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Economic, Finance & Revenue Terms & Glossary Explained!
 
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Confused By The Economic, Finance & Revenue Canada Terms and Definitions? Get The Answers Here!
 
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C
Canada Bill - Canada Bond - Canada Child Tax Benefit (CCTB) - Canada Child Tax Benefit Base Benefit - Canada Deposit Insurance Corporation (CDIC) - Canada Education Savings Grant (CESG) - Canada Foundation for Innovation - Canada Health and Social Transfer (CHST) - Canada Health Transfer (CHT) - Canada Investment and Savings (CI&S) - Canada Mortgage and Housing Corporation (CMHC) -Canada Note - Canada Pension Plan (CPP) - Canada Premium Bond (CPB) - Canada Savings Bond (CSB) - Canada Social Transfer (CST) - Canadian Bankers Association (CBA) - Canadian Film or Video Production Tax Credit - Canadian International Trade Tribunal (CITT) - Canadian Life and Health Insurance Association (CLHIA) - Canadian Life and Health Insurance Compensation Corporation (CompCorp) - Canadian Life and Health Insurance OmbudService (CLHIO) - Canadian Payments Association(CPA) - Capital Account - Capital Cost Allowance - Capital Gain - Capital Gain or Loss - Capital Tax - Centre for The Financial Services Ombuds Network (CFSON) - Charge Card - Cheque - Cheque Cashing Outlet - Closely Held Bank - Code of Conduct - Coercive Tied Selling - Collateral - Commercial Paper - Commercialization - Common Shares - Competition Bureau - Competitiveness - Complaint Handling Process - Compliance Agreement - Compound Interest - Consolidated Revenue Fund - Consumer Expenditure - Consumer Price Index (CPI) - Consumer Provisions - Consumption Tax - Contingency Reserve - Co-operative Credit Association - Co-operative Credit Associations Act - Core Unemployment Rate - Corporate Tax - Cost Recovery - Countervailing Duty - Coupon - Credit - Credit Bureau - Credit Card - Credit Memo - Credit Rating - Credit union / Caisse Populaire - Crown Corporation - Current Account - Cyclical Unemployment
 
Canada Bill
Promissory note denominated in US dollars. Canada bills mature not more than 270 days from their date of issue and are discount obligations with a minimum order size of US$1,000,000 and a minimum denomination of US$1,000. Primary distribution occurs through a number of specified issuing agents, and rates on Canada bills are posted daily. Participants in this market include US, Canadian and international financial institutions.
 
Canada Child Tax Benefit (CCTB)
The CCTB provides annual financial assistance to families with children. It has two key components: the CCTB base benefit and the National Child Benefit supplement. As of July 2001, the maximum CCTB benefits will be $2,372 for the first child and $2,172 for each subsequent child. Nationally, the CCTB will then provide close to $7.7 billion to 3.2 million families. Consult the Department of Finance's  Canada Child Tax Benefit: Update pamphlet for more information and the Canada Customs and Revenue Agency Canada Child Tax Benefit (CCTB) page to find out how to qualify.
 
Canada Child Tax Benefit (CCTB) Base Benefit
Effective July 2000, the CCTB base benefit provided to modest- and middle-income families was increased. This was achieved by increasing the net income threshold at which the base benefit begins to be phased out from $25,921 to $29,590. As of July 2001, the threshold was further increased to $32,000.
Consult the Department of Finance's Canada Child Tax Benefit: Update pamphlet for more information and the Canada Customs and Revenue Agency Canada Child Tax Benefit (CCTB) page to find out how to qualify.
 
Canada Deposit Insurance Corporation (CDIC)
A federal Crown corporation that was established in 1967 to protect Canadian currency deposits against the possible failure of CDIC member financial institutions. As a general rule, eligible deposits are protected up to a maximum of $60,000 per person, including principal and interest, at each member institution. For more information, visit the Canada Deposit Insurance Corporation Web site.
 
