Issue
A fully integrated income tax system, as stated by the Carter Commission Report, would avoid double taxation under the corporate income tax system and the private income tax system, while ensuring that there is relative indifference between earning income through a Canadian corporation, by salary or by dividend. It would also address other distortions in Canadian taxation.
Background
The Royal Commission on Taxation, better known as the "Carter Commission", conducted its comprehensive review of the Canadian income tax system over 50 years ago in 1966, rendering its report to Canadians in 1972.
The Carter Commission Report introduced, among other recommendations, the concept that income should be taxed at the same rate regardless of whether it was earned in a corporation or personally.
Our Recommendations
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Undertake a full review of the integration mechanisms that currently exist within the Act, including, but not limited to: corporate income tax rates for active small business, general and investment income; the additional tax on investment income earned in a corporation; the personal income tax dividend gross-up mechanism; and, the personal income tax dividend tax credit; the corporate income tax refundable dividend tax on hand rates; eligible dividend personal income tax rates; non-eligible dividend personal income tax rates; and, personal income tax rates; and,
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That upon completion of this review, the Department of Finance amend the applicable rates and provisions of the Act to ensure the restoration of tax integration as recommended by the Carter Commission Report.
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Implement a refundable corporate income tax mechanism to ensure that provincial personal income tax and corporate income tax systems support the integration of all forms of income earned and taxed in the province.
Topic
Year
2025
Contact
If you have any questions, contact Dana Severson at dseverson@abchamber.ca or (780) 425-4180 ext. 2.