The Grant Thornton International IFRS team has published the document Accounting Implications of the Conflict in Ukraine.

In light of the latest conflict in Ukraine, including the introduction of wide-ranging sanctions against certain Russian companies and individuals, entities need to carefully consider the accounting implications of this situation.

The publication considers the financial reporting impact of the conflict as at December 31, 2021 and subsequent year-ends as well as determining the importance of assessing going concern.

Updated on January 30, 2024

The accrued gain on your principal residence is generally not taxable. Be careful however as there are certain exceptions.

Without necessarily getting into the details, individuals who sell their residence know that they are no reporting requirements regarding this sale.

However, they should know that since 2016, the tax authorities have introduced new rules for improving the compliance and administration of taxes in this regard. Since these rules have changed how things are done, they could result in some nasty surprises for those who do not comply, so pay careful attention.

Certain exceptions apply

There are three main exceptions to the general rule where a gain on the sale of a principal residence is tax exempt:

• Your property cannot be qualified as a principal residence for each of the years owned (e.g., due to the surface area of the land or because another property was designated as such for certain years by you or your spouse);
• Your property was used, in whole or in part, to earn income;
• You are selling a principal residence and have held the property for less than a year (early sale of a property).

Early sale of a property (or property flip)

Since January 1, 2023, an individual who sells a residential property that they have held for less than a year will be deemed to have earned business income rather than realized a capital gain. As a result, the profit gained from the sale will be taxable at 100% rather than 50% and will not qualify for the primary residence exemption.

The exceptions to this rule include the following events: death, separation, serious disability or illness, change of employer and involuntary disposition (resulting from a fire or expropriation, for example).

Your obligations

As long as you lived in your residence in each of the years that you owned it and if you or your spouse did not own any other property that could be qualified as a principal residence and the residential property rule does not apply, the gain will be entirely exempt and no tax will be payable. Up to here, nothing has changed.

However, you can no longer sell your residence without notifying the tax authorities. Since 2016, you must comply with disclosure obligations if you disposed of your residence during the year.

At the very least, you must complete the prescribed forms (T2091 and TP-274) and designate the property in Schedule 3 of your income tax return. You must also specify the year of acquisition, sale price and description of the property sold in the prescribed forms.

Additionally, if the property sold cannot be designated as your principal residence for each of the years you owned it, you will have to complete the prescribed forms in detail to calculate the tax-exempt and taxable portions.

Don’t forget to declare the sale, otherwise…

Unless you declare the sale of your residence during the year, you will not be able to benefit from the exemption for a principal residence, such that the profit realized (called capital gain) will be taxable.

If you neglect to declare the disposal of your property and to designate it as a principal residence in the year it was sold, you could request to amend your income tax return. Please note that the tax authorities may grant the right to file a late designation in certain situations, but a penalty may apply. This penalty will correspond to the lesser of the following two amounts:

• $100 per late month calculated since the filing deadline for the sale year;
• $8,000.

Furthermore, individuals who have not reported the sale could be in for another surprise. The period during which the the tax authorities can issue a new assessment (which is currently three years) will be indefinitely extended. The tax authorities will therefore have all the time needed to ask questions.

Reminder: procedure to follow when selling your principal residence

• Make sure you satisfy all the criteria for designating the property sold as a principal residence for each of the years.
• Make sure that you are not subject to the rules regarding early sale of residential properties.
• Make sure you comply with the new disclosure requirements in order to benefit from the exemption for a principal residence.
• If you forget to declare the sale of your principal residence, consider notifying the tax authorities and paying the penalty applicable. It could be less costly than the capital gains tax.
• Remember: keeping track of the cost of your property and related improvements will help you make the best choice at the time of the sale and reduce your tax bill if you or your spouse held more than one property for the same period.
• Specific rules apply if you’re a non-resident of Canada or if you hold a residence in a personal trust.

To avoid nasty surprises, you should consult a tax specialist.

Updated on May 2, 2023

Future-proofing your business starts with updating your technology. Tech tools can do a lot for you, so don’t let fear hold you back.

A lot of companies are due to upgrade their technology, but they can’t seem to get the ball rolling because they are too busy addressing other needs, like the labour shortage. But the more time passes, the more they get left behind. And without a well-thought-out plan, they will have a hard time resolving this problem—and many others down the line.

