Canadian Taxation Overview

A government program that helps families save for their children's education. The program provides grants based on contributions made to a Registered Education Savings Plan (RESP).

The percentage of your contribution to an RESP that the government matches, which is a part of the Canada Education Savings Grant (CESG).

An additional percentage of the first $500 contributed to an RESP, beyond the Basic CESG, that the government matches. This extra grant amount is based on family income.

A type of retirement savings plan designed for Canadians who lack employer-sponsored pension plans. It offers low-cost, pooled investments managed by financial institutions to help save for retirement.

Financial institutions that manage and administer Pooled Registered Pension Plans, such as banks and insurance companies.

The tax rate that applies to the next dollar of income earned.

Income from property is taxed in the year it is earned, even if it's not received as cash.

Compensation received by lenders for the use of their funds. It's taxed at the investor's marginal rate.

These are fully taxable at the investor's marginal rate, either when received or as they accrue.

Tax credits are available for dividends from Canadian corporations, but they vary based on whether the company is privately or publicly traded.

The process of adjusting the dividend amount received by an investor to reflect the taxes already paid by the corporation. This adjustment ensures the investor is taxed on the equivalent of the pre-tax profit.

The percentage used to increase the dividend amount to reflect the corporation's pre-tax profit. This gross-up amount is applied to eligible Canadian dividends.

The amount of tax payable on eligible Canadian dividends is calculated based on the individual's marginal tax rate. The lower the marginal tax rate, the lower the tax liability.

A tax credit provided by the federal government on eligible Canadian dividends. The credit is a fixed percentage of the taxable amount of the dividend.

When exercising warrants or rights, the adjusted cost base (ACB) of the acquired shares is calculated by dividing the total outlay by the number of common shares owned.

The exercise of warrants or rights is not considered a disposition of property, so no capital gain or loss is recognized at the time of exercise.

When receiving rights from owning shares, the ACB of all common shares needs to be recalculated, including both the original shares and the new shares acquired using the rights.

If warrants or rights are sold in the open market or expire, the capital loss equals the purchase cost plus commission if purchased directly.

Warrants and rights acquired at zero cost (e.g., as part of a bond unit) have a zero cost base. Any profit from their sale is taxed as capital gains.