The Quebec Accounting Glossary is the reference tool for any entrepreneur who wants to decode the language of Quebec accounting and taxation. IMRTD, TOSI, DPA, ECGC, T2, CO-17, DPE ceiling... These acronyms come up in all discussions with an accountant, a tax specialist or a banker. This 2026 glossary defines more than 170 essential terms with their up-to-date rates, ceilings and rules, in a format designed to be cited and understood quickly. Whether you are self-employed, an incorporated SME manager or in the midst of estate planning, this glossary becomes your anchor point for understanding your accountant and making informed financial decisions.
The main takeaways
Table of Contents
Mandatory tax advance payments when the balance owing exceeds $1,800 per year, both federally and provincially. These quarterly payments (15 March, 15 June, 15 September, 15 December) avoid interest and penalties for insufficiency. Calculated on the current year's income, the previous year's income, or using a hybrid method.
See also: Late filing penalty, Tax prescription. In-depth article: GST/QST instalments for Quebec entrepreneurs.
A federal form attached to the T2 to calculate the business limit of a CCPC and its division among associated corporations. Determines the portion of taxable income eligible for the small business deduction (SBD). Mandatory as soon as one company is associated with another.
Document issued by the CRA or Revenu Québec after a tax return has been processed. Confirms or modifies the amounts reported, indicates the refund or balance owing, and serves as official proof of filing. To be kept for a minimum of 6 years for verification or dispute purposes.
See also: Notice of Reassessment, Objection, Tax Audit. In-depth article: What is the notice of assessment in Quebec.
A document issued when the CRA or Revenu Québec amends a return after the initial assessment, following an audit, adjustment, or objection. May increase or decrease the tax payable. The taxpayer generally has 90 days to file a formal objection.
An accumulated tax balance in a private corporation that allows for the payment of fully tax-free dividends to Canadian resident shareholders. Funded in particular by the tax-free portion of capital gains, corporate life insurance products and certain dividends received. Key tax planning tool for CCPCs.
See also: CDO, Capital Gains, CCPC / SBD.
A corporate tax account that tracks the balance of ordinary (non-eligible) dividends that a CCPC can pay. Financed mainly by active income taxed at the DPE rate. The counterpart of the CDC for taxable dividends: allows precise planning of the dividend mix paid.
Tax-Free Savings Account. Non-deductible contributions, but completely tax-free growth and withdrawals. Annual limit set by the federal government ($7,000 in 2026, indexed). A complementary tool to the RRSP, useful for short-term savings, emergency funds or tax diversification in retirement.
Corporation income tax return in Quebec, the provincial equivalent of the federal T2. Any corporation with an establishment in Québec must file it annually, within 6 months of the end of its fiscal year. Prepared with professional software such as Taxprep or ProFile, usually by an accountant.
See also: T2, TP1, Fiscal Year. In-depth article: Avoiding CO-17 mistakes.
The amount of income that each taxpayer can earn without paying tax, set annually at the federal ($16,129 in 2026) and provincial ($18,056 in Quebec in 2026) levels. First credit applied in the calculation of personal income tax. Indexed annually to inflation.
Input Tax Credit (Federal) and Input Tax Refund (Quebec). Mechanism allowing registered businesses to recover the GST and QST paid on their business expenses. Claimed via the GST/QST periodic return. Key to optimizing the cash flow of an SME registered for taxes.
In-depth article: Input tax credits (ITCs) and ITRs.
Payroll deductions made by the employer and remittances to the government: federal and provincial taxes, QPP, EI, QPIP. The employer acts as a collector on behalf of the tax authorities. Monthly, quarterly or accelerated remittances depending on payroll. Failure to do so will result in penalties and interest.
Periodic form (monthly, quarterly, or annual depending on sales) to report the GST/QST collected, subtract ITCs/ITRs, and remit or claim the difference. The frequency is determined by Revenu Québec based on annual taxable sales. Late filing triggers automatic penalties.
In-depth article: Understanding the GST and QST for businesses in Quebec.
The eligible dividend comes from corporate income taxed at the general rate (without the DPE) and benefits from an enhanced tax credit for the shareholder. The non-eligible dividend comes from income taxed at the DPE rate and gives a lower tax credit. The mix determines the shareholder's personal taxation.
See also: CDC, CDO, Salary-Dividend Strategy.
A tax deduction that allows the cost of a fixed asset (equipment, vehicle, building, software) to be spread over several years. Common categories: cat. 8 furniture 20 %, cat. 10 vehicles 30%, cat. 50 computers 55%, cat. 1 buildings 4%. Accounting and tax rates may differ.
See also: Depreciation, Fixed Assets. In-depth article: Guide to depreciation and CCA classes.
A federal and provincial tax exemption that applies to the income of a Status Indian located on a reserve. Covers employment, business and investment income according to the connecting criteria established by case law. Also includes exemption from GST/QST on purchases delivered to reserve. Forms: Federal TD1-IN and TP-1015-V. R.13.1 Quebec.
In-depth article: Section 87 and tax exemption for First Nations entrepreneurs in Quebec.
A lifetime tax exemption that allows a tax-free capital gain to be realized on the sale of qualified shares of a CCPC. A lifetime limit of $1,250,000 as of June 25, 2024 (Federal Budget 2024, annual indexation carried over in 2026) for qualified small business corporation shares, and a special limit for fishing and farming. A major tool in the planning of the sale of a practice or family business.
See also: Capital gain, Estate freeze. In-depth article: LCGE: Lifetime Capital Gains Exemption for the Sale of a Business.
A profit realized on the sale of a property at a price higher than its adjusted cost base (ACB). In Canada, 50% of the gain is taxable since June 25, 2024 up to $250,000 per year for individuals, and 66.67% beyond that (and from the first dollar for corporations). Relevant for the sale of shares, real estate and business assets.
A tax strategy that transfers the future growth of a business to heirs or a family trust, while freezing the current value of shares in the name of the founder. Typically involves an exchange of shares under section 86 or a rollover under section 85. Combined with the LCGE, multiplies the exemption between family members.
