Chapter
10

Glossary

3
min read

Business Number (BN)

A numbering system used by the CRA for businesses to identify themselves with.

Canada Revenue Agency

The federal agency that oversees and administers tax laws for the Government of Canada. They also handle international trade legislation, incentive programs delivered through the tax system and the registration of charities in Canada.

Compensation

A general term that includes payments made to employees as well as other beneficial items such as taxable benefits.

Employer

An entity is generally considered to be an employer if it meets one of these requirements:

  • pay salaries, wages (including advances), bonuses, vacation pay, or tips to employees
  • provide certain taxable benefits to employees (for example, an automobile or allowances)

Gross pay

The total amount paid to an employee each period plus any taxable allowances, and optional to cash benefits or reimbursements.

Net pay

The amount of pay an employee receives after all withholdings are deducted from gross pay i.e. the amount of the employee’s paycheck.

Pay periods

The frequency at which you pay employees. Common pay periods are either weekly, bi-weekly or monthly.  Paying employees more often should not affect the annual gross pay of an employee but there are costs associated with processing.

Paycheck

Traditionally a paper document issued by an employer to pay an employee. The tangible paycheck has been more commonly replaced by electronic direct deposits.  

Payroll Service

A third-party company that handles every aspect of the payroll process.

Pensionable Employment

Any employment in which a fund or pension plan has been set up.

Remittance

The act of sending a sum of money in exchange for goods, services or a gift.

Remuneration

Pay or other compensation provided in exchange for services or employment.

T4 (or Statement of Remuneration Paid)

An information slip that summarizes an employee's earnings and deductions for the year.

T4 Summary

Lists the total amounts reported on related T4 slips and is submitted with the T4 slips.

Trustee

A trustee is any type of person or organization holding the legal title of an asset or group of assets. A trustee authorizes payments or causes payments to be made to the beneficiary and is liable for deducting and remitting the income tax, Canada Pension Plan contributions, and Employment Insurance premiums for all payments the trustee makes.¹

Wage

Monetary compensation paid by an employer to an employee.

Withholding

Refers to statutory deductions taken from an employee’s paycheck for federal and provincial income taxes, EI and CPP.

¹ https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/payroll-overview/employer-responsibilities-payroll-steps/you-a-trustee.html
Note: The information in this book is in reference to the Government of Canada’s website