Vocabulary
Home Buyer's Plan
Life Income Fund.
This index is used to calculate the Québec Pension Plan's indexation. For a given year, it is equal to the average CPI for the 12-month period ending on the previous 31st of October.
Benefit payments are increased on January
1st of each year. The rate of increase is equal to the rate of increase of the
QPP benefits index.
Registered Retirement Savings Plan.
Alternative minimum tax
A special tax charged to certain high-income individuals with considerable tax shelters. The alternative minimum tax (AMT) adds to their tax bill. This measure was put into place to improve the fairness of the tax system at various income cutoffs. AMT tax rules do not apply in the year the taxpayer dies.
Attribution rules
The provisions that determine which taxpayer declares a given investment income.
Autorité des marchés financiers
Set up on February 1, 2004, Autorité is a regulating agency that oversees Québec's financial sector. It has taken on the duties and personnel of the following five organizations:
Bureau des services financiers; Commission des valeurs mobilières du Québec; Fonds d'indemnisation des services financiers; Inspector General of Financial Institutions (financial institutions sector only);
Régie de l'assurance-dépôts du Québec (www.lautorite.qc.ca 
)
Its mission includes...
- Promoting efficiency in Québec's financial markets
- Protecting investors and regulating the information that share issuers must provide their shareholders
- Overseeing the work of securities professionals and market organizations
Beneficiary
Person designated to receive an inheritance.
Bond
A certificate of indebtedness for which the issuer promises to pay the holder a certain amount of interest over a specific period and redeem the total value at maturity (source:
Lexique des termes employés dans le commerce des valeurs mobilières, published by the Canadian Securities Institute).
Bond fund
An investment fund containing first-class bonds from multiple issuers (source:
Lexique des termes employés dans le commerce des valeurs mobilières, published by the Canadian Securities Institute).
Common stock
A certificate representing participation or a share of ownership in a company and granting the right to vote (source: Lexique des termes employés dans le commerce des valeurs mobilières, published by the Canadian Securities Institute).
Consumer Price Index (CPI)
The CPI is a measure of the rate variation of the price of goods and services bought by Canadian consumers. The CPI is the most widely used indicator for price changes in Canada.
CSI
The Canadian Securities Institute is a training organization with the following goals:
- Enhancing knowledge of the financial industry and securities among finance professionals
- Promoting knowledge and understanding of investment among Canadians
Debenture
Bonds not secured by any specific property but issued against the general credit of the issuer (source: Lexique des termes employés dans le commerce des valeurs mobilières, published by the Canadian Securities Institute).
Deferred pension
A pension payable at the normal age of retirement set out in the plan, when you have not yet reached this age.
Defined Benefit Pension Plan
The pension payable is determined in advance according to a very specific formula.
Defined Contribution Pension Plan
The employer's and, as the case may be, the employee's contributions are set in advance.
Early pension
A pension payable before the normal age of retirement set out in the plan.
Equity fund
An investment fund containing stocks from small, medium, or large companies (source: Lexique des termes employés dans le commerce des valeurs mobilières, published by the Canadian Securities Institute).
Exemption from seizure
A rule of law preventing creditors from seizing any part of their debtor's estate.
Fixed-term annuity (annuity certain)
An annuity contract that guarantees a specified number of payments.
Guaranteed income certificate/Term deposit
A certificate with a predetermined interest rate over a specific period that cannot be redeemed prior to maturity; issued by most financial institutions (source: Lexique des termes employés dans le commerce des valeurs mobilières, published by the Canadian Securities Institute).
Hedge fund
A means of protection against losses due to rate fluctuation (source: Lexique des termes employés dans le commerce des valeurs mobilières, published by the Canadian Securities Institute).
Heir
Person who has accepted an inheritance.
Income splitting
A strategy by which a high-income taxpayer can transfer a portion of their earnings to someone with a lower income to reduce the tax bite.
Income trust
An entity in a specific business sector that generally redistributes practically all profits to its shareholders (source: Lexique des termes employés dans le commerce des valeurs mobilières, published by the Canadian Securities Institute).
Income-generating asset
An asset that generates a taxable income (e.g., an investment)
Indexed term savings
A certificate of indebtedness providing a guarantee on the capital and a rate of return that is generally only known at maturity (source: Lexique des termes employés dans le commerce des valeurs mobilières, published by the Canadian Securities Institute).
Level premium
A level premium is higher than a term policy premium in early years, but less in later years.
Life annuity
An annuity that is payable for the life of the purchaser.
Liquidity
The ease with which an investment can be converted to cash.
Major Shareholder
A person who holds at least 10% of shares of the employer's company. Synonym: connected person.
Maximum deduction
The maximum
RRSP contribution you can deduct on your tax return.
Maximum Eligible Earnings (MEE)
The MEE for a given year is equal to the MEE from the previous year, multiplied by the ratio of the averages for the last two 12-month periods' average weekly earnings in Canada, ending on June 30th. For
2014 it is $52 500 and for
2023 it was $66 600.
Money market fund
A type of mutual fund invested solely in short term, low risk debt securities such as treasury bills, bankers' acceptance notes, and other commercial debt instruments (source: Lexique des termes employés dans le commerce des valeurs mobilières, published by the Canadian Securities Institute).
Mortgage fund
An investment fund containing first-class mortgages (source: Lexique des termes employés dans le commerce des valeurs mobilières, published by the Canadian Securities Institute).
Non-income-generating asset
An asset that does not generate any income (e.g., a home).
Normal pension
A pension payable at the normal age of retirement set out in the plan, when you have reached that age.
Participate
Own shares.
Postponed pension
A pension payable after the normal age of retirement set out in the plan.
Preferred stock
A company certificate entitling the bearer to receive dividends ahead of common shareholders and conferring a priority right to the company's residual assets if it is liquidated (source: Lexique des termes employés dans le commerce des valeurs mobilières, published by the Canadian Securities Institute).
Registered Plan
In Canada, a plan is considered registered if it meets the requirements of the
Income Tax Act and is registered with the
CRA.
Risk
The level of uncertainty regarding return on investment, including the possibility that some or all of the capital may be lost.
Risk concentration
Concentrating your investments in one or few products
Segregated funds
An insurance company product that guarantees coverage of at least 75% of the capital invest
Support payments
Payments to cover an individual's basic living expenses (housing, food, clothing, medical care).
Tax damming
A planning option for self-employed workers who have loans with nondeductible interest. They can take out a loan to cover their business expenses, gradually making interest deductible, and the income generated is used to pay off nondeductible debts (e.g., home mortgage). Eventually, personal debts are paid off and interest on the new business loan is deductible.
Term
Period from purchase to maturity.
Treasury bill
A short term certificate of indebtedness issued by the government (source: Lexique des termes employés dans le commerce des valeurs mobilières, published by the Canadian Securities Institute).
Unused contributions
Contributions you have made but never deducted on your tax return.
Unused deductions
The difference between your annual maximum
RRSP deduction and the amount you actually deducted. If you do not max out your
RRSP each year, your unused deductions accumulate.
Wrap account
An account that charges a set annual fee based on the account balance, rather than brokerage fees for each transaction. Each account is managed separately
Yield
Total profit from an investment, either in the form of interest income, dividends, or capital gains (or losses) from fluctuations in the market value