Canadian small business tax glossary
Reviewed by EverStone CPA · July 2026
Every term your accountant uses, defined in plain English — with links to the full guide where one exists. Bookmark it; we keep it current.
A
Accrual accounting
Recording income when earned and expenses when incurred, not when cash moves. Corporations report on the accrual basis, which is why receivables and payables matter at year-end.
Active business income
Income a corporation earns from carrying on a business, as opposed to passive investment income. Only active business income qualifies for the small business deduction.
AgriStability
A federal-provincial program that supports farm operations through large margin declines. Participation leans on clean accrual records — part of farm accounting done well.
Arm’s length vs related persons
Two parties deal at arm’s length when neither controls or influences the other, so the price they agree on is a genuine market price. Family members, and a corporation and its controlling shareholder, are automatically related and are treated as not dealing at arm’s length. This matters because transfers between related parties are re-priced to fair market value for tax purposes, and a number of reliefs, exemptions and loss rules are switched off when the other side is related to you.
Associated corporations
Corporations under common control. Associated groups must share one $500,000 small business deduction limit and one Employer Health Tax exemption — you cannot multiply thresholds by multiplying companies. Full guide.
Attribution rules
Rules that send investment income or capital gains back to the person who funded the investment rather than the person who legally holds it. If you give or lend money to your spouse, or to a minor child, and they invest it, the resulting income is generally taxed in your hands instead of theirs. The rules exist to stop income being moved to a lower-taxed family member. They shape how an owner-manager can and cannot share investment income within a family.
AUT-01
Authorize a Representative for Offline Access — the CRA form that lets your accountant deal with the CRA by phone, mail or fax on your behalf. It replaced the old T1013/RC59 forms, must reach the CRA within six months of signing, and covers offline access only; online access runs through Represent a Client. Setup guide.
Automobile benefit
The taxable benefit arising when a corporation-owned or leased vehicle is available for your personal use. It has two parts: a standby charge (based on the vehicle’s cost and how much it was available to you) and an operating benefit (based on your personal-use share of running costs). A mileage log is what separates business from personal use. Full guide.
B
Balance-due date
The date corporate tax owing must be paid — generally two months after year-end (three for many CCPCs claiming the SBD), and earlier than the six-month T2 filing deadline. Interest runs from this date. Deadlines guide.
Bare trust
An arrangement where one person holds legal title to property while someone else has all the real benefit and control — a parent added to a child’s mortgage, or a nominee corporation holding land for the true owner. For tax purposes the beneficial owner reports the income, not the person on title. Bare trusts have drawn attention because trust reporting rules can create a filing obligation even where the arrangement is purely administrative, so confirm your filing requirement for each year rather than assuming.
Beneficial ownership
The person who truly benefits from and controls property, as opposed to whoever appears on the title or the share register. Canadian corporations are required to keep a register of individuals with significant control, and tax and corporate regulators increasingly ask who the real owners are. For an owner-manager this matters when shares are held through a holding company, a trust or a nominee: the tax result generally follows beneficial ownership, and your corporate records should tell the same story.
C
Capital cost allowance (CCA)
The tax version of depreciation: each asset class has a set rate (Class 8 — 20%, Class 10 — 30%, Class 50 — 55%) claimed on a declining balance. See the CCA guide and half-year rule.
Capital dividend account (CDA)
A notional account tracking the tax-free half of capital gains a private corporation realizes. Balances can be paid to shareholders as tax-free capital dividends with a CRA election.
Capital gain and capital loss
The profit or loss when you sell an asset held for its long-term value — shares, a rental property, equipment sold above its tax cost. Only a portion of a capital gain is taxable, which is what makes capital treatment more favourable than ordinary business income. Capital losses can generally only be applied against capital gains, not against your regular income. Whether a sale is on capital or income account turns on your intention and pattern of activity, not on what you call it.
CCPC
Canadian-controlled private corporation — private, resident in Canada, not controlled by non-residents or public companies. CCPC status unlocks the small business deduction and the LCGE.
Clearance certificate
CRA confirmation that a corporation (or estate) has paid or secured its taxes, protecting directors when dissolving a corporation or distributing assets.
Compilation engagement
The standard financial-statement service for most small corporations (formerly “Notice to Reader”), prepared under CSRS 4200 without audit or review assurance. What it includes.
