!fN75 DIPT. l^ A'i a ^^ • 9-10 GEORGE V.' ' '^''"'''■' CHAP 55. An Act to amend The Income War Tax Act, 1917. {Assented to 7th July, 1919.] HTS Majesty, by and with the advice and consent i9i7.c.28r of the Senate and House of Commons of Canada, ^^^^■<^-25. enacts as follows: — 1. (1) Paragraph (c) of section two of The Income War Tax Act, 1917, chapter twenty-eight of the statutes of 1917, is repealed, and the following is substituted therefor: — " (c) 'normal tax' means the tax authorized by paragraph Definitions, (a) of subsection one of section four of this Act." "Normal (2) Paragraph (e) of section two of the said Act, as '^^" enacted by chapter twenty-five of the statutes of 1918, is repealed, and the following is substituted therefor: — ''(e) ' surtax ' means the taxes authorized by paragraph -Surtax.'^ (b) of subsection one of section four of this Act." (3) Paragraph (h) of section two, as enacted by the said statute of 1918, is repealed. (4) The following paragraphs are added to section two: — 'YiJ 'Persons employed in Canada' means all persons "Persons who receive, directly or indirectly, salary, wages, c!^naX^""*' commissions, fees or other remuneration derived from sources within Canada for personal services, any part of which is performed in Canada. " r^J ' Commissioner of Taxation' means the officer "Commia- appointed by the Governor in Council pursuant to t^alio^i- the propsions of this Act, having such powers and "^*'°°' performing such duties as are assigned to him by the Governor in Council or by the Minist.er under the provisions of this Act." • 2. (1) Subsection one of section three of the said Act income, is amended by inserting after the word " be " in the ninth line thereof the words " whether derived from sources within Canada or elsewhere " and after the word " con- tract " in the twenty-second line thereof the following: " and including the salaries, indemnities or other remu- 365 neratioa Chap. 55. Income War Tnr. 9-10 Geo. V. Allowanro for deprefia- tion and for exhaustion of mines, gas and oil wells, and timber limits. Exemption in respect of children. Dividends from corporations liable to tax. Personal and living expenses. Losses. neration of members of the Senate and House of Commons of Canada and officers thereof, members of Provincial L<'pislativ(> Councils and Assemblies and Municipal -tiiHH^c'ils.-.J-'iaujiji^^ions or Boards of Management, any Jtif^fre o-jTa:5siiij^.\)ri1iis Act, and of all persons whatsoever •uhctiier ihe said salaries, indemnities or other remuneration ai-e }-)aid out of the revenues of His Majesty in respect of His Government of Canada, or of any province thereof, or by any person, except as provided in section five of this Act." (2) Paragraph (a) of subsection one of section three of the said Act; paragraph (b) of the said subsection one as enacted by section two of the said statute of 1918, and paragra])h (d) of the said subsection one, as amended by section two of the said statute of 1918, are repealed, and the following paragraphs are enacted in lieu thereof: — "(a) such reasonable amount as the Minister, in his dis- cretion, may allow for depreciation, and the Minister in determining the income derived from mining and from oil and gas wells and timber limits shall make such an allowance for the exhaustion of the mines, wells and timber limits as he may deem just and fair; "(b) for the purposes of the normal tax only, two hundred dollars for each child under eighteen years of age who is dependent upon the taxpayer for support; ''(d) dividends received by or credited to shareholders of a corporation which is liable to taxation under the provisions of this Act shall not be liable to the normal tax in the hands of the shareholders, but shall be liable to the supertax and surta;x provisions of this Act or any amendment thereto. The amount of the exemp- tion from the normal tax to the shareholder shall not exceed the net amount of such dividends after the deduction of the interest or carrying charges, if any, in respect of such dividends; "(e) in determining the income no deduction shall be allowed in respect of personal and hving expenses, and in cases in which personal and living expenses form part of the profit, gain or remuneration of the taxpayer, the same shall be assessed as income for the purposes of this Act; "(f) deficits or losses sustained in transactions entered into for profit but not connected with the chief business, trade, profession or occupation of the taxpayer shall not be deducted from income derived from the chief business, trade, profession or occupation of the tax- payer in determining his taxable income." (3) Subsection four of section three of the said Act is repealed, and the following is substituted therefor: — 306 "(•1) 1919. Income War Tax. Chap. 55. 