Canadian Tax Glossary

Plain-English definitions for 39 key Canadian tax terms.

ACB (Adjusted Cost Base)

Cost of an asset for capital gains purposes

AMT (Alternative Minimum Tax)

Minimum tax for high-income earners with large deductions

BPA (Basic Personal Amount)

Non-refundable credit that makes the first ~$16,000 tax-free

Capital Gains

Profit from selling an asset for more than you paid

Carry Forward

Unused tax room that carries to future years

CCB (Canada Child Benefit)

Tax-free monthly payment for families with children under 18

CESG (Canada Education Savings Grant)

Government matching grant for RESP contributions

CPP (Canada Pension Plan)

Federal retirement pension program

CRA (Canada Revenue Agency)

Canada's federal tax authority

Dividend Tax Credit

Reduces double-taxation on corporate dividends

Effective Tax Rate

Average rate of tax paid across all income

EI (Employment Insurance)

Federal income replacement for unemployed workers

FHSA (First Home Savings Account)

Tax-deductible savings for first home purchase

Foreign Tax Credit

Prevents double taxation on foreign income

GST (Goods and Services Tax)

5% federal consumption tax

GST/HST Credit

Quarterly refundable credit for low-income Canadians

HBP (Home Buyers' Plan)

Withdraw up to $35,000 from RRSP to buy first home

HST (Harmonized Sales Tax)

Combined federal + provincial sales tax

Inclusion Rate

Fraction of a capital gain that's taxable (50% in 2025)

LCGE (Lifetime Capital Gains Exemption)

Exemption on gains from small business shares and farm property

LLP (Lifelong Learning Plan)

Withdraw RRSP funds for full-time education

Marginal Tax Rate

Tax rate applied to your next dollar of income

NOA (Notice of Assessment)

CRA's confirmation of your filed tax return

Pension Adjustment (PA)

Reduces your RRSP room if you have a workplace pension

Principal Residence Exemption

Eliminates capital gains tax when you sell your home

PST (Provincial Sales Tax)

Provincial consumption tax separate from GST

QPIP (Quebec Parental Insurance Plan)

Quebec's parental benefits program (replaces part of EI)

QST (Quebec Sales Tax)

Quebec's provincial sales tax at 9.975%

RESP (Registered Education Savings Plan)

Tax-sheltered education savings account with government grants

Revenu Québec

Quebec's provincial tax authority

RRIF (Registered Retirement Income Fund)

RRSP successor account with mandatory withdrawals

RRSP (Registered Retirement Savings Plan)

Tax-deferred retirement savings account

Severance Pay Tax

How severance and termination pay are taxed in Canada

T1 (General Income Tax Return)

Individual income tax return filed with the CRA

T4 (Statement of Remuneration Paid)

Annual employment income slip from employer

Tax Credit

Reduces the amount of tax you owe

Tax Deduction

Reduces your taxable income

Tax Instalments

Quarterly tax prepayments for self-employed and investors

TFSA (Tax-Free Savings Account)

Account where investment gains are tax-free