Flow-through mining 
expenditure

A form of grassroots CEE that is renounced by a corporation 
to an individual (other than a trust) or a partnership of which 
the individual is a member pursuant to a flow-through share 
agreement that entitles the individual to an investment tax 
credit of 15% of the expenditure.

Flow-through share

A share or a right to acquire a share of a principal-business 
corporation issued by the corporation to an investor pursuant 
to an agreement in writing under which the corporation agrees 
to incur qualifying CEE or qualifying CDE and to renounce such 
expenses to the investor. 

Foreign accrual property 
income

Income of a controlled foreign affiliate of a Canadian resident 
that is imputed to the Canadian resident as it is earned. Includes 
most passive property income such as interest, rent, royalties, 
and taxable capital gains realized by the controlled foreign 
affiliate on dispositions of property other than excluded property.

 Foreign affiliate

A non-resident corporation will be a “foreign affiliate” of a 
Canadian-resident taxpayer if the Canadian resident owns 
directly or indirectly 1% or more of the shares (of any class) 
of the non-resident, and, either alone or together with related 
persons, 10% or more of the shares (of any class) of the non-
resident.

Foreign exploration and 
development expense

An expense that would be a foreign resource expense if it were 
incurred after 2000.

Foreign resource expense

See discussion on page 14 and following.

Foreign resource property

Property that would be a Canadian resource property if it were 
located in Canada.

Functional currency year

A taxation year in which a functional currency election 
is effective.

Generally accepted 
accounting principles and 
international financial 
reporting standards

Accounting standards accepted by a recognized professional 
body.

General anti-avoidance rule

A statutory rule in the ITA that applies to deny a tax benefit 
arising from an avoidance transaction if the transaction 
otherwise would result in a misuse or abuse of the provisions 
of the statute. An avoidance transaction is a transaction, or a 
transaction that is part of a series of transactions, that cannot 
reasonably be considered to have been undertaken or arranged 
primarily for bona fide purposes other than to obtain the 
tax benefit.

© 2013 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms 
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

 Glossary 

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