3 "(4) The share of a taxpayer in the undivided or undis- Undistri- tributed gains and profits of a corporation shall not be profits ot deemed to be taxable income of the taxpayer, unless the corporationa Minister is of opinion that the accumulation of such undivided and undistributed gains and profits is made for the purpose of evading the tax, and is in excess of what is reasonably required for the purposes of the business." (4) Section three of the said Act is amended by adding thereto the following subsections: — "(5) Dividends or shareholders' bonuses paid or credited Dividends to its shareholders by a corporation on or after the first day hokierT^ of January, one thousand nine hundred and seventeen, bonuses. shall be taxable as income of the shareholder in the year in which the same are received or credited unless paid exclusively out of a surplus or accumulated profits on hand prior to the first day of January, one thousand nine hundred and seventeen. No dividend or shareholder's bonus shall be deemed to be paid or credited out of surplus or accumulated profits on hand prior to the first day of January, one thousand nine hundred and seventeen, if the earnings of the corporation since the beginning of the accounting period which ended in the year one thousand nine hundred and seventeen are sufficient to provide for the said dividend and other taxable dividends paid or credited since the said date. " (6) Income of a beneficiary of an estate shall be deemed income from to include the amount accruing during each taxation year ^'' ''''*^*®- to which he, his heirs or assigns are entitled from the income of the estate whether distributed or not. " (7) Any part of the remuneration of a taxpayer retained Money by his employer in connection with an employee's employer 'for superannuation or pension fund or plan shall be allowed pension, etc. as an exemption or deduction from the income of the taxpayer for income tax purposes, and any payment to an employee out of such fund or plan shall be included as taxable income of the employee." 3. (1) Subsections one and two of section four of the said Act, as enacted by section three of the said statute of 1918, are repealed and the following are substituted therefor: — "4. (1) There shall be assessed, levied and paid upon the Tax. income during the preceding year of every person residing in Canada for six months or more of such year or who having been resident in Canada has left Canada with the intention of resuming residence in "Canada or who is em- ployed in Canada or is carrying on any business in Canada, except corporations and joint stock companies, the following taxes : (a) Four per centum Normal tax. upon all income exceeding one thousand dollars but not exceeding six thousand dollars in the case of unmarried persons and widows or widowers without dependent 367 children, Cluii). 5»'>. Income M'ar Tax. 9-10 Geo. V. children, and persons who are not suj)porUng dependent brolh(>rs or sisters under the age of eighteen years, or a dej^endent parent or parents, grandparent or grand- parents, and ex('ee(hng two thousand dollars but not exceeding six thousand dollars in the case of all other persons, and Eight i)er centum uj^on all income exceeding six thousand dollars. And in addition thereto the following surtax: ^^(h) One per centum upon the amount by which the income exceeds five thousand dollars and does not exceed six thousand dollars; Two 15 er centum upon the amount by which the income exceeds six thousand dollars and does not exceed eight thousand dollars; Three per centum upon the amount by which the income exceeds eight thousand dollars and does not exceed ten thous- and dollars; Four per centum upon the amount by which the income exceeds ten thousand dollars and does not exceed twelve thousand dollars; Five per centum upon the amount by which the income exceeds twelve thousand dollars and does not exceed fourteen thousand dollars; Six per centum upon the amount by w^hich the income exceeds fourteen thousand dollars and does not exceed sixteen thousand dollars; Seven per centum upo-n the amount by which the income exceeds sixteen thousand dollars and does not exceed eighteen thousand dollars; Eight per centum upon the amount by w^hich the income exceeds eighteen thousand dollars and does not exceed twenty thousand dollars; Nine per centum upon the amount by which the income exceeds twenty thousand dollars and does not exceed twenty- two thousand dollars; Ten per centum upon the amount by which the income exceeds twenty-two thousand dollars and does not exceed twenty-four thousand dollars; Eleven per centum upon the amount by which the income exceeds twenty-four thousand dollars and does not exceed twenty-six thousand dollars; Twelve per centum upon the amount by which the income exceeds twenty-six thousand dollars and does not exceed twenty-eight thousand dollars; Thirteen per centum upon the amount by which the income exceeds twenty-eight thousand dollars and does not exceed thirty thousand dollars ; 308 Fourteen 1919. Income War Tax. Chap. 55. Fourteen per centum upon the amount by which the income exceeds thirty 'hoiisaad dollars and does not scceed chirty-two thousand dollars; Fifteen per centum upon the amount by which the income exceeds thirty-two thousand dollars and does not exceed thirty-four thousand dollars; Sixteen per centum upon the amount by which the income exceeds thirty-four thousand dollars and does not exceed thirty-six thousand dollars; Seventeen per centum upon the amount by which the income exceeds thirty-six thousand dollars and does not exceed thirty-eight thousand dollars; Eighteen per centum upon the amount by which the income exceeds thirty-eight thousand dollars and does not