Skip to main content

Briefing highlights

  • When income tax was launched
  • Markets at a glance
  • Uber stripped of London licence
  • Inflation at 1.4 per cent in August

Apparently, we liked it so much that we kept it.

We all moan about income tax, which Canada launched 100 years ago this week as a wartime measure, and which followed a war tax on business profits.

Consider what they were saying in 1917, in the midst of World War I, based on a digest prepared by certified accountant R. Easton Burns, who looked at each clause, mixing in debates from Hansard, including the comments of then finance minister Sir Thomas White. It was, as Mr. Burns noted, "a new departure in Canadian methods of raising money for federal purposes."

Sir Thomas White

The final tax would see a 4-per-cent hit to single folks, with a $1,500 exemption, while the exemption for families was $3,000. If you made more than $6,000, you could get hit up for more in a 1917 version of taxing the rich.

Here are snippets from the digest of Mr. Burns. Note that entire discussions reflect the freaking sexism of the day, not that you can miss it. Any of it ring any bells?


MP William Cockshutt: : "I venture to say that there are very few people in this country who know exactly what their income is. They be desirous of having the proper amount entered, but there are so many factors that have to be taken into consideration in connection with the origin and net result of a man's income … I would also like the Minister to tell me whether any regard is to be paid to the depreciation which may occur in a man's property."

Mr. White: "I think it would be a very dangerous admission to make that the estimate made by a taxpayer that his property has depreciated to the extent of, say, $5,000 or $10,000 would be sufficient to justify that $5,000 or $10,000 being deducted from his income … I do not think it possible to get an income taxation down to a mathematical nicety such as is suggested where the amount of annual depreciation would be allowed."


MP Alexander Maclean: "I understood the Minister to say that the fact that a man was paying an annual tax bill of $5,000 upon unproductive property in the West would not be taken into consideration in calculating his income?"

Mr. White: "My view is he should not be allowed to deduct it because his income is $25,000 and he is speculating in the West."


The Act: "For every default in complying with the provisions of the two next preceding sections, the taxpayer, and also the person or persons required to make a return, shall each be liable on summary conviction to a penalty of one hundred dollars for each day during which the default continues."


Sir Wilfrid Laurier


Mr. White: "What I am trying to establish is that it was fully understood before this income taxation measure was brought down, that the Business Profits War Tax Act was a limited measure … What is the position of the Business Profits War Tax Act today? It is this: the individuals, firms and companies who are liable under that tax paid out of their profits of 1916, because the tax was retroactive, the amount to which they were liable in respect of 1915, and they pay this year, 1917, upon their profits of 1916. Next year, 1918, they will be a heavy taxation - I think the heaviest in the world - against their profits of 1917.

Wilfrid Laurier: "They are lucky to be able to do it."

Mr. White: "I agree with my right hon. friend. They are fortunate to be able to do it, and that is what I told them when they complained."


The Act: "If a person liable to taxation hereunder is unable for any reason to make the return required by this section, such return shall be made by the guardian, curator, tutor or other legal representative of such person, or if there is no such legal representative, by some one acting as agent for such person, and in the case of the estate of any deceased person, by the executor, administrator or heir of such deceased person, and if there is no person to make a return under the provisions of this subsection, then such person as may be required by the Minister to make such return."


Mr. White: "It has been our view that so far as the average business firm is concerned, a tax of this character is not a good tax in peace time. This Parliament will be in session in 1918. If this war goes on more and more money will be needed. The business of the country is the prosecution of the war and to find money with which to prosecute the war … We have taken the largest portion of profits of any country in the world. I have been criticized, in this House and outside of it, as I believe no Finance Minister has ever been, for imposing such heavy taxation."


Mr. White: "Taxation has many aspects. Personally, I do not believe it should be imposed for the purpose of punishing any citizen because he happens to have an income. That is not a sound principle. A Government must be sagacious in imposing taxation, else it will defeat its object. Place too heavy a tax upon liquid wealth - that is to say, bank credits - and they disappear. Place too heavy a tax upon income, and you do not collect your tax, because people will not come into the country, and in many cases investments will be placed elsewhere."


The Act: "All employers shall make a return of all persons in their employ receiving any salary or other remuneration, any portion of which is liable to taxation under this Act, and all corporations, associations and syndicates shall make a return of all dividends and bonuses paid to shareholders and members."


Mr. White: "It will be recalled that last evening the hon. gentleman from Halifax raised the question as to the husband assigning a part of his income to his wife for the purpose of evading the tax, which would be possible by reason of the double exemption, the exemption to the wife, and the exemption to the husband … In order to prevent evasion of the tax, I desire to move that the following be inserted … A person who, after the first day of August, 1917, has reduced his income by the transfer or assignment of any real or personal, movable or immovable property to such person's wife or husband, as the case may be, or to any member of the the family of such person shall, nevertheless, be liable to be taxed as if such transfer had not been made, unless the Minister is satisfied that such transfer or assignment was not made for the purpose of evading the taxes imposed under this Act, or any part thereof."


The Act: "Any person objecting to the amount at which he is assessed, or as having been wrongfully assessed, may, personally or by his agent, within twenty days after the date of mailing of the notice of assessment, as provided in section ten of this Act, give notice in writing to the Minister in form II of the Schedule to this Act that he considers himself aggrieved for either of the causes aforesaid, otherwise such person's right to appeal shall cease, and the assessment made shall stand and be valid and binding upon all parties concerned, notwithstanding any defect, error or omission that may have been made therein …"

Read more


Markets at a glance

Read more


More news

Streetwise

Economic Insight

Inside the Market

In case you missed it