The Finance Dictionary

This information provides users with thorough and reliable meanings to all the most common, and even uncommon, financial terms

Financial Terms Beginning With The Letter C

Call option

See option.


A callable security is one which can be redeemed by the issuer before the expiry date.

Canada Revenue Agency (CRA)

Canada Revenue Agency, formerly Canada Customs and Revenue Agency, and formerly Revenue Canada Taxation. The CRA administers tax laws for the Government of Canada, and for most provinces and territories. The CCRA became the CRA on December 12, 2003. However, until the name is officially changed by an Act of Parliament, the old name will still be used on documents of a legal or contractual nature.

Canadian controlled private corporation (CCPC)

A CCPC is a private corporation which is controlled by Canadian residents. A corporation will not qualify as a CCPC if it is controlled directly or indirectly by a public corporation or non-residents, or a combination of the two.

A CCPC is eligible for the small business deduction, which is a reduction in corporate income tax on active business income.

When the shares of a qualifying CCPC are sold, the shareholder(s) may avoid capital gains tax by utilizing all or part of the $750,000 lifetime capital gains deduction. This exemption was increased from $500,000 to $750,000 by the 2007 Federal budget.

Capital cost allowance (CCA)

This is the depreciation that is allowed to be expensed for tax purposes for fixed assets, except land. Different types of assets are allocated to different CCA classes, and each class has its own rate for capital cost allowance. For instance, most automobiles would be class 10, which is allowed to be expensed at 30% per year on a declining balance basis. In most cases, the CCA allowed in the year an asset is purchased is only 50% of the normal amount. Thus, the class 10 CCA would be 15% in the first year.

See also recapture and terminal loss. They also have tax tips about the timing of purchase and disposal of assets.

Capital dividend

Canadian controlled private corporations (CCPCs) keep track of certain non-taxable income amounts, and are able to pay these amounts to shareholders as a capital dividend. The capital dividend is not taxable to the shareholders. The non-taxable income amounts are tracked in the company's capital dividend account, and include the non-taxable portion of capital gains, less the non-allowable portion of capital losses, plus the non-taxable portion of gains on eligible capital property (such as goodwill), plus non-taxable life insurance proceeds.

Capital gain or loss

A capital gain or loss is the gain or loss resulting from the sale of a capital asset, such as stocks, bonds, art, stamp collections, and real estate.

A taxable capital gain is 50% of a capital gain. Because only 50% of the gain is taxable, less tax is paid on capital gains than on income such as interest.

An allowable capital loss is 50% of a capital loss. It can only be used to reduce or eliminate taxable capital gains, except in the year of a taxpayer's death or the immediately preceding year, when it can be used to reduce other income.

When allowable capital losses exceed taxable capital gains in a year, the difference is the net capital loss for the year.

See the Canada Revenue Agency Capital Gains Guide T4037 for more information.

Capital personal property

There are special rules for GST registrants for claiming input tax credits on the purchase of capital personal property.

Capital personal property includes movable capital property, such as office furniture, computers, photocopiers, movable machinery and equipment, and free-standing appliances. Built-in appliances are fixtures, and are usually considered part of capital real property.

Capital property

Capital property includes fixed assets, and items which are purchased for investment purposes, such as Any gain or loss on the sale of capital property is considered a capital gain or loss for tax purposes.

Capital real property

Capital real property includes land and buildings, and any items which are installed in and attached to the buildings or land. Capital cost allowance can be claimed on buildings and attachments, but not on land.

There are special rules for charging GST/HST and for claiming GST/HST input tax credits on capital real property.

Capital stock

Capital stock is the total amount of money (equity) invested in a corporation by its shareholders (owners). The capital stock is made up of individual shares, which are registered in the names of the shareholders (also called stockholders).

A corporation may have more than one class of share, with different rights attached to them. At least one class of shares will have voting rights, but there may be classes of shares which do not have voting rights. There are many corporations with 2 classes of shares, let's say Class A and Class B shares, where the Class A shares have voting rights, and Class B shares do not. In many of these cases, the Class B shareholders will have a much greater investment in the corporation than the Class A shareholders. The Class B shares are issued in order to raise funds without losing voting control.

See also common shares and preferred shares.

Cash basis accounting

Under the cash basis for preparing accounting records, the revenues and expenses are recorded when the revenues are received and the expenses are paid. Using the accrual basis, revenues and costs are recorded in the accounting period in which they occur, even if the revenue has not been received or the costs have not been paid.

Most businesses are required to use the accrual basis for preparing their tax returns. Those people who are in a farming or fishing business, or who are self-employed commission sales agents, are allowed by the Income Tax Act to use the cash basis.

Cashflow / cashflow per share

The "cash flow" used in reporting cash flow per share usually means net income with depreciation and amortization added back. See also operating cash flow and free cash flow.

Cashflow per share is cashflow divided by the total number of common shares outstanding.

Cashflow statement

The cashflow statement is a financial statement which reports the reasons for changes in cash balances for a period of time. It provides details of changes in cash balances resulting from operating activities, financing activities, and investing activities.

Central bank

A central bank, such as the Bank of Canada, tries to prevent the country's currency from rising or falling too much or too quickly.

