2020-0842721M4 Authority to collect taxes under the Constitution

Principal Issues: What is the legislative authority in the Constitution that gives the Canada Revenue Agency the legal right to collect taxes?

Position: See response.

Reasons: See response.

Author: El-Kadi, Randa
Section: 91(3) of the Constitution Act, 1867; 92(2) of the Constitution Act, 1867 (giving provincial legislatures the power to make taxation laws); subsections 164(2) and 220(1) of the Income Tax Act.

June 17, 2020

XXXXXXXXXX

Dear XXXXXXXXXX:

The Honourable Diane Lebouthillier, Minister of National Revenue, has asked me to reply to your correspondence about the legal authority of the Canada Revenue Agency (CRA) to collect taxes. Thank you for your understanding regarding the delay of this response.

The legal authority for Canadian taxation is established under the Constitution Act, 1867. Subsection 91(3) of the Constitution Act, 1867 gives the federal government the power to make laws about “the raising of money by any mode or system of taxation.” The Income Tax Act is an example of one of these laws. The courts have upheld the legality of the Income Tax Act under the Constitution Act, 1867.

The Minister of National Revenue has a statutory duty under subsection 220(1) of the Income Tax Act to administer and enforce the Act. The Commissioner of the CRA has the delegated authority to perform the Minister’s duties under the Act.

In other words, the CRA has the constitutional authority to administer the provisions of the Income Tax Act. These provisions include subsection 152(1) of the Act, which requires the assessment of tax, interest, and penalties as applicable. They also include the discretionary power in subsection 164(2) of the Act, which allows the CRA to apply refunds or repayments to a taxpayer’s debt instead of sending them to the taxpayer.

Subsection 92(2) of the Constitution Act, 1867 gives the provinces the power to make tax laws to raise revenue for provincial purposes. In the provinces where the CRA collects provincial income tax, the provincial income tax legislation is the authority that allows for a tax collection agreement between the federal and provincial governments.

I trust the information I have provided is helpful.

Sincerely,

Geoff Trueman
Assistant Commissioner
Legislative Policy and Regulatory Affairs Branch

Randa El-Kadi
343-543-2506
2020-084272

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