Use this page to quickly look up a term. For depth, follow the link to the full article. All definitions are educational.
- Active Business Income (ABI)
- Income earned by a Canadian Controlled Private Corporation (CCPC) from carrying on an active business — as opposed to passive investment income. ABI up to the small-business deduction limit is taxed at the low small-business rate. See Corporate Tax Flow.
- AMF (Autorité des marchés financiers)
- The Québec regulator overseeing financial advisors, insurance representatives, and securities dealers. Anton Ivanov is registered with the AMF as a Financial Security Advisor and Group Insurance and Group Annuity Plans Advisor.
- Capital Dividend Account (CDA)
- A notional account tracking tax-free amounts a corporation can distribute to its shareholders as capital dividends. The CDA increases with the non-taxable half of capital gains, net life-insurance proceeds received, and capital dividends received from other corporations. See CDA 101.
- Capital Gains Inclusion Rate
- The fraction of a capital gain included in taxable income. Historically 50% for corporations. Proposed legislation has aimed to raise this to 66.67% above certain thresholds; the current rate should be verified with your CPA. See Corporate Tax Flow.
- CCPC (Canadian-Controlled Private Corporation)
- A private corporation that is Canadian-resident and not controlled by non-residents or a public company. CCPCs benefit from the small-business deduction, the lifetime capital gains exemption on qualified shares, and RDTOH / CDA mechanisms. See Corporate Investing in Canada.
- CDA Credit
- An addition to the Capital Dividend Account — typically from the non-taxable half of a realized capital gain, or from net corporate life-insurance proceeds. Enables tax-free dividends to shareholders.
- CIRO (Canadian Investment Regulatory Organization)
- The national self-regulatory organization overseeing mutual-fund dealers and investment dealers. Anton Ivanov is registered as a Mutual Fund Dealing Representative under CIRO via WhiteHaven Securities Inc.
- Corporate-Class Mutual Fund
- A mutual fund structured inside a single corporation rather than a trust. Allows internal swaps between funds without triggering capital gains, and typically distributes only capital gains / eligible dividends, reducing annual taxable income at the shareholder level. See Corporate Class Funds.
- CRA (Canada Revenue Agency)
- The federal agency administering Canadian income tax, GST/HST, and related programs. Issues the interpretations and T2 return forms governing corporate income tax.
- Dividend Tax Credit (DTC)
- A non-refundable tax credit that reduces personal tax on dividends received from a Canadian corporation. Eligible dividends (paid from income taxed at the general rate) receive a more generous DTC than non-eligible dividends. See Tax Integration.
- Eligible Dividend
- A dividend paid out of a corporation's General Rate Income Pool (GRIP) — i.e., income taxed at the general corporate rate. Receives the enhanced dividend tax credit and gross-up at the shareholder level.
- Estate Freeze
- A restructuring where the current owner exchanges growth shares for fixed-value preferred shares (Section 86 or 85 exchange), and the next generation receives newly issued common shares. Future growth accrues to the next generation; the founder's tax liability is locked in at today's value. See Estate Freeze.
- General Rate Income Pool (GRIP)
- A notional account tracking corporate income that was taxed at the general corporate rate (i.e., not the small-business rate). Dividends paid out of GRIP qualify as eligible dividends. See RDTOH and GRIP.
- HoldCo (Holding Company)
- A corporation that owns shares of one or more operating companies or passive investments rather than carrying on an active business itself. Used for asset protection, passive-investment segregation, family-share issuance, and estate planning. See HoldCo/OpCo Structure.
- Income Tax Act (ITA)
- The federal statute (RSC 1985, c. 1, 5th Supp.) governing Canadian income tax. Specific sections (Section 85, 86, 112, etc.) are routinely referenced in corporate tax planning.
- Integration (Tax Integration)
- The principle that combined corporate-plus-personal tax on corporate income flowed through to an individual should approximate the tax the individual would have paid directly. In practice, integration is imperfect and varies by province and income type. See Tax Integration.
- OpCo (Operating Company)
- The corporation that carries on the active business, contrasted with a HoldCo that holds shares of OpCo. Separating OpCo and HoldCo is a common structure for asset protection and tax planning.
- Passive Investment Income
- Income earned from investments rather than active business operations — interest, net taxable capital gains, most dividends from non-connected corporations, royalties, and rent not from an active business. Relevant for the $50,000 SBD grind threshold.
- RDTOH (Refundable Dividend Tax on Hand)
- A notional account tracking refundable taxes paid on a corporation's passive investment income. When the corporation pays a taxable dividend to shareholders, a portion of RDTOH is refunded to the corporation — partially offsetting the higher passive-income tax rate. Split into Eligible RDTOH and Non-Eligible RDTOH. See RDTOH and GRIP.
- Section 85 Rollover
- A provision of the Income Tax Act allowing a taxpayer to transfer eligible property to a Canadian corporation on a tax-deferred basis, in exchange for shares. Commonly used to move OpCo shares into a HoldCo without triggering a capital gain. Requires joint Form T2057.
- Section 86 Exchange
- A provision allowing a shareholder to exchange all shares of a class for shares of another class of the same corporation on a tax-deferred basis. The primary mechanism for a classical estate freeze.
- Small Business Deduction (SBD)
- A federal tax deduction that reduces the corporate tax rate on the first $500,000 of active business income earned by a CCPC. Provinces provide additional SBD-like preferences. The federal SBD is clawed back based on passive investment income above $50,000 (the "SBD grind"). See SBD Grind.
- SBD Grind (Passive-Income Grind)
- The reduction in a CCPC's small-business deduction when the associated group's adjusted aggregate investment income exceeds $50,000. The SBD is reduced by $5 for every $1 of passive income above $50,000, reaching zero at $150,000. See The $50K Threshold.
- Tax Deferral
- The advantage of paying tax later rather than now, allowing pre-tax capital to compound. In the corporate context, earning income inside a CCPC (taxed at the low corporate rate) rather than personally (at a higher marginal rate) produces a deferral until funds are withdrawn as salary or dividends. See Tax Deferral Over 50 Years.
- T2 Corporate Tax Return
- The annual federal corporate income tax return filed with CRA. The T2 is where a CCPC reports active business income, passive investment income, RDTOH, GRIP, CDA, and claims the small-business deduction.
- Universal Life Insurance (UL)
- A permanent life-insurance policy with a tax-exempt investment component inside the policy. Frequently used as a corporate-owned policy to build tax-sheltered growth that funds future CDA credits at death. See Life Insurance as a Corporate Asset Class.
- WhiteHaven Securities Inc.
- The CIRO-registered mutual-fund dealer through which mutual funds are distributed on behalf of iAssure clients. Anton Ivanov is registered as a Mutual Fund Dealing Representative with WhiteHaven Securities Inc.
- Whole Life Insurance
- A permanent life-insurance policy with a fixed premium and a guaranteed (plus dividend-based) cash value. Popular as a corporate asset for its predictability and CDA-credit potential at death.
