PRINCE EDWARD ISLAND

INCOME AND PERSONAL PROPERTY TAX

All personal property within the Province, and all income of every person resident in the Province, and the personal property within the Province and the income earned within the Province of nonresidents is liable to taxation.84 "Person" includes any individual, firm, partnership, joint stock company, or syndicate in receipt of income or possessed of personal property assessable under the provisions of the act.

Where the amount of tax on personal property is greater than the amount of the tax on the income from such personal property, the tax on personal property is the only tax payable in respect of both the income and the personal property, and if the relationship is the converse then only the income tax is payable; and where the two taxes are equal in amount then only the tax on income is payable in respect of both income and personal property.

Personal exemptions under the income tax provisions are as follows: Married persons and unmarried persons in loco parentis, $1,000; unmarried persons, $750; married persons and unmarried persons in loco parentis who served overseas during the World War, $1,500; and others, $1,250 up to 1939.

The following rates apply to the incomes of all persons, including corporations, and in each instance the appropriate rate is applied to the entire income:

"Personal property" includes goods, chattels, securities, and everything capable of ownership, except land or real estate, mortgages on real property or on personal property within the Province, and securities of the Province, or of any incorporated city or town in the Province specifically exempted by the taxing act.

The rate of taxation of personal property is one-half of 1 percent on its assessed value.

SPECIAL CORPORATION TAXES

Part IV of the Taxation Act levies special taxes on certain corporations and persons, varying according to the nature, volume, or extent of such business. Among the types of business subject to special taxes are banking, trust, building and loan, insurance, common carrier, telegraph, express and automobile or finance companies.

84 Income and Personal Property Taxation Act, 1924, as amended.

CHAIN-STORE TAX

A tax of $2,000 is levied on each branch chain store doing business in the Province or, if it is established that the said amount exceeds 3 percent gross annual turnover, then a tax of 3 percent of such turnover is payable. "Chain store" is defined as including any branch retail store operated or controlled directly or indirectly by any person or corporation, who or which either within or without the Province operates or controls four or more retail stores, either directly or through affiliated persons or subsidiary corporations.

Under the same conditions a branch wholesale store is taxed at $2,000, or if it is established that the said amount exceeds 1 percent of the gross annual turnover of said branch, then the tax is reduced to 1 percent of such turnover.

INSURANCE COMPANIES

Fire-insurance companies with their head office outside the Province pay a fixed fee of $225, while those with their head office within the Province pay $100. Life-insurance companies are subject to a 1 percent tax on gross premiums received within the Province, with a minimum fee of $100. Accident companies pay a fixed fee of $75, guaranty companies $50, and companies doing both types of business $100.

A fee of $150 is payable by nonresidents selling stocks, etc., in the Province, and nonresident stock or investment brokers are subject to a tax of 5 percent of the gross earnings in the Province, with a minimum tax of $200.

SASKATCHEWAN CORPORATION TAX

Under the Corporations Taxation Act 85 companies carrying on business in Saskatchewan are required to pay taxes of various types depending on the nature of the business, the number of offices, or the volume and extent of such business. Banking, finance, insurance, loan, land, grain, telegraph, express, and trust companies are subject to such special taxes.

Any unincorporated company and any company not exclusively engaged in any one or more of the businesses mentioned above in respect of which special taxes are imposed, or in ranching, farming, employment or such other business as may be determined pay an annual tax to be prescribed by regulation of the Lieutenant Governor in Council. Such companies pay a capital tax graded at $0.40 per $1,000 of authorized capital ranging from $10 to $500.

A corporation is allowed a deduction from the tax imposed under the Income Tax Act of an amount equal to the tax paid by it under the Corporations Taxation Act (sec. 8 of the Income Tax Act). The $10 annual registration fee cannot be deducted.

INSURANCE COMPANIES

Insurance companies carrying on business in the Province pay a tax of: 1 percent on the gross premiums when less than $50,000; 1.25

Revised Statutes of Saskatchewan, 1930, ch. 38, as amended.

percent when between $50,000 and $100,000; 1.5 percent when between $100,000 and $150,000; 1.75 percent when between $150,000 and $200,000; and 2 percent when the gross premiums are $200,000 or more. The minimum tax is $100 where the authorized capital is $100,000 or less and $175 where the authorized capital exceeds $100,000. An increase of 50 percent of these rates is in effect until April 30, 1939.

Companies operating two or more retail stores or shops are subject to a chain-store tax determined on the following basis: $15 for each store up to 5; $30 for each store in excess of 5 and up to 10; and $60 for each store in excess of the tenth. Where such a company operates a store or shop having gross annual revenue not exceeding $150,000, it is deemed to operate one store for each $50,000; having a gross revenue of more than $150,000 and not more than $750,000, one additional store for each $150,000 or major fraction thereof between $150,000 and $750,000; and having a gross annual revenue of more than $750,000, one additional store for each $250,000 of such revenue or major fraction thereof over $750,000. This tax is not payable in respect of a store unless a gross annual revenue of more than $25,000 is received therefrom. It is provided that a company operating stores through subsidiaries may be taxed in respect of the total number of stores under its control. "Shops and stores" do not include lumber or coal yards or establishments used exclusively for the sale of petroleum products.

SASKATCHEWAN INCOME TAX

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Under the Income Tax Act, 1936, all resident persons, including corporations, are subject to tax on their income from all sources and nonresident persons, including corporations, on their income within. the Province. The Saskatchewan Act has a reciprocal tax credit provision with respect to taxes paid in other Canadian Provinces.

