Glossary of Frequently-Used Terms.
Quebec Pension Plan (QPP) (Régime de rentes du Québec (RRQ)).
A contributory, earnings-related social insurance program which ensures a measure of income protection to contributors and their families against the loss of income due to retirement, disability or death. The plan operates only in Quebec; throughout the rest of Canada a similar program (the Canada Pension Plan) is in effect. For more information, visit the QPP Web site.
quota (contingent ou quota).
Explicit limit (usually measured by volume or sometimes by value) on the amount of a particular product that can be imported or exported during a specified time period. A quota may be applied on a selective basis, with varying limits set according to the country of origin, or on a global basis, which only specifies the total limit and thus tends to benefit more efficient suppliers.
real interest rate (taux d'intérêt réel).
The nominal interest rate minus the inflation rate, i.e. the rate of interest excluding the effects of inflation. All else being equal, the higher the current inflation rate, the higher nominal interest rates will be. With a nominal interest rate of 7 per cent on a loan and inflation at 2 per cent, the real interest rate is 5 per cent (7 - 2 = 5). Lenders will often use predicted inflation rates to calculate the expected real interest rate for a given nominal interest rate. The creditworthiness of the borrower and the perceived risk of the investment are other major factors affecting interest rates.
real return bond (RRB) (obligation à rendement réel (ORR)).
Government of Canada RRBs pay semi-annual interest based on a real interest rate. Unlike standard fixed-coupon marketable bonds, interest payments on RRBs are adjusted for changes in the consumer price index.
Receiver General for Canada (receveur général du Canada).
The chief financial officer of the federal government, who receives all revenues from the government and deposits them in the Consolidated Revenue Fund. For more information, visit the Receiver General for Canada Web site.
refundable tax credit (crédit d'impôt remboursable).
Where a tax credit is refundable, the portion of the credit which is not needed to reduce a taxpayer's tax liability (because it is already zero) may be paid to the taxpayer. The goods and services tax credit is refundable.
registered pension plan (RPP) (régime de pension agréé (RPA)).
RPPs are pension plans for employees sponsored by employers or unions and usually funded through contributions by both employees and employers. RPPs must satisfy certain conditions and be registered for the purposes of the federal Income Tax Act. Contributions to RPPs are tax deductible, the investment income in them is tax-deferred and payments from them are taxable. For more information, visit the Canada Customs and Revenue Agency Registered Retirement Savings Plans Web page.
registered retirement income fund (RRIF) (fonds enregistré de revenu de retraite (FERR)).
RRIFs are funds for individuals, established at financial institutions and registered under the Income Tax Act, that provide income in retirement. RRIFs are established by directly transferring monies from registered retirement savings plans or from lump-sum payments from registered pension plans. Amounts withdrawn from RRIFs are taxable. A minimum amount must be withdrawn from a RRIF each year, beginning in the year after the RRIF is established. For more information, visit the Canada Customs and Revenue Agency Registered Retirement Savings Plans Web page.
registered retirement savings plan (RRSP) (régime enregistré d'épargne-retraite (REER)).
RRSPs are savings plans for individuals, including the self-employed, that have been registered for the purposes of the federal Income Tax Act. RRSP contribution limits are based on earned income. RRSPs provide retirement income at retirement based on accumulated contributions and return on investment in the plan. Contributions to an RRSP are tax deductible, the investment income in it is tax-deferred and payments from it are taxable. Annual contributions are limited to 18 per cent of earnings up to a maximum of $13,500. RRSP contributors may also belong to a registered pension plan (RPP), but their RRSP contribution limits are reduced by the amount of a pension adjustment that is a standardized measure of the RPP contributions made by and on behalf of the RPP member. Unused RRSP contribution room may be fully carried forward to future years. For more information, visit the Canada Customs and Revenue Agency Registered Retirement Savings Plans Web page.
See also locked-in registered retirement savings plan.
resource allowance (déduction relative aux ressources).
The resource allowance provides an annual deduction to mining and oil and gas producers. It is calculated as 25 per cent of a taxpayer's annual resource profits, computed after operating costs and capital cost allowances, but before the deduction of exploration expenses, development expenses, earned depletion and interest expenses. The resource allowance measure gives the provincial governments room to impose royalties or mining taxes on the production of natural resources. The non-deductibility of these charges, coupled with the resource allowance, means that these provincial charges do not affect the level of federal income taxes payable.
retiring allowance (allocation de retraite).
In general terms, a lump sum payment made by an employer to an individual on termination of employment.
retiring allowance rollover (transfert ou roulement d'allocation de retraite).
A retiring allowance rollover can be transferred to a registered retirement savings plan (RRSP) to defer tax. This is in addition to the normal limits for RRSP contributions. A portion of a retiring allowance may be transferred to an RRSP. An individual may transfer up to $2,000 for each year of service before 1996 plus up to $1,500 for each year of service before 1989 in which no pension or deferred profit-sharing plan benefits were earned. The 1995 budget eliminated the rollover for years of service after 1995 given the maturation of pension plans and the ability to carry forward unused RRSP limits.
rule of origin (règle sur l'origine des biens).
The term for the set of laws, regulations and administrative procedures that determine a product's country of origin. A decision by a customs authority on origin can determine whether a shipment falls within a quota limitation, qualifies for a tariff preference or is affected by an anti-dumping duty. These rules can vary from country to country.