See also: LCGE, Section 85 Rollover, Family Trust. In-depth article: Estate freeze in Quebec: an entrepreneur's guide.
A tax mechanism that taxes a CCPC's passive income (investments, rents, interest, portfolio dividends) at a high rate, and then refunds a portion of that tax when the corporation pays taxable dividends to shareholders. Aims to eliminate the benefit of tax deferral on investment income. Consists of two accounts: RDTOH Eligible and Non-Eligible.
See also: Passive Income vs. Assets, CCPC/SBD, Business Limit (SBC). In-depth article: RDTOH: Dividend Tax Refund Explained.
Accrual accounting: revenues and expenses recognized when earned or incurred, regardless of cash flows. Cash accounting: Transactions recorded at the time of actual payment. TAs can usually use the cash register; Companies must use the exercise. Direct impact on the declared result and instalments.
In-depth article: Understanding accrual and cash accounting.
Simplified GST/QST calculation method for small businesses (annual taxable income under $400,000). Instead of calculating the actual ITCs/ITRs on each expense, the company remits a reduced percentage of its taxable sales. Advantageous for service companies with few inputs. Election to be held in the 1st year of registration.
A 9-digit identifier assigned to each Canadian resident by Service Canada. Required to work, file a tax return, open an RRSP or TFSA, and receive government benefits. The accountant needs it to file the T1 and issue the T4, T4A, and RL-1 tax slips.
Formal recourse to contest a notice of assessment or reassessment. Must be filed within 90 days of the date of the notice (or 1 year for individuals, depending on the situation). This is a mandatory first step before an appeal to the Tax Court of Canada or the Court of Québec.
In-depth article: How to handle tax disputes.
Penalty imposed by the CRA or Revenu Québec when a return is filed late. Federal for T1 and T2: 5% of the balance owing, plus 1% for each month that the balance owes (up to 12 months) is late. In the event of a repeat offence within 3 years, the penalties are doubled. Added to daily compound interest.
First $500,000 of active business income eligible for the federal reduced small business tax rate (SBD). Quebec applies an identical limit. Reduced when taxable capital exceeds $10 million or passive income exceeds $50,000. Shared between associated companies via Appendix L.
Period beyond which the CRA or Revenu Québec can no longer issue a reassessment. Generally 3 years after the initial notice of assessment for normal returns of an individual or CCPC, 4 years for other corporations, 6 years for negligence, and unlimited for fraud.
The tax cost of a property for the purpose of calculating the capital gain on sale. Includes purchase price plus acquisition costs (commissions, transfer taxes, capitalized improvements). Reduced by certain capital repayments or depreciation deducted. Essential for correctly calculating tax when disposing of a property.
Tax slip issued in Quebec by an employer, complementary to the federal T4. Itemizes employment income and provincial deductions (Quebec tax, RRQ, QPIP, FSS). Must be remitted to the employee and to Revenu Québec no later than the last day of February following the calendar year.
Registered Retirement Savings Plan. Tax-deductible contributions, tax-sheltered growth, taxation on withdrawal. Limit based on 18% of the previous year's earned income, up to $32,490 in 2026. Dividends do not create RRSP contribution room, but salary does - a key factor in the salary-dividend strategy.
A structural operation that changes the share capital or structure of a company for tax, inheritance or business reasons. Includes estate freeze, section 85 rollover, amalgamation, winding-up, section 86 share exchange, and business transfer. Requires the expertise of a tax professional to avoid unintended tax consequences.
A strategy that consists of leaving profits in a corporation (taxed at the reduced corporate rate of the SBD, about 12.2% combined in Quebec) rather than immediately taking them out as wages or dividends (taxed at the marginal personal rate). The difference creates a cash flow benefit that can be reinvested. The main tax advantage of incorporation.
Active income: from the operation of a business (sale of goods and services, fees). Passive income: from investments (interest, portfolio dividends, rents, capital gains). A crucial distinction: since 2019, annual passive income in excess of $50,000 in a CCPC has gradually reduced the SBD limit (loss of $5 of limit per $1 of passive income above the threshold).
Quebec statement of partnership income, provincial counterpart of the T5013. Issued by a SENC or an SEC to each of its partners to declare their share of income, deductions and credits. The partner uses the RL-15 to file their individual TP1.
Quebec Statement of Investment Income, provincial counterpart of the T5. Issued by financial institutions and corporations to report interest, dividends, royalties and other investment income paid to an individual resident in Québec. Necessary for the production of TP1.
A mechanism that allows assets (assets, shares, intellectual property) to be transferred to a Canadian corporation without triggering an immediate tax on the capital gain. The transfer is made on a choice between book value and fair market value, in exchange for shares of the company. Used in TA incorporations, estate freezes and corporate reorganizations.
In-depth article: Understanding tax rollover for entrepreneurs.
Scientific research and experimental development. Federal and provincial tax credit program for companies that conduct qualifying R&D in Canada. Refundable credit for CCPCs (up to 35% federal on the first $3 million + provincial enhancement in Quebec). Covers salaries, subcontracting and directly attributable materials.
In-depth article: R&D tax credits in Quebec.
Annual documents that the employer produces to summarize all T4 (federal) and RL-1 (Quebec) slips issued during the year. To be sent to the CRA and Revenu Québec on or before the last day of February. Any delay or error will result in administrative penalties.
Choice of remuneration for the incorporated entrepreneur: salary (deductible for the corporation, creates RRSP room, contributes to the QPP and EI) or dividend (non-deductible, no payroll taxes, benefits from a tax credit). The optimal mix depends on personal situation, cash flow needs and family structure (TOSI rules).
See also: Eligible dividend, TOSI, RRSP. In-depth article: Choosing between salary and dividends. Department: Taxation for entrepreneurs.
| Criterion | Salary | Dividend |
|---|---|---|
| Deductible for the company | Yes | No |
| Creates RRSP room | Yes (18%) | No |
| Contributed to the QPP / EI | Yes | No |
| Dividend tax credit | Not applicable | Yes (determined or not) |
| Subject to DAS | Yes | No |
| Applicable TOSI rules | No | Yes (family members) |
| Recommended for | Regular cash flow, RRSP fees | Tax flexibility, optimization |
Federal income tax return for individuals and self-employed individuals. Must be filed by April 30 of each year (June 15 for LDs, but the balance owing remains due on April 30). Includes all worldwide income of a Canadian resident: employment, business, investments, capital gains.