Connected corporation
One corporation is connected to another when it controls that corporation, or holds a large enough share stake in it, under the dividend rules. The label matters because a dividend between connected corporations can usually flow without the special refundable tax that applies to portfolio dividends, unless the payer itself received a dividend refund. This is the mechanism that lets profits move from an operating company up to a holding company without an immediate tax cost at the corporate level.
Corporate reorganization
A restructuring of how a business is owned — inserting a holding company, splitting a company between shareholders, freezing the value of your existing shares, or amalgamating two corporations. Carried out under the right provisions, these steps can be completed on a tax-deferred basis instead of triggering tax on accrued value. Owners typically reorganize to bring in a new shareholder, protect retained earnings from operating risk, prepare a business for sale, or set up a succession to the next generation.
CPP (Canada Pension Plan)
The federal retirement plan funded by contributions on employment earnings. Salary generates CPP contributions and future benefits; the corporation pays the employer half and you pay the employee half. Dividends are investment-type income and build no CPP at all. CPP for owners.
D
Deemed disposition
A sale the tax rules treat as having happened even though nothing was sold and no money changed hands. Common triggers include death, ceasing to be a resident of Canada, a change in how a property is used, and certain trust anniversaries. Because the asset is treated as sold at fair market value, accrued gains become taxable in that year even though there are no proceeds to pay the bill with. Planning for that liquidity gap is central to estate and succession work.
Departure tax
The tax that arises when you stop being a resident of Canada. Most of your property is treated as sold at fair market value on the day you leave, so accrued gains are taxed on your final Canadian return even though you still own everything. Some property, including Canadian real estate, is excluded. Security can be posted with the CRA to defer payment until an asset is actually sold. Owner-managers leaving Canada also have to consider where their corporation is resident.
Directors’ liability
Directors of a corporation can be held personally responsible for certain amounts the company failed to remit — payroll source deductions and GST/HST in particular. Limited liability protects you from ordinary business debts, but not from these trust amounts. A director who can show they exercised the care, diligence and skill a reasonably prudent person would have used in comparable circumstances may avoid the assessment. Resigning does not erase exposure for amounts that fell due while you were in office.
Dividend
A distribution of corporate after-tax profit to shareholders. Not deductible to the corporation, no CPP, no RRSP room. Eligible vs non-eligible determines the personal tax rate. Salary vs dividends.
Due diligence defence
The argument that a penalty should not apply because you took genuine, documented steps to get things right. It arises in directors’ liability assessments and in penalties for late or incorrect filings and remittances. Good intentions alone rarely carry the day; what counts is evidence — the systems you put in place, the questions you asked, the professional advice you obtained and acted on, and records showing you monitored the result. This defence is built before the problem, not after it.
E
Earned income
A defined measure used mainly to set the RRSP contribution room you receive for the following year. It includes salary and self-employment profit, and it does not include dividends. That distinction is the practical reason many incorporated owners pay themselves at least some salary: dividends create no RRSP room and no CPP contributions, while salary creates both. Earned income also matters for the child care expense deduction, where the lower-income spouse’s earned income limits what the family can claim.
EI (Employment Insurance)
Federal insurance providing benefits between jobs. Employees pay premiums and employers pay a larger share. Owners who control more than 40% of voting shares are generally not insurable on their own employment, so most incorporated owner-managers do not pay EI on their own salary — but do pay it for their staff.
Eligible vs non-eligible dividends
Eligible dividends (from income taxed at general corporate rates) carry a larger gross-up and credit than non-eligible ones (from income taxed at the small-business rate). Most small-corp dividends are non-eligible. Full guide.
Employer Health Tax (EHT)
BC’s payroll tax: exempt at or under $1,000,000 of BC remuneration, 5.85% on the excess up to $1.5M, then 1.95% of the whole payroll. Associated employers share one exemption. EHT guide.
ERDTOH / NERDTOH
For tax years starting after 2018 the old RDTOH account was split in two. ERDTOH (eligible) tracks Part IV tax on eligible dividends received; NERDTOH (non-eligible) tracks refundable Part I tax on investment income and other Part IV tax. Paying eligible dividends refunds ERDTOH; non-eligible dividends refund NERDTOH first.
F
Fair market value
The price property would fetch between a willing buyer and a willing seller who are informed, unhurried and dealing at arm’s length. It is the default yardstick throughout the tax system: transfers to family, gifts, deemed dispositions on death or emigration, and shares issued in a reorganization are all measured against it. If you transact with a related party at some other price, the rules generally substitute fair market value anyway, so supporting your number with a defensible valuation matters.
