Canadian Tax Principles Chapter 1:
Introduction to Federal Taxation in
Canada
Advance tax ruling - ANSInterpretations provided, at the request of a taxpayer, by the Income
Tax Rulings Directorate as to how a particular transaction will be treated for tax purposes; such
interpretations are not binding on the CRA
Allowable capital loss - ANSThe deductible portion (currently one-half) of a capital loss
Business income - ANSIncome that is earned through active business activity; includes
amounts earned by producing goods, selling goods or services, or delivering services; usually
refers to a net amount
Capital asset - ANSAn asset that is held for the purpose of producing income
Capital gain - ANSThe excess of proceeds resulting from the disposition of a capital asset, over
the sum of the adjusted cost base of the asset plus any costs of disposition
Capital loss - ANSThe excess of the sum of the adjusted cost base of a capital asset plus any
costs of disposition, over the proceeds resulting from the disposition of the asset
Capital tax - ANSA tax assessed on the capital of a corporation, without regard to its income
Consumption tax - ANSA tax levied on the consumption of some product or service; also called
a sales tax
Customs duties - ANSA tax imposed on the importation or exportation of certain goods or
services
Division B income - ANSAn alternative name for net income for tax purposes
Fiscal period - ANSA taxation year that does not exceed 53 weeks
Flat tax system - ANSA tax on income that is applied at the same rate to all taxpayers, without
regard to the level of their income
Head tax - ANSA tax levied on individuals that are included in a specified classification
Introduction to Federal Taxation in
Canada
Advance tax ruling - ANSInterpretations provided, at the request of a taxpayer, by the Income
Tax Rulings Directorate as to how a particular transaction will be treated for tax purposes; such
interpretations are not binding on the CRA
Allowable capital loss - ANSThe deductible portion (currently one-half) of a capital loss
Business income - ANSIncome that is earned through active business activity; includes
amounts earned by producing goods, selling goods or services, or delivering services; usually
refers to a net amount
Capital asset - ANSAn asset that is held for the purpose of producing income
Capital gain - ANSThe excess of proceeds resulting from the disposition of a capital asset, over
the sum of the adjusted cost base of the asset plus any costs of disposition
Capital loss - ANSThe excess of the sum of the adjusted cost base of a capital asset plus any
costs of disposition, over the proceeds resulting from the disposition of the asset
Capital tax - ANSA tax assessed on the capital of a corporation, without regard to its income
Consumption tax - ANSA tax levied on the consumption of some product or service; also called
a sales tax
Customs duties - ANSA tax imposed on the importation or exportation of certain goods or
services
Division B income - ANSAn alternative name for net income for tax purposes
Fiscal period - ANSA taxation year that does not exceed 53 weeks
Flat tax system - ANSA tax on income that is applied at the same rate to all taxpayers, without
regard to the level of their income
Head tax - ANSA tax levied on individuals that are included in a specified classification
