CPA Resource · Canadian Tax Glossary

Canadian Tax Glossary: 220+ Terms Defined

Clear, plain-language definitions of the Canadian tax and accounting terms that matter, covering personal, business, corporate, GST/HST, payroll and international tax. Written and maintained by a licensed CPA firm.

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A

Accelerated Investment Incentive: A federal measure allowing a larger capital cost allowance deduction in the year a depreciable asset is first available for use, accelerating tax depreciation on new and used eligible property.
Accounts Payable: Amounts a business owes to its suppliers and vendors for goods or services received but not yet paid. Learn more →
Accounts Receivable: Amounts owed to a business by its customers for goods or services delivered but not yet collected. Learn more →
Accrual Method: An accounting method that records income when earned and expenses when incurred, regardless of when cash is received or paid. Most corporations must use the accrual method.
Active Business Income: Income earned from a business actively carried on, as opposed to passive investment income. Active business income up to the small business limit qualifies for the small business deduction. Learn more →
Adjusted Cost Base (ACB): The cost of a property for tax purposes, adjusted for certain additions and reductions, used to calculate a capital gain or loss on disposition.
Allowable Business Investment Loss (ABIL): A portion of a business investment loss that can be deducted against all sources of income, not just capital gains, subject to conditions.
Amalgamation: The combining of two or more corporations into one, which can be carried out on a tax-deferred basis under specific rules.
Amortization: The accounting allocation of the cost of an intangible asset over its useful life. For tax, capital cost allowance plays the equivalent role for depreciable property.
Arm's Length: A relationship or transaction between parties acting independently with separate interests. Non-arm's length transactions, such as between family members, face special tax rules.
Assessment: The CRA's determination of tax payable after reviewing a filed return, communicated through a notice of assessment.
Assignment Sale: The sale of the rights and obligations under a pre-construction purchase agreement before closing. Assignments of new housing are generally subject to HST. Learn more →
Associated Corporations: Corporations connected through control or ownership that must share the small business limit and certain other tax thresholds. Learn more →
Attribution Rules: Rules that tax income or gains in the hands of the transferor when property is transferred to a spouse or minor child to split income.
Audit: A CRA review of a taxpayer's books, records and returns to verify that income, deductions and credits were reported correctly. Learn more →

B

Balance Owing: The amount a taxpayer still owes after credits and payments are applied against total tax payable.
Bare Trust: An arrangement where a trustee holds legal title to property but the beneficial owner controls it. Bare trusts can have specific reporting obligations.
Basic Personal Amount (BPA): A non-refundable tax credit available to all individuals that exempts a base level of income from federal tax.
Beneficial Owner: The person who enjoys the benefits of owning property, even if legal title is held by someone else such as a trustee or nominee.
Beneficiary: A person entitled to receive income or capital from a trust or estate. Learn more →
Bonus: Additional remuneration paid to an employee or owner-manager. A year-end bonus can be used to reduce corporate income below the small business limit if paid within the required period. Learn more →
Book Value: The value of an asset recorded in the accounting records, equal to cost less accumulated depreciation or amortization.
Bookkeeping: The systematic recording, categorizing and reconciling of a business's financial transactions, forming the foundation for financial statements and tax filings. Learn more →
Business Expense: A cost incurred for the purpose of earning business income, generally deductible in computing business profit.
Business Number (BN): A nine-digit identifier the CRA assigns to a business, to which program accounts such as GST/HST, payroll and corporate income tax are linked.

