Glossary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

B

Beneficiary (bénéficiaire): The person or organization that receives a bequest under a will, death benefits from a life insurance policy, or payments from a trust.

C

Capital (capital) : With reference to a trust, the principal upon which income is earned. Also called corpus in legal documents. Capital gain (gain en capital ou plus-value): An increase in the money value of a capital asset such as a share, bond, parcel of land, antique or other asset, which results in a profit if the asset is sold. If a share is bought at $26 and sold at $30, there is a capital gain of $4.

D

Deed of gift (acte de don): A document used for transferring personal property.

Donee (donataire): The recipient of a gift.

Donor (donateur): A person, corporation, foundation, or other organization that makes a gift.

E

Estate (patrimoine): Everything that a person owns or has an interest in.

Executor / executrix (exécuteur testamentaire): The person or institution (such as a trust company) named in a will to carry out the terms of the will.

F

Family trust (fiducie familiale): Family trust arrangements allow property to be held by a trust for the benefit of beneficiaries under the trust. Trusts are used for many purposes, including succession planning for businesses and dealing with the needs of beneficiaries in special circumstances, such as age and disability.

Fiscal year (exercice): The financial or accounting year of an organization, which may or may not coincide with the calendar year. An organization may find it convenient to end its accounting year at a time when inventory stocks are down. The fiscal year of Canada's federal and provincial governments runs from April 1 to March 31.

Foreign affiliate (société étrangère affiliée) : A non-resident corporation in which a taxpayer resident in Canada has a significant interest (an equity percentage of not less than 10 per cent). A controlled foreign affiliate is generally a foreign affiliate in which the taxpayer has or participates in a controlling interest.

Foreign trust (fiducie étrangère): An entity organized outside Canada set up to hold and administer funds or property on behalf of beneficiaries. Such arrangements can also be set up for the purpose of reducing income from property for Canadian tax purposes. The 1999 budget proposed changes to the Income Tax Act to address such tax planning.

I

Inter vivos trust (donation entre vifs): A trust created by an individual during his or her lifetime. Investment (investissement): In its broadest sense, investment consists of putting an asset into a form that is intended to increase its value. In an economic context, however, it refers to spending on capital goods in order to increase output - building a new factory, purchasing new equipment or public spending on infrastructure. Irrevocable trust (fiducie irrevocable): A trust that cannot be terminated or changed by the person creating it.

L

Legacy (héritage): A designation of property under a will. Also called a bequest. Liquidator (liquidateur): The term used in Quebec for the executor of an estate.

M

Mandate (mandat): Contract by which a person, the mandator, empowers another person, the mandatary, to represent him in the performance of a juridical act with a third person, and the mandatary, by his acceptance, binds himself to exercise the power.

P

Probate (homologation): The court-supervised process of validating a will and administering an estate in accordance with the terms of the will.

R

Residual interest (droit irreversible à l’intérêt résiduel): The right to receive property when the rights of one or more persons to use the property have expired.

S

Société étrangère affiliée (foreign affiliate) : Société étrangère dans laquelle un contribuable résidant au Canada détient une importante participation (au moins 10 % du capital). Une société étrangère affiliée contrôlée est généralement une société étrangère affiliée dans laquelle le contribuable détient une participation qui lui en donne le contrôle.

T

Tax base (assiette fiscale): The amount on which a tax rate is applied. When economists speak of the tax base being broadened, they mean a wider range of goods, services, income, etc. has been made subject to a tax. In the case of income tax, the tax base is taxable income. Some kinds of income are excluded from the definition of taxable income, such as a portion of capital gains. In the case of sales taxes, the tax base is the value of items that are subject to tax; basic groceries, for example, are not part of the tax base of the goods and services tax.

Tax expenditure (dépense fiscale): Tax expenditures are foregone tax revenues, due to special exemptions, deductions, rate reductions, rebates, credits and deferrals that reduce the amount of tax that would otherwise be payable. Tax expenditures include deductions for pension and registered retirement savings plan contributions, credits for charitable donations, and incentives for firms to invest in research and development. Tax expenditures are often designed to encourage certain kinds of activities or to serve other objectives, such as providing assistance to lower-income or elderly Canadians.

Tax transfer (transfert de points d'impôt) : A federal tax transfer involves the federal government ceding some of its "tax room" to provincial governments. Specifically, a tax transfer occurs when the federal government reduces its tax rates to allow provinces to raise their tax rates by an equivalent amount. With a tax transfer, the changes in federal and provincial tax rates offset one another and there is no net financial impact on the taxpayer. Tax transfers represent a growing source of revenue for provinces since they increase in value over time with growth in the economy.

Trust (fiducie): An arrangement under which money or other property is held by one person or company, often a trust company, for the benefit of another person or persons. These assets are administered according to the terms of the trust agreement. Each province has a trustee act, which regulates the kinds of investments that can be made by the trustees of a trust fund.

Trust company (société de fiducie): A financial institution that operates under either provincial or federal legislation and conducts the same activities as a bank. Like a bank, it operates through a network of branches. However, because of its fiduciary role, a trust company can administer estates, trusts, pension plans and agency contracts, which banks cannot do.

Trust indenture (acte de fiducie): A document used for giving a residual interest in property.

Trustee (fiduciaire): The person or institution that holds legal title to property in a trust and has responsibility for managing it.

Usufruct (usufruit): Right of use and enjoyment, for a certain time, of property owned by another as one's own, subject to the obligation of preserving its substance.

W

Wealth tax (impôt sur la fortune): Tax imposed either annually (annual net wealth tax) or at death (gift, inheritance or estate tax) on the net value of assets. Property taxes levied by provincial and municipal governments are a form of wealth taxation in Canada.

Will (testament): A legal declaration of how a person’s property is to be distributed at death.