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Glossary term
Tax Residency (residential ties)
Canada taxes by residency, not citizenship. A tax resident pays tax on worldwide income from the date of establishing residential ties (home, family, bank account) — usually the arrival date for newcomers. In your first year you're a part-year resident: only income after entry is taxed.
Related terms
Tax Slips
Standardized forms that payers send to you and the CRA reporting your income. T4 — employment income; T5 — in…
ACB
Adjusted Cost Base — the tax cost of an investment: purchase price + commissions + reinvested distributions,…
Capital Gains Inclusion Rate
The share of a capital gain added to taxable income. In Canada it's 50% — sell an investment at a $10,000 gai…
Marginal Tax Rate
The tax rate on your next earned dollar (combined federal + provincial). Canada uses progressive brackets: th…
PRE
Principal Residence Exemption — shelters the capital gain on selling a home that was your principal residence…
CDA
Capital Dividend Account — a notional CCPC account tracking the tax-free half of capital gains (the 50% not i…
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