Common tax terms - Learn about your taxes
A glossary of terms used to learn about your taxes.
Terms starting with the letter A
- Automated Benefits Application
- A service individuals use to apply for child and family benefits when they register the birth of their newborn with their province or territory.
- Accumulated income payments (AIP)
- Amounts, usually paid to the subscriber, of the income earned from an RESP. A subscriber is usually the individual who set up the plan, like a parent or a guardian. There is an additional tax on these payments.
- Annual maximum (medical expenses)
- A value that changes every year due to inflation. All certified tax software will have the current amount. You can also find it on the Canada Revenue Agency website.
Terms starting with the letter B
- Balance owing
- An amount generated when you have more amounts payable than credits. This could happen if you did not pay enough tax during the year, for example, if not enough tax was deducted from your pay.
- Basic personal amount (BPA)
- A non-refundable tax credit that can be claimed by all individuals.
- Box number
- Each information slip is made up of various box numbers that represent specific types of income or credits.
Terms starting with the letter C
- Calendar year
- The dates from January 1 to December 31 that are used for personal income tax purposes.
- Canada child benefit (CCB)
- A tax-free payment that helps eligible families with the cost of raising children under 18 years of age.
- Canada Pension Plan (CPP)
- A retirement pension administered by Service Canada. It also offers additional payments related to disability.
- Canada Revenue Agency (CRA)
- The agency responsible for collecting taxes and administering various benefits and credits.
- Canada training credit
- A refundable tax credit available to help Canadians with the cost of eligible training fees.
- Canada workers benefit (CWB)
- A refundable tax credit that is intended to supplement the earnings of low-income workers.
- Carry forward
- If you do not use certain credits, such as tuition amounts, they will be available on your account for you to claim in a future year.
- Carryforward amounts (also known as Carryover amounts)
- Unused tax credits from a prior year that you may be able to claim in a future year, such as tuition amounts.
- carry forward amounts, carry over amounts
- Citizenship status
- The legal citizenship status of a person in Canada, including statuses such as citizen, permanent resident, visitor, permit holder, refugee, and temporary worker.
- Climate action incentive (CAI)
- A benefit available to residents of Saskatchewan, Manitoba, Ontario, and Alberta who are 18 or older.
- Compound daily interest
- A daily charge on your updated account balance, including the interest from your previous balance, if you have one.
- Conjugal relationship
- A relationship between 2 individuals that is marriage-like.
Terms starting with the letter D
- Deductions
- Certain amounts or expenses that reduce the income you pay tax on.
- Dependant (amount for an eligible dependant)
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A person who, at any time in the year, is dependent on you for support.
For this credit, the dependant must also have been either:
-
- your parent or grandparent by blood, marriage, common-law partnership, or adoption
- your child, grandchild, brother or sister by blood, marriage, common-law partnership, or adoption and was under 18 years of age or had an impairment in physical or mental functions
- Disability tax credit (DTC)
- A non-refundable tax credit that helps persons with disabilities or their supporting persons reduce the amount of income tax they may have to pay. To be eligible, you must have an approved T2201, Disability Tax Credit Certificate, on file with the Canada Revenue Agency.
- Discounted refund
- The amount the discounter pays you. The discounter can only discount your refund by amounts pre-determined by the Tax Rebate Discounting Act.
Terms starting with the letter E
- Earned income
- It is calculated by adding your employment earnings and self-employment earnings. It will be reduced if you have employment expenses or rental losses.
- Educational assistance payments
- Amounts paid to a beneficiary (a student), from an RESP to help finance the cost of post-secondary education. An EAP consists of the Canada education savings grant, the Canada learning bond, amounts paid under a designated provincial program and the earnings on the money saved in the RESP.
- Eligible child (child care expenses)
-
They must be one of the following:
- your or your spouse's or common-law partner's child
- a child who was dependent on you or your spouse or common-law partner and whose net income was less than the allowable maximum for the year
- The child must have been under 16 years of age at some time in the year. However, the age limit does not apply if the child had an impairment in physical or mental function and was dependent on you or your spouse or common-law partner.
- Eligible individual (tuition amount)
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They must be:
- your spouse or common-law partner
- your parent or grandparent, or your spouse’s or common-law partner’s parent or grandparent
- Employment insurance (EI)
-
A program administered by Service Canada. It provides benefits to individuals who lose their jobs through no fault of their own and are available for and able to work, but can’t find a job. This program also offers benefits related to parental, sickness, and caregiving leave.
Terms starting with the letter G
- Goods and services tax / harmonized sales tax (GST/HST) credit
- A tax-free payment that eligible individuals receive every 3 months. It helps individuals and families with low or modest incomes offset the GST or HST they pay.
Terms starting with the letter I
- Income tax and benefit return
- The Canadian tax return that individuals complete every year to calculate whether they owe tax on their income. They must also complete the return to receive federal and provincial or territorial benefits and credits. The process of completing and submitting your tax return to the Canada Revenue Agency is often referred to as "filing your taxes" or "doing your taxes."
- Inflation
- The rise of the average prices of common goods and services over time.
- Information slip
- Most income that you received during the year is reported on an information slip. These slips may also contain details about credits that you can claim.
