Glossary of fiscal terms used in Canada

There are 140 entries in this glossary.
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Term Definition
Notice of Assessment

form sent by the government to all taxpayers after they process returns. It tells taxpayers or GST/HST registrants if they made any corrections to the returns or rebate applications and, if so, what they are. It also informs taxpayers or registrants if they owe more tax or what the amount of their refund will be.

nventory

Generally, the total value of the goods on hand that a business intends to sell, uses for manufacture, or use to render a service. In certain cases, inventory might also include services.

Objection

A statement of facts and reasons detailing why a taxpayer or registrant disagrees with an assessment.

Operating expenses

The routine costs of running a business. They include expenses for gasoline, electricity and office supplies. They do not include the cost of buildings or machinery that is expected to last for several years. See capital cost allowance.

Payroll deductions

Income tax deductions, Canada Pension Plan or Quebec Pension Plan contributions, and employment insurance premiums which are deducted from an employee's wages or salary and sent regularly to the government. Employers also make their own contributions to the Canada Pension Plan or Quebec Pension Plan and Employment Insurance.

Penalties

Amounts taxpayers or registrants must pay if they fail to file returns or remit or pay amounts owing on time, or if they try to evade paying or remitting tax by not filing returns. Penalties must also be paid by people who knowingly, or under circumstances amounting to gross negligence, participate in or make false statements or omissions in their returns, and by those who do not provide the information required on a prescribed form.

Personal tax credit return (Form TD1)

The first income tax form a person has to complete when starting a new job. It tells an employer how much income tax to deduct from the employee's pay.

PHD in Taxes

Knowledge in tax matters.

Prepaid expense

An expense you pay for in advance; an expense you incur for goods and services you will receive at a later fiscal period ; amounts you pay as interest, income tax, municipal taxes, rent, dues, or insurance for later fiscal periods. These amounts are included as assets on the balance sheet at the end of a fiscal period.

Proceeds of disposition

Usually, the selling price of property when it is disposed of. Proceeds of disposition also include compensation received for property that has been destroyed, expropriated, stolen, or damaged. It is also the fair market value of property when it is transferred to another person, or when there is a change in its use.

Professional dues

Membership fees paid to maintain a professional status recognized by law, such as lawyers' annual law society fees.

Profit and loss statement

Same as an income statement.

Proprietorship

A non-incorporated business entirely owned by one person. Same as a sole proprietorship.

Quebec Pension Plan (QPP)

A pension plan equivalent to the Canada Pension Plan (CPP) but maintained by the province of Quebec. The provincial government handles the contributions.

Quebec tax advise

Sum of advises from the Quebec government

Quebec tax court cases

Sum of cases in Quebec courts

Rates of tax

Rates of tax - Percentages of income that must be paid as tax. The Department of Finance sets the basic income tax rates, which vary progressively with the amount of income received.

For GST/HST purposes, the GST rate is 5%, while the HST rate is 13 %.
Records

Documents such as account books, sales and purchase invoices, contracts, bank statements and cancelled cheques. You must keep records in an orderly manner at your business or residence in Canada for at least six years from the end of the last taxation year to which the records relate. You must make these books and other documents available to the governments’ officers for audit purposes.

Refund

The overpayment of income tax returned to a taxpayer after the governments assess the return.

Registrant

A person who is registered or required to be registered under GST/HST legislation.

Remittance

A payment of CPP or QPP, EI, income tax, or GST/HST that is paid to the governments through a financial institution, or that a business or individual sends directly to the governments. It also includes the employer's share of CPP contributions and EI premiums.

Request from government

Information asked by the government.

Request technical advice

Help you can get to solve your tax problem.

Research grants

Amounts of money given to individuals to explore areas in various fields of study. The grants cover the cost of research plus the researcher's income. These amounts are taxable but some of the researcher's expenses may be deductible for tax purposes. For more specific information, refer to Interpretation Bulletin IT-75, Scholarships, Fellowships, Bursaries, Prizes, and Research Grants.

Reserves

Funds set aside to cover future expenses, losses, or claims.

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