Are you familiar, with the world acronyms used for tax and accounting? If not don’t worry! We understand that it can be confusing when professionals use abbreviations that you’re not familiar with. That’s why we’ve created a list of used abbreviations in the tax and accounting field. The time you come across an abbreviation that leaves you scratching your head you can refer to this list for clarity. Make sure to save it for reference!
Abbreviations and their Meanings:
CRA: The Canada Revenue Agency is responsible for managing direct and indirect taxes in Canada. They provide insights through information circulars, interpretation bulletins, CRA views, and advance income tax rulings.
T1: The T1 form is used for filing individual income tax returns in Canada. It also covers business income or losses from businesses like proprietorships or partnerships where the partner is an individual.
T2: The T2 form is specifically designed for corporate income tax returns in Canada. It encompasses business income or losses from incorporated businesses.
T3: The T3 form is utilized for reporting trust income and providing information, in Canada. There is also a slip called T3 that is generated when the trust distributes its income to the beneficiaries.
T5013: This is an information return, for partnerships. Unlike an income tax return. It serves to provide information rather than calculate taxes. This is because partnerships themselves are not subject to tax. Instead, the partners report the partnership’s income on their tax returns. Partners can be corporations, trusts, other partnerships, or individuals. Similarly, there is a T5013 slip with the name that partnerships issue to their partners in order to report income and other items that need to be included on the partner’s tax returns.
T slips: These are not tax returns or information, they are used in preparing T1, T2, and T3 returns.
GIFI: Stands for general index financial information. When completing a T2 return in Canada since 2000 financial statements must be transposed into a GIFI format.
CCPC: Stands for Canadian Controlled Private Corporation. A CCPC refers to a corporation, in Canada that is not controlled by either a non-resident or public corporation alone or combined.
ABIL: It stands for 50% of business investment loss (BIL). The BIL refers to a loss incurred when selling shares or debt of a small business corporation (SBC) and the SBC is not related to the taxpayer.
ACB: This stands for Adjusted Cost Base. It can be different, for accounting and tax purposes in situations.
AII: This represents Aggregate Investment Income encompassing capital gains, interest, rents, royalties, and dividends. A concept that exists for CCPCs only.
ITA: ITA stands for the Income Tax Act of Canada.
AOC: This refers to the Acquisition of Control concept, which occurs when a corporation’s control is acquired by an unrelated party.
ARA: It pertains to the At-risk Amount to partners in limited liability partnerships. It differs from ACB for these partners.
ASPE: This is an accounting standard for private entities.
CCA: Capital Cost Allowance, it is also referred to as tax depreciation/amortization.
CDA: It represents the Capital Dividend Account, a tax account allowing private corporations to distribute tax-free dividends to shareholders.
CFA: CFA denotes controlling investments made by Canadians in foreign corporations—an aspect of Canadian outbound international tax.
The Canada Pension Plan: This is a retirement pension, also known as CPP. It is a benefit that individuals receive after they retire. This benefit is liable to taxes. The amount you receive depends on factors such as when you started receiving the pension your contributions throughout your working life and your average yearly earnings.
DTA/DTL: This is a concept used in financial statements for reporting taxes. Referred to as deferred tax assets and deferred tax liabilities in IAS 12.
Employment Insurance: Also referred to as EI. It provides benefits to individuals who lose their jobs through circumstances beyond their control such as lack of work or layoffs due to other reasons. To qualify for EI benefits individuals must be willing and able to work but unable to find employment.
FA: This stands for affiliate which represents Canadian investments in foreign corporations.
FAPI: Stands for foreign accrual property income. If Canadians have investments in controlled foreign affiliates (CFA) that earn passive income there is an obligation to report the income, from these CFAs annually regardless of whether dividends are distributed from them i.e., on accrual basis.
FAPL: It is a foreign accrual property loss. This is when the CFA generates a passive income loss.
FAT: It is called the foreign accrual tax deduction. It offsets the FAPI income inclusion. The relevant tax factor is multiplied by the underlying tax to compute it.
Fair market value (FMV): It refers to the market price of an asset or property.
FTC: FTC is known as the Foreign Tax Credit. When reporting worldwide income Canadian taxpayers have the opportunity to claim taxes paid on their foreign source income as a credit, against their Canadian taxes.
GAAR: To prevent tax avoidance transactions there is a General Anti Avoidance Rule (GAAR) in place. If there are no specific anti-avoidance measures available in the ITA to particular abusive transactions the Canada Revenue Agency (CRA) can invoke GAAR on those transactions.
GRIP: For Canadian Controlled Private Corporations (CCPCs) there is a concept called the General Rate Income Pool (GRIP). If CCPCs have a balance in their GRIP pool, they can distribute eligible dividends to their shareholders.
GST: Goods and Services Tax (GST) It is an indirect federal tax for taxable supplies of goods and services.
HST: Harmonized Sales Tax (HST) is a combined provincial and federal sales tax.
IC: The CRA has issued Information Circulars (ICs) that provide policies and commentaries on legislation.
