The meaning of words we often use in our industry
This refers to the highest level of assurance an accountant may provide based on their examination of the underlying financial information including collaborating evidence from third party sources. An audit indicates the accountant is providing a high level of assurance that the financial information is free from material misstatement to the readers of the financial information.
Canada Revenue Agency (CRA):
Capital Cost Allowance (CCA):
Capital Dividend Account (CDA):
Capital Dividend Account refers to the current amount that a corporation may pay to its shareholders as a non-taxable dividend.
Excise Tax Act (ETA):
Income Tax Act (ITA):
This is the law governing federal income tax
Lifetime Capital Gains Exemption (LTCGE):
Each Canadian is entitled to a capital gains exemption of up to $866,912 (for 2019) on certain small business shares, as well as on qualified farm and fishing properties.
Notice To Reader financial statements, also known as compilation level financial statements. These are financial statements prepared without an audit or a review of the underlying financial information. As such compilation/NTR financial information comes with no assurance that the financial information is free from material misstatement.
Personal Service Business (PSB):
This is a structure where a person sets up their own corporation (“PSBco”) and then provides services to another corporation. If it weren’t for their PSBco they would be considered an employee for tax purposes. Unlike most small businesses a PSB is not allowed to get the small business tax rate on the first $500,000 of earnings, and can often end up paying more tax than if they really were an employee.
Registered Retired Savings Plan (RRSP):
These are tax deferred retirement savings vehicles available to individuals.
Review refers to the middle level of assurance an accountant may provide based on their examination of the underlying financial information. A review indicates the accountant is providing a moderate level of assurance that the financial information is free from material misstatement to the readers of the financial information.
A tax deferred (delayed) sale of assets to a business.
Small Business Deduction (SBD):
This is a reduction in corporate taxes for Canadian controlled private corporations, or CCPCs. The reduced rate of tax is available on active business income up to the corporation's business limit for the year. The federal business limit is $500,000 for 2009 and later years.
Specified Investment Business (SIB):
Where a small business earns passive income (such as rents, royalties and investment type revenues) and has fewer than five full time employees. These corporations are specifically denied the Small Business Deduction.
Personal Income Tax Return
Corporate Income Tax Return
Trust Income Tax Return, can also refer to the information slips showing income earned from a trust such as a mutual funds.
A tax information slip showing employment earnings.
A tax information slip showing various non-employee type incomes
A tax information slip for investment incomes such as dividends and interest.
Tax Free Savings Account (TFSA):
Is an account that provides tax benefits for saving. Any investment income (I.e. dividends, capital gains) or salary that is placed in a TFSA is often not taxed.