Accrued liabilities are expenses a business has incurred but not yet paid or been billed for, recorded so the period reflects all costs it actually generated.
Accrued liabilities capture costs the business has used up but not yet settled, wages earned but unpaid, interest accumulating on a loan, utilities consumed but not yet invoiced. Under accrual accounting they are recorded as liabilities (and expenses) in the period incurred, even before an invoice or payment.
Accruals are recorded through adjusting entries at period-end and reversed or settled when the actual bill is paid. They ensure the income statement reflects the full cost of running the business in a period, rather than only the costs that happened to be paid in cash.
At December 31, a company owes $1,500 of interest that accrued but is not due until January. It records an accrued liability and interest expense in December, so the year's results include the cost it actually incurred.
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Income tax is tax charged on the income you earn in a year, levied by both the federal government and your province or territory. Rates are graduated, so successive slices of taxable income are taxed at higher rates, and credits such as the basic personal amount reduce the tax calculated. Employment income is taxed through payroll withholding and settled on your T1 return. Quebec residents also file a separate provincial return with Revenu Quebec.
Most enquiries are settled without a phone call in My Account, My Business Account or Represent a Client, where assessments, balances, slips and CRA mail all sit. When you need a person, use the enquiries line for your programme from the contact page on canada.ca, and have your social insurance or business number plus a figure from a recent return ready for identity checks. Written enquiries go to the tax centre named on your notice of assessment.
Taxable income is what is left after you total the income the tax rules include and subtract the deductions you are allowed. Employment and self-employment earnings, most pensions, EI and CPP benefits, interest, dividends, rental profit, the taxable portion of capital gains, RRSP and RRIF withdrawals and most taxable benefits from work all go into the total. Tax is then calculated on that figure and reduced by non-refundable credits such as the basic personal amount.
Yes. In Canada the tax on land and buildings is called property tax and is levied by the municipality; real estate tax is the American term for the same charge, so results using that wording often describe a US system. Property tax is not income tax and the CRA does not administer it. On a rental or business property it is a deductible operating expense, while on a personal residence it is not deductible.
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Reviewed and fact-checked by Udit Gupta
Ex Big 4 — Ernst & Young, Deloitte · International & cross-border tax specialist · CPA Canada (In-Depth Tax Program) · Chartered accountant, ICAI & MIA
Udit Gupta has over 15 years of experience helping corporations and business owners with corporate structuring, corporate tax filing, bookkeeping, payroll, GST/HST, cross-border tax and CRA representation. Big 4 trained at Ernst & Young and Deloitte, and qualified as a chartered accountant in India and again in Malaysia, he founded his accounting practice in 2014 to serve entrepreneurs, startups and non-resident business owners across Canada. View full member bio.
The Institute of Chartered Accountants of India — member 521458 · Malaysian Institute of Accountants — member CA 44667 · Ex Big 4: Ernst & Young, Deloitte · CPA Canada (In-Depth Tax Program), completed 19 Dec 2023 · In-Depth GST/HST Part I, 12 Jul 2022 · Part II, 5 Jul 2023
Editorial policy. Every page is researched against primary sources — the Income Tax Act, CRA publications and CPA Canada guidance — and every rate or threshold is stated with the tax year it applies to.
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