Category: Definitions

Sole proprietorship is an unincorporated business entirely owned by an individual. It is one of the three most common types of business structures. The other two are partnership and corporation.

Prescribed proxy amount (PPA) is a notional amount on which SR&ED ITC can be earned with respect to SR&ED overheads (and other expenditures). It is calculated as a percentage of a salary base. The PPA is only applicable when the claimant elects to use the proxy method.

Am arm’s length transaction is a transaction between persons who each act in their own self-interest. Related persons are not considered to deal with each other at arm’s length.

Common-law partner applies to 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:

Goodwill is the excess of the purchase price of a business over the fair market value of the net assets of the business.

Assets are any property owned by a person or business. Assets include money, land, buildings, investments, inventory, cars, trucks, boats, or other valuables that belong to a person or business.

For income tax purposes, a business is an activity that you intend to carry on for profit and there is evidence to support that intention.

Inventory generally refers to the total value of the goods on hand that a business intends to sell, uses for manufacture, or uses t render a service.

Payroll deductions are income tax deductions, Canada Pension Plan (CPP), or Quebec Pension Plan (QPP) contributions, and Employment Ensurance (EI) Premiums which are deducted from an employee’s wages or salary and sent regularly to the Canada Revenue Agency (CRA).

A passenger vehicle is a motor vehicle designed or adapted primarily to carry people on highways and streets. It seats a driver and no more than eight passenger.