Fiscal year-end
The date your corporation’s financial year closes. A new corporation may pick almost any date, as long as its first fiscal year does not exceed 53 weeks. The choice drives your balance-due date and T2 filing deadline. Changing it later needs CRA approval. How to choose.
Foreign accrual property income (FAPI)
Passive income — interest, rent, royalties, portfolio dividends — earned inside a foreign corporation that a Canadian controls. Rather than allowing that income to sit offshore untaxed, the rules attribute it to the Canadian shareholder as it is earned, with relief for foreign tax paid. If you or your corporation owns a company outside Canada, this is the regime deciding whether its investment income is taxable here now or only when funds come home, and it carries its own annual reporting forms.
G
General Anti-Avoidance Rule (GAAR)
A rule allowing the CRA to undo the tax benefit of a transaction that follows the letter of the law but misuses or abuses its purpose. It is the backstop applied when a plan is technically correct yet clearly not what the provision was designed to do. For an owner, the practical message is that a structure needs to make sense for reasons beyond the tax saving, and that steps taken purely to manufacture a deduction or exemption carry real risk.
GIFI
The General Index of Financial Information — the standardized code set (e.g., 8000 for sales) used to file financial statements with a T2 return.
Goodwill
The value of a business beyond its identifiable assets — reputation, customer relationships, systems, the fact that the phone rings. It lands on the books when you buy a business for more than the value of what you can point at. For tax, purchased goodwill is written off gradually through its own capital cost allowance class. When you sell, how much of the price is allocated to goodwill rather than equipment or inventory changes the tax result for both sides, so it belongs in the agreement.
GRIP (General Rate Income Pool)
A notional account tracking income a CCPC has taxed at the general corporate rate rather than the small business rate. A CCPC can designate eligible dividends only to the extent of its GRIP; paying more than the balance triggers Part III.1 tax.
Gross negligence penalty
A substantial penalty the CRA can assess when a false statement or omission on a return was made knowingly, or in circumstances amounting to gross negligence — not merely a careless mistake. It goes well beyond ordinary late-filing penalties and interest, and the CRA carries the burden of proving the conduct. Expenses claimed that were never incurred, or income deliberately left off, are the usual triggers. Correcting an error voluntarily, before the CRA contacts you, is generally the way to avoid it.
GST/HST
The federal value-added tax (5% GST in BC). Registration is required once taxable sales pass $30,000 over four rolling quarters; registrants charge it, then recover tax paid via input tax credits. GST guide.
H
Half-year rule
In the year you buy an asset you generally claim CCA on only half the net addition — a Class 8 asset gives 10% in year one instead of 20%. Acceleration incentives have at times suspended it.
Holding company
A corporation that owns shares of an operating company or investments rather than running a business. Used for creditor-proofing and moving profits via tax-free inter-corporate dividends — when it makes sense.
Home office
Workspace in your home used for business. Once you incorporate you can no longer use Form T2125 — instead the corporation reimburses a reasonable documented share under an accountable arrangement, or it issues a T2200 and you claim employment expenses on Form T777. Full guide.
I
Immediate expensing
A measure allowing eligible businesses to write off the full cost of qualifying property in the year it becomes available for use, rather than claiming capital cost allowance over many years. It applies to a capped amount of additions per year, shared among associated corporations, and only to designated classes of property. Availability has been time-limited, so whether a particular purchase qualifies depends on when it was acquired and put to use. Confirm the rules for your own year before relying on it.
Income splitting
Shifting income to a family member taxed at a lower rate, usually through salary, dividends or share ownership. It is legitimate in principle but heavily restricted in practice: the split-income rules can tax dividends paid to a family member at the top personal rate unless a specific exception applies, and the attribution rules can push investment income straight back to whoever funded it. Salary paid to a family member stays deductible only if the work was genuinely performed and the pay is reasonable.
Inducement payment
An amount received to persuade you to do something — a landlord’s cash contribution or free-rent period for signing a lease, a supplier’s signing bonus, a grant tied to locating somewhere particular. These are generally taxable when received, or applied to reduce the cost of the related asset, rather than being a windfall you can ignore. Owners often assume a leasehold allowance arrives tax-free; usually it does not, and the treatment should be settled when the deal is negotiated.
Input tax credit (ITC)
The mechanism letting GST registrants recover GST/HST paid on business purchases. Requires proper documentation; commonly denied when receipts are missing. ITC guide. (BC PST has no equivalent.)
