Quick Summary. In 1867, the United Kingdom passed a Parliamentary act establishing what is now known as Canada. Today, Canada, the largest country in the Western Hemisphere, is a federation of ten provinces and three territories.
Following its formation in 1867, Canada’s new government was provided with the power to raise money by taxation. Moreover, the new government was divided between the federal government and the provincial governments. Generally, the federal government was tasked with providing railways, roads, bridges, and harbors. Conversely, the provincial governments were responsible for providing its citizens with education, health, and welfare.
Canada’s federal government did not initiate a formal income tax until World War I. Due to its involvement in the war and its need for war funds, Canada’s federal government established a corporate tax in 1916. A year later, the federal government introduced the Income War Tax Act, which added an income tax regime on individuals. In 1948, the Income War Tax Act was replaced with the Income Tax Act. Today, the Canada Revenue Agency and various provincial governments administer the federal and other tax laws in Canada.