- Interest
- The rate of interest the CRA charges on current or previous balances can change every 3 months based on prescribed interest rates.
- Issuer
- An individual or company, also known as a payer, that paid you and issues you an information slip, such as your employer or your financial institution.
Terms starting with the letter L
- Line
- A place on the tax return where you report a specific type of income or tax credit.
- Low income (Canada workers benefit)
- The eligible threshold for this credit is different for some provinces and territories. It will also change if you have a spouse or common-law partner or a dependant.
Terms starting with the letter M
- Maximum (tuition amount)
- You may transfer a maximum of $5,000 of the current year’s federal tuition amount, minus the amount you used to reduce your tax owing. The provincial or territorial maximum varies.
- My Account
- The CRA's secure online portal for individuals to view and manage personal income tax and benefit information. You must have filed your taxes at least once before you can register for this service.
Terms starting with the letter N
- Net income
- Your income after deducting certain amounts from your total income. It is used to determine if you are eligible to claim certain tax credits, or if you are entitled to certain benefits and credits.
- NETFILE Access code
- A code comprised of eight characters including numbers and letters. It is not mandatory, but if you do not enter your Access code when you do your taxes electronically, you will not be able to use any information from that tax return when confirming your identity with the CRA.
- Newborn Registration Service
- A service used to establish a permanent, legal record of the person’s birth, which is then used for requesting things such as a birth certificate, SIN, or accessing other important services for the child.
- Non-refundable tax credits
- Credits that reduce the taxes you owe, but only to zero. They cannot be refunded to you.
- Notice of assessment
- The document that the CRA sends you after processing and assessing your tax return.
Terms starting with the letter P
- Pay stub
- A document that shows how your pay was calculated during a particular pay period.
- Payer
- An individual or company, also known as an issuer, that paid you and issues you an information slip such as your employer or your financial institution.
- Payroll deductions
- Amounts that your employer takes off of your pay. Generally, this includes amounts such as income tax, Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) contributions, and Employment Insurance (EI) premiums.
Terms starting with the letter Q
- Quebec Pension Plan (QPP)
- A retirement pension administered by Retraite Québec. It also offers additional payments related to health and disability.
Terms starting with the letter R
- ReFILE
- An online service that lets individuals send online adjustments for income tax and benefit returns with NETFILE-certified software.
- Refund
- An amount generated when you have more credits than amounts payable. This could happen if you paid more tax during the year than you actually owe, for example, through the tax that was deducted from your pay. It could also happen if you are entitled to any refundable tax credits.
- Refundable tax credits
- Amounts that help reduce your tax payable, and any excess amounts can be refunded to you.
- Registered disability savings plan (RDSP)
- A savings plan intended to help parents and others save for the long-term financial security of a person who is eligible for the disability tax credit (DTC).
- Registered education savings plan (RESP)
- A savings plan used to save for a child’s post-secondary education.
- Registered retirement savings plan (RRSP)
- A retirement savings and investment plan that individuals can open an account for and contribute to. Deductible contributions can be used to reduce your income tax.
- Report
- To include information on your tax return.
- Residency status
- An individual becomes a resident of Canada for income tax purposes once they have established significant residential ties in Canada, such as home, a spouse or common-law partner, or dependants.
Terms starting with the letter S
- Schedule
- A type of form that is completed with the tax return. Each schedule is used to calculate for a particular type of income, deduction, or tax credit.
- Self-employed worker (also known as freelancer or independent contractor)
- A worker without a working relationship with an employer. They work for themselves and have business relationships with customers or clients.
- Social insurance number (SIN)
- A 9-digit identification number that you need to work in Canada and to receive benefits and services from the government.
- Support
- To provide basic necessities of life such as food, shelter and clothing to an individual.
Terms starting with the letter T
- T4 slip
- A tax document given to you by your employer that outlines your employment earnings and payroll deductions for the year.
- TD1, Personal Tax Credits Return
- A form that you must complete when you start a new job. You provide information about your tax situation so that your employer can pay you accurately.
- Tax brackets
- Pre-determined levels of income that are used on the tax return to calculate the taxes you owe.
- Tax credits
- Amounts that help reduce the taxes that you owe. Some can only reduce your taxes to zero, while others can be refunded to you.
- Tax-Free Savings Account (TFSA)
- An account that lets you save money throughout your lifetime. Your contributions to the account, and income earned in the account, are generally tax-free, even when you withdraw them.
- Tax rate
- A pre-determined percentage used to calculate the taxes you owe.
- Tax year
- The dates from January 1 to December 31. Each personal income tax and benefit return includes the information from one tax year.
- Taxable income
- Your income after deducting certain amounts from your net income. It is used to calculate how much tax you owe. In Canada, you are subject to federal and provincial or territorial tax. Residents of Quebec will calculate their provincial tax owing with Revenu Québec.
- Taxes
- Mandatory payments that help the government fund social programs and benefits. One of the most common types of taxes that you pay is income tax.
- Total credits
- This amount includes your income tax deducted at source and your refundable tax credits, which reduce your tax payable and any excess amounts can be refunded to you.
- Total income
- The sum of all income that you earned or received during the year.
- Total payable
- The sum of all the amounts you owe, most commonly your federal and provincial or territorial taxes.
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