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Income taxes in Canada constitute the majority
of the annual revenues of the Government of Canada, and of the
governments of the Provinces of Canada. In the 2005,
the government collected roughly three times more personal
income taxes than it did corporate income taxes.
Tax collection agreements enable different governments to levy
taxes through a single administration and collection agency. The
federal government collects personal income taxes on behalf of
all provinces and territories except Quebec and collects
corporate income taxes on behalf of all provinces and
territories except Alberta, Ontario and Quebec. Canada's federal
income tax system is administered by the Canada Revenue Agency (CRA).
Canadian federal income taxes, both personal and corporate are
levied under the provisions of the Income Tax Act. Provincial
and territorial income taxes are levied under various provincial
statutes.
The Canadian income tax system is a self-assessment regime.
Taxpayers assess their tax liability by filing a return with the
CRA by the required filing deadline. CRA will then assess the
return based on the return filed and on information it has
obtained from employers and financial companies, correcting it
for obvious errors. A taxpayer who disagrees with CRA's
assessment of a particular return may appeal the assessment. The
appeal process starts when a taxpayer formally objects to the
CRA assessment. The objection must explain, in writing, the
reasons for the appeal along with all the related facts. The
objection is then reviewed by the appeals branch of CRA. An
appealed assessment may either be confirmed, vacated or varied
by the CRA. If the assessment if confirmed or varied, the
taxpayer may appeal the decision to the Tax Court of Canada and
then to the Federal Court of Appeal.
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