Tax Guide/Start here
A short history of income tax in Canada
Updated November 4, 2026
Canada's federal government once relied mostly on customs and excise duties. Income tax arrived during the First World War and never left.
Key moments
| Year | What happened |
|---|---|
| 1917 | The Income War Tax Act introduced federal income tax. Single people paid on income above $1,500, and rates began at 4% |
| 1941 | Provinces agreed to "rent" their income tax fields to Ottawa during the Second World War |
| 1942 | Employers began withholding tax from pay, and far more workers started paying income tax |
| 1948 | The Income Tax Act replaced the wartime law |
| 1957 | Registered Retirement Savings Plans were introduced |
| 1966 | The Carter Commission recommended treating all income alike |
| 1972 | Major reform began taxing capital gains |
| 1991 | The GST replaced the older manufacturers' sales tax |
| 1999 | Revenue Canada became an agency, renamed the Canada Revenue Agency in 2003 |
| 2009 | The Tax-Free Savings Account arrived |
| 2023 | The First Home Savings Account arrived |
What has not changed
Canada still uses self-assessment. You report your income, work out your tax and file. The CRA then reviews what you sent and can ask for proof.