C

Calendar Quarter: A three-month period beginning on the first day of January, April, July or October. Relevant to the GST/HST small supplier threshold.
Canada Carbon Rebate: A payment returning federal fuel charge proceeds to individuals and, in some cases, small businesses in applicable provinces.
Canada Child Benefit (CCB): A tax-free monthly payment to eligible families to help with the cost of raising children under 18.
Canada Pension Plan (CPP): A contributory social insurance plan funded by employee, employer and self-employed contributions, paying retirement, disability and survivor benefits. Learn more →
Canada Revenue Agency (CRA): The federal agency that administers tax laws and delivers benefits and credits for the Government of Canada and most provinces and territories.
Canada Workers Benefit (CWB): A refundable tax credit that supplements the earnings of low-income workers.
Canadian-Controlled Private Corporation (CCPC): A private corporation resident in Canada that is not controlled by non-residents or public corporations, eligible for the small business deduction and other benefits. Learn more →
Capital Cost Allowance (CCA): The tax deduction that allows a business to write off the cost of depreciable property over time, at rates set by CCA class. Learn more →
Capital Dividend Account (CDA): A notional account tracking the tax-free portion of a private corporation's capital gains and certain other amounts, which can be paid to shareholders as a tax-free capital dividend. Learn more →
Capital Expenditure: A cost incurred to acquire or improve a long-term asset, capitalized and deducted over time through CCA rather than expensed immediately.
Capital Gain: The profit realized when a capital property is sold for more than its adjusted cost base. A portion of a capital gain is included in income.
Capital Loss: The loss realized when a capital property is sold for less than its adjusted cost base. Capital losses generally offset only capital gains.
Capital Property: Property that can give rise to a capital gain or loss on disposition, such as shares, real estate or equipment.
Carryforward: An unused deduction or credit from a prior year that may be claimed in a future year, such as non-capital losses or tuition amounts.
Cash Method: An accounting method recording income when received and expenses when paid, permitted for certain farmers, fishers and individuals.
CCA Class: A category of depreciable property with an assigned capital cost allowance rate. For example, Class 16 covers certain highway tractors at 40%. Learn more →
Charitable Donation Tax Credit: A non-refundable credit for gifts to registered charities, reducing tax based on the amount donated.
Clearance Certificate (CRA): A document confirming that all amounts owed by a taxpayer, such as a deceased person's estate, have been paid before assets are distributed.
Clearance Certificate (WSIB): A document confirming a construction business has an active WSIB account in good standing, often required before a principal releases payment. Learn more →
Common-Law Partner: A person living with a taxpayer in a conjugal relationship who meets the conditions in the Income Tax Act, affecting credits, benefits and income attribution.
Compilation Engagement: An engagement where an accountant compiles financial information into financial statements without providing assurance. Formerly called a Notice to Reader. Learn more →
Connected Corporation: A corporation in which another corporation holds a significant interest, relevant to the taxation of inter-corporate dividends.
Controlled Foreign Affiliate: A foreign corporation controlled by a Canadian taxpayer, subject to rules that may attribute its passive income to Canada. Learn more →
Corporate Tax Planning: The proactive arranging of a corporation's affairs before year-end to legally minimize tax, covering compensation, deductions and structure. Learn more →
Corporation: A legal entity separate from its owners that can earn income, own property and is taxed under the corporate tax system through a T2 return. Learn more →
Cost Base: The amount used as the starting point to measure a gain or loss on a property, generally its adjusted cost base.
Cost of Goods Sold (COGS): The direct cost of producing or purchasing the goods a business sold during a period, calculated as opening inventory plus purchases minus closing inventory.
CPP Contributions: Mandatory contributions to the Canada Pension Plan deducted from employee pay and matched by the employer, or paid in full by self-employed individuals. Learn more →
Credit (Tax): An amount that reduces tax payable. Credits may be non-refundable, reducing tax only to zero, or refundable, paid out even if no tax is owed.

