Canadian small business glossary

The tax, payroll, payments, and construction terms Canadian owners run into, in plain language. Rates are current as of September 2026, and each term links to a guide with the official sources.

Business Number (BN): A nine-digit number the Canada Revenue Agency assigns to a business. Program accounts are added to it for each obligation, such as RT0001 for GST/HST.How to register for a GST/HST number →
Corporation: A business that is a separate legal entity from its owners, incorporated federally or provincially. A Canadian-controlled private corporation pays the 9% federal small business rate on the first $500,000 of active business income.Sole proprietorship vs corporation →
CPPCanada Pension Plan: Mandatory pension contributions deducted from pay. In 2026 employees and employers each contribute 5.95% of earnings between $3,500 and $74,600, and a second tier (CPP2) of 4% applies to earnings above that, up to $85,000.Best payroll software in Canada →
EIEmployment Insurance: Premiums deducted from employee pay to fund Employment Insurance. In 2026 the employee rate is 1.63% of insurable earnings up to $68,900, and employers pay 1.4 times the employee premium.Best payroll software in Canada →
GSTGoods and Services Tax: The 5% federal sales tax charged on most goods and services in Canada. In provinces with HST, the GST is part of the harmonized rate rather than charged separately.GST, HST, PST and QST rates by province →
Holdback: A share of each payment on a construction project that the payer must retain and release on a set schedule, protecting subcontractors' lien rights. Under Ontario's Construction Act, the basic holdback is 10%, and since January 1, 2026 it must be released annually on longer projects.Ontario holdbacks and prompt payment →
HSTHarmonized Sales Tax: A single sales tax combining the 5% GST with a provincial portion. The rate is 13% in Ontario, 14% in Nova Scotia (since April 1, 2025), and 15% in New Brunswick, Newfoundland and Labrador, and Prince Edward Island.Sales tax calculator →
Input tax credit (ITC): The GST/HST a registered business paid on business purchases, which it can claim back on its GST/HST return. You need to be registered to claim ITCs.How to register for a GST/HST number →
Interac debit: Canada's debit card network. Card processors usually charge a flat fee per Interac transaction, which is typically much cheaper than the percentage charged on credit cards.Square vs Moneris vs Helcim →
Interchange: The fee a card network sets for the card-issuing bank on each credit card sale, which makes up most of what a merchant pays. Since October 19, 2024, eligible small businesses get lower Visa and Mastercard rates, averaging 0.95% for in-store consumer credit.Card processing fees in Canada →
PSTProvincial Sales Tax: A separate provincial sales tax charged alongside GST in some provinces: 7% in British Columbia, 6% in Saskatchewan, and 7% in Manitoba (called RST). Businesses register for it with the province, not the CRA.GST, HST, PST and QST rates by province →
QSTQuebec Sales Tax: Quebec's 9.975% sales tax, charged on the price before GST, for a combined rate of 14.975%. Revenu Québec administers both QST and GST in Quebec.Sales tax calculator →
Quick method: An optional, simplified way to calculate the GST/HST you remit, available to eligible businesses with annual taxable sales up to $400,000. You remit a set percentage of your tax-included sales instead of tracking input tax credits on most expenses.How to register for a GST/HST number →
ROERecord of Employment: A form employers file with Service Canada when an employee has an interruption of earnings, such as leaving the job. Electronic ROEs are generally due within five days after the end of the pay period in which the interruption occurs.Best payroll software in Canada →
Small supplier: A business whose worldwide taxable sales are $30,000 or less, both in any single calendar quarter and over the last four consecutive calendar quarters. Small suppliers do not have to register for GST/HST, but may register voluntarily.The $30,000 rule explained →
Sole proprietorship: A business owned and run by one person with no separate legal entity. Business income is reported on the owner's personal tax return, and the owner is personally liable for business debts.Sole proprietorship vs corporation →
T4 slip: The slip employers issue to report an employee's annual pay and deductions. T4 slips must be filed with the CRA and given to employees by the last day of February.Best payroll software in Canada →
T5018 slip: The Statement of Contract Payments that construction businesses file to report what they paid subcontractors for construction services, when payments to a subcontractor total more than $500 (before GST/HST) in the reporting period. It is due six months after the end of the reporting period.T5018 guide for contractors →