Canada Education Savings Grant (CESG)
Federal government program designed to help parents, grandparents and interested Canadians save for a child's post-secondary education. The Government of Canada will contribute 20% of the amount of contributions made to a Registered Education Savings Plan, to a maximum yearly amount of $400 per child per year or a lifetime maximum of $7,200.
 
Canada Foundation for Innovation (CFI)
An independent organization that makes strategic investments in Canadian research. The foundation provides funding for research at universities, colleges, research hospitals and not-for-profit institutions, in areas such as science, engineering, health and the environment. Members of the foundation act independently of the government and are drawn from the research community and the private sector. The CFI does not support projects of government departments, agencies or Crown corporations. In 1998 the CFI announced $58 million in awards, about 45 per cent of which was for health research infrastructure. It expects to announce about $429 million in awards in 1999. For more information, visit the Canada Foundation for Innovation Web site.
 
Canada Health and Social Transfer (CHST)
Federal transfer provided to provinces and territories in support of provincial health care, post-secondary education, social assistance and social services, including early childhood development and early learning and child care. On April 1, 2004, the CHST was replaced by the Canada Health Transfer (CHT) in support of health care and the Canada Social Transfer (CST) in support of other social programs previously supported by the CHST. For more information, visit the Department of Finance Federal Transfers to Provinces and Territories Web page.
 
Canada Health Transfer (CHT)
Federal transfer provided to each province and territory in support of provincial health care. CHT funding is provided through cash payments and tax transfers and is subject to the five principles of the Canada Health Act and the prohibition of minimum residency requirements for social assistance. For more information, visit the Department of Finance Federal Transfers to Provinces and Territories Web page.
 
Canada Investment and Savings (CI&S)
A special operating agency in the Department of Finance. Its mandate is to revitalize the federal government's retail debt program and to maintain a reasonable retail share of the Government of Canada's debt. For more information, visit the Canada Investment and Savings Web site.
 
Canada Mortgage and Housing Corporation (CMHC)
Crown corporation that administers the National Housing Act for the federal government, and creates and sells mortgage loan insurance products.
 
Canada Note
Promissory note usually denominated in US dollars and available in book-entry form. Notes can be issued for terms of nine months or longer, and can be issued at a fixed or a floating rate. Canada notes are issued for foreign exchange reserve funding purposes only.
 
Canada Pension Plan (CPP)
A contributory, earnings-related social insurance program which ensures a measure of income protection to contributors and their families against the loss of income due to retirement, disability or death. The plan operates throughout Canada except in the province of Quebec, where a similar program – the Quebec Pension Plan – is in effect. CPP contributions and benefits are not part of the federal government's revenues or expenditures and therefore do not directly affect the federal government's budget. For more information, visit the Canada Pension Plan page at the Human Resources Development Canada Web site.
 
Canada Premium Bond (CPB)
A new savings product for individual Canadians, introduced by the Government of Canada in 1998. It offers a higher interest rate compared to the Canada Savings Bond and is redeemable once a year on the anniversary of the issue date or during the 30 days thereafter without penalty. For more information, visit the Canada Investment and Savings Canada Premium Bonds Web page.
 
Canada Revenue Agency
Also known as Canada Customs and Revenue Agency, see also, Revenue Canada.
 
Canada Savings Bond (CSB)
CSBs are currently offered for sale by most Canadian financial institutions to individual Canadians. CSBs pay a competitive rate of interest that is guaranteed for one or more years. They may be cashed at any time and, after the first three months, pay interest up to the end of the month prior to encashment. For more information, visit the Canada Investment and Savings Canada Savings Bond Web page.
 
Canada Social Transfer (CST)
Federal transfer provided to each province and territory in support of post-secondary education, social assistance and social services, including early childhood development and early learning and childcare. CST funding is provided through cash payments and tax transfers and supports the Government of Canada’s commitment to maintain the five principles of the Canada Health Act and to prohibit minimum residency requirements for social assistance. For more information, visit the Department of Finance Federal Transfers to Provinces and Territories Web page.
 
Canadian Bankers Association (CBA)
Established in 1891, the CBA is the main representative body for banks in Canada. It provides its members — the chartered banks of Canada — with information, research, advocacy and operational support services. The CBA also provides information to the public on banking and financial issues.
 
