Definitions for letter C (Business)

Calendar quarter

A period of three consecutive months ending on the last day of any of the following months: March, June, September, and December.

Calendar year

The twelve-month period beginning January 1 and ending December 31. Depending on your business circumstances, you may or may not use the calendar year as your fiscal period.

Canada Pension Plan (CPP)

An insurance program to help Canadians provide income for their retirement. It also gives them income if they become disabled. Contributions are directly related to annual earnings.

Capital cost

This is the amount on which you first claim CCA. The capital cost of a rental property is usually the total of:

• the purchase price, not including the cost of land;
• the part of your legal, accounting, engineering, installation, and other fees that relates to the purchase or construction of the rental property, excluding the part that applies to the land;
• the cost of any additions or improvements you made to the rental property after you acquired it, provided you have not claimed these costs as current expenses; and
• for a building, soft costs (such as interest, legal and accounting fees, and property taxes) related to the period you are constructing, renovating, or altering the building, if you have not deducted these expenses as current expenses.

Legal and accounting fees for buying a rental property are allocated between the cost of the land and the capital cost of the building. If land is acquired for rental purposes or for constructing a rental property, the legal and accounting fees apply to the land.

Capital cost allowance (CCA)

A yearly deduction or depreciation on the cost of certain assets. You can claim CCA for tax purposes on the assets of a business such as buildings or equipment, as well as on additions or improvements, if these assets are expected to last for some years.

In the year you buy a depreciable property, such as a building, you cannot deduct the full cost. However, since this type of property wears out or becomes obsolete over time, you can deduct its capital cost over a period of several years.

Capital expense

Capital expenses provide a benefit that usually lasts for several years. For example, costs to buy or improve your property are capital expenses. Generally, you cannot deduct the full amount of these expenses in the year you incur them. Instead, you can deduct their cost over a period of several years as capital cost allowance (CCA).

Capital expenses can include:

• the purchase price of rental property;
• legal fees and other costs connected with buying the property; and
• the cost of furniture and equipment you are renting with the property.

Capital gain

You have a capital gain when you sell, or are considered to have sold, a capital property for more than the total of its adjusted cost base and the outlays and expenses incurred to sell the property.

Capital loss

You have a capital loss when you sell, or are considered to have sold, a capital property for less than the total of its adjusted cost base and the outlays and expenses incurred to sell the property.

Note
You cannot have a capital loss when you sell depreciable property such as a rental property. However, you may have a terminal loss.

Capital property

Capital property is generally:

• any depreciable property that is eligible or would be eligible for a capital cost allowance deduction for income tax purposes; and
• any property, other than depreciable property, which, if you disposed of it, would result in a capital gain or capital loss for income tax purposes.

Cash method of accounting

With this method, you report income in the fiscal period it is actually received. Similarly, expenses are deducted in the year they are actually paid. Farmers, fishers, and certain salespeople who work on commission may use the cash method.

Commercial activity

Any business, adventure, or concern in the nature of trade carried on by certain persons, but does not include the making of exempt supplies. It also includes the supply of real property by any person, other than an exempt supply, and anything done in the course of making the supply or in connection with the supply.

A commercial activity does not include any business or adventure or concern in the nature of trade carried on without a reasonable expectation of profit by an individual, a personal trust, or a partnership where all the members are individuals.

Common-law partner

A person who is not your spouse with whom you are living in a conjugal relationship, and to whom at least one of the following situations applies. He or she:

• has been living with you in a conjugal relationship for at least 12 continuous months;
• is the parent of your child by birth or adoption; or
• has custody and control of your child (or had custody and control immediately before the child turned 19 years of age) and your child is wholly dependent on that person for support.

For more information, see Marital status.

Confidentiality

The privacy of income tax and GST/HST returns and other related tax information. The only people with access to this information are those who are authorized by law or those to whom the taxpayer has given permission in writing.

Corporation

A form of business authorized by federal, provincial, or territorial law to act as a separate legal entity. Its purpose and regulations are set out in its articles of incorporation. A corporation may be owned by one or more persons.

Cost of goods sold

The actual cost of the items sold in the normal course of business during a specific period.

Current expense

Current or operating expenses are recurring expenses that provide a short-term benefit. For example, a current expense is the cost of repairs you make to keep a rental property in the same condition as it was when you acquired it. You can deduct current expenses from your gross rental income in the year you incur them.

Customs duties

Taxes you pay when you bring foreign goods into Canada.