D

Death Benefit: An amount paid on or after the death of an employee in recognition of service, a portion of which may be received tax-free.
Deduction: An amount subtracted from income to reduce the income on which tax is calculated, such as RRSP contributions or business expenses.
Deemed Disposition: A tax rule treating property as sold at fair market value even though no actual sale occurred, such as on death or emigration.
Deferred Tax: An accounting concept reflecting tax expected to be paid or recovered in future periods due to timing differences between accounting and tax.
Departure Tax: Tax arising when a person ceases to be a Canadian resident, based on a deemed disposition of certain property at fair market value. Learn more →
Depreciable Property: Property used to earn income that wears out or becomes obsolete over time, eligible for capital cost allowance.
Director Liability: The personal liability of a corporation's directors for certain unremitted amounts, such as payroll source deductions and GST/HST. Learn more →
Disability Tax Credit (DTC): A non-refundable credit that reduces tax for individuals with a severe and prolonged impairment, requiring an approved Form T2201.
Disbursement: A payment made by a business or a trust, such as funds paid out to beneficiaries or to settle expenses.
Dividend: A distribution of a corporation's after-tax profits to its shareholders. Dividends are taxed under the gross-up and dividend tax credit system. Learn more →
Dividend Sprinkling: Paying dividends to multiple family-member shareholders to split income, now constrained by the tax on split income rules. Learn more →
Dividend Tax Credit: A credit that reduces the personal tax on dividends received from Canadian corporations, recognizing tax already paid at the corporate level.

E

Eligible Capital Expenditure: A former category of intangible expenditure, now generally included in CCA Class 14.1, such as goodwill and certain licences.
Eligible Dividend: A dividend paid from corporate income taxed at the general rate, carrying a higher gross-up and dividend tax credit than non-eligible dividends.
Employment Insurance (EI): A federal program providing temporary income support to workers who lose employment, funded by employee and employer premiums. Learn more →
Estate: The property and obligations a person leaves on death, administered and reported for tax through a T3 trust return. Learn more →
Estate Freeze: A planning technique that locks in the current value of a business for the founder while shifting future growth to the next generation. Learn more →
Excise Tax: A tax imposed on specific goods such as fuel, tobacco and alcohol, separate from GST/HST.
Expense Recognition: The accounting principle of recording expenses in the period they are incurred to earn the related revenue.

F

Fair Market Value (FMV): The highest price a property would bring in an open and unrestricted market between informed, willing parties dealing at arm's length.
Family Trust: A trust established to hold assets or shares for family members, used in income splitting and succession planning. Learn more →
Federal Tax: Income tax levied by the federal government, calculated on taxable income before provincial tax is added.
Filing Deadline: The date by which a return must be filed. Personal returns are generally due April 30; corporate T2 returns are due six months after the fiscal year-end.
Financial Statements: Formal records of a business's financial position and performance, including the balance sheet, income statement and cash flow statement. Learn more →
First Home Savings Account (FHSA): A registered account allowing first-time home buyers to save toward a home, with deductible contributions and tax-free qualifying withdrawals.
Fiscal Year: The 12-month accounting period a business uses for financial reporting and tax. A corporation may choose a fiscal year-end other than December 31.
Fixed Asset: A long-term tangible asset used in operations, such as equipment or buildings, depreciated for accounting and subject to CCA for tax.
Foreign Accrual Property Income (FAPI): Passive income earned by a controlled foreign affiliate that is attributed to and taxed in the hands of the Canadian shareholder. Learn more →
Foreign Income Verification (T1135): A reporting form required when a taxpayer holds specified foreign property costing more than $100,000. Learn more →
Foreign Tax Credit: A credit that reduces Canadian tax for income or profits taxes paid to a foreign government, preventing double taxation. Learn more →

G

General Anti-Avoidance Rule (GAAR): A rule allowing the CRA to deny tax benefits from transactions that comply with the letter of the law but abuse its purpose.
General Rate Income Pool (GRIP): A balance tracking income of a corporation taxed at the general rate, from which eligible dividends can be paid.
Gift in Kind: A donation of property other than cash, such as securities or goods, valued at fair market value for the donation credit.
Goodwill: The intangible value of a business beyond its identifiable assets, such as reputation and customer relationships, treated as eligible capital property for tax.
Gross Income: Total income before any deductions are applied.
Gross-Up: The required addition to the actual dividend received to arrive at the taxable dividend amount, offset by the dividend tax credit.
GST/HST: The goods and services tax and harmonized sales tax applied to most goods and services in Canada. Ontario applies HST at 13%. Learn more →
GST/HST Registration: The process of registering for a GST/HST account, mandatory once worldwide taxable revenue exceeds $30,000 over four consecutive quarters. Learn more →
Guaranteed Income Supplement (GIS): A monthly non-taxable payment to low-income seniors who receive Old Age Security.