Federal Corporation Income Tax Return. Any Canadian corporation (SPA, CCPC, NPO) must file it within 6 months of the end of its fiscal year. The balance of tax is due 2 months after the end of the fiscal year (3 months for qualifying CCPCs). Quebec equivalent: CO-17.
In-depth article: What is a T2 tax return? Department: Corporate Tax.
Statement of the activities of a business or a liberal profession. Schedule to the T1 that all self-employed persons or sole proprietorships must complete to report their business income and expenses. Federal-provincial counterpart: only one T2125 is used for T1 and TP1.
Tax slip and return for income from a trust: investment income, capital gains, dividends allocated to beneficiaries. Issued by the trustee no later than 90 days after the end of the trust's fiscal year. As of 2024, the new expanded reporting rules also affect non-active trusts.
Tax slip issued by an employer showing employment income and source deductions (tax, QPP, EI, QPIP) for a calendar year. Must be given to the employee and sent to the CRA on or before the last day of February. Mandatory to file the T1. Quebec counterpart: RL-1.
Federal slip that reports payments made to an individual who is not employed: commissions paid to self-employed individuals, subcontracting fees over $500, educational assistance payments from an RESP, pension benefits. Issued by the paying organization no later than February 28 following the calendar year.
Tax slip for investment income: interest, dividends, royalties. Issued by financial institutions and corporations that pay dividends to their shareholders. Minimum threshold: $50 in interest or dividends per year. Quebec counterpart: RL-3.
Federal statement of partnership income. A slip issued by a PSC or LP to each of its partners to report their share of income, expenses, deductions and credits. Quebec counterpart: RL-15. Mandatory as soon as a partnership has 6 or more partners.
Federal carbon pricing applied in provinces without an equivalent system. Companies that use fossil fuels pay the charge embedded in the price. A refund exists for eligible SMEs via a tax credit. Quebec has its own cap-and-trade system (C&B).
Tax on Split Income. Federal rules in effect since 2018 that tax dividends or interest paid by a private corporation to a family member who does not actively and regularly contribute to the business at the highest marginal rate. Several exceptions apply: age 25+ with 10% investment, owner's pension, retired spouse.
See also: Wage-Dividend Strategy, Family Trust. In-depth article: TOSI and family income splitting in Quebec.
Good to know - TOSI and Entrepreneurs Incorporated
If you pay dividends to your spouse or adult children through your company, check with your accountant that the TOSI exceptions apply. With no applicable exceptions, the dividend is taxed at the highest marginal rate (approximately 53% in Quebec) - which negates the tax advantage sought.
Summary of employer deductions and contributions in Quebec. Provincial counterpart to the federal T4 Summary: summarizes the SAR remittances made to Revenu Québec during the year, including Quebec tax, QPP, QPIP, HSF, and CNESST.
Quebec income tax return for individuals and self-employed individuals. Provincial counterpart of T1. Must be filed by April 30 (June 15 for LDs, but balance due April 30). Includes all taxpayer income and applies specific provincial credits (child care expenses, child support, senior home care).
Federal Goods and Services Tax, set at 5%. Registration required for businesses with taxable revenues in excess of $30,000 over 4 consecutive quarters. Voluntary enrollment below this threshold allows ITCs to be claimed on business expenses and is often recommended for B2B businesses.
In-depth article: GST and QST registration. Department: Taxes and duties.
Quebec sales tax, set at 9.975% and calculated on the price before GST. Same mandatory registration threshold of $30,000 as the GST. Registration is done in conjunction with the two taxes with Revenu Québec, which administers the GST in Quebec through an agreement with the CRA. The two taxes appear together on the invoices.
A detailed review of a tax return by the CRA or Revenu Québec, which can be random or targeted. The taxpayer must provide the requested supporting documents (invoices, contracts, accounting records) generally within 30 days. May lead to a notice of reassessment or objection. The duration varies from a few weeks to several months.
In-depth article: Corporate tax audit.
The federal agency responsible for tax administration, tax collection, GST/HST and benefit programs. Issues notices of assessment, conducts audits and manages program accounts: payroll (RP), GST (RT), Corporate Income Tax (RCA), Import/Export (RM).
Contract that defines the rights and obligations of a company's shareholders: buy-sell clause, right of first refusal, exit in the event of death or disagreement, valuation of shares, non-competition clause. Essential for any SPA with several shareholders. Difference with the unanimous agreement: more limited in scope, does not bind future shareholders without a specific clause.
In-depth article: Shareholders' agreement: the fundamental pact.
An agreement signed by all shareholders that restricts the powers of the board of directors and transfers certain decisions to the shareholders themselves. Provided for in the Canada Business Corporations Act (CBCA) and the Quebec Business Corporations Act (QBCA). Binding on future shareholders and enforceable against third parties.
Legal entity founded by a group of people with common needs (consumption, production, work). Members are both owners and users, with a democratic functioning (one member = one vote, regardless of the capital invested). Special tax regime (deductible rebates). Frequent in agriculture, housing and services in Quebec.
Simplest legal form: The owner and the company form a single legal entity. No incorporation required. Income is reported to the owner's T1/TP1 via the T2125. Unlimited personal liability – the owner's personal assets can be seized for the company's debts. Synonymous with unincorporated self-employed worker.
In-depth article: What is a sole proprietorship.
A legal arrangement by which a trustee holds and administers property (shares, real estate, investments) for the benefit of beneficiaries. Three distinct roles: settlor (creates the trust), trustee (administers), beneficiary (receives). Used in tax, estate and asset protection planning. T3 reporting required annually.