Instalment interest
Interest charged when required tax instalments are paid late, or in amounts that are too small. It is calculated by comparing what you actually paid, and when, against what a compliant schedule would have produced, and it compounds daily. Paying an instalment early or overpaying a later one can offset the charge, because credit interest on early payments is netted against the debit interest. If the charge grows large enough, an additional instalment penalty can apply on top of it.
Instalments
Periodic prepayments of corporate tax or GST once amounts owing pass thresholds — monthly or quarterly for corporations. Missing them accrues non-deductible interest. Instalment guide.
Inter-corporate dividend
A dividend paid from one Canadian corporation to another. As a general rule these flow without a second layer of tax, which is what allows profits to move from an operating company to a holding company for creditor protection or investment. The relief is not unconditional: a refundable tax can apply where the corporations are not connected, and anti-avoidance rules can recharacterize a dividend as a capital gain where it is used to strip value out of a company before a sale.
K
Key person insurance
Life or disability insurance a corporation buys on an owner or a critical employee, with the corporation as beneficiary. It funds the disruption if that person dies or can no longer work — replacing lost profit, repaying a loan, or buying out a family’s shares. Premiums are generally not deductible, and the death benefit is generally received tax-free by the corporation, with much of it able to flow out to shareholders through the capital dividend account. Lenders often require it as a condition.
L
Leasehold improvement
Money spent improving premises you rent rather than own — build-out, partitions, lighting, flooring. Because you do not own the building, the cost is treated neither as an ordinary repair nor as buying real estate. It goes into its own capital cost allowance class and is written off over the term of the lease plus a renewal period, subject to minimum and maximum periods. Splitting a renovation between deductible repairs and capitalized improvements is a common year-end judgment call.
Lifetime capital gains exemption (LCGE)
The exemption that can shelter capital gains on the sale of qualified small business corporation shares. Three tests must be met — and usually planned years ahead. LCGE guide.
LRIP (Low Rate Income Pool)
The mirror image of GRIP, for corporations that are not CCPCs. A non-CCPC with an LRIP balance must pay out ordinary (non-eligible) dividends to reduce that pool to zero before it can designate an eligible dividend.
M
Management fee
A charge from one corporation to another, usually from a holding or management company to the operating company, for services provided. Handled properly it can be a legitimate way to match cost to benefit and move profit where it belongs. Handled carelessly it is among the first things the CRA challenges: the fee has to be for real services, reasonable in amount for what was actually delivered, and supported by an agreement, invoices and evidence that the work genuinely happened.
My Business Account
The CRA’s online portal for corporations and registrants — balances, filings, mail and authorizing your accountant as representative. Setup guide.
N
Net capital loss
The unused portion of your capital losses after they have been applied against capital gains for the year. It cannot reduce salary, business profit or other ordinary income. The balance can be carried back three years to recover tax already paid on earlier gains, or carried forward indefinitely against future capital gains. Because the pool sits idle until a gain appears, timing the sale of an appreciated asset so it absorbs an old loss is a common piece of planning.
Non-capital loss
A loss from carrying on a business or from property, after it has been applied against your other income for the year. Unlike a capital loss, it can shelter ordinary income. The remaining balance can generally be carried back three years and forward twenty, so a bad year can recover tax paid in good years or shelter profit still to come. Loss carryforwards can be restricted when control of a corporation changes hands, which matters when a company is bought or sold.
Notice of assessment (NOA)
The CRA’s summary after processing a return: tax assessed, balances and carry-forward amounts. Check it against the filed return — the objection clock runs from its date.
O
Opco
Shorthand for the operating company — the corporation that actually runs the business, holds the contracts and carries the commercial risk. Usually paired with a Holdco that owns its shares and holds retained earnings away from that risk.
P
Paid-up capital (PUC)
The tax measure of what shareholders actually contributed for their shares, tracked separately from accounting share capital and from retained earnings. It represents the amount that can be returned to shareholders without being treated as a dividend. Paid-up capital is often far smaller than what the shares are now worth, and it can be ground down in certain reorganizations. Knowing the figure matters before taking money out, because a return of capital and a dividend are taxed very differently.
Partnership
Two or more people or corporations carrying on business together with a view to profit. The partnership itself does not pay income tax: it computes income and allocates it to the partners, who report their share on their own returns. Larger partnerships must file an annual information return. Partners are generally exposed to the partnership’s liabilities, which is why many investors hold their interest through a corporation. A written agreement covering profit allocation, decisions and exit terms is essential.
Passive income
Investment income (interest, rents, portfolio dividends, capital gains) inside a corporation. Over $50,000 a year of it starts grinding away the small business deduction. The $50K rule.