H

Harmonized Sales Tax (HST): The combined federal and provincial sales tax applied in participating provinces, including Ontario at 13%. Learn more →
Holdback: An amount, generally 10% under Ontario's Construction Act, retained from each construction progress payment as security and released after the statutory period. Learn more →
Holding Company: A corporation that holds investments or shares of other companies rather than carrying on active business, often used for asset protection and tax planning. Learn more →
Home Office Expense: A deduction for the business-use portion of home costs where a home is used to earn business or employment income.

I

Income Splitting: Shifting income from a higher-income family member to a lower-income one to reduce overall tax, now restricted by the tax on split income rules. Learn more →
Income Tax Act (ITA): The federal statute governing income taxation in Canada, administered by the CRA.
Incorporation: The legal process of forming a corporation, creating a separate legal entity for liability protection and tax planning. Learn more →
Indexation: The annual adjustment of tax brackets, credits and benefit amounts to reflect inflation.
Input Tax Credit (ITC): A credit a GST/HST registrant claims to recover the GST/HST paid on purchases used in commercial activities. Learn more →
Instalments: Periodic prepayments of tax required when tax owing exceeds set thresholds, made by individuals or corporations during the year.
Inter Vivos Trust: A trust created during the settlor's lifetime, as opposed to a testamentary trust arising on death. Learn more →
Inter-Corporate Dividend: A dividend paid from one corporation to another, which can often flow tax-free between connected Canadian corporations. Learn more →
Interest Deductibility: The rules determining when interest on borrowed money is deductible, generally requiring the funds to be used to earn income.
Inventory: Goods held for sale in the ordinary course of business, valued at year-end to determine cost of goods sold.
Investment Tax Credit (ITC, income tax): A credit reducing tax for eligible investments and expenditures, such as scientific research and experimental development. Learn more →
Involuntary Disposition: A disposition occurring without the owner's intention, such as expropriation or destruction, which may allow a deferral of the resulting gain.

J

Joint Venture: A business arrangement where parties share a specific project without forming a partnership, each reporting its own share for tax.

L

Lifetime Capital Gains Exemption (LCGE): An exemption sheltering capital gains on the sale of qualified small business corporation shares or qualified farm or fishing property from tax, up to a lifetime limit. Learn more →
Limited Partnership: A partnership with general partners who manage the business and limited partners whose liability and loss claims are restricted.

M

Management Fee: A charge between related businesses for management or administrative services, which must be reasonable to be deductible.
Marginal Tax Rate: The rate of tax that applies to the next dollar of income, rising as income moves into higher brackets.
Medical Expense Tax Credit: A non-refundable credit for eligible medical expenses exceeding a set threshold.
Mileage Log: A record of business versus personal vehicle use, required to support a deduction for vehicle expenses.

N

Net Capital Loss: An unused capital loss that can be carried back three years or forward indefinitely to offset capital gains.
Net Income (Tax): Total income less specific deductions, used to determine eligibility for many credits and benefits.
New Housing Rebate: A GST/HST rebate returning part of the tax paid on a new or substantially renovated home that is a primary residence. Learn more →
New Residential Rental Property Rebate (NRRPR): A GST/HST rebate for builders and investors who construct or buy a new home to rent out long-term. Learn more →
Nominee Director: A person who acts as a director of a corporation on behalf of another, often used by non-residents who require a resident director. Learn more →
Non-Capital Loss: A business or property loss that can be carried back three years and forward twenty to offset income of other years.
Non-Eligible Dividend: A dividend paid from corporate income taxed at the small business rate, carrying a lower gross-up and dividend tax credit.
Non-Refundable Tax Credit: A credit that reduces tax payable only to zero and is not paid out if it exceeds the tax owing.
Non-Resident: A person who does not reside in Canada for tax purposes and is generally taxed only on Canadian-source income. Learn more →
Notice of Assessment (NOA): The statement the CRA issues after assessing a return, showing the result and any balance owing or refund.
Notice of Objection: A formal document a taxpayer files to dispute a CRA assessment or reassessment, starting the appeals process. Learn more →
Notice to Reader: The former name for a compilation engagement, where financial statements are compiled without assurance. Learn more →