Children's special allowances (CSA)

Children's special allowances are non-taxable amounts paid monthly, by the federal government, to agencies, institutions and foster parents who are responsible for the care and education of children under 18.

For more information see the Canada Revenue Agency web page Children's Special Allowances.


CICA is the Canadian Institute of Chartered Accountants. The CICA publishes the CICA handbook, which provides the primary source of generally accepted accounting principles.

Closed-end fund

This is an investment company which has a fixed number of shares. The shares trade on a stock exchange (such as TSX, NYSE, AMEX, etc) at market value.

See also mutual fund, open-end fund, exchange traded fund, and management expense ratio.


Collateral is property which is pledged as security for the repayment of a loan.

Commercial paper

Commercial paper is a short term debt instrument issued by a corporation and sold through brokerages to investors.


In financial markets, usually refers to agricultural or resource products, which are traded on commodities exchanges. Examples: wheat, coffee, lumber, oil, copper, pork bellies, etc.

Common-law partner

For purposes of the Income Tax Act, a common-law partner is a person (of the same or opposite sex) who lives with the taxpayer in a conjugal (marriage-like) relationship, and
(a) has lived with the taxpayer for a continuous period of at least one year, or
(b) is a parent of a child of whom the taxpayer is a parent, by birth or adoption, or
(c) 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.

Where two people have been living in a marriage-like relationship, it is considered to be continuous unless it has ceased for a period of at least 90 days due to a breakdown in the relationship.

You must report the net income of your spouse or common-law partner on your tax return.

Common shares

When a corporation is formed, common shares are purchased by investors who then become shareholders in the corporation, and hold voting privileges. Common shareholders elect the board of directors, and vote on other matters which require the approval of the owners of the company. If a corporation is liquidated, the common shareholders have the right to a share of the assets of the corporation, after any prior claims on the corporation have been settled.

A corporation may authorize an unlimited number of common shares to be issued, so that they may raise funds in the future by issuing more shares.

See also capital stock and preferred shares.


A group of individuals.

Compound interest

See interest rates.


A conglomerate is a company which operates in multiple industries.

Connected corporation

Two corporations are connected if
  1. one of the corporations controls the other corporation (owns more than 50% of the voting shares), or
  2. one corporation owns more than 10% of the voting shares and more than 10% of the fair market value of all the shares of the other corporation.

Consolidated financial statements

Consolidated financial statements group together the financial results of a parent company and its subsidiaries.

Consumer price index (CPI)

The consumer price index (CPI) is a measurement produced by Statistics Canada which is meant to reflect the increase in the cost of living. Current and historical CPI data can be obtained from the Bank of Canada and Statistics Canada web sites.


A contract is a legally binding agreement between two parties.

Contributed surplus

When shares are issued by a corporation and sold above par value, the amount in excess of par value becomes contributed surplus, which is a part of shareholders' equity on the balance sheet.


A convertible bond, debenture or preferred share is a security which may be exchanged, usually for common shares of the company, at a set price, for a fixed period of time.


A corporation is a separate legal entity, which is formed by application to either the federal government, or one of the provincial/territorial governments. The corporation issues shares (capital stock) to one or more shareholders. A corporation has limited liability. This means that the liability of the shareholders is limited to the amount of their investment in the shares of the corporation. However, shareholders who are directors of the corporation can be held legally liable for some debts of the corporation (such as GST and payroll taxes) in certain circumstances.

See also Canadian controlled private corporation, and public corporation.

Cost basis (stocks)

The cost basis is calculated separately for each security owned. It is the total cost of all shares owned, and is divided by the total number of shares owned to get the cost basis per share, or weighted average cost per share. This cost per share is used in calculating any capital gains or losses when some or all of the shares are sold. See also adjusted cost base.


A coupon is the interest payment portion of a bond. When a bond is issued, a brokerage company will buy bonds and will sometimes split them into two parts to sell separately. One part is the interest payment (coupon), and the other part is the maturity value of the bonds, sold as strip bonds.

Covered call option

See covered vs. uncovered (naked) call.

Covered put option

See covered vs. uncovered (naked) put.

Cumulative Net Investment Loss (CNIL)

The CNIL balance is the amount by which the total of all investment expenses exceeds the total of all investment income for all tax years after 1987. The CNIL can be calculated by filling in CRA's form T936 for each year after 1987.

The CNIL is used in the calculation of the $750,000 capital gains deduction available on the sale of qualified capital property.

Current account

The current account of Canada is a measurement of the flow of goods, services, and investment income to and from other countries. If Canada is receiving more money from investment income and exports of goods and services than it is paying out, then there is a current account surplus. Investment income includes interest, dividends, and property rental income.

Current assets

These are assets which are expected to be either consumed or converted to cash within one year, or are able to be readily converted to cash. Examples are accounts receivable, inventories, short term investments, and prepaid expenses such as insurance.

Current liabilities

These are debts which are due to be paid within one year, such as accounts payable, accrued liabilities, and the portion of long term debt which is due within 1 year.

Current ratio (C/R)

Current assets divided by current liabilities. This is a measure of the liquidity of the company.
Example: current assets $25,000, current liabilities $20,000, C/R = 25,000/20,000 = 1.25

Cyclical stock

A cyclical stock is one which tends to have greater price fluctuations over an economic cycle. Manufacturing and resources tend to be cyclical sectors.