Finance Canada
Glossary of Frequently-Used Terms


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family income (revenu familial).

For income tax purposes, the combined net incomes of both spouses. Family income does not include income of children living at home.
It is used to calculate benefits such as the Canada Child Tax Benefit and the goods and services tax (GST) credit. A two-earner couple with net income of $29,000 would be eligible for various credits such as the GST credit, which is income-tested using family income. As net income rises, the value of the GST credit decreases. For example, if net income rises from $29,000 to $30,000, the amount of the GST credit received will be $50 lower. For more information, visit the Canada Customs and Revenue Agency Child and Family Benefits Web page.

family trust (fiducie familiale).

Family trust arrangements allow property to be held by a trust for the benefit of beneficiaries under the trust. Trusts are used for many purposes, including succession planning for businesses and dealing with the needs of beneficiaries in special circumstances, such as age and disability.

federal budget (budget fédéral).

The statement by the Minister of Finance setting out the government's projected revenues and expendituressometimes called fiscal projectionsand the resulting surplus or deficit. It contains an overview of the government's economic and fiscal projections, and also sets out fiscal policy for the period ahead. In recent years, federal budgets have generally been delivered in February. To read recent federal budget publications, visit the Department of Finance Budget Info Web page.

federal debt charges (frais de la dette fédérale).

Interest payments on the federal debt.

federally regulated financial institution (institution financière fédérale).

In general, federally incorporated companies - regulated by the Office of the Superintendent of Financial Institutions (OSFI) - that take deposits, or provide trust and loan services, life insurance or property and casualty insurance. For more information, visit OSFI's Regulation and Supervision Web page.

film or video production services tax credit (crédit d'impôt pour production cinématographique ou magnétoscopique).

The production services tax credit applies to film or video production services that are provided in Canada for films that do not have sufficient Canadian content to qualify for the Canadian film or video production tax credit. It is a refundable credit of 11% of salaries and wages paid to Canadian residents for services performed in Canada after October 31, 1997. The Canadian Audio-Visual Certification Office of the Department of Heritage provides certificates of eligibility. For more information, visit the Heritage Canada Guide to Federal Programs for the Film and Video Sector and the Canada Customs and Revenue Agency Film Tax Credit Programs Web pages.

Financial Action Task Force on Money Laundering (FATF) (Groupe d'action financière sur le blanchissement des capitaux (GAFI)).

Established in 1989 at the G-7 Economic Summit, the FATF addresses the international problem of money laundering. In 1990 the Task Force proposed 40 recommendations to improve national legal systems, enhance the role of financial systems and strengthen international co-operation against money laundering. The recommendations are not a binding international convention, but each of the FATF members has made a firm political commitment to combat money laundering. In 1996, the recommendations were modified to take into account recent money laundering trends and potential future threats. Visit the FATF Web site for more information.

financial institution (institution financière).

Institution such as a commercial or investment bank, trust company, brokerage house or  insurance company that participates in financial transactions involving cash or financial products, normally in the role of intermediary. The primary role of these institutions is to facilitate the financing of investments, from home mortgages to the raising of funds via the issue of debt or equity for financing mega-projects. They also provide insurance, take on fiduciary responsibilities, store cash and securities for safekeeping, etc.
See also federally regulated financial institution.

financial requirements (besoins financiers).

The amount by which cash leaving the government exceeds cash coming in. It is a broad measure of the amount of new borrowing required to meet the government's financing needs in any given year. Zero financial requirements may mean that the government does not have any new borrowing requirements and that it will not be issuing any new debt. Financial requirements are a good measure of Canada's fiscal situation when compared to other countries. In many other countries, including the United States, financial requirements more closely equate to their deficits.

fiscal consolidation (assainissement des finances publiques).

Refers to corrective measures/actions taken by the government to reduce budget deficits and improve its ratio of public debt to gross domestic product.

fiscal policy (politique budgétaire).

Establishes the level and composition of government revenues and spending, and surpluses or deficits such as those incorporated into the fiscal plans presented in the annual budgets of both federal and provincial governments. Changes in fiscal policy can have impacts on the growth of the economy.

fiscal year (exercice).

