10 Canadian tax & accounting terms starting with P
Plain-language definitions, each with the CRA rule it comes from and the filings it affects.
Paid-Up Capital
Paid-up capital is the amount shareholders contributed for their shares, which can generally be returned to them tax-free as a return of capital.
Passive Income
Passive income is income a corporation earns from investments rather than active business, such as interest, rent and portfolio dividends, and it is taxed at a high refundable rate.
Payroll
Payroll is the process of paying employees and remitting the required income tax, CPP and EI withholdings to the CRA, along with issuing T4 slips.
Personal Services Business (PSB)
A personal services business is an incorporated worker who would be an employee of the client but for the corporation, and it faces punitive tax rules and denied deductions.
Petty Cash
Petty cash is a small amount of physical cash a business keeps on hand for minor expenses, controlled through a float and receipts to keep it accountable.
Place of Supply
Place-of-supply rules determine which province's GST/HST rate applies to a sale, generally based on where the customer receives the goods or services.
Prepaid Expense
A prepaid expense is a payment made in advance for goods or services to be received later, recorded as an asset until the benefit is used up.
Prescribed-Rate Loan
A prescribed-rate loan is an income-splitting strategy where you lend money to a spouse or family trust at the CRA's prescribed interest rate to shift investment income legitimately.
Principal Residence Exemption
The principal residence exemption lets Canadians sell their main home without paying tax on the capital gain, for the years it qualified as their principal residence.
Provincial Sales Tax (PST)
Provincial sales tax is a separate retail tax charged in British Columbia, Saskatchewan and Manitoba on top of GST, filed with the province and generally not recoverable.
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