Joint Filing of Spousal Personal Income Tax Returns

The Carter Commission recognized long ago that the appropriate unit of taxation is the “family unit” rather than the individual. Recent changes to the taxation of spouses within a family unit has highlighted the inequality of the tax burden realized by the family unit. In particular, shareholders of Canadian businesses are most affected by the changes, and it is now necessary to reverse them through the introduction of amendments to the Income Tax Act that will provide for the filing of Joint Spousal income tax returns.

Prior to the issuance of the “Report of the Royal Commission on Taxation” more commonly referred to as the “Carter Commission” in 1966, the unit of taxation in Canada had been the individual. More specifically, income taxation was directed at the individual or “person” receiving the income, irrespective of marital status. In his report, Mr. Kenneth Carter pointed to the inequity of this approach and stated “Because the individual is the tax unit, serious inequity and enforcement problems arise”.

The Alberta Chambers of Commerce recommends that the Government of Canada and Department of Finance:

1. Establish a framework within the Income Tax Act, Canada, to address the importance of the family unit as the appropriate unit of taxation;

2. Introduce legislation to provide for an appropriate “family unit rate schedule” to address taxation of the family unit;

3. Review and address current non-refundable tax credits to ensure their appropriate application to the taxation of the family unit; and

4. Introduce legislation to provide for the ability for families to file a Joint Spousal income tax return to report the aggregate family income of the family unit.