1998
980076