annual dollar limit The maximum amount CRA lets you add to your TFSA each year. For 2026, it's $7,000.
attribution rule If you give or lend money to your spouse or minor child to invest, the tax on that income gets charged back to you, not them. It prevents shifting income to a lower-taxed family member.
average tax rate The overall percentage of your total income that actually goes to tax. It's usually lower than your marginal rate because your first dollars are taxed at lower brackets.
basic personal amount The amount of income every Canadian can earn before paying any federal tax. In 2026, it's up to $16,452.
canada child benefit A tax-free monthly payment from the government to help families with the cost of raising kids. The amount depends on your income and how many children you have.
capital gain The profit you make when you sell an investment for more than you paid. In Canada, only half of the gain is taxed.
carry forward If you don't use all your contribution room this year, it doesn't disappear — it rolls over and adds to next year's room indefinitely.
combined tax rate Your federal tax rate and provincial tax rate added together into one number. This is the actual percentage of tax on your next dollar of income.
contribution room The total amount of space you have to put money into a registered account like a TFSA or RRSP. Unused room carries forward, so it builds up over the years.
cra my account CRA's secure website where you can check your tax info, see your TFSA and RRSP room, track your refund, and update your personal details.
deduction limit The maximum amount you can contribute to your RRSP and deduct from your taxes. It's 18% of last year's income, up to a yearly cap set by CRA.
earned income The income CRA uses to calculate how much RRSP room you get. It mainly includes employment income and self-employment income, but not investment income.
eligible dividend A type of dividend from larger Canadian companies that gets special tax treatment. You pay less tax on it than on regular income thanks to a gross-up and tax credit system.
fair market value What something would sell for on the open market between a willing buyer and seller. CRA uses this to figure out the value of assets for tax purposes.
first time home buyer For tax purposes, you're a first-time buyer if you (and your spouse) haven't owned a home you lived in during the current year or the 4 years before that.
gis clawback The Guaranteed Income Supplement is extra money for low-income seniors, but almost any other income you earn reduces it aggressively — dollar for dollar in some cases.
home buyers plan A program that lets you borrow up to $60,000 from your own RRSP tax-free to buy your first home. You pay yourself back over 15 years.
indexation Each year, CRA adjusts tax brackets and credit amounts upward based on inflation so that rising prices don't push you into a higher bracket unfairly.
lifelong learning plan A program that lets you withdraw from your RRSP to pay for full-time school or training — up to $10,000 per year and $20,000 total. You pay it back over 10 years.
locked in retirement account An account that holds money transferred from an employer pension plan. Unlike a regular RRSP, you can't just take out a lump sum — withdrawals are restricted.
marginal tax rate The percentage of tax you pay on your next dollar of income. It goes up as you earn more because Canada uses tax brackets.
non refundable credit A tax credit that can lower your tax bill to zero, but you won't get any money back if the credit is more than what you owe.
non registered account A regular investment account with no special tax sheltering. You pay tax on interest, dividends, and gains every year as you earn them.
notice of assessment A letter from CRA after you file your taxes that confirms how much you owe or get back, and shows your RRSP and TFSA room for next year.
notice of reassessment An updated version of your Notice of Assessment that CRA sends when something changes — like if you forgot a slip or CRA audited your return.
oas clawback If your income in retirement is too high, the government takes back some or all of your Old Age Security payments. In 2026, this starts when income exceeds $95,323.
over contribution Putting more money into your TFSA or RRSP than you're allowed. CRA charges a 1% penalty per month on the excess until you fix it.
pension adjustment If your employer provides a pension, the value of that pension benefit reduces your RRSP room. It keeps things fair between people with and without workplace pensions.
qualifying home A property that's eligible for programs like the FHSA or Home Buyers' Plan — basically a home in Canada that you plan to live in.
refundable credit A tax credit that gets paid out to you even if you owe zero tax. It can actually put money in your pocket.
registered account A special investment account registered with the government that gives you tax benefits — like a TFSA, RRSP, or FHSA. Each has its own rules and limits.
rrif When you turn 71, you must convert your RRSP into a RRIF. Then you have to withdraw a minimum amount each year, and it's taxed as income.
spousal rrsp The higher earner in a couple contributes to their spouse's RRSP. They get the tax deduction now, and the spouse withdraws it later at a lower tax rate in retirement.
t1 general The main tax return form every Canadian files each year. It's where you add up your income, claim deductions and credits, and figure out what you owe or get back.
t4 A slip your employer gives you showing how much you earned and how much tax, CPP, and EI were taken off your pay during the year.
tax credit An amount that directly reduces the tax you owe, dollar for dollar. Unlike a deduction, it doesn't matter what bracket you're in — a $500 credit saves everyone $500.
tax deduction An amount that reduces the income the government taxes you on, before your tax rate is applied. The higher your tax bracket, the more a deduction saves you.
tax deferred You get a tax break now when you put money in (like an RRSP), but you pay tax later when you take it out. The tax is delayed, not eliminated.
tax free Money that grows and can be withdrawn without you ever paying tax on it. TFSA and qualifying FHSA withdrawals are tax-free.
TFSA A savings account where your money grows tax-free and you pay no tax when you take it out. The government sets a yearly limit on how much you can put in.
withholding tax Tax that gets taken off your pay before you even receive it. Your employer sends it straight to CRA on your behalf throughout the year.