O

OAS Clawback: The recovery of Old Age Security payments through an additional tax when net income exceeds an annual threshold.
Old Age Security (OAS): A monthly federal pension paid to eligible seniors, which may be reduced by a recovery tax at higher income levels.
Operating Expense: A day-to-day cost of running a business, deductible in the period incurred, as opposed to a capital expenditure.
Owner-Manager: An individual who both owns and actively manages a corporation, for whom salary versus dividend planning is a key consideration. Learn more →

P

Partnership: A relationship between two or more persons carrying on business together, where income flows through to the partners for tax.
Passive Income: Income from property such as interest, dividends and rents. Passive investment income over $50,000 in a private corporation reduces the small business deduction. Learn more →
Payroll: The process of calculating and paying employee wages, withholding deductions, and remitting them to the CRA. Learn more →
Payroll Source Deductions: Amounts an employer withholds from employee pay, including income tax, CPP and EI, which must be remitted to the CRA on a set schedule. Learn more →
Penalty: An amount the CRA charges for non-compliance, such as late filing or failure to remit, in addition to interest.
Permanent Establishment: A fixed place of business, such as an office or branch, that can create a tax presence and filing obligation in a jurisdiction. Learn more →
Personal Real Estate Corporation (PREC): A corporation through which an Ontario realtor can earn commission income, allowing tax deferral on retained earnings. Learn more →
Personal Services Business (PSB): An incorporated employee relationship that the CRA may treat as a personal services business, denying many deductions and the small business deduction. Learn more →
Prescribed Rate: An interest rate set quarterly by the CRA, used for overdue amounts, refunds and certain income-splitting loans.
Principal Residence Exemption: An exemption that can eliminate the capital gain on the sale of a taxpayer's principal residence, subject to conditions.
Professional Corporation: A corporation through which a regulated professional, such as a doctor or lawyer, carries on practice where permitted. Learn more →
Progress Billing: An invoice issued for the portion of a long-term project completed to date, common in construction. Learn more →
Property Income: Income earned from property such as rent, interest and royalties, generally considered passive for corporate tax purposes.
Proprietorship: An unincorporated business owned by one individual, whose income is reported on the owner's personal tax return. Learn more →
Provincial Sales Tax (PST): A separate provincial retail sales tax applied in provinces that have not harmonized with the GST, such as British Columbia, Saskatchewan and Manitoba.

Q

Qualified Small Business Corporation (QSBC) Shares: Shares of a small business corporation that meet asset and holding tests, eligible for the lifetime capital gains exemption. Learn more →
Quick Method: A simplified GST/HST accounting method letting eligible small businesses remit a lower flat percentage of sales instead of tracking every input tax credit. Learn more →

R

Reasonable Expectation of Profit: A test historically used to determine whether an activity is a genuine source of business income eligible for loss deductions.
Reassessment: A revised assessment the CRA issues after changing a previously assessed return, generally within a set reassessment period.
Recapture: Income arising when proceeds on disposing of depreciable property exceed the undepreciated capital cost of its CCA class.
Reconciliation: The process of matching account balances, such as bank statements to the general ledger, to ensure records are accurate. Learn more →
Refundable Dividend Tax on Hand (RDTOH): A notional account tracking refundable tax paid on a private corporation's investment income, refunded when taxable dividends are paid. Learn more →
Refundable Tax Credit: A credit that can reduce tax below zero, with the excess paid out to the taxpayer.
Registered Retirement Income Fund (RRIF): A registered plan that receives transferred RRSP funds and pays a minimum taxable amount each year in retirement.
Registered Retirement Savings Plan (RRSP): A registered plan whose deductible contributions reduce taxable income and whose investment growth is tax-deferred until withdrawal.
Related Persons: Individuals or entities connected by blood, marriage, common-law partnership, adoption or control, subject to non-arm's length rules.
Remittance: The payment of amounts collected or withheld, such as GST/HST or payroll source deductions, to the CRA. Learn more →
Rental Income: Income earned from renting out real or movable property, reported net of allowable expenses.
Residency (Tax): The status determining how a person is taxed in Canada. Residents are taxed on worldwide income; non-residents on Canadian-source income only. Learn more →
Retained Earnings: The accumulated after-tax profits a corporation has kept rather than distributed to shareholders. Learn more →
Review Engagement: An assurance engagement providing limited assurance on financial statements, less extensive than an audit. Learn more →
Rollover: A provision allowing property to be transferred on a tax-deferred basis, such as a Section 85 rollover into a corporation. Learn more →

