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

In the 2015 Quebec budget speech, the Finance Minister announced changes to the Tax Credit for the Development of E-Business (TCEB) by introducing the concept of “work under an agreement entered into by the employer and a government entity”.

As a result, the portion of an employee’s wages that is attributable to the employee’s duties in the performance of work in respect of a government entity no longer qualifies. This change applies to agreements entered into, renewed or extended after September 30, 2015.

This modification in the tax credit calculation does not change the eligibility criteria for the entity or its employees. Accordingly, even though the entity has ongoing agreements with government entities, its qualification tests are unchanged, since its income from such agreements still qualifies. The work performed by employees in connection with these agreements continues to qualify for the 75% threshold. Rather, the change results in limiting the credit amount on a prorata basis of work carried out under agreements with these entities.

Due to a subtlety in the calculation of eligible salaries, in some cases, the calculation will not be on a true prorata basis. In practice, it will be the employee’s total wages that will be reduced rather than the maximum wages for the tax credit. In certain situations, this subtlety alters the prorata to the claimant’s benefit. Consider the example of employees with annual wages of $100,000 who spend 15% of their time on agreements with entities targeted by the tax change—their qualified wages will be $85,000. Since the TCEB is calculated on maximum wages of $83,333, in this case, the tax credit is not reduced.

For clarification, a government entity is:

It’s interesting to note that not all Quebec government organizations are included within the scope of government bodies. Accordingly, agreements with universities, CEGEPs, hospitals, school boards, municipalities and organizations not listed in the schedules are not subject to the change.

A detailed analysis of employees’ individual timesheets, on the basis of the agreement signature date, will be needed to deduct a portion of the qualified employee’s wages.

27 Jun 2017  |  Written by :

Mr. Rhéaume is your expert in taxation for the Québec office. Contact him today!

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Intended especially for foreign companies considering investing in Québec, Taxation in Québec: Favourable Measures to Foster Investment provides an overview of the principal tax measures that apply to companies operating in Québec.

In addition to very attractive tax measures, Québec has given Investissement Québec specific tools that enable it to act as a financial partner to businesses. Although this brochure focuses on tax issues, Québec provides businesses with a range of financial solutions that complement those offered by financial institutions. These solutions may include conventional loans, loan guarantees, non-refundable contributions or equity interests.

Further information about these financial products can be obtained from Investissement Québec at 1 844 474-6367 or by logging on to investquebec.com.

 

The information in this brochure was up to date as at May 1, 2017, and does not reflect any modifications that might have been announced subsequent to that date. Monetary amounts are expressed in Canadian dollars.

This brochure is for information purposes only. It does not substitute for legislation, regulations or orders adopted by the Québec government.

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Raymond Chabot Grant Thornton is pleased to present a webinar entitled IFRS 9 Instruments financiers – Entités autres que les institutions financières (IFRS 9 – Financial Instruments – Non-financial institutions).

This French-language session discusses IFRS 9 concepts, particularly the new classification of financial assets model and new expected credit loss impairment model.

Upon the successful completion of a test that will be made available at the end of the session, webinar participants will receive a training certificate, which is applicable to training hours recognized by the Ordre des CPA du Québec (OCPAQ).

For this workshop, our experts include Gilles Henley, CPA, CA, Partner, Risk Management and Accounting Research; Louise Roy, CPA, CA, Senior Manager, Risk Management & Accounting Research and Caroline Lessard, CPA, CA, Manager, Risk Management and Accounting Research.

To access the webcast, please click here:

http://www.icastpro.ca/rcgt170615 (use the password: rcgt061501)

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Martin Deschênes
Partner | CPA, CA | Financial advisory

Your SME has experienced considerable growth in recent years. It’s ready to expand by making an acquisition beyond Quebec’s borders. Your analyses indicate that this is the most beneficial and least risky option. Provided, of course, that the price is right…

But price is not the only consideration. During the analysis, ask yourself whether the target business:

  • Has a solid management team.
  • Sells high potential products or services.
  • Operates in a market with strong growth opportunities.
  • Would provide synergies that will add value to your business and be beneficial for all stakeholders.

Note that it’s usually more advantageous to acquire a business that is less profitable than yours since there will be a higher potential to grow its earnings based on the transaction cost.

Team work

Here are a few considerations for a successful transaction:

  • Make sure you have a competent team you can rely on, with experience in cross-border acquisitions and the market where you want to set up. You will likely have to call on the support of financial, tax, legal, environmental and other specialists.
  • Involve various managers (production, human resources, etc.) in the acquisition project right from the start and in preparing the integration plan.
  • Prepare the integration very carefully and apply it diligently. Integration should not take more than two years, otherwise, you won’t reap the benefits of the expected synergies.
  • However, be flexible in the integration plan. Adapt it to the circumstances and review certain actions as necessary.
  • Send head office staff to the new location to oversee the integration process. They will also ensure that the new employees adopt your corporate culture and rules.
  • Don’t underestimate the cost of integrating the other company: it is often more than you’d expect.

The human side, a key component

The human component is particularly important when acquiring a business outside Quebec. Your ability to have the new employees engage fully into your company’s growth is essential to your project’s success. You need to:

  • Be aware of cultural factors (language, values, customs, etc.) that may be quite different from those in Quebec.
  • Give the acquiree’s managers a lot of autonomy. They know how it works, its business environment, local laws and regulations, etc.
  • Let them know their contribution is key to your success. Give them the opportunity to rise up the ladder within the group, by giving them international responsibilities, for example.
  • Invite some managers to your head office so that they can get a better understanding of your culture, work methods, etc.
  • Keep an open mind and take the time to analyze their way of doing things. Who knows? You might find that some of their practices are better than yours and should be adopted across the board.

There are several factors at play for a successful international expansion. Don’t hesitate to contact us. We are available to help with planning and carrying out your project.

14 Jun 2017  |  Written by :

Mr. Deschênes is a partner at Raymond Chabot Grant Thornton. He is your expert in Transaction...

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