Taxes may not be on your list of languages to learn, but trust us, knowing the lingo makes filing way less intimidating. Whether you’re doing your first return, saving for a home, or finally understanding what your pay stub is telling you, having these terms in your back pocket can save time, stress, and possibly money.
Here’s your A-to-Z cheat sheet of Canadian tax terms, explained in plain English. Bookmark this for tax season, or for the next time you hear someone mention “capital gains” and don’t want to Google it under the table.
After-Tax Income – The money you actually get to keep after the government takes its cut for taxes and other deductions.
Audit – When the Canada Revenue Agency (CRA) or Revenu Quebec reviews your tax return in detail to make sure everything’s accurate. Think of it as a “pop quiz” for your finances—except you want to have studied.
Balance Owing – The amount you still need to pay to the CRA or Revenu Quebec after filing your taxes.
Basic Personal Amount (BPA) – A non-refundable tax credit that lets you earn a certain amount each year before you have to start paying federal income tax.
Business Income – Money you earn from self-employment, freelancing, or running your own company.
Calendar Year – January 1 to December 31. This is the time frame most Canadians use for personal tax returns.
Canada Caregiver Amount – A tax credit for people supporting dependants who are infirm due to age or disability.
Canada Child Benefit (CCB) – A tax-free monthly payment for families to help with the cost of raising kids under 18.
Canada Education Savings Grant (CESG) – A government top-up (usually 20%) to contributions made to a Registered Education Savings Plan (RESP).
Canada Learning Bond (CLB) – A government contribution for low-income families for children born in 2004 or later to help start an RESP, even if you don’t contribute anything yourself.
Canada Pension Plan (CPP) – A retirement pension plan all working Canadians pay into, which pays you a monthly benefit when you retire or if you become disabled.
Canada Training Credit (CTC) – A refundable tax credit for working Canadians between 25 and 65 to help cover eligible training fees.
Canada Workers Benefit (CWB) – A refundable tax credit for low-income workers to boost their income.
Capital Cost Allowance (CCA) – A tax deduction for businesses to claim depreciation on property or equipment.
Capital Gains – Profit from selling investments or property for more than you paid.
Carry Forward – Tax amounts (like unused RRSP contributions or capital losses) you can apply to future tax years.
Citizenship Status – Your legal status in Canada, which can impact your taxes and benefits eligibility.
Class – In tax speak, a category for different types of assets for depreciation purposes.
Common-Law – When you live with a partner in a marriage-like relationship for a certain amount of time (usually one year), affecting your taxes like marriage would.
Corporation – A legal business structure that is separate from its owners, with its own tax obligations.
Credits – Amounts that reduce the tax you owe. Can be refundable (you get money back) or non-refundable (only reduces what you owe).
CRA (Canada Revenue Agency) – The federal agency that collects taxes and administers benefits.
Deductions – Expenses you can subtract from your taxable income to lower your tax bill.
Dependent – Someone who relies on you financially, like a child, spouse, or elderly parent.
Disability Tax Credit (DTC) – A non-refundable credit for people with a prolonged impairment, or for someone supporting them.
Dividend – Payments from a corporation’s profits to shareholders, taxed at a lower rate thanks to a tax credit.
Employee – A person hired to perform work for an employer in exchange for wages or salary.
Employment – Any work done in exchange for pay, including full-time, part-time, or seasonal jobs.
Employment Insurance (EI) – A program providing temporary income to people who have lost their job through no fault of their own, or who are on maternity, parental, or sickness leave.
Fair Market Value (FMV) – The price an asset would reasonably sell for on the open market.
First Home Savings Account (FHSA) – A registered plan that lets you save for your first home tax-free.
Guaranteed Income Supplement (GIS) – A monthly benefit for low-income seniors receiving Old Age Security (OAS).
GST/HST Credit – A tax-free payment to help offset sales tax for low-income individuals and families.
Home Buyers’ Amount – A non-refundable tax credit for first-time homebuyers.
Incorporation – The process of legally creating a corporation.
Income Tax Return – The official form you file with the CRA and/or Revenu Quebec each year to report income and claim benefits.
Inflation – The general rise in prices over time, which can impact tax brackets and benefit amounts.
Interest – The cost of borrowing money, or the income earned from lending it or keeping it in certain accounts.
Investment – Money put into assets like stocks, bonds, or property with the hope of profit.
Investment Tax Credit (ITC) – A credit for investments in certain industries or types of property.
Land Transfer Tax – A tax you pay when purchasing real estate.
Line – A specific numbered spot on a tax form where you enter amounts.
Loss – When you sell an asset for less than you paid.
Medical Expense Tax Credit – A non-refundable credit for eligible medical expenses.
My Account – The CRA’s secure online portal for managing your tax information.
NETFILE – An electronic service that lets you file your taxes online directly to the CRA.
NETFILE Access Code – A code needed to file taxes online for extra security.
NETFILE Certified Tax Software – Tax software approved by the CRA for electronic filing.
Net Income – Your income after deductions but before taxes.
Non-Refundable Tax Credits – Credits that can reduce the tax you owe but won’t give you a refund if they exceed your tax bill.
Notice of Assessment (NOA) – The summary the CRA sends after reviewing your return, showing what they calculated you owe or will get back.
Partnership – A business owned by two or more people who share profits and responsibilities.
Pay Stub – The breakdown of your earnings and deductions each pay period.
Payroll Deductions – Amounts taken from your pay for taxes, CPP, EI, and other contributions.
Pension – Income you receive after retiring, often from the CPP, QPP, or a workplace plan.
Profit – What’s left after a business subtracts expenses from revenue.
Quebec Pension Plan (QPP) – A Social Insurance similar to CPP, but for workers in Quebec.
Refund – Money the CRA or Revenu Quebec gives back if you’ve paid more tax than you owed.
Refundable Tax Credits – Credits that can give you money back even if you owe no tax.
Registered Disability Savings Plan (RDSP) – A savings plan to help people with disabilities and their families save long-term.
Registered Education Savings Plan (RESP) – A tax-sheltered plan for saving for a child’s post-secondary education.
Registered Retirement Savings Plan (RRSP) – A tax-advantaged plan for saving for retirement.
Revenu Quebec – The provincial tax authority for Quebec.
Schedule – An additional form you attach to your return to calculate specific credits or deductions.
Sole Proprietorship – A business owned and operated by one person.
Social Insurance Number (SIN) – A unique number you need to work in Canada and access government programs.
Support – Payments made for the care of a spouse, common-law partner, or child.
T4 Slip – A statement from your employer showing your income and deductions for the year.
T4A Slip – A statement showing other types of income, such as pensions or self-employment income.
T5 Slip – A statement showing investment income like dividends or interest.
Tax Bracket – The range of incomes taxed at a specific rate.
Tax-Free Savings Account (TFSA) – A savings account where investment growth is tax-free, even when withdrawn.
Tax Rate – The percentage of your income you pay in tax.
Taxes – Money collected by the government to pay for public services, economic development, and other government expenditures..
TD1 Form – A form you fill out to determine how much tax should be deducted from your pay.
Tuition Tax Credit – A non-refundable credit for eligible post-secondary tuition fees.
How does TurboTax help me understand my tax terms?
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