Glossary of Frequently-Used Terms.
tariff (droit de douane).
Customs duties on merchandise imports, levied on an ad valorem (percentage of value) or specific basis (e.g. $5 per 100 kilograms). Tariffs give a price advantage to similar locally produced goods and raise revenues for the government.
See also duty remission, surtax.
tariff rate quota (contingent tarifaire).
Two-stage tariff: imports up to the quota level enter at a lower rate of duty; over-quota imports enter at a higher rate.
tax base (assiette fiscale).
The amount on which a tax rate is applied. When economists speak of the tax base being broadened, they mean a wider range of goods, services, income, etc. has been made subject to a tax. In the case of income tax, the tax base is taxable income. Some kinds of income are excluded from the definition of taxable income, such as a portion of capital gains. In the case of sales taxes, the tax base is the value of items that are subject to tax; basic groceries, for example, are not part of the tax base of the goods and services tax.
tax collection agreement (accord de perception fiscale).
Tax collection agreements enable different governments to levy taxes through a single administration and collection agency. The federal government collects personal income taxes on behalf of all provinces except Quebec.
tax credit (crédit d'impôt).
An amount deducted directly from income tax otherwise payable. Examples include the disability tax credit and the married credit for individuals, and the scientific research and experimental development investment tax credit for corporations.
See also age credit; film or video production services tax credit; goods and services tax (GST) credit; input tax credit; investment tax credit; manufacturing and processing tax credit; pension income credit; refundable tax credit.
tax deduction (déduction fiscale).
An amount deducted from total income to arrive at taxable income. Childcare expenses and capital cost allowances are tax deductions.
See also small business deduction
tax deferral (report d'impôt).
A deferral of income taxes from the current taxation year to a later year. Registered pension plans (RPPs), deferred profit-sharing plans, registered education savings plans (RESPs) and registered retirement savings plans (RRSPs) all provide tax deferrals. Income contributed to an RRSP, for example, is not taxed (because of the RRSP deduction) in the year the contribution is made. However, it is taxed in a later year when the proceeds are withdrawn from the RRSP. Likewise, investment income earned on the contribution is taxed at the time of withdrawal rather than each year as it is earned. In the case of RESPs, there is no tax deferral on the income contributed, only on the investment earnings in the plan. For more information on RPPs and RRSPs, visit the Canada Customs and Revenue Agency Registered Retirement Savings Plans Web page; for more information on RESPs, visit the Canada Customs and Revenue Agency Registered Education Savings Plans Web page.
tax-exempt goods and services (biens et services exonérés).
Some types of goods and services are exempt under the goods and services tax (GST). This means that tax is not applied to these sales. However, vendors of exempt products are not entitled to claim input tax credits to recover the GST they paid on their inputs to these products. Tax-exempt goods and services include long-term residential rents, most health and dental care services, day care services, most sales by charities, most domestic financial services, municipal transit and legal aid services. For more information, visit the Canada Customs and Revenue Agency Goods and Services Tax (GST) and Harmonized Sales Tax (HST) Web page.
tax expenditure (dépense fiscale).
Tax expenditures are foregone tax revenues, due to special exemptions, deductions, rate reductions, rebates, credits and deferrals that reduce the amount of tax that would otherwise be payable. Tax expenditures include deductions for pension and registered retirement savings plan contributions, credits for charitable donations, and incentives for firms to invest in research and development. Tax expenditures are often designed to encourage certain kinds of activities or to serve other objectives, such as providing assistance to lower-income or elderly Canadians. For more information, visit the Department of Finance Tax Expenditures Web page.
tax shelter (abri fiscal).
Any investment sold on the basis that the buyer receives accelerated deductions or credits. Flow-through shares are examples of tax shelters.
tax transfer (transfert de points d'impôt).
