This webinar was presented on March 26, 2019 and addresses the main questions regarding the first budget tabled by the Coalition avenir Québec (CAQ) government.

Organized by Raymond Chabot Grant Thornton in association with the Association des professionnels en développement économique du Québec, the webinar was hosted by Jean-Pierre Poulin, Tax Partner, and Jean-Philippe Brosseau, Economist and Senior Manager in Management Consulting from our firm.

Listen to this webinar (in French) that highlights a number of measures related to regional economic development in Quebec.

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The Grant Thornton International IFRS team has published Insights into IFRS 16 – Lease payments.

The bulletin Insights into IFRS 16 – Lease Payments provides guidance on how to determine which lease payments to include in the measurement of the lease liability when accounting for a lease under IFRS 16.

The issue

IFRS 16 requires a lessee to measure the lease liability at the present value of the lease payments that are not paid at that date. This liability includes both fixed lease payments (including in-substance fixed payments) and variable lease payments that depend on an index or rate, and it represents the starting point for the measurement of the related right-of-use asset.

Deciding which payments need to be recognized in the measurement of the liability and how changes in those payments are recognized often involves considerable judgment. The bulletin Insights into IFRS 16 – Lease payments aims to help you with this judgment.

Download the bulletin below.

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Jean-François Rhéaume
Senior Manager | CPA, CA | Tax

The criteria for obtaining SR&ED credits for SMEs have been modified. This was announced with the release of the March 2019 federal budget.

Profitable SMEs have always been at a disadvantage with respect to federal scientific research and experimental development (SR&ED) tax credits because of the famous taxable income test. When taxable income reached a threshold of $800,000, all of the tax credits earned by an SME were then at the same rate as for large businesses.

The March 19 federal budget proposes to correct this injustice. As a result, for all year ends ending after that day, the taxable income test will be removed from the relevant provisions of the SR&ED program. A company would therefore be able to obtain SR&ED credits at the increased rate of 35% on the first $3M of qualified expenditures when it meets the following conditions:

  1. Be a Canadian-controlled private company (CCPS);
  2. Have taxable capital less than or equal to $10M at the end of the previous fiscal year. Remember that the taxable capital of all associated companies must be considered.

When taxable capital is between $10M and $50M, there will be a linear reduction in the expenditure limit for the first $3M. For all expenditures exceeding this reduced limit, the credits granted will be at the rate of 15%.

Furthermore, don’t forget that SR&ED credits earned at a rate of 35% are fully refundable when the federal tax is not sufficient for an SME to use them in full.

26 Mar 2019  |  Written by :

Jean-François Rhéaume is your expert in taxation for the Québec office. Contact him today!

See the profile

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On March 19, 2019, Finance Minister Ernie L. Steeves tabled New Brunswick’s 2019-20 budget. The budget projects a $23.1 million surplus in 2019-20 and sees the province’s net debt decrease for the first time in 13 years.

The net debt is currently estimated at $14.1 billion, and is expected to decline by $49 million in 2019-20.

The estimates provided in Budget 2019 show that the province projects a surplus of $4.5 million for the 2018-19 fiscal year, rather than the $188.7 million deficit projected for the same fiscal year in the previous budget.

Tax measures

No changes to the corporate tax rates, or the $500,000 small business limit, are proposed.

Rejecting federal measures on small business limit

The budget indicates that the government will maintain the current rules for the New Brunswick small business corporate income tax rate and will not parallel the federal measures around passive income, which phase out access to the small business tax rate. This makes New Brunswick the second province to deviate from the federal government on these rules, after Ontario.

The rejection of this federal rule at the provincial level means that the small business limit in New Brunswick ($500,000) will not be reduced by any passive investment income earned in the corporation. Therefore, if passive income is high enough to fully eliminate the small business deduction at the federal level, it would result in a 15% federal corporate rate; however, the provincial tax rate would be unaffected and would remain at 2.5%. Overall, this would result in a combined tax rate of 17.5%.

The province has announced, as part of this budget, that it will be paralleling the federal capital cost allowance incentives that were introduced as part of the Fall Economic Statement.

These changes will allow businesses to increase the capital cost allowance deduction that is available in the year of purchase for certain capital expenditures, thereby decreasing taxes payable.

Personal income tax rates

New Brunswick’s personal tax brackets are indexed to inflation on an annual basis. Budget 2019 proposes no further changes to the personal tax brackets and rates.

Harmonized sales tax

Budget 2019 proposes no changes to the current 15% HST rate, which is composed of a federal component of 5% and a provincial component of 10%.

Consult our document below for more details.