Payroll remittances
Income tax, CPP and EI withheld from pay plus the employer share, remitted to the CRA through an RP account on a set schedule. Unremitted amounts carry personal director liability. Payroll guide.
Personal services business (PSB)
What the CRA calls an incorporated worker who would be an employee without the corporation — single client, no business risk. PSB status strips the SBD and most deductions. PSB risk guide.
Place of supply
The GST/HST rules deciding which province’s rate you charge — generally the customer’s province for goods shipped and many services. Critical for e-commerce.
Prescribed rate
An interest rate the CRA sets each quarter, based on government bond yields, that drives several calculations: interest on overdue tax and on refunds, the taxable benefit on a low-interest shareholder or employee loan, and the minimum rate at which a loan to a family member avoids the attribution rules. Because it moves with market rates, the same planning idea — a spousal loan at the prescribed rate, for instance — can be attractive one quarter and unattractive a year later.
Principal residence exemption
The rule that shelters the gain on a home you, your spouse or your child ordinarily inhabited, for the years you designate that property as your principal residence. Only one property per family unit can be designated for a given year. The sale must be reported on your return even when the gain is fully exempt. Changing a home to a rental, or a rental to a home, triggers a deemed disposition, and holding a residence inside a corporation generally forfeits the exemption.
Provincial sales tax (PST)
BC’s separate 7% retail tax on taxable goods, software and certain services — expanding to professional services October 1, 2026. No input credits: PST paid is a real cost. PST guide.
Q
Quick Method
A simplified GST/HST calculation where you remit a flat percentage of sales instead of tracking most ITCs — often saves service businesses real money. Quick Method guide.
R
RDTOH
Refundable dividend tax on hand — the notional account of refundable tax a corporation pays on investment income, recovered when it pays taxable dividends. For tax years starting after 2018 it is split into ERDTOH and NERDTOH.
Reasonable expectation of profit
The question of whether an activity is a genuine business or essentially a personal pursuit. Where there is no realistic path to profit and a strong personal element — a hobby farm, a boat, a side venture that only ever loses money — the CRA can deny those losses against your other income. Courts look at whether the operation is carried on in a commercial manner. A written plan, real marketing, and evidence you changed course in response to losses all help.
Recapture
When you sell a depreciated asset for more than its remaining UCC, the excess CCA previously claimed is added back to income in the year of sale.
Retained earnings
Accumulated after-tax profits kept in the corporation rather than paid out. The engine of the deferral advantage — and of the passive-income problem if invested inside. Leave it in or pay it out?
S
s.85 rollover
A section 85 election under the Income Tax Act lets you transfer property into a corporation on a tax-deferred basis, choosing an elected amount rather than triggering the full gain. Commonly used when incorporating a sole proprietorship with appreciated assets, or moving shares into a holdco. It is a formal election with strict filing requirements.
Safe income
The after-tax income a corporation has actually earned and retained that stands behind the accrued gain on its shares. It sets how large a dividend can be paid between corporations without the anti-avoidance rule recharacterizing that dividend as a capital gain. The concept surfaces whenever profits are moved to a holding company ahead of a sale or a reorganization. Calculating it is detailed work, and the calculation should be done and documented before the dividend is declared, not afterwards.
Salary vs dividend
The core owner-compensation decision. Salary is deductible to the corporation, creates RRSP room and builds CPP, and requires payroll. Dividends are paid from after-tax profit, need no payroll, and build neither RRSP room nor CPP. Most owners use a deliberate mix. Full comparison.
Small business deduction (SBD)
The rate cut giving CCPCs a ~9% federal rate (about 11% combined in BC) on the first $500,000 of active income. Shared among associated corporations; ground down by passive income over $50,000. Full guide.
Sole proprietorship
An unincorporated business — you and the business are one taxpayer, profits taxed on your T1 at personal rates, unlimited liability. Compare with incorporation.
Statute-barred
A year the CRA can no longer reassess, once the normal reassessment period has run from the date of the original notice of assessment. For most Canadian-controlled private corporations and individuals that window is three years. Reopening a statute-barred year requires misrepresentation attributable to neglect, carelessness or wilful default, or fraud — or a waiver you signed. The clock cuts both ways: once it has run, you generally lose the right to change that return in your own favour too.