A critical plan for a successful transformation

The future is right around the corner. Companies of all sizes, including SMEs, risk seeing their dreams evaporate and all their hard work go to waste if they invest time and money in the wrong things.

You don’t want to fall into the trap of inaction or making hasty decisions. Instead, take things one step at a time, based on a well-designed plan that’s part of your growth strategy. This will help you sidestep pitfalls.

Make up for the labour shortage

Let’s consider the case of a fast-growing company whose operations revolve around a series of manual processes. The business needs people to help it step up production, but it can’t find enough workers due to the labour shortage. The right technology could make up for the shortfall, plus it would give the company’s employees more time to spend on value-added tasks.

Preventing costly inefficiencies

What about a company that has added new technologies over the years, but the different programs aren’t linked. This means that data gets entered twice, leading to inconsistencies and an increased risk of error. Their IT team is overwhelmed and feels powerless trying to manage the monster and keep it fed. A custom digital transformation plan would help them get back on track to efficiency.

Achieve your business goals

Any transformation journey requires time, money and competent personnel. It can be hard for companies to know where to start. There are so many different technologies out there. Which ones are right for your business priorities?

It makes sense to get help from an external consultant who is neutral and committed to helping your organization reach its strategic objectives using technology. This consultant will help analyze your needs, assess your available resources and develop a realistic game plan to get you where you want to go. You will come away with a well-defined plan that you can translate into a success story.

A solid game plan, step-by-step

1. Diagnose the issue

First, you need to understand your starting point. What challenges are you facing right now? What issues will affect your business’ ability to achieve its objectives in the coming years? You have to know where you stand and where you want to be in order to really understand your company’s current limitations.

2. Map out your processes

Having a solid understanding of your business processes is essential. You may need to optimize some of them before choosing a technology. Otherwise, your new tech could just end up making things more chaotic instead of more efficient. You will want to hold workshops with your internal teams to define, review and clarify processes before selecting the right tools.

3. Develop an action plan

A good plan is broken down into small, realistic steps and addresses issues in the right order.

For example, it would be pointless to purchase an application that lets you produce bids more quickly if your production plant is already operating at maximum capacity.

A well-designed plan is aligned with your business vision and will help you achieve your broader organizational goals, instead of just serving the needs of discrete departments.

It’s like building a house: you need a strong foundation. And in this case, technology is your cornerstone. Then you want to make sure all new assets can be connected so that they can contribute positively to the system.

4. Back your plan up with people

You need to have someone in charge of the company’s digital transformation plan. They will need to be able to dedicate most of their time to the project and rely on a knowledgeable team to help get things done. Having the right talent is crucial for your transformation’s success.

5. Prepare a change management plan

Digital transformations impact people. Every change or new piece of information will have an effect on your employees. Details that seem trivial to some workers can be perceived as disruptive by others because they change the way things are done.

For instance, what if you start using digital tablets for inventory management but your staff is used to a colour coded system. If workers need to remove their gloves to enter information into a new program, that will have an impact.

That’s why a digital transformation plan should always be paired with a change management plan. With communication and training provisions, it will keep your priorities centred on people.

6. Never assume that it is over!

Technology is always changing. Even if your company’s digital transformation plan has a three-year timeline, don’t expect to hit cruise control afterward. You will need to keep refining your digital vision and make sure it is aligned with the organization’s strategic goals.

Expert support: a key ingredient for success

External experts can provide a different perspective and help you see what is in your blind spots when it comes to digital transformation planning. They will be familiar with proven methods and have broad experience that you can leverage. By working closely with your in-house team, they will help you get started and keep the project moving forward.

A consultant can also provide support for calculating costs and returns, selecting the right suppliers, managing change and assessing project risks. At the end of the day, it is your project. Being able to get a handle on it with an expert at your side—that is the key to success.

Your business’ future is directly linked to its digital transformation. After all, there are many strategic advantages to modernized technologies, including:

• Staying ahead of the competition;
• Increased productivity;
• Obtaining reliable data to support decision-making;
• Attracting young employees;
• Keeping up with customer demands and market requirements.

Our experts are available to help you master your technological evolution. Don’t hesitate to contact us. We want you to succeed!