A type of inter vivos trust (created during the settlor's lifetime) used to split income between family members, multiply the LCGE on the sale of eligible shares, and plan for intergenerational transfers. Subject to the TOSI rules since 2018, which strongly limit splitting with non-active adult members.
Mandatory declaration to the Registraire des entreprises du Québec, to be filed each year during the filing period assigned to the enterprise. Allows you to update information: address, directors, major shareholders. Failure to do so results in increasing penalty costs and possible automatic removal from the register.
A 9-digit federal business number assigned by the CRA to which the program accounts are attached: GST/HST (RT), payroll (PR), corporate income tax (RC), import/export (RM), information (RZ). The same company uses a single BN for all its federal accounts.
A unique 10-digit identifier assigned by the Registraire des entreprises du Québec to any business registered in Québec. Required for government contracts, grant applications, legal audits, and business deals. Separate from the federal BN.
In-depth article: How do I register my business in Quebec?
Non-profit organization. An entity whose revenues in excess of expenses are not distributed to members but reinvested in the mission. May be exempt from income tax if the majority of the activities are non-profit-making. Different filing obligations depending on status: T1044 federal, T2 if taxable.
A Quebec organization that manages the public registry of companies registered in Quebec. Any business (TA, SPA, SENC, NPO) with an establishment in Québec must register there. Responsible for mandatory annual updating, change reporting, and deregistration. Public information available online.
Provincial agency responsible for tax administration in Quebec. Collects personal income tax (TP1) and corporate income tax (CO-17), manages the GST/QST through an agreement with the CRA, administers payroll tax programs (RRQ, QPIP, FSS) and Quebec socio-fiscal tax credits.
A business operated by two or more partners, without legal personality separate from the partners. Each partner reports their share of the income on their own tax return (T1/TP1) via the T5013/RL-15. Unlimited joint and several liability: a creditor can claim the entire debt from a single partner. Obligation to register with the REQ.
Corporations that are bound by common control (direct or indirect, de jure or de facto) under the complex criteria of sections 256 and 251 of the Income Tax Act. Must share the $500,000 SBD limit between them. The determination of the status of association has major fiscal impacts.
A corporation owned by a professional (CPA, doctor, lawyer, engineer) or an entrepreneur, who receives his or her professional income or operating dividends, manages his or her investments and optimizes his or her taxation. Allows for tax deferral, LCGE multiplication, separation of operating and passive assets, and estate planning. Very common among incorporated professionals.
See also: SPC, CCPC / SDC, LCGE. In-depth article: Management company (Gesco) for professionals in Quebec.
Partnership with two types of partners: general partners (responsible for management, unlimited liability) and limited partners (passive investors, liability limited to their down payment). Used in real estate financing, investment structures and certain tax arrangements.
A separate legal entity from its shareholders, with its own limited liability, bank account and tax obligations (T2 Federal, CO-17 Provincial). Allows for salary-dividend optimization, tax deferral via the reduced corporate rate, and estate planning. Federal (CBCA) or provincial (QBCA) depending on territorial needs.
In-depth article: Business corporations in Quebec.
Canadian-Controlled Private Corporation that is eligible for the small business deduction. Enhances a reduced tax rate (approximately 12.2% combined in Quebec) on the first $500,000 of active business income. The limit is shared among associated corporations and reduced based on taxable capital and passive income.
Legal entity created automatically when a divided co-ownership is established. Composed of all the co-owners, it administers the common areas: maintenance, insurance, contingency fund, annual budget. Own accounting obligations and T2 if taxable income. Quebec's Bill 16 requires a maintenance booklet and a study of the contingency fund.
A person who carries on an economic activity on his or her own account, without being incorporated. Must file a T1 and TP1 with Schedule T2125 to report business income and expenses. Responsible for its own GST/QST remittances, instalments, and doubled QPP contributions. Synonym: sole proprietorship, freelancer, freelancer.
In-depth article: Difference between self-employed and salaried worker.
| Criterion | TA / Sole proprietorship | SENC | SPA | Cooperative |
|---|---|---|---|---|
| Separate legal personality | No | No | Yes | Yes |
| Personal Responsibility | Unlimited | Unlimited solidarity | Limited to capital | Limited to capital |
| Tax return | T1/TP1 + T2125 | T5013/RL-15 per partner | T2 + CO-17 | T2 + CO-17 |
| Access to the DPE | No | No | Yes (if CCPC) | Variable |
| Cost of incorporation | Low | Moderate | High | High |
| Suitable for | Start-up, freelance | Partners without incorporation | Growth, optimization | Collective projects |
Assets and receivables held for the purpose of being converted into cash in the next 12 months: cash, accounts receivable, inventory, prepaid expenses, short-term deposits. Essential component of working capital and liquidity ratio calculation.
Work carried out by a tenant in a rented premises: renovations, fittings, installations. Capitalized as capital assets and amortized over the remaining term of the lease or useful life (whichever is shorter). Separate CCA category (usually Cat. 13).
The systematic allocation of the cost of an asset over its useful life. In accounting, it is a non-monetary expense that reduces the value of the asset on the balance sheet and the result on the income statement. Distinct from the tax CCA: the accounting (straight-line) and tax (degressive) rates differ, generating a deferred tax.
Highest level of certification by a CPA. In-depth audit of financial statements with audit procedures (confirmations, observations, internal control tests). The CPA issues an opinion on the fairness of the financial statements in accordance with the standards (ASPE, IFRS). Required by certain creditors, investors, NPOs receiving significant subsidies or listed companies.
See also: Review engagement, Compilation. In-depth article: Accounting and financial auditing. Service: Audit for companies.
Earnings before interest, taxes, depreciation and amortization. Measures a company's operational performance, regardless of its financing structure and tax choices. Used for business valuation, sales transactions and sector multiples (buyer pays X times EBITDA).
A list of all general ledger accounts with their debit and credit balances as of a given date. Accounts receivable and credit totals must be strictly equal. Control tool used by the accountant prior to the production of financial statements - an imbalance indicates an accounting error.