A federal tax transfer involves the federal government ceding some of its "tax room" to provincial governments. Specifically, a tax transfer occurs when the federal government reduces its tax rates to allow provinces to raise their tax rates by an equivalent amount. With a tax transfer, the changes in federal and provincial tax rates offset one another and there is no net financial impact on the taxpayer. Tax transfers represent a growing source of revenue for provinces since they increase in value over time with growth in the economy. For more information, visit the Department of Finance Federal Transfers to Provinces and Territories Web page.
taxable capital gain (gain en capital imposable).
The portion of capital gain realized during the year that is required to be included in income. This is equal to three-quarters of the net capital gain. If a share is bought at $26 and sold at $30, there is a capital gain of $4. The taxable capital gain is three-quarters of this amount, or $3. This is the amount that is included in income.
taxable income (revenu imposable).
Net income minus certain allowable deductions such as the northern residents deductions. In most cases, a tax filer's taxable income will be the same as his or her net income. However, there are a number of deductions that could lead to a difference between a tax filer's net and taxable income. A single individual with net income of $50,000 residing in the far north and claiming a special residency deduction of $1,500 would report his or her taxable income as $48,500. For general information on taxation, visit the Canada Customs and Revenue Agency Web site.
Technology Partnerships Canada (TPC) (Partenariat technologique Canada).
Created in 1996, TPC makes strategic investments with companies to commercialize innovative products and processes in such areas as the aerospace and defence industries, environmental technologies, and enabling technologies such as manufacturing and advanced materials. For more information, visit the Technology Partnerships Canada Web site.
Territorial Formula Financing (formule de financement des territoires).
Federal transfer to the territorial governments to assist them in providing public services. The transfers are based on a formula that fills the gap between the expenditure requirements and revenue-raising capacity of the territories. For more information, visit the Department of Finance Federal Transfers to Provinces and Territories Web page.
See also transfer payment.
total income (revenu total).
For personal income tax purposes, the sum of all income that is potentially subject to tax. Total income includes wages, dividends, interest, taxable capital gains, private and public pension income, employment insurance benefits and business income. In reporting business income, a taxpayer may deduct expenses incurred in earning income such that total income includes only net business income. A single individual with employment income of $50,000 and interest income of $2,000 would report, for personal income tax purposes, total income of $52,000.
trade liberalization (libéralisation du commerce).
Unilateral, bilateral or multilateral reductions in tariffs and other measures that restrict world trade.
A portion of a bond offering delineated by maturity.
transfer payment (paiement de transfert).
Funding provided by the federal government to the provinces and territories. The federal government provides most of its transfers by way of three major programs: the Canada Health and Social Transfer, Equalization and Territorial Formula Financing. For more information, visit the Department of Finance Federal Transfers to Provinces and Territories Web page.
Treasury bill (T-bill) (bon du Trésor).
Government of Canada T-bills are issued in denominations ranging from $1,000 to $1,000,000. New issues are sold by public tender at a discount. T-bills with terms to maturity of 3, 6 or 12 months are auctioned on a bi-weekly basis, typically on Tuesday for delivery on Thursday. From time to time, shorter-term cash management bills are also auctioned. The difference between the purchase price and the face amount represents the return to the investor. For more information, consult the Department of Finance Government of Canada Securities Web page.
An arrangement under which money or other property is held by one person or company, often a trust company, for the benefit of another person or persons. These assets are administered according to the terms of the trust agreement. Each province has a trustee act, which regulates the kinds of investments that can be made by the trustees of a trust fund.
See also family trust; foreign trust.
trust company (société de fiducie).
A financial institution that operates under either provincial or federal legislation and conducts the same activities as a bank. Like a bank, it operates through a network of branches. However, because of its fiduciary role, a trust company can administer estates, trusts, pension plans and agency contracts, which banks cannot do.
turnover ratio (volume des opérations).
Twenty-One-Year Deemed Disposition Rule (règle de disposition réputée au bout de vingt et un ans).
A rule requiring that trust assets be treated for tax purposes as if they were disposed of every 21 years. This measure accompanied the introduction of capital gains taxation in 1972 to prevent trusts from being used to avoid the taxation of capital gains on death.