IFRS: All public corporations, in Canada are required to use International Financial Reporting Standards (IFRS). These are accounting standards used for reporting purposes.
IT: Interpretation Bulletins (IT) are issued by the CRA to provide policies and commentaries, on specific legislation.
ITC: Investment Tax Credits (ITC) are tax credits to SR&ED and other eligible expenditures in Canada.
ITR: Income Tax Regulations (ITR) govern income tax matters. It is a legal statute like ITA.
ITTN: The CRA issues Income Tax Technical News (ITTN) which offers policies and commentaries on certain legislation.
LLC: Limited Liability Company. A concept mostly used for the U.S. investment.
LLP: Limited Liability Partnerships
LOI: Letter of Intent. A concept that is important, in the purchase and sale of businesses.
LRIP: A concept for non-CCPCs. Non-CCPCs need to clear the Low-Rate Income Pool (LRIP) by paying out non-eligible dividends before distributing eligible dividends.
M&P: Manufacturing and processing
NAICS: North American Industry Classification System
NBV: Net Book Value is a concept for financial accounting.
NOA: Each year after filing their tax returns taxpayers receive a Notice of Assessment (NOA) which evaluates their tax situation.
NOO: If individuals or businesses disagree with the assessment made by the CRA regarding their income or taxes they can file a Notice of Objection (NOO).
NOR: When there are changes made to the taxpayer’s return a Notice of Reassessment (NOR) is issued.
NPO: Non-profit organization.
OBCA: Ontario Business Corporations Act.
OECD: a network of international countries called the Organization for Economic Co-operation and Development (OECD).
OITC: The tax credit related to SR&ED activities in Ontario is called the Ontario Innovative Tax Credit.
PE: PE refers to Permanent establishment. It’s a factor in determining tax rights. If Canadian citizens own a corporation. It is subject to tax in a province where there is a PE. If the corporation is owned by a non-resident, it is subject to tax in Canada only if it conducts business through a PE.
PLOI: Pertinent Loan or Indebtedness is a concept applicable in international scenarios.
POD: Proceeds of Dispositions.
PPA: Prescribed proxy amount, which is utilized in SR&ED computations.
PSB: Personal Services Business is a term used for Incorporated employees.
PUC: Paid-up capital, a concept in corporate reorganizations.
RDTOH: It refers to Refundable Dividend Tax on Hand. Part I tax and Part IV of the refundable taxes are added to the RDTOH pool. In 2018 RDTOH was divided into two categories: Eligible RDTOH and Non-eligible RDTOH.
RPP: refers to a Registered Pension Plan managed by an individual’s employer. The employer matches the contributions made to this plan. These contributions can be deducted from the individual’s taxes, on their T1 form.
RRSP: It stands for Registered Retirement Savings Plan, which is a retirement plan managed directly by the taxpayer. Contributions made to this plan can also be deducted from the individual’s taxes on their T1 form.
SBC: A Small Business Corporation is defined as a Canadian-controlled corporation where most of its assets (90% or more) are primarily used in a business conducted in Canada either by the corporation itself or by a related corporation. These assets can include shares or debts of connected corporations that were considered business corporations. It can be a combination of both.
SBD: This represents the Small Business Deduction, which is applicable to CCPCs. If eligible these corporations are taxed at a lower tax rate on their active business income that qualifies for the small business deduction.
SCC: The Supreme Court of Canada serves as the final authority on legal matters.
SCI: It stands for Specified Corporate Income. To prevent exploiting or multiplying small business deductions this concept was introduced in the 2016 Federal budget.
SIB: This refers to Specified Investment Business. If a CCPC earns 90% or more of its income, from passive sources it is referred to as a Specified Investment Business (SIB). SIBs are subject to taxation at the investment income rate.
Safe Income on Hand (SIOH): It serves as an exception to subsection 55(2).
Specified Partnership Income (SPI): This was introduced in the 2016 Federal budget to prevent the multiplication of small business deductions through tax planning strategies.
(SR&ED): Scientific Research and Experimental Development refers to activities involving research and experimental development.
TCC: The Tax Court of Canada (TCC) is responsible for adjudicating tax-related disputes.
TCP: Taxable Canadian Property, a concept used mostly in the non-resident’s context.
TFSA: Tax-Free Savings Account
UCC: Undepreciated Capital Cost (UCC) is a tax concept that represents the net book value of assets. It is calculated by subtracting the accumulated capital cost allowance from the capital cost.
USA: A Unanimous Shareholders Agreement (USA) outlines an agreement among all shareholders regarding aspects of governance and decision-making processes.
V_DAY: Valuation Day, also known as V-Day refers to the determination of market value at the end of 1971 for purposes, particularly with regard to capital gains taxes.
VDP: The Voluntary Disclosure Program (VDP) also referred to as VDP offers relief on a case-by-case basis for taxpayers and registrants who voluntarily come forward before being contacted by CRA regarding errors or omissions, in their tax filings.