Profits accumulated in a company since its inception, less dividends paid to shareholders and losses incurred. Equity component on the balance sheet. A positive BNR means an accumulation of social wealth; a negative BNR (accumulated deficit) indicates historical losses greater than profits.
A financial picture of a company on a specific date: assets (what the company owns), liabilities (what it owes) and equity (the difference). The fundamental accounting equation follows: Assets = Liabilities + Shareholders' equity. Also referred to as a statement of financial position under ASPE and IFRS.
Projection of actual inflows and outflows of funds over a future period (week, month, quarter). Management tool to anticipate cash flow shortages, plan financing and coordinate instalment payments. Different from the operating budget: it focuses on the actual timing of receipts and disbursements.
The residual value of a company after subtracting all liabilities from assets. Includes paid-up capital, retained earnings and contributed surplus. Represents the book value of the business to its owners. Separate from fair market value (which may be higher for a profitable business).
Expenses paid today for services that will be rendered in the future: annual insurance, rent paid in advance, prepaid software subscriptions. Capitalized as current assets on the balance sheet and then gradually transferred to an expense on a reconciliation basis.
Basic level of certification by a CPA: preparation of financial statements based on figures provided by the client, without independent verification. The CPA issues a compilation engagement report that gives no assurance of accuracy. The most economical service, sufficient for the majority of Quebec SMEs and for the production of tax returns.
In-depth article: Compilation mission and notice to the reader. Department: Corporate Accounting.
Amounts that a company owes to its suppliers for goods or services received but not yet paid. Current liabilities on the balance sheet. The management of PAs (payment terms, discounts for prompt payment) is an important cash flow lever. A payment cycle of 30 to 60 days is standard in Quebec depending on the sector.
Amounts owed to the company by its customers for goods or services delivered but not yet cashed. Current assets on the balance sheet. The management of ARs (customer payment terms, collection, provision for bad debts) has a direct impact on cash flow. An aging AR is a financial red flag.
Consolidation of the financial statements of several related entities (parent company and subsidiaries) into a single set of financial statements. Eliminates intercompany transactions (sales, loans, internal dividends). Required when a corporation controls one or more subsidiaries under ASPE or IFRS.
Direct cost of goods sold during a period: purchases of goods, raw materials, direct production labour, incoming transport costs. Subtracts from revenue to calculate gross margin. Does not include general operating expenses (rent, administrative salaries, marketing).
Accounting adjustments made at period-end to reflect economic reality on a reconciliation basis: depreciation, amortization, accrued liabilities, deferred revenues, allowance for bad debts, prepaid expenses, accrued interest. Necessary to ensure that financial statements are accurate prior to the filing of tax returns.
Financial statement that presents revenues minus expenses over a given period (full year, quarter, month). Shows if the company is profitable. Also known as a profit and loss (P&L) account. This is followed by the sequence: revenues - CMV = gross margin - operating expenses - interest - taxes = net income.
12-month period used for accounting and the production of financial statements and tax returns. The term common in practice in Quebec and in legal documentation (Business Corporations Act). Chosen at incorporation, does not necessarily correspond to the calendar year. Synonym: fiscal year.
Convenient to invoice the client as the work progresses, rather than at the end of the assignment. Improves the firm's cash flow, reduces the WIP on the balance sheet and limits the risk of bad debts. Common for long mandates (audit, corporate taxation, development projects).
Financial statement that shows the actual inflows and outflows of funds over a period, classified into three categories: operations, investment, financing. Often required by banks and investors. Not to be confused with accounting profit: a declared profit can coexist with a lack of cash.
In-depth article: Cash flow for businesses.
The difference between current assets and current liabilities. Measures a company's ability to pay its short-term obligations with its liquid resources. Key indicator tracked by bankers and lenders. Negative working capital is a red flag.
Master record of all accounting transactions, classified by chart of accounts account. Each entry appears with its date, amount, denomination and double-entry counterpart. It is the reference document for tracing any historical transaction of the company and for preparing the trial balance.
International Financial Reporting Standards. Mandatory accounting framework for publicly traded companies in Canada since 2011. More complex than ASPE, with a principles-based approach rather than rules. Used voluntarily by certain private companies with an international outlook or planning a public offering.
Long-term assets held for use in operations (not for resale): buildings, equipment, vehicles, furniture, software, leasehold improvements. Recorded on the balance sheet at their acquisition cost and amortized over their useful life.
Goods held for resale or used in production. Measured at the lower of cost and net recoverable value at the end of each fiscal year. Accounting methods: FIFO (first-in, first-out), weighted average cost. Direct impact on cost of goods sold and reported profit.
A written contract between a CPA and his or her client that defines the nature of the mandate (compilation, review, audit, taxation), the responsibilities of each party, the fees (flat rate or hourly rate), deliverables and deadlines. Mandatory according to CPA Canada's professional standards.
Revenues minus cost of goods sold, expressed in dollars or as a percentage of revenues. Shows how much the company keeps on each dollar of sales before overhead expenses. Key indicator of direct operating profitability and pricing.
Net profit divided by total revenues, expressed as a percentage. Measures what the company keeps after all expenses (COGS, operating expenses, interest, taxes). The ultimate measure of financial profitability. Allows comparison with other companies in the same industry.
Intermediate level of certification by a CPA, between compilation and audit. Analytical procedures and requests for information from management, without full audit testing. Moderate level of assurance: The CPA concludes that nothing has been brought to his attention to conclude that the financial statements are not fair. Often requested by banks.
Additional information attached to the financial statements: accounting policies used, details of significant items, contractual commitments, contingencies, subsequent events. Are an integral part of financial statements and are essential for understanding the numbers.
Obligations payable in the next 12 months: accounts payable, current portion of long-term debt, accrued liabilities (interest, wages, taxes), DAS to be remitted, GST/QST to be remitted, dividends declared. Working capital component.
Bonds with a maturity of more than 12 months: mortgage, term loans, bond debt, long-term leases, deferred taxes. Often accompanied by conditions (covenants) that impose financial ratios to be maintained, the non-compliance of which triggers a technical defect.
