Income Tax Definition:

In Canadian Industrial Gas & Oil v. Government of Saskatchewan, Justice Dickson of Canada's Supreme Court adopted these words:

"A true income tax means, for taxation purposes, a levy on gains and profits...

"[I]ncome tax (is) according to generally accepted accounting principles and business practice, a tax imposed on net income and in determining such net income any expenses incurred in earning that income are inherently deductible."

In London County Council, Justice MacNaghten wrote:

"Income tax ... is a tax on income. It is not meant to be a tax on anything else. It is one tax, not a collection of taxes essentially distinct."

For many individuals, income comes from an employer and income tax is deducted at source. For others including corporations and those who are self-employed, income tax can be charged against profit.

Canada's first income tax statute was called the Income War Tax of 1917 and it defined income tax as:

"There shall be assessed, levied and paid, upon the income during the prceding year of every person resideing or ordinarily resident in Canada or carrying on any business in Canada, the following taxes: (a) 4% upon all income exceeding $1,500 in the case of unmaried persons.... etc."

REFERENCES:

• Canadian Industrial Gas & Oil v. Government of Saskatchewan, [1978] 2 S.C.R. 545
• Income War Tax Act, 1917, 1917 7-8 Geo. V, S.C., Chapter 28, §4
• London County Council v Attorney-General, [1901] A.C. 26