Income Tax Act turns 100, warts and all

Here is a look at the evolution of Canada’s Income Tax Act since its introduction in 1917.

Strike up the band! Canada’s Income Tax Act turns 100 this year. While some might see no cause for celebration, the act, the systems and community that have grown to support it are fundamental to our country’s economic and social development and financial health.

Introduced in 1917 as a temporary measure to finance Canada’s efforts in the First World War, the tax stayed on the books — over vociferous protest — after the battles were won and the war debts paid.

The Second World War and its massive financial commitments eclipsed any notion that the tax would be abolished. Income taxation became entrenched as a primary means of federal government financing. Today personal income taxes account for 36% of federal tax revenues, while taxes on corporate income contribute 11%, according to the Organization for Economic Co-operation and Development’s most recent figures.

Like the government and the economy, the act got bigger and more complex as the years went by. The first filers had to fill 23 lines on their returns for personal and business income combined. Fast-forward to the 2016 T1 General form and you’ll find nearly 500 lines — and that excludes the accompanying raft of schedules and information returns.

As the act enters its second century, it remains a work in progress. Throughout its history it has seen ongoing fine-tuning and adjustment, growing ever more unwieldy. From six pages in 1917, page counts for current versions of the act now number in the thousands.

In 1944, an editorial in The Canadian Chartered Accountant urged a top-to-bottom rewrite, describing the act as “a horrible example of piling amendment upon amendment, with the result that what is stated or implied by one section of the act may be modified by another.” These words still ring true today.

That’s why CPA Canada and others have repeatedly called for a comprehensive tax system review to streamline the Income Tax Act and set the stage for Canada’s continued prosperity for the next 100 years.


From the Income Tax Act’s inception, CPAs and their legacy counterparts have been instrumental in helping Canada’s tax system evolve and Canadian taxpayers comply. Among the latest contributions:

• CPA Canada and the Canada Revenue Agency collaborate on improving tax administration through their Framework Agreement signed in 2014;

• more than 100 volunteers work on tax system improvements through CPA Canada committees, covering 11 tax areas;

• CPAs are helping the Minister of National Revenue’s Underground Economy Advisory Committee address tax cheating;

• CPAs on the Advisory Panel on Canada’s System of International Taxation delivered insight on enhancing Canada’s tax advantage; and

• CPA Canada is active in the Global Accounting Alliance Tax Directors Group, sharing knowledge and resources on international tax matters.

Looking ahead, CPAs will continue to work in the public interest toward the ideal of a truly equitable, effective and efficient tax system.