S

Salary: Remuneration paid to an employee or owner-manager that is deductible to the corporation and creates RRSP room and CPP contributions for the recipient. Learn more →
Sale of Business: The disposition of a business, structured as either an asset sale or a share sale, each with different tax consequences. Learn more →
Scientific Research and Experimental Development (SR&ED): A federal program providing tax credits and deductions for eligible research and development carried out in Canada. Learn more →
Section 85 Rollover: An election allowing a taxpayer to transfer eligible property to a corporation on a tax-deferred basis in exchange for shares. Learn more →
Self-Supply Rule: A GST/HST rule deeming a builder to have sold a newly built or substantially renovated home to themselves at fair market value when they occupy or rent it. Learn more →
Shareholder: An owner of shares in a corporation, entitled to dividends and a share of assets on winding up.
Shareholder Agreement: A contract among shareholders governing ownership, transfer of shares, and decision-making in a corporation.
Shareholder Loan: An amount a corporation lends to a shareholder, which can be included in the shareholder's income if not repaid within the required time. Learn more →
Small Business Deduction (SBD): A deduction reducing the federal corporate tax rate on the first $500,000 of active business income of a Canadian-controlled private corporation. Learn more →
Small Supplier: A business with worldwide taxable revenue of $30,000 or less over four consecutive calendar quarters, not required to register for GST/HST. Learn more →
Social Insurance Number (SIN): A nine-digit number required to work in Canada and to receive government benefits, also used for tax identification.
Sole Proprietor: An individual who owns an unincorporated business and reports its income on their personal T1 return. Learn more →
Source Deductions: Amounts withheld at source from payments such as salary, including income tax, CPP and EI, remitted to the CRA. Learn more →
Specified Investment Business: A corporation whose principal purpose is earning income from property, generally denied the small business deduction. Learn more →
Spousal RRSP: An RRSP to which one spouse contributes for the other, used to balance retirement income and reduce future tax.
Statute-Barred: A tax year that the CRA generally can no longer reassess because the normal reassessment period has expired.
Stub Period: A short fiscal period of less than 12 months, often arising on incorporation, a year-end change, or winding up.
Subcontractor: A person or business hired to perform part of a contract, whose payments may be reported on a T5018 in construction. Learn more →
Substantial Renovation: A renovation removing or replacing 90% or more of the interior of an existing home, treated as new housing for GST/HST purposes. Learn more →
Superficial Loss: A capital loss denied when the same or identical property is reacquired within 30 days before or after the sale.