Canadian Film or Video Production Tax Credit
The Canadian film or video production tax credit mechanism provides a fully refundable tax credit of up to 12 per cent of the eligible cost of a certified Canadian film or video production to qualified taxable Canadian corporations. The credit is computed as 25 per cent of qualified labour costs, which may not exceed 48 per cent of the cost of the film or video production (i.e. generally a net credit of 12 per cent). The Minister of Canadian Heritage is responsible for certifying whether a film or video production meets certain prescribed Canadian content rules. For more information, visit the Heritage Canada Guide to Federal Programs for the Film and Video Sector and the Canada Customs and Revenue Agency Film Tax Credit Programs Web page.
 
Canadian International Trade Tribunal (CITT)
The body responsible under Canadian legislation for findings of injury in anti-dumping and countervailing duty cases and the provision of advice to the government on other import issues. For more information, visit the Canadian International Trade Tribunal Web site.
 
Canadian Life and Health Insurance Association (CLHIA)
An association comprised of most of the life and health insurance companies in Canada. It conducts research and compiles information about the life and health insurance industry in Canada.
 
Canadian Life and Health Insurance Compensation Corporation (CompCorp)
A private, non-profit corporation that was established in 1990 by the life insurance industry. It is funded by the industry and provides Canadian policyholders with compensation coverage against loss of policy benefits in the event of the insolvency of their insurance company. For more information, visit the CompCorp Web site.
 
Canadian Life and Health Insurance OmbudService (CLHIO)
An independent service that assists consumers with concerns and complaints about life and health insurance products and services, with the objective of providing fair and prompt resolution of problems.
 
Canadian Payments Association (CPA)
A not-for-profit association established through legislation in 1980 to operate national systems for the clearing and settlement of payment items between financial institutions. To maintain the safety and soundness of the Canadian payments system taking into account the interest of users, the CPA also administers the framework of rules, standards and procedures for the exchange, clearing and settlement of cheques, pre-authorized debits, direct deposit payments, wire transfers and other payment items. The Association’s membership includes chartered banks, trust and loan companies, credit union centrals and federations of caisses populaires, and other deposit-taking financial institutions. The Canadian Payments Act, passed by Parliament in June 2001, will extend eligibility for CPA membership to life insurance companies, securities dealers and money market mutual funds. For more information, visit the Canadian Payments Association Web site.See also payments system; trust company.
 
Capital Account
A measure of the sales and purchases of assets, such as direct investment (e.g. the purchase of a factory) or portfolio investment (e.g. the purchase of stocks and bonds), between Canada and the rest of the world. If Canada has a current account
deficit, it must be financed by either selling Canadian assets to foreigners or borrowing from foreigners, typically in the form of government bonds. Canada typically runs a current account deficit. This requires a capital inflow, which increases our overall foreign indebtedness.
 
Capital Cost Allowance (CCA)
A tax deduction for business-related capital property that provides for the depreciation of these assets. Businesses can deduct up to a fixed percentage of the depreciated cost each year. There are approximately 40 CCA classes described in the regulations to the Income Tax Act. The CCA rate applicable to each class is usually intended to reflect the economic life of the assets of that class. Where the CCA rate is clearly in excess of that required to reflect the economic useful life, it can be considered to be an accelerated CCA.
 
Capital Gain
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.
See also taxable capital gain.
 
Capital Tax
The federal government taxes the capital of all large corporations (large corporations tax) and of large financial institutions (financial institutions capital tax). The financial institutions capital tax acts as a minimum tax and ensures that large financial institutions pay tax every year. All provinces levy capital taxes on financial institutions and seven provinces levy a capital tax on other corporations. Provinces rely more heavily on corporate capital taxes than the federal government.
 