The financial or accounting year of an organization, which may or may not coincide with the calendar year. An organization may find it convenient to end its accounting year at a time when inventory stocks are down. The fiscal year of Canada's federal and provincial governments runs from April 1 to March 31.

fixed-coupon marketable bond or Canada bond (obligation négociable à intérêt fixe ou obligation du Canada).

Government bond available in denominations ranging from $1,000 to $1,000,000. Fixed-coupon marketable bonds are interest-bearing securities based on stated coupon rates, pay interest semi-annually and are non-callable. Government of Canada bonds are the benchmark bonds in the Canadian bond market.

fixed-rate debt (dette à taux fixe).

Debt that will mature or be re-priced after a year or more.

flat tax (impôt uniforme ou forfaitaire).

A tax levied at the same rate on all taxable income for all taxpayers, usually on a broadly defined income base with only a limited number of deductions.

flow-through share (action accréditive).

A flow-through share is available to mining, petroleum and certain types of renewable energy companies to facilitate financing their exploration and project development activities. Eligible companies issue these equity shares to new investors. Investors receive an equity interest in the company and income tax deductions associated with new expenditures incurred by the company on exploration and development. Flow-through shares are available to selected companies but are of greater benefit to non-taxpaying junior companies. These companies are often unable to use income tax deductions against their corporate income and are willing to forgo the deduction to new investors. For more information, visit the Canada Customs and Revenue Agency Flow-through Share (FTS) Program Web page.

foreign affiliate (société étrangère affiliée).

A non-resident corporation in which a taxpayer resident in Canada has a significant interest (an equity percentage of not less than 10 per cent). A controlled foreign affiliate is generally a foreign affiliate in which the taxpayer has or participates in a controlling interest.

foreign bank branching (succursale d'une banque étrangère).

An option that permits a foreign bank to operate in Canada through branches rather than subsidiaries and to focus on commercial banking and broader lending activities. Foreign bank branches are not permitted to take deposits under $150,000, which are defined as retail deposits.

foreign debt (dette extérieure).

Debt owed by Canadians to foreign lenders. Foreign debt is not exclusive to the federal government. Provincial governments and Canada's private sector also have large foreign debt loads. Foreign debt may not be bad if it is used to finance investment, but a high foreign debt means that less of Canada's income is available to Canadians because more goes to paying interest to foreign lenders.

foreign exchange  (devise (étrangère) ou monnaie étrangère).

A collective term for the currencies of sovereign states, other than the domestic currency.

foreign exchange reserves (réserves de change).

Stocks of foreign exchange assets (e.g. interest-earning bonds) held by sovereign states to support the value of the domestic currency. Canada's foreign exchange reserves are held in a special account called the Exchange Fund Account.

foreign trust (fiducie étrangère).

An entity organized outside Canada set up to hold and administer funds or property on behalf of beneficiaries. Such arrangements can also be set up for the purpose of reducing income from property for Canadian tax purposes. The 1999 budget proposed changes to the Income Tax Act to address such tax planning.

forward rate agreement (FRA) (opération à terme sur taux d'intérêt).

Short-term interest rate guarantee instruments that are negotiated by two parties, one of which is typically a chartered bank.

fraternal benefit society (société de secours mutuel).

A society that is without share capital, has a representative form of government and is incorporated for fraternal, benevolent or religious purposes, including the provision of insurance benefits solely to its members or their spouses or children.

frictional unemployment (chômage frictionnel).

Frictional unemployment occurs when participants in the labour force change their job status. This includes people between jobs and new labour force entrants such as those returning to the labour force after completing school or raising children.

futures contract (contrat à terme (normalisé)).

Agreement to buy or sell a financial instrument at a particular price, for a specific quantity, on a stipulated future date. Fixed income futures contracts are traded in the futures market at the Montreal Stock Exchange. The key fixed income futures contracts are the 5-and 10-year Government of Canada bond futures contract (the CGF and the CGB contracts) and the Bankers Acceptance contracts (BAX).

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