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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.
The statement by the Minister of Finance setting out the government's projected revenues and expenditures – sometimes called fiscal projections – and the resulting surplus or deficit. It contains an overview of the government's economic and fiscal projections, and also sets out fiscal policy for the period ahead. In recent years, federal budgets have generally been delivered in February. To read recent federal budget publications, visit the Department of Finance Budget Info Web page.
A financial institution regulated by the federal government. It has been created or allowed to offer financial services in Canada pursuant to one of the financial institution statutes established by the federal government (the Bank Act, the Insurance Companies Act, etc.). Federally regulated institutions (also called federal financial institutions) consist of all banks and all federally incorporated or registered insurance, trust and loan companies and co-operative credit associations. In general, federally incorporated companies - regulated by the Office of the Superintendent of Financial Institutions (OSFI) - that take deposits, or provide trust and loan services, life insurance or property and casualty insurance. For more information, visit OSFI's How We Regulate Web page.
Financial Action Task Force on Money Laundering (FATF)
Established in 1989 at the G-7 Economic Summit, the FATF addresses the international problem of money laundering. In 1990 the Task Force proposed 40 recommendations to improve national legal systems, enhance the role of financial systems and strengthen international co-operation against money laundering. The recommendations are not a binding international convention, but each of the FATF members has made a firm political commitment to combat money laundering. In 1996, the recommendations were modified to take into account recent money laundering trends and potential future threats. Visit the FATF Web site for more information.
An individual who advises clients on one or more aspects of their finances. Financial advice comes in many forms and from many sources. It can be from an insurance agent who recommends certain types of insurance, an accountant who offers tax tips, or a mortgage broker who suggests a home financing strategy. A financial advisor is not to be confused with a financial planner, although their roles may overlap. A financial planner analyses a client's total financial situation and prepares a comprehensive plan to help that person attain financial security in the long term.
Financial Consumer Agency of Canada (FCAC)
A new independent agency working to protect and educate consumers of financial services. The FCAC provides consumer information and oversees financial institutions to ensure that they comply with federal consumer protection laws.
Institution such as a commercial or investment bank, trust company, brokerage house, insurance company, credit union or caisse populaire that participates in financial transactions involving cash or financial products, normally in the role of intermediary. The primary role of these institutions is to facilitate the financing of investments, from home mortgages to the raising of funds via the issue of debt or equity for financing mega-projects. They also provide insurance, take on fiduciary responsibilities, store cash and securities for safekeeping, etc.
A professional who reviews and analyses all aspects of a client's financial situation — investments, tax situation, insurance, retirement strategies and estate planning — and prepares a comprehensive individualized plan to help that person attain financial security in the long term. A financial planner works with clients to assess their goals and important personal information, and then provides written recommendations and implements a financial plan tailored to their needs. Currently, Quebec is the only province with legislated standards for financial planners (i.e., to be a financial planner in Quebec, an individual must be licensed and fulfil certain educational and experience requirements). Regulators are in the process of developing common standards that would apply to financial planners in the rest of the country.
The amount by which cash leaving the government exceeds cash coming in. It is a broad measure of the amount of new borrowing required to meet the government's financing needs in any given year. Zero financial requirements may mean that the government does not have any new borrowing requirements and that it will not be issuing any new debt. Financial requirements are a good measure of Canada's fiscal situation when compared to other countries. In many other countries, including the United States, financial requirements more closely equate to their deficits.
Financial Service Charge
A fee charged by a financial institution for using its services — for instance, for making bill payments, writing cheques or using automated banking machines. Fees vary depending on the service and the financial institution used. Under per transaction fee plans, you pay as you go for each transaction; under flat fee plans, you pay a set price each month for a certain number of transactions. Companies set their own service charges but federally regulated institutions must advise clients when they plan to increase or introduce new fees.
Financial Services OmbudsNetwork (CFSON)
The Centre for the Financial Services OmbudsNetwork (CFSON) provides Canadian financial services consumers with single-window access to high-quality, independent, impartial and effective complaint resolution services in the banking, life and health insurance, general insurance, securities and mutual funds industries.
Establishes the level and composition of government revenues and spending, and surpluses or deficits such as those incorporated into the fiscal plans presented in the annual budgets of both federal and provincial governments. Changes in fiscal policy can have impacts on the growth of the economy.
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.
Fixed-Coupon Marketable Bond or Canada Bond
Government bond available in denominations ranging from $1,000 to $1,000,000. Fixed-coupon marketable bonds are interest-bearing securities based on stated coupon rates, pay interest semi-annually and are non-callable. Government of Canada bonds are the benchmark bonds in the Canadian bond market.
Debt that will mature or be re-priced after a year or more.
A tax levied at the same rate on all taxable income for all taxpayers, usually on a broadly defined income base with only a limited number of deductions.
Float or Public Float
Outstanding shares of a limited company presumed to be available for trading.
A flow-through share is available to mining, petroleum and certain types of renewable energy companies to facilitate financing their exploration and project development activities. Eligible companies issue these equity shares to new investors. Investors receive an equity interest in the company and income tax deductions associated with new expenditures incurred by the company on exploration and development. Flow-through shares are available to selected companies but are of greater benefit to non-taxpaying junior companies. These companies are often unable to use income tax deductions against their corporate income and are willing to forgo the deduction to new investors. For more information, visit the Canada Customs and Revenue Agency Flow-through Share (FTS) Program Web page.
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 Bank Branching
An option of legislation that permits a foreign bank to operate in Canada through branches rather than subsidiaries and to focus on commercial banking and broader lending activities. Foreign bank lending branches are not permitted to take any deposits, while full-service branches are only permitted to take deposits greater than $150,000.
Debt owed by Canadians to foreign lenders. Foreign debt is not exclusive to the federal government. Provincial governments and Canada's private sector also have large foreign debt loads. Foreign debt may not be bad if it is used to finance investment, but a high foreign debt means that less of Canada's income is available to Canadians because more goes to paying interest to foreign lenders.
Various instruments used to settle payments for transactions between individuals or organizations using different currencies (e.g., notes, cheques, etc.). A collective term for the currencies of sovereign states, other than the domestic currency.
Foreign Exchange Reserves
Stocks of foreign exchange assets (e.g. interest-earning bonds) held by sovereign states to support the value of the domestic currency. Canada's foreign exchange reserves are held in a special account called the Exchange Fund Account.
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.
A society that is without share capital, has a representative form of government and is incorporated for fraternal, benevolent or religious purposes, including the provision of insurance benefits solely to its members or their spouses or children.
Frictional unemployment occurs when participants in the labour force change their job status. This includes people between jobs and new labour force entrants such as those returning to the labour force after completing school or raising children.
Agreement to buy or sell a financial instrument at a particular price, for a specific quantity, on a stipulated future date. Fixed income futures contracts are traded in the futures market at the Montreal Stock Exchange. The key fixed income futures contracts are the 5-and 10-year Government of Canada bond futures contract (the CGF and the CGB contracts) and the Bankers Acceptance contracts (BAX).
A firm that buys and sells investments, provides investment advice and helps manage portfolios. It typically charges higher commissions or trading fees than a discount brokerage, which doesn't offer investment advice.