Superficial loss
A capital loss the rules deny because you, or someone affiliated with you such as your spouse or your corporation, acquired the same property within thirty days before or after the sale and still held it at the end of that window. The denied loss is added to the cost of the repurchased property rather than disappearing, so it is a deferral instead of a forfeit. It is the trap that catches year-end tax-loss selling done a little too casually.
T
T1 return
The personal income tax and benefit return every Canadian individual files annually — due April 30, or June 15 if you or your spouse are self-employed (with any balance still due April 30). Your salary, dividends and other personal income all land here. Personal tax service.
T2 return
The corporate income tax return every Canadian corporation files annually, due six months after year-end (tax owing is due earlier — see balance-due date). T2 service.
T2200
Declaration of Conditions of Employment — the form an employer (including your own corporation) signs certifying that you were required to pay certain expenses as a condition of employment. It is what lets an employee claim home-office and other employment expenses on Form T777. The employee keeps it; it is not filed with the return.
T4 / T4A / T5 slips
Information slips: T4 for employment income, T4A for certain other payments, T5 for investment income including dividends. Due to recipients and the CRA by the end of February. Slip guide.
T5018
The slip construction businesses file reporting payments to subcontractors. The CRA cross-matches every slip against the subcontractor’s reported revenue. T5018 guide.
Taxable benefit
Any non-cash advantage your corporation provides that the CRA treats as employment income — a company vehicle, certain insurance, personal expenses paid by the company. Taxable benefits are added to your T4 and taxed like salary. Getting them un-reported is a common review adjustment.
Taxable capital employed in Canada
A measure of a corporation’s size based on its capital — share capital, retained earnings and debt — rather than on its profit. It matters to small businesses for one main reason: as the taxable capital of a corporation and its associated group rises past a set threshold, access to the small business deduction is reduced and eventually eliminated. Growth in retained investments, not just in sales, can quietly erode your access to the small business rate.
Terminal loss
The opposite of recapture. If you dispose of the last asset in a CCA class and UCC still remains, the leftover balance is deducted in full that year — recognising that the asset depreciated faster in reality than the class rate allowed.
Thin capitalization
Rules limiting the interest a Canadian corporation can deduct on debt owed to significant non-resident shareholders and related non-residents. Without them, a foreign parent could strip Canadian profits out as deductible interest instead of taxable dividends. Interest above the permitted debt-to-equity ratio is denied and treated as a dividend subject to withholding tax. The rules only bite where there is non-resident related-party debt, so they matter to owners with a foreign parent, a foreign investor, or family financing from abroad.
TOSI
Tax on split income — rules taxing dividends paid to family members at top rates unless an exception applies (like the excluded-business test for family who genuinely work in it). TOSI guide.
Trust
A legal relationship in which a trustee holds property for beneficiaries on the terms a settlor set. Owner-managers most often meet trusts as a family trust holding shares of the operating company, which can add flexibility in who receives dividends and can multiply access to the capital gains exemption on a sale. Trusts file their own annual return, face expanded beneficiary reporting, and are subject to a deemed disposition of their property on a long fixed cycle, so they need active management.
U
Undepreciated capital cost (UCC)
The remaining tax value of an asset class after CCA claims — the base for next year’s claim, and the reference point for recapture or terminal loss on sale.
V
Voluntary Disclosures Program (VDP)
The CRA program for correcting past non-compliance — unfiled returns, unreported income — with penalty relief when the disclosure is voluntary and complete. VDP guide.
W
Work in progress (WIP)
Work you have performed but not yet billed — the hours on a job that is half finished, the labour and materials on a contract still under way. It is an asset, and for tax it generally has to be brought into income as it is earned rather than deferred until the invoice goes out. Professionals once had an election to exclude it, and that relief was phased out. Valuing work in progress consistently is what makes year-end profit believable to a lender.
Working capital
Current assets minus current liabilities — the cash and near-cash a business has to fund day-to-day operations. Positive and stable working capital is what lets a profitable company still pay its bills; profit on the income statement and cash in the bank are not the same thing.
WorkSafeBC premiums
BC’s workers’ compensation coverage — registration is generally required when you hire workers, with premiums based on payroll and industry classification. Separate from CRA payroll and from EHT.
Z
Zero-rated supplies
Sales taxed at 0% GST (exports, basic groceries) — you charge nothing but still claim ITCs. Different from exempt supplies, where ITCs are lost. Zero-rated vs exempt.
No term matches that. Try a shorter word — or ask us directly, which is usually faster anyway.
Missing a term? Tell us and we will add it. Definitions are simplified for orientation — the linked guides carry the detail, and none of this replaces advice on your specific situation.
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