Definitions for letter A (Business)

Account

A formal record of transactions involving a particular item or person.

Accounts payable

Debts you have as a result of making purchases or receiving services on an open account or on credit. You have accounts payable when you have not yet paid for the assets or services you have received.

Accounts receivable

Amount of money you are owed. Generally, you are owed this amount because you sold goods or provided services.

Accrual method of accounting

With this method, income is reported in the fiscal period it is earned, regardless of when it is received. The expenses are also deducted in the fiscal period they are incurred, whether they are paid or not. This method is generally used by businesses or professionals.

Address of business records

Is the address where the records of the business are stored.

Adjusted cost base (ACB)

Usually, the cost of a property plus any expenses to acquire it, such as commissions and legal fees. The cost of a capital property is its actual or deemed cost, depending on the type of property and how you acquired it. It also includes capital expenditures, such as the cost of additions and improvements to the property. You cannot add current expenses, such as maintenance and repair costs, to the cost base of a property.

For more information on ACB, go to Interpretation Bulletin IT-456R, Capital Property - Some Adjustment to Cost Base, and its Special Release.

Appeal

A process by which you ask a Court to review the decision the Appeals Division made on behalf of the Minister of National Revenue.

Arm's length transaction

Refers to a relationship or a transaction between persons who act in their separate interests. An arm's length transaction is generally a transaction that reflects ordinary commercial dealings between parties acting in their separate interests.

'Unrelated persons' may not be dealing with each other at arm's length at a particular time. Each case will depend upon its own facts.

Unrelated persons include individuals not connected by blood relationship, marriage or common-law partnership, adoption, or otherwise.

For more information, go to Income Tax Folio S1-F5-C1, Related persons and dealing at arm's length.

Articles of incorporation

Legal document filed with a provincial or territorial government, or the federal government, which sets out the purpose and regulations of a corporation.

Assessment

A formal determination of taxes to be paid or refunded. An assessment includes a reassessment. Go to Notice of Assessment.

Assets

Any property owned by a person or business. Assets include money, land, buildings, investments, inventory, cars, trucks, boats, or other valuables that belong to a person or business. They also may include intangibles such as goodwill.

Associated

For GST/HST purposes, this is generally used to describe a relationship between persons where one controls the other. An association may exist, for example, between two or more corporations, between an individual and a corporation, or between an individual and a partnership or trust. Also, a person is associated with another person if each of them is associated with the same third person.

Available for use

You can claim capital cost allowance (CCA) on a rental property only when it becomes available for use.

A rental property, other than a building, usually becomes available for use on the earliest of either:

  • the date you first use it to earn income
  • the second year after the year you acquire the rental property
  • the time immediately before you dispose of the property

A rental property that is a building, or part of a building, usually becomes available for use on the earliest of either:

  • the date when construction of the building is complete or a fully constructed building is bought, as long as it can be used at once as a rental building
  • the date that you rent out 90% or more of the building
  • the second year after the year you acquire the building
  • the time immediately before you dispose of the building
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