exceed forty thousand dollars; Nineteen per centum upon the amount by which the income exceeds forty thousand dollars and does not exceed forty- two thousand dollars; Twenty per centum upon the amount by which the income exceeds forty-two thousand dollars and does not exceed forty-four thousand dollars; Twenty-one per centum upon the amount by which the income exceeds forty-four thousand dollars and does not exceed forty-six thousand dollars; Twenty-two per centum upon the amount by which the income exceeds forty-six thousand dollars and does not exceed forty-eight thousand dollars; Twenty-three per centum upon the amount by which the income exceeds forty-eight thousand dollars and does not exceed fifty thousand dollars; Twenty-four per centum upon the amount by which the income exceeds fifty thousand dollars and does not exceed fifty- two thousand dollars; Twenty-five per centum upon the amount by which the income exceeds fifty-two thousand dollars and does not exceed fifty-four thousand dollars; Twenty-six per centum upon the amount by which the income exceeds fifty-four thousand dollars and does not exceed fifty-six thousand dollars; Twenty-seven per centum upon the amount by which the income exceeds fifty-six thousand dollars and does not exceed fifty-eight thousand dollars; Twenty-eight per centum upon the amount by which the income exceeds fifty-eight thousand dollars and does not exceed sixty thousand cloUars; Twenty-nine per centum upon the amount bj^ which the income exceeds sixty thousand dollars and does not exc-eed sixty-two thousand dollars; Thirty per centum upon the amount by which the income exceeds sixty-two thousand dollars and does not exceed sixty-four thousand dollars; VOL. 1—24 369 Thirtv-one <'h:ip. 55. Income War Tax. 9-10 (Jeo. V. Thirty-one per centinn upon the amount by which the income exceeds sixty-four thousand dollars and does not exceed sixty-six thousand dollars; Thirty-two per centum upon the amount by which the income exceeds sixty-six thousand dollars and does not exceed sixty-eight thousand dollars; Thirty-three per centum upon the amount by which the income exceeds sixty-eight thousand dollars and does not exceed seventy thousand tlollars; Thirty-four per centum upon the amount by which the income exceeds seventy thousand dollars and does not exceed seventy-two thousand dollars; ThirtN^-five per centum upon the amount by which the income exceeds seventy-two thousand dollars and does not exceed seventy-four thousand dollars; Thirty-six per centum upon the amount by which the income exceeds seventy-four thousand dollars and does not exceed seventy-six thousand dollars; Thirty-seven per centum upon the amount by which the income exceeds seventy-six thousand dollars and does not exceed seventy-eight thousand dollars; Thirty-eight per centum upon the amount by which the income exceeds seventy-eight thousand dollars and does not exceed eighty thousand dollars; Thirty-nine per centum upon the amount by which the income exceeds eighty thousand dollars and does not exceed eighty-two thousand dollars; Forty per centum upon the amount by which the income exceeds eighty-two thousand dollars and does not exceed eighty-four thousand dollars; Forty-one per centum upon the amount by which the income exceeds eighty-four thousand dollars and does not exceed eighty-six thousand dollars; Forty-two per centum upon the amount by which the income exceeds eighty-six thousand dollars and does not . exceed eightj^-eight thousand dollars; Forty-three per centum upon the amount by which the income exceeds eighty-eight thousand dollars and does not exceed ninet}^ thousand dollars; Forty-four per centum upon the amount by which the income exceeds ninety thousand dollai s and does not exceed ninety-two thousand dollars: Forty-five per centum upon the amount by which the income exceeds ninety-two thousand dollars and does not exceed ninety-four thousand dollars; Forty-six per centum upon the amount by which the income exceeds ninetj^-four thousand dollars and does not exceed ninety-six thousand dollars; Forty-seven per centum upon the amount by which the income exceeds ninety-six thousand dollars and does not exceed ninety-eiglit thousand dollars; 370 Forty-eight 1919. Income War Tax. Chap. 55. Forty-eight per centum upon the amount by which the income exceeds ninety-eight thousand dollars and does not exceed one hundred thousand dollars; Fifty-two per centum upon the amount by which the income exceeds one hundred thousand dollars and does not exceed one hundred and fifty thousand dollars; Fifty-six per centum upon the amount by which the income exceeds one hundred and fifty thousand dollars and does not exceed two hundred thousand dollars; Sixty per centum upon the amount by which the income exceeds two hundred thousand dollars and does not exceed three hundred thousand dollars; Sixty-three per centum upon the amount by which the income exceeds three hundred thousand dollars and does not exceed five hundred thousand dollars ; Sixty-four per centum upon the amount by which the income exceeds five hundred thousand dollars and does not exceed one million dollars; Sixty-five per centum upon the amount by which the income exceeds one million dollars. "(2) Corporations and joint stock