T

T1 Return: The personal income tax and benefit return individuals file annually to report income and claim credits and benefits.
T2 Return: The corporate income tax return a corporation files annually, due six months after its fiscal year-end. Learn more →
T3 Return: The income tax return filed for a trust or estate to report income earned and distributed. Learn more →
T4 Slip: An information slip employers issue showing an employee's annual employment income and payroll deductions. Learn more →
T4A Slip: An information slip reporting other income such as pension, self-employed commissions or fees for services. Learn more →
T5 Slip: An information slip reporting investment income such as dividends and interest paid to a taxpayer. Learn more →
T5018 Slip: The contract payment information slip used to report payments to subcontractors in the construction industry. Learn more →
Tax Bracket: A range of income taxed at a specific rate. Canada uses a progressive system with rising rates across brackets.
Tax Credit: An amount that reduces tax payable, either non-refundable or refundable.
Tax Deferral: Arranging affairs so that tax is paid in a later year, such as retaining income in a corporation taxed at a lower rate. Learn more →
Tax on Split Income (TOSI): Rules applying the highest marginal rate to certain income split with family members who are not sufficiently involved in the business. Learn more →
Tax Shelter: An arrangement marketed to provide tax benefits, subject to registration and reporting requirements and CRA scrutiny.
Tax-Free Savings Account (TFSA): A registered account in which contributions are not deductible but investment income and withdrawals are tax-free.
Taxable Benefit: A benefit an employer provides to an employee that must be included in the employee's income, such as personal use of a company vehicle. Learn more →
Taxable Capital Gain: The portion of a capital gain that is included in income, calculated by applying the inclusion rate to the gain.
Taxable Income: Net income less additional deductions, the amount on which income tax is actually calculated.
Taxpayer Relief: A CRA program that can cancel or waive penalties and interest where a taxpayer was unable to comply due to circumstances beyond their control. Learn more →
Terminal Loss: A loss arising when the undepreciated capital cost of a CCA class exceeds the proceeds on disposing of the last asset in the class.
Testamentary Trust: A trust that arises on and as a consequence of a person's death, reported through a T3 return. Learn more →
Thin Capitalization: Rules limiting the deductibility of interest where a Canadian corporation is financed by excessive debt from related non-residents. Learn more →
Transfer Pricing: The rules requiring transactions between related parties across borders to be priced as if between arm's length parties. Learn more →
Treaty (Tax Treaty): An agreement between two countries that allocates taxing rights and relieves double taxation, such as the Canada-US tax treaty. Learn more →
Trust: A legal relationship where a trustee holds and manages property for the benefit of beneficiaries, taxed through a T3 return. Learn more →

U

Undeducted RRSP Contributions: RRSP contributions made but not yet claimed as a deduction, which can be carried forward to a future year.
Undepreciated Capital Cost (UCC): The remaining balance of a CCA class after deducting capital cost allowance claimed, used to calculate future CCA.
Unincorporated Business: A business carried on without forming a corporation, such as a sole proprietorship or partnership. Learn more →

V

Vehicle Expense: A deduction for the business-use portion of automobile costs, supported by a mileage log distinguishing business from personal use.
Voluntary Disclosures Program (VDP): A CRA program allowing taxpayers to correct prior inaccurate or incomplete filings, potentially reducing penalties and interest. Learn more →
Voluntary Registration: Registering for GST/HST before reaching the mandatory threshold, allowing a small supplier to claim input tax credits. Learn more →

W

Winding Up: The process of dissolving a corporation and distributing its assets, with specific tax rules on the final distributions. Learn more →
Withholding Tax: Tax withheld at source on certain payments to non-residents, such as dividends, interest, rent and royalties. Learn more →
Work-in-Progress (WIP): The value of work performed but not yet billed or completed, recognized for accurate job costing and income measurement. Learn more →
Working Capital: The difference between current assets and current liabilities, a measure of a business's short-term financial health.
WSIB: The Workplace Safety and Insurance Board, Ontario's mandatory workplace injury insurance, compulsory in industries such as construction. Learn more →

Y

Year-End: The last day of a business's fiscal period, the point at which income is measured and CCA and other claims are determined.

Z

Zero-Rated Supply: A supply taxable at 0% GST/HST, such as basic groceries and most exports, on which the supplier can still claim input tax credits. Learn more →

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About This Glossary

What is a Canadian tax glossary?

A reference list that defines the tax and accounting terms used in Canada, covering personal, business, corporate, GST/HST, payroll and international tax, in plain language.

Who is this glossary for?

Business owners, individuals, students and anyone who needs clear definitions of Canadian tax terms. It is written and maintained by a licensed CPA firm.

Is this glossary specific to Ontario?

The terms apply across Canada. Where a rate or rule is province-specific, such as Ontario HST at 13%, the Ontario figure is noted.

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We review and update the glossary regularly so the definitions stay current with Canadian tax rules and CRA terminology.

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