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The new Income Tax Act (S.C. 1970-71, c.63), formely known as Bill C-259, has introduced important changes and many new rules into Canadian legislation, which affect taxation of non-residents. This thesis is a study of the tax treatment which the new law imposes on non-residents and an examination of the differences from the previous system. However, taxation of non-residents depends not only on statutes but also on case law. Therefore, attention is devoted to judicial decisions to ascertain whether they conflict with the new statutory provisions. This thesis studies non-residents earning income from a business they carry on in Canada, and deriving income from investments they make in Canada. The comparatively simple situations of persons holding employments in Canada, or receiving pension payments from Canadian sources are not analyzed. The study is limited to the law normally applicable without modifications dependent on international treaties. The thesis is organized in seven main chapters and a short conclusion. The first chapter summarizes the reasons making taxation of non-residents a complexe matter, and the rules governing it. The second chapter is devoted to the definition of residence as well as to a brief comparison with certain other countries. The tax consequences of non-residents carrying on business in Canada and the methods available are examined in the third chapter. The taxation of the different forms of investment income which non-residents may derive from Canada is the object of the fourth chapter. The non-resident-owned investment corporation, that is to say the special vehicle afforded to foreign investors, is analyzed in the fifth chapter. The sixth chapter explains the technical provisions aimed at counteracting thin capitalization. The taxation of capital gains realized by non-residents is studied in the chapter seven. Finally, some conclusions are drawn in the eighth and last chapter. / Law, Peter A. Allard School of / Graduate

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The Report of the Royal Commission on Taxation, 1967, stated that tax treatment of leases was of great concern if the system of capital cost allowances was not to be undermined. In spite of this warning, nothing has been done since the repeal of former Section 18 of the Canadian Income Tax Act, in 1963, to remedy the situation. Section 18 was repealed because it was found to be administratively inoperable. A study of current accounting and business practice, of theoretical and research committee recommendations, and of legislation in the United States appears to isolate the reason for legislative difficulties. The premise on which Canadian legislation was based is much too narrow. Only those leases which had purchase options were dealt with. In fact, most long term leases, regardless of whether or not they have purchase options, have most of the attributes of purchases. These attributes include property rights acquired in assets, useful life of assets, equity accumulation in assets, and the fair -market value of assets in relation to the present value of total payments required under the lease. In most long term leases, the present value of contract payments, including options, comprises the major part of the fair market value. Current opinion and practice, as expressed by most writers, by research committees, and as evidenced by accounting practice and business acceptance in balance sheet footnoting of long term leases, effectively treats such acquisition as quasi-purchases. In this regard, both theory and practice is far ahead of legislation. The inequity in the tax treatment of long term leases is much more consequential than is generally realized. Not only is there substantial tax postponement for an ever burgeoning number of realty and equipment leases, but there is 'proper' tax avoidance under the long term lease through depreciation of land for tax purposes, effectively available to lessees, but not available to purchasers. When the thousands of service station and supermarket outlets, and the fact that most are under long term lease in Canada, are considered, tax avoidance from this source alone amounts to many, many, millions of dollars annually. Since leasing is always initially more expensive than purchasing, and the major reason for many leases is tax advantage, it is not unfair to say that legislative inaction contributes considerably to business inefficiency. This taxation problem is examined under varying aspects, including historical applications of the Canadian Income Tax Act; present legislation and its effectiveness; pertinent tax cases in Canada and in the United States; current accounting and business trends, and Carter Report suggestions. Finally, suggested legislation which embodies the transition of long term leasing to purchasing is proposed. While the proposed solution is relatively simple and concise, it is supported by theory, by practicality, and by operability. / Business, Sauder School of / Graduate

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Taxpayers in the Canadian professions have expressed their opinions, individually, and through their professional association, that they are unfairly taxed under present taxation legislation. While they are able to deduct the expenses incurred to earn their professional income, they would like to be placed on an equal tax basis with merchants and other taxpayers in the service industries who are able to incorporate and take advantage of certain tax concessions available to corporate taxpayers. The British Columbia government enacted the Professional Corporations Act in 1970 which gave the option of incorporation to all taxpayers who previously, due to either law, tradition, or their professional code of ethics were unable to incorporate. Confusion arose as to whether the Department of National Revenue would recognize professional corporations and the British Columbia Act was subsequently suspended. The Canadian taxation system has been intensively investigated in recent years and extensive amendments have been proposed by the government. To achieve equity Canadian professionals should be subject to the same tax burden as other Canadian businesses. Professional incorporation should not be permitted due to the ethical problems it would raise. Instead professionals should be given the option under the Income Tax Act of having their income taxed at corporate rates and in addition being able to take advantage of the other tax planning mechanisms presently available to corporations. Equity will thus be established between taxpayers in the professions and other Canadian businesses. / Business, Sauder School of / Graduate

This thesis examines the impact of taxation on small businesses in Canada. It reviews the relevant economic and taxation literature from a historical perspective to provide appropriate background for policy analysis. Other nations' tax systems are also considered. The key elements of the existing system are examined in order to define the present status and to identify the strengths and weaknesses. The learned proposals of various academics, professionals and other parties are reviewed in order to seek new ideas, comments and criticism on the system. The final chapter defines the author's perceived objectives for small business tax policy and identifies some impediments to tax reform. Finally, general and specific recommendations are detailed. The author proposes that the tax definition of "small" be narrowed and that "medium-sized" businesses be given recognition in tax policy. Small business tax policy should recognize as its prime purpose the providing of financial assistance to counteract the natural prejudices that small businesses encounter in the capital markets. To achieve this, the small business tax rate should be lowered and loss provisions should remain liberal. The concept of integration with the personal tax system should attain greater integrity by changing the calculation of Part Two Tax on distributions. Various small business tax measures extant should be scrapped because they are ineffective. Temporary or specific tax incentives should be used sparingly. / Business, Sauder School of / Graduate

The diploma thesis deals with the tax system of Canada. The object of this thesis is to analyze a tax system in terms of economic and political situation of the country. The reader should acquire an overview of current version of income tax. The main attention in this thesis is dedicated to federal income tax as well as province income tax in Ontario. Taxation of income of individuals in Canada is a significant source of revenue for public budgets. Furthermore, this work compares calculation of income tax within Canada and the Czech Republic and describes the differences among provinces in Canada. The conclusion contains a complete assessment of the findings presented in this work. On the basis of such a diploma thesis, the reader should acquire a complex insight into the Canadian tax system and specifics of income tax in province Ontario.