Generally Accepted Accounting Principles / Accounting Standards for Private Enterprises. Canadian accounting framework used by private companies (SMEs, non-issuing NPOs) for the preparation of their financial statements. Alternative to IFRS for non-listed companies. Easier to apply.
An organized structure of all accounts used to classify a company's transactions: income, expenses, assets, liabilities, shareholders' equity. This is the skeleton of accounting. Each software (QBO, Sage, Acomba, Xero) comes with a basic chart of accounts that can be customized according to the sector.
In-depth article: What is a chart of accounts.
Accounting estimate of accounts receivable that are unlikely to be cashed, based on collection history and age of receivables. Reduces the net value of accounts receivable on the balance sheet and creates an expense on the income statement. Tax-deductible only for actual or very likely losses.
Verify that the transactions in the ledger match the bank statement for the period. Detects data entry errors, duplicates, missing transactions, unrecorded bank charges, and potential fraud. To be done monthly as a basic check.
Total debt (total liabilities or long-term debt) divided by total assets or equity. Measures the financial leverage of the company. A high ratio means more risk but also potentially more return on equity. Banks often set maximum thresholds (e.g. 2:1).
A measure of a company's ability to meet its short-term obligations. Current ratio = current assets / current liabilities (ideal above 1.5). Quick ratio = (current assets - inventories) / current liabilities (more conservative). Indicators monitored by bankers.
In-depth article: Decipher key financial ratios.
Money received in advance for services that have not yet been rendered. Recorded as a liability on the balance sheet until the service is delivered, at which time they are transferred to revenue on the income statement. Common for subscriptions, lump sum mandates, customer deposits.
The level of sales at which the income covers exactly all expenses (fixed and variable). Below: loss. Above: profit. Essential calculation for any entrepreneur who is starting out, launching a new product or making a major investment decision. Formula: fixed costs / (unit price - unit variable cost).
Daily recording of financial transactions: sales invoices, purchase invoices, payments, receipts, deposits, withdrawals, payroll. Basis of all accounting - without rigorous bookkeeping, no reliable financial statement is possible. Can be done by an accounting technician, a clerk, the owner himself or outsourced.
In-depth article: Bookkeeping for entrepreneurs. Department: Bookkeeping.
Accounting (or professional services) mandates started but not yet invoiced. Represent time and costs invested that have not yet generated realized revenue. Crucial follow-up for the profitability of an accounting firm. Recorded as an asset on the balance sheet, measured by hours worked at the expected billing rate, less an allowance for losses.
| Level | Compilation | Review engagement | Audit |
|---|---|---|---|
| Level of Assurance | None | Moderate | High |
| CPA Procedures | Compilation of figures | Analytics + Interviews | Tests, confirmations, controls |
| Relative cost | $ | $$ | $$$$ |
| Asked by | Tax production, SMEs | Banks, some lenders | Large NPOs, listed companies, certain subsidies |
| Standard applied | Compilation engagement standard | CSAE 2400 | CASs |
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Mandatory federal employer-employee contributions to fund unemployment, sickness, compassionate care and compassionate care benefits. In Quebec, the rate employed is reduced (1.32% in 2026 vs. 1.64% in the rest of Canada) because the QPIP covers parental benefits. TAs do not contribute to EI except through voluntary registration.
Goods or services provided by the employer to the employee in addition to the salary: company vehicle, group insurance paid by the employer, free parking, allowances, meals. Must be assessed, added to the employee's income on the T4/RL-1 and subject to source deductions. Some benefits are completely tax-free.
In-depth article: Managing taxable benefits.
Organization that manages labour relations, payroll and benefits in the construction industry in Quebec. Specific payroll regime with its own forms, agreed rates and reporting obligations. All employers in the industry are subject to the tax: the CCQ collects union dues, benefits and pension funds.
Commission des normes, de l'équité, de la santé et de la sécurité du travail. Compulsory employer contribution to cover occupational accidents and diseases. The rate varies depending on the sector of activity (from less than 1% to more than 10% for construction) and the employer's claims history.
Substantial unilateral change in working conditions by the employer (salary reduction, significant demotion, unplanned move) that amounts to a termination of employment without formal announcement. The employee can leave and claim the same rights as in the case of dismissal.
An employer's contribution to an employee's RRSP, often in the form of a matching plan or a percentage of salary. For the employee, it is a taxable benefit that reduces his or her personal RRSP contribution room. For the employer, immediately deductible as a payroll expense.
Mandatory employer contribution in Quebec, calculated on total payroll. Variable rate from 1.65% to 4.26% in 2026 depending on the size of the payroll (with exemptions for the first dollars depending on the sector). Not deducted from the employee's salary - this is an employer cost. Funds Quebec's health care system.
Quebec's Act respecting labour standards, which sets the minimum working conditions: minimum wage, annual vacation (2-4 weeks depending on seniority), statutory holidays (8 per year), overtime (50% after 40 hours), notice of dismissal, parental leave, psychological harassment. Applies to the majority of Quebec employees.
Complete process of calculating and paying compensation to employees: calculation of hours worked, application of hourly rate or wages, calculation of source deductions (DAS, QPP, EI, QPIP, HSF), benefits, issuance of pay stubs, bank transfer. Usual frequencies: weekly, bi-weekly, bi-monthly or monthly.
In-depth article: Mandatory information on a payslip. Department: Payroll management.
Electronic document issued by the employer to Service Canada when an employee ceases to work (layoff, resignation, parental leave, sick leave). Must be issued within 5 calendar days of cessation. Required for the employee's application for Employment Insurance benefits.
A savings plan where the employer makes contributions related to the company's profits to the retirement account of eligible employees. Contributions are deductible to the employer in the year, and not taxable to the employee until withdrawal. Contribution limit linked to the RRSP limit.
Mandatory Employer-Employee Contributions funds maternity, paternity, parental, and adoption benefits in Quebec. Separate from federal EI for these specific benefits (due to the reduced EI rate in Quebec). The QPIP offers more generous benefits than the federal program for new Quebec parents.