companies, no matter Corporation how created or organized, shall pay ten per centum upon *^''- income exceeding two thousand dollars. Any corporation or joint stock company the fiscal year of which is not the calendar year, shall make a return and have the tax pa3'able by it computed upon its income for its fiscal year ending with- in the calendar year for which the return is being made." (2) Subsection three of section four of the said Act is repealed and the following is substituted therefor: — "(3) Any persons carrying on business in partnership shall Partnerships, be liable for the income tax only in their individual capacity ; provided, however, that a husband and wife carrjdng on business together shall not be deemed to be partners for any purpose under this Act. A member of a partnership or the proprietor of a bilsiness whose fiscal year is other than the calendar year shall make a return of his income from the business, for the fiscal period ending witliin the calendar year for which the return is being made, but his return of income derived from sources other than his business shall be made for the calendar year." (3) Subsection five of section four of the said Act is repealed and the following is substituted therefor: — ^ "(5) Taxpayers shall be entitled to the following deduc- De' changed. Refunds. No bank charges for discount, etc., on cheques for income tax or penalty. 7. Subsection one of soM-tion nine of the said Act is amended by striking out the words "two next preceding sections" in the second Hue thereof and sul)stituting therefor the woids "next prececHng section." H. (1) Subsection one of section ten of tlie said Act is n pealed and the following is suljstituted therefor: — "lO. (1) The Minister sliall, on or l^efore the thirty-first day of October in each year, or on or before such other date as he may in any case or cases prescribe, determine the sevei-al amounts payable for the tax, and shall thereupon send by registered mail a notice of assessment, in such form as the Minister may prescribe, to each taxpayer, notifying liim of the amount payable by him for the tax. The tax shall he paid within one month from the date of mailing of the notice of assessment. In default of pa3'ment within the said one month from the date of the mailing of the assess- ment notice, a penalty of five per centum of the amount of such tax shall be added thereto, and thereafter a further pc^nalty of one per centum per month shall be ad(led for each additional month or portion thereof during which the said tax and penalty remain unpaid." (2) Section ten of the said Act is amended by adding thereto the following subsections: — "(4) The Minister may refund any tax or penalty wrong- fully or illegally assessed and collected, but no refund shall be allowed because of any alleged error in the assessment unless application therefor is made within twelve months of the date of the payment of the tax or penalty. "(5) Any chartered bank of Canada shall receive for deposit, without any charge for discount or conmiission, any cheque made payable to the Receiver General of Canada in payment of tax or penalty imposed by this Act, whether drawn on the bank receiving the cheque or on any other chartered bank in Canada." Adminis- tration by Minister. Regulations. Commis- sioner of Taxation to etercise auth- orized powers. 9. Section twenty-tw^o of the said Act is repealed and the following is substituted therefor: — "22. The Minister shall have the administration of this Act and the control and management of the collection of the taxation levied hereby, and of all matters incident thereto, and of the officers and persons employed in that service. The Minister may make any regulations deemed necessary for carrying this Act into effect, and may thereby authorize the Commissioner of Taxation to exercise such of the powers conferred by this Act upon the Minister, as may, in the opinion of the Minister, be conveniently exer- cised by the Commissioner of Taxation." Application lO. Subscctions two and three of section one, subsection ot sections. ^^^ ^£ section three, and sections five and seven hereof, 374 shall 1919. Incojne War Tax. Chap. 55. 11 shall be applicable to income tax returns and assessments of income for the year one thousand nine hundred and nineteen, and accounting periods ending in the year one thousand nine hundred and nineteen and subsequently; subsection four of section one, paragraph (h ) of subsection one of section three of the said Act, as enacted by.subsQctioii two of section two hereof, subsection three »£ r^cjti'^ih. •.,.* :* three, and subsection one of section eight her^ot* s\ialj . |3e. .., .^ . . . applicable to income tax returns and assessments j^.Jnebhie. ;•••*. :**i i/**. for the 3'ear one thousand nine hundred and eighteen, and accounting periods ending in the 3'ear one thousand nine hundred and eighteen and subsequently; all other provisions of this Act shall, for the purpose of administra- tion, be deemed and construed to have come into operation on and from the date upon which The Income War Tax Act, 1917, came into operation. OTTAWA: Printed by Joseph de Labroqueuie Tache, Law Printer to the King's most Excellent Majesty. 375 Gaylord Bros. Makers Syracuse. N. Y. PAT. JAN. 21. 1908