Centre for the Financial Services OmbudsNetwork (CFSON)
The CFSON is an industry-sponsored consumer assistance and complaints referral service. It provides consumers of banking, life and health insurance, property and casualty insurance, securities and mutual fund products with access to a network of industry-level ombudsman services. These ombudsmen provide independent and impartial dispute resolution and redress services, at no cost to consumers. The CFSON is also responsible for developing and promoting industry standards and best practices for the handling of financial consumer complaints by the network.  For more information, visit the CFSON Web site.
 
Charge card
A plastic card that allows the holder to make purchases at participating retailers with borrowed funds.
 
Cheque
A written order for payment of a certain amount of money.
 
Cheque cashing outlet
A business that provides cheque cashing and basic financial services, such as foreign currency exchange, money transfers and money orders.
 
Closely Held Bank
A bank in which a single shareholder can own more than 20 per cent of outstanding shares. Typically, a closely held bank is controlled (but not necessarily 100-per-cent owned) by a single shareholder. A common example would be a domestically incorporated subsidiary of a foreign bank, controlled by a parent institution.
See also: widely held bank.
 
Code of Conduct
Non-legislated guidelines that one or more organizations agree to follow. Also referred to as "voluntary code" or "code of practice," it typically outlines service standards that you can expect in dealings with a company subscribing to the code.
 
Coercive Tied Selling
A practice that imposes undue pressure, or coerces a person to obtain a product or service from a bank and any of its affiliates, as a condition for obtaining a loan or any other product from that same bank. Section 459.1 of the Bank Act prohibits coercive tied selling and requires banks to disclose to consumers that coercive tied selling is illegal through the display of plain-language brochures made available at all of their branches.
 
Collateral
Securities such as bonds, shares, insurance policies, or other valuable property that are pledged against a loan. If the borrower fails to repay the loan, the creditor can sell the collateral assets to recover the money.
 
Commercial Paper
Short-term debt securities issued by non-financial corporations.
 
Commercialization
The adoption of a commercial approach to the delivery of public services. Commercialization helps to improve services by increasing responsiveness and reducing costs while protecting the public interest. It can also involve cost recovery from users. Commercialization has been used to improve the management of Crown corporations, mixed private-public enterprises, transfers to other levels of government and privatization. For example, the National Airports Policy leased Canada's 26 busiest airports to local, not-for-profit organizations that manage them towards self-sufficiency.
 
Common Shares
An investment that gives the holder part ownership in a company and the right to vote on major decisions affecting it.
 
Competition Bureau
A unit of the federal Department of Industry, headed by the Commissioner of Competition, whose mandate is to ensure that Canadian businesses are in conformity with the laws under its jurisdiction. The Competition Bureau maintains and encourages fair competition in Canada through the administration and application of four statutes: the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act. For more information, visit the Competition Bureau Web site.
 
Competitiveness
The ability to sell goods or services profitably relative to other producers of the same goods or services. A number of factors contribute to competitiveness including technological change, a highly skilled labour force, low inflation and a sound public policy environment. As competitiveness improves, costs are reduced and exports expand across international markets.
 
Complaint Handling Process
Procedures that financial institutions must have in place for customers who want to make a complaint.
 
Compliance Agreement
The Commissioner of the Financial Consumer Agency of Canada may enter into an agreement, called a "compliance agreement," with a financial institution for the purposes of implementing any measure designed to further compliance by that institution with federal consumer provisions (see below).
 
Compound Interest
The interest earned on a principal amount, including interest earned in an earlier period. A deposit (or loan) compounded at 10 per cent annually will double in about seven years if no money is taken out (or paid back).
 
Consolidated Revenue Fund
The general pool of all income of the federal government, such as tax, tariff and licence fee income, and profits from Crown corporations. All money received by the federal government must be credited to this fund and be properly accounted for.
 
Consumer Expenditure
Refers to spending by consumers to satisfy personal demands. It is by far the largest share of spending in Canada.
 