Mandatory contributions shared between employer and employee (or paid entirely by the self-employed person who pays both shares). Funds retirement, disability and survivors' pensions in Quebec. The combined rate and maximum pensionable earnings are adjusted annually (base rate 12.8% combined + additional 8% in 2026). Federal counterpart: CPP.
Quebec accounting software designed for SMEs, developed by ACCEO Solutions. Strong presence in accounting firms in Quebec, especially for traditional industries (construction, distribution, manufacturing). Offers accounting, payroll, commercial management and inventory. Local alternative to QBO and Sage. Available in local mode and in cloud mode (Acomba X).
Software page: Acomba on Bankeo.
Professional software used by CPAs to prepare year-end files, produce financial statements, and perform compilation, review and audit engagements. Automates calculations, cross-checks and presentation according to ASPE/IFRS. Standard in Canadian accounting firms.
An accounting model where data is stored and processed on remote servers that can be accessed via the Internet, rather than locally on the user's computer. Enables simultaneous access by the owner and their accountant, automatic banking integration, continuous backups, and mobility. Current standards: QBO, Xero, Sage Business Cloud, FreshBooks, Wave.
Application for automatic scanning and filing of invoices and receipts via OCR (Optical Character Recognition) and artificial intelligence. Used by accounting firms to automate the collection of supporting documents from clients. Natively integrates with QBO, Xero, and Sage.
The most widely used cloud-based accounting software by small and medium-sized businesses in Canada, developed by Intuit. Enables bookkeeping, invoicing, expense tracking, integrated payroll (via QuickBooks Payroll), and financial reporting. Automatic banking integration with most Canadian institutions. Multiple subscription levels (Simple Start, Essentials, Plus, Advanced).
Software page: QuickBooks on Bankeo.
Accounting software suite offering solutions for bookkeeping, payroll, and financial management. Sage 50 (formerly Simply Accounting) is still widely used by Quebec firms and SMEs for its local installation and robustness. Sage 100 and Sage Intacct target medium-sized businesses. Sage Business Cloud is the modern cloud offering.
Software page: Sage on Bankeo.
Professional tax filing software used by CPAs and public accounting technicians. Taxprep (by Wolters Kluwer / Cantax) is the standard in Quebec for T1, T2, CO-17 and complex forms. ProFile (by Intuit) is also very popular. Enable automated calculation and electronic transmission to authorities.
New Zealand-based cloud-based accounting software, a direct competitor of QBO. Less common in Quebec but present in the English-speaking Canadian market and among modern accountants. Modern interface, strong in third-party integrations (more than 1,000 connected apps). Particularly appreciated by e-commerce and technology companies.
Software page: Xero on Bankeo.
| Software | Target | Main Force | Fashion |
|---|---|---|---|
| QuickBooks Online (QBO) | Multi-purpose SMEs | Canada's Most Used Banking Integrations | Cloud |
| Sage 50 / Sage Business Cloud | SMEs, Firms | Robustness, on-premises or cloud accounting | Local + Cloud |
| Acomba | Traditional Quebec SMEs | Local, commercial management, payroll | Local + Cloud |
| Xero | E-commerce, technology | Over 1,000 integrations | Cloud |
| Wave | Self-employed workers | Free for basic functions | Cloud |
To go further: The accounting software most used in Quebec by entrepreneurs.
A professional who acts as a link between the entrepreneur looking for an accountant and the network of CPA firms. Responsible for the initial contact, the analysis of needs, the presentation of corresponding profiles and the follow-up until the signing of the mandate. A relatively new concept in the Quebec market - Bankeo is the first structural player to position this professional role.
The process of association between an entrepreneur and an accountant according to the specific needs of the company (industry, size, required services, budget, location, language). Includes a needs analysis, selection from a network of verified CPA partners, and presentation of corresponding profiles. Alternative model to direct search on Google or traditional submission platforms.
Accountant or firm that focuses its expertise on a specific sector (construction, real estate, catering, technology, NPO, health, e-commerce). Provides in-depth knowledge of specialized deductions, tax particularities (CCQ for construction, SR&ED for technology, NPO rules, restaurant tipping) and software in the sector.
A federally regulated financial institution that provides financing, venture capital and advisory services to Canadian SMEs. Complementary mandate to commercial banks: financing projects that traditional banks refuse (patient capital, unsecured loans, equity financing). Specific programs for technology, ecological transition, entrepreneurial succession and export.
A leadership role that drives a company's overall financial strategy: financing, growth, risk management, investor relations, M&A. Differs from accountant: does not do bookkeeping or financial statements themselves. Can be CPA or non-CPA, depending on size. In an SME, it is often the founder who takes on this role, or a part-time external CFO consultant.
A broad term for a professional who does accounting: bookkeeping, payroll, financial reporting, taxation, financial statements. Can be a CPA, accounting technician or accounting clerk depending on their qualifications. In a firm, often the main contact for SME clients. In Quebec, only CPAs can legally certify financial statements.
In-depth article: Accounting: What does it really do for entrepreneurs.
Conditions imposed by the lender in a financing contract: financial ratios to be maintained (debt, liquidity, debt service coverage), restrictions on dividends, quarterly reporting obligations, investment ceilings. Failure to comply triggers a technical defect, which can result in the loan being recalled.
Official designation issued by CPA Canada and the Ordre des CPA du Québec after university training (bachelor's degree in accounting or equivalent), 24 to 30 months of internship and successful completion of the Common Final Examination (CFE). Only CPAs can sign certified financial statements, audit or legally certify financial information. Regulated members with continuing education obligations.
Loan secured by a commercial, industrial or multi-tenant building (minimum 5 units). Generally more advantageous than an unsecured loan, with an amortization of 15 to 25 years. The building serves as security for the lender – in the event of default, the lender can take possession and sell the asset.
A Quebec Crown corporation that provides financing, loans and loan guarantees to Quebec businesses. Sectoral programs (technology, manufacturing, agriculture, succession), export support and capitalization assistance. Often partners with commercial banks to share the risk on strategic projects.