The tax exemption for a married person is $1,450, with $300 additional for each dependent, and for all other persons, except corporations, $700.

The tax rate applicable to corporations and joint stock companies is 5 percent on the profits earned within the Province, with no exemption.

The rates of tax applicable to persons other than corporations and joint stock companies are levied on the following basis:

On the first $500 or any portion thereof, 2 percent; on the amount in excess of $1,500 but not in excess of $2,500, 3 percent; then increasing by 1 percent on each $1,000 thereafter up to 19 percent on the amount between $17,500 and $18,500; on the amount in excess of $18,500 but not in excess of $20,000, 20 percent; on the amount in excess of $20,000 but not in excess of $25,000, 21 percent; then increasing by 1 percent on each successive $5,000 up to 37 percent on the amount in excess of $100,000.

The amount of the tax is subject to a 5-percent surtax in respect of the income of all persons, except corporations and joint stock companies, where the income is in excess of $5,000.

8 Statutes of Saskatchewan, 1936, ch. 15.

SALES, EXCISE, AND TRANSFER TAXES

DOMINION SALES TAX

The sales tax came into effect on May 19, 1920, but the provisions at present in force are those contained part XIII of the Special War Revenue Act, chapter 179 of the Revised Statutes, 1927, as amended.87 A consumption or sales tax of 8 percent is levied on the sale price of all goods

(a) Produced or manufactured in Canada, payable by the producer or manufacturer at the time of the delivery of such goods to the purchaser thereof;

(5) Imported into Canada, payable by the importer or transferee who takes the goods out of bond for consumption at the time when the goods are imported or taken out of warehouses for consumption; or

(c) Sold by a licensed wholesaler, payable by the vendor at the time of delivery by him, and the tax is computed on the duty-paid value of goods imported or, if the goods were manufactured or produced in Canada, on the price for which the goods were purchased by the said licensed wholesaler, and the price includes the amount of the excise duties on goods sold in bond.

The sales tax is not payable on goods;

(a) Exported, except that the tax is payable on the sale of spirituous and fermented liquors, other than wine, unless such goods are exported in bond by the manufacturer and foreign landing certificates satisfactory to the Minister are produced as proof that the said goods have been landed at the place designated in the export entry;

(b) Sold by a licensed manufacturer to another manufacturer if the goods are partly manufactured goods; or

(c) Imported by a licensed manufacturer if the goods are partly manufactured goods; or

(d) Imported by a licensed wholesaler, on importation; or

(e) Sold by a licensed manufacturer to a licensed wholesaler; f) Sold by a licensed wholesaler to a licensed manufacturer if the goods are partly manufactured goods; or

(g) Sold by a licensed wholesaler to another licensed wholesaler.

LICENSES

Every manufacturer or producer is required to take out an annual license for which a fee of $2 is charged, renewable on April 1 of each year. A bona fide wholesaler or jobber may be granted an annual license for which the fee is $2. The wholesaler or jobber

$7 Special War Revenue Act and amendments to date. Published by Department of National Revenue, Excise Division. Office Consolidation, July 1935; and Amendment Act of June 23, 1936, ch. 45.

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applying for a license must give security, that he shall keep adequate books or accounts, for an amount of not more than $15,000 and not less than $2,000. Applications for wholesale licenses are not considered until the applicants have been in business for a period of at least 3 months.

INCIDENCE OF THE TAX

Generally speaking, the tax is one of single incidence that is, it applies once only, and that, on the sale by the final manufacturer. By a system of licensing, manufacturers or producers are permitted to purchase articles or materials to be used in, wrought into, or attached to their taxable products being manufactured or produced for sale, free from sales tax, the tax then applying on the completely manufactured article. For example, an abattoir produces hides but is permitted to sell them free from sales tax to a licensed tanner; the tanner, after tanning the hides, is permitted to sell them to a licensed shoe manufacturer without tax, and the shoe manufacturer accounts for the sales tax on the sale of finished shoes to a retailer or unlicensed wholesaler.88

INVOICES AND CERTIFICATES

When goods are sold by a licensed manufacturer or by a licensed wholesaler to an unlicensed wholesaler, the purchaser must be furnished with a written invoice of the goods sold, stating separately the amount of the sales tax. The same requirement prevails when an unlicensed wholesaler or jobber sells goods to a licensed manufacturer. A licensed manufacturer or wholesaler when selling to retailers or consumers is not required to show the tax as a separate item on the invoice. A licensed manufacturer when making purchases or importing taxable goods which are subject to further manufacture is required to quote his license number and give a certificate on the order or entry in the following general form: "We certify that the goods ordered (or imported) hereby are to be used in, wrought into, or attached to taxable goods for sale"; then signed by the purchaser, quoting license number. Every licensed wholesaler or jobber, when purchasing or importing goods for resale, must quote his license number on the order or entry and certify thereon that the goods are for resale.89

INSTALLMENT PAYMENTS OF SALES

In the case of any contract for the sale of goods wherein it is provided that the sale price shall be paid to the manufacturer or producer by installments as the work progresses, or under any form of conditional sales agreement, contract of hire-purchase, or any form of contract whereby the property in the goods sold does not pass to the purchaser until a future date, the sales tax is payable pro tanto at the time each of such installments falls due and becomes payable in accordance with the terms of the contract, all such contracts for the purpose of the tax being regarded as sales and deliveries. In cases where there is no physical delivery of the goods

88 National Revenue, February 1936, Department of National Revenue.

80 Regulations January 1, 1935, Department National Revenue, Canada Excise Division.