Consumer Price Index (CPI)
Measure of price changes produced by Statistics Canada on a monthly basis. The CPI measures the retail prices of a "shopping basket" of about 300 goods and services including food, housing, transportation, clothing and recreation. The index is "weighted," meaning that it gives greater importance to price changes for some products than others – more to housing, for example, than to entertainment – in an effort to reflect typical spending patterns. Increases in the CPI are also referred to as increases in the cost of living. For more information, visit Statistic Canada's Consumer Price Index Web page
 
Consumer Provisions
Certain sections of various federal acts and regulations relating to financial institutions (e.g., the Bank Act, the Insurance Companies Act) are designated as “consumer provisions” by the Financial Consumer Agency of Canada Act. They are designed to protect consumers in their everyday dealings with financial institutions. The FCAC monitors federally regulated financial institutions to ensure they adhere to the consumer provisions that apply to them.
 
Consumption Tax
A tax on consumption – purchases of goods and services. Such taxes are levied by both the federal and provincial governments. Federal consumption taxes consist mainly of the goods and services tax (GST) and excise taxes on motor fuel, tobacco products and alcoholic beverages. Provincial consumption taxes consist mainly of retail sales taxes, and provincial taxes on fuel and tobacco products. For more information, visit the Canada Customs and Revenue Agency Goods and Services Tax (GST) and Harmonized Sales Tax (HST) Web page.
 
Contingency Reserve
Funds set aside in the fiscal projections to cushion against changes in the economy. When these reserves are not otherwise used they are applied to the federal debt.
 
Co-operative Credit Association
An association that is organized and operated on co-operative principles, with one of its principal purposes being to provide financial services to its members.
 
Co-operative Credit Associations Act
Federal legislation governing the structure and operation of co-operative credit associations in Canada.
 
Core Unemployment Rate or Natural Rate of Unemployment
The lowest rate of unemployment that can occur before the scarcity of qualified workers will begin to boost wage growth and inflation. The core rate is often thought of as the percentage of the labour force that is either frictionally or structurally unemployed.
 
Corporate Tax
Tax on corporate income in Canada and other taxes and levies paid by corporations to the various levels of government in Canada. These include capital and insurance premium taxes; payroll levies (e.g. employment insurance, Canada Pension Plan, Quebec Pension Plan and Workers' Compensation); property taxes; and indirect taxes, such as sales and excise taxes, levied on business inputs. For more general information, visit the Canada Customs and Revenue Agency Business Web page.
 
Cost Recovery
The full or partial financing of programs or services through fees or other charges. It is applied primarily to services that confer a private benefit.
 
Countervailing Duty
Additional duties imposed by the importing country to offset government subsidies in the exporting country when the subsidized imports cause material injury to domestic industry in the importing country.
 
Coupon
The interest rate specified on a bond when it is originally issued.
 
Credit
On your bank statement, 'credit' represents funds that you have deposited into your account. The opposite of a credit is a debit. However, 'credit' also means money that you borrow from a financial lender, like a bank.
 
Credit Bureau
An organization that provides lenders with with credit information concerning existing or potential customers who are looking to obtain credit services.
 
Credit card
A plastic payment card that allows the holder to obtain goods and services on credit terms and without the requirement to pay cash. A credit card may also be used to obtain cash.
 
Credit Memo
A record of the funds which have been credited to an account.
 
Credit Rating
A rating created by authorized credit agencies that denotes a person's credit history.
 
Credit Union / Caisse Populaire
A co-operative financial institution that is owned by its members and operates for their benefit. Credit unions and caisses populaires (a form of credit union located primarily in Quebec) are subject to provincial regulation and are usually small and locally oriented.
 
Crown Corporation
A corporation wholly owned directly or indirectly by government in lieu of the Crown.
 
Current Account
A measure of the flow of goods, services and investment income between Canada and the rest of the world, including merchandise imports and exports, international service transactions, and interest and dividend payments or receipts. If a country receives more money from investments in and the sale of goods and services to the rest of the world than it pays out, it has a current account surplus. A country can also have a surplus in merchandise trade, but a larger deficit in service and investment transactions, resulting in an overall current account deficit. The deficit on investment transactions reflects the need to pay interest and dividends on foreign debt.
 
Cyclical Unemployment
Temporary downturn in the job market. The most common form of cyclical unemployment occurs when workers are temporarily laid off.
 
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