An Act to modernize the legislative provisions relating to the protection of personal information in Québec, in force since 2022 with compliance phases until 2024. Imposes obligations on companies of all sizes: appointment of a data protection officer, processing register, explicit consent, right of portability, mandatory reporting of incidents. Penalties of up to $25 million or 4% of worldwide revenue.
Revolving credit facility offered by a bank or credit union. The company borrows up to a pre-authorized limit as needed, repays and reborrows according to its cash flows. Variable rate (often prime rate + margin depending on the risk). Essential tool for managing working capital and covering seasonal shifts.
Bank loan with a fixed amount paid once, a rate (fixed or variable) and a repayment schedule defined over a given period (5, 10, 15 years). Used to finance asset acquisitions, expansion, or specific projects. Monthly payments combine principal and interest, like a residential mortgage.
EBITDA divided by total annual debt service (principal + interest on all loans). Measures the company's ability to repay its loans with its operating flows. Minimum ratio often required at 1.2x by Canadian banks to keep the loan in good standing.
Pre-seed and seed funding instrument created by Y Combinator. The investor hands over funds in exchange for the right to receive shares in a future financing round, at a predefined valuation cap or with a discount. No debt, no interest, no maturity date. Widely used in the Quebec tech ecosystem.
Non-repayable financial assistance offered by a government level (federal, provincial, regional, municipal) to support a specific project: hiring, R&D, training, export, green equipment. Strict eligibility criteria, accountability required. Examples: ALMP, Mitacs, NRC-IRAP, Prime-Vert, MEIE programs. The subsidy received is generally taxable.
Technical and operational role: entry of entries, bank reconciliation, accounts payable and receivable, preparation of T4/RL-1 and TP-4, payroll files, pre-invoicing. Usually works under the supervision of an accountant or CPA. College diploma in accounting and management techniques (3 years). Not authorized to certify financial statements.
In-depth article: Clerk, technician or CPA?
Good to know - RDTOH and passive income in 2026
If your corporation (CCPC) generates more than $50,000 in passive income (rent, portfolio dividends, interest), the SBD limit is reduced by $5 for every $1 above this threshold. At $150,000 in passive income, the SBD cap drops to zero – and your entire business is taxed at the general corporate rate. A well-orchestrated RDTOH planning by your accountant is key.
The accountant is responsible for bookkeeping, financial statements and current returns (T1, T2, GST/QST). The tax specialist focuses on strategic tax planning: structure optimization (estate freeze, Gesco), tax disputes, sale of business and complex rules (TOSI, RDTOH). In Quebec, a tax specialist is often a CPA with a specialization in taxation (e.g., Mr. Tax).
RDTOH (Refundable Dividend Tax on Hand) is a federal mechanism that taxes a CCPC's passive income at a high rate and then refunds a portion of that tax when the corporation pays taxable dividends to shareholders. It is intended to eliminate the benefit of tax deferral on investment income.
The TOSI (Tax on Split Income) rules tax dividends or interest paid by a private company to a family member who does not actively contribute to the business at the highest marginal rate. Several exceptions apply, including age 25+ with a 10% investment in the shares, the owner's pension, and certain spousal situations.
An estate freeze is a tax strategy that transfers the future growth of a business to heirs or a family trust, while freezing the current value of the shares in the name of the founder. Typically involves an exchange of shares (Section 86) or rollover (Section 85). Combined with the LCGE, multiplies the exemption between family members.
Registration is mandatory as soon as taxable income exceeds $30,000 over 4 consecutive quarters. Below this threshold, voluntary registration is often recommended for B2B businesses, as it allows ITCs/ITRs to be claimed on business expenses.
The T1 is the federal personal income tax return (including LD). The T2 is the federal corporation income tax return. TP1 is the Quebec income tax return for individuals – the provincial counterpart of the T1. A SPA produces T2 + CO-17. A TA produced T1 + TP1 with T2125 annex.
A CCPC eligible for the SBD pays approximately 12.2% combined (federal + Quebec) on the first $500,000 of active business income. Above this limit, the general corporate rate of approximately 26.5% applies. Passive income is taxed separately through the RDTOH mechanism.
The SBD (small business deduction) allows a CCPC to be taxed at a reduced rate (approximately 12.2% combined in Quebec) on the first $500,000 of active income. The limit is shared between associated corporations via Schedule L and reduced when taxable capital exceeds $10 million or passive income exceeds $50,000.
At least 6 years after the end of the taxation year in question, according to the requirements of the CRA and Revenu Québec. Records include invoices, receipts, bank statements, contracts, accounting records, and notices of assessment. For certain documents (e.g. legal acts, permanent registers), the retention may be unlimited until the end of the company + 2 years.
The sole proprietorship is suitable for start-ups, freelancers, and low-income activities (less than $50,000/year). The SPA becomes relevant from $80,000-100,000 of annual profit for tax deferral (DPE rate), limited liability and salary-dividend optimization. The cost of incorporation and annual maintenance (T2 + CO-17) must be justified by the tax savings.
The main signals are: lack of communication or responsiveness, repeated errors in declarations, lack of strategic advice, unjustified fee increases, insufficient specialization for your industry, and growth of your business beyond the skills of the current firm. The change is made via a transfer letter and the retrieval of tax and accounting records.
A Gesco is a SPA owned by a professional or an entrepreneur, who receives his professional income or operational dividends, manages his investments and optimizes his taxation. Allows for tax deferral, LCGE multiplication, separation of operating and passive assets, and estate planning. Very common among incorporated professionals (doctors, lawyers, engineers).
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Find my accountantThis Quebec 2026 accounting glossary covers the 170+ essential terms that any Quebec entrepreneur will encounter throughout their relationship with an accountant, tax specialist or financial institution. From RDTOH to TOSI, estate freeze to CCA, structures (SPA, SENC, Gesco), tax, and software – you now have a point of reference to understand your accountant and make informed financial decisions. Bookmark this page: the 6 satellite articles to be published Q3 2026 (RDTOH, TOSI, Estate Freeze, ECGE, Gesco, Article 87) will delve deeper into the most complex topics.
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