Clara Demers
Senior Advisor | Management consulting

An intergenerational business transfer brings its share of challenges. Finding common ground among the differences is the key to success.

The business successors have a new approach, one developed using a different set of values. There are benefits to be gained from this input provided the transition is properly prepared and there is a gradual changing of the guard.

New market challenges

The successors will have to adopt different approaches and develop specific skills to adapt to new issues:

  • Rapidly changing technology;
  • Need to take account of the environmental impact;
  • Enhanced ethical standards and increased controls;
  • Demographic changes and shifting consumer habits;
  • Increasingly intense competition and need to manage growth.

Characteristics of the new generations

Young entrepreneurs do not have the same expectations as their predecessors, resulting in the need to adapt how things are done. What are some of the characteristics of the next generations?

  • They expect mentoring rather than a hierarchical structure;
  • They are creative and want to be in the thick of things, to interact;
  • Technology and the wide range of communication channels are part of their DNA.

It’s important to call on each party’s strengths and abilities while offsetting gaps and weaknesses.

How to ensure a successful transition

A successful transition should be prepared years in advance. The main steps include:

  • Developing a succession plan;
  • Being attentive to the transferor’s and transferee’s expectations, concerns and motivations;
  • Implementing an efficient internal communication process;
  • Identifying the skills needed and providing for additional training as needed;
  • Clearly defining individual roles;
  • Starting the transfer process early.

You can increase your chances of success by being properly prepared and getting the support of an object expert. Don’t hesitate to contact our renowned professionals to ensure a smooth transition.

Over 90% of Quebec SMEs are family businesses. To successfully transfer the business to the next generation you need to follow a comprehensive, disciplined and well-thought-out process that involves a key human component. Take advantage of our unique, integrated business transfer approach.

Do you own an SME? One of your greatest accomplishments, ensuring your business’s continuity, cannot be taken lightly. Join the ranks of those who plan well in advance to make sure they keep their key employees. Succession is not a destination, it’s a journey that warrants the support of experienced experts. Take advantage of our approach.

14 Jun 2018  |  Written by :

Clara Demers is your expert in management consulting at Raymond Chabot Grant Thornton. Contact her...

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Rémi Fortin
Manager | Eng. | Tax

Scientific research and experimental development (SR&ED) tax credits can be a major source of financing for a technological business in the first years of its existence.

However, it can be complex to determine which projects and activities are eligible for claiming SR&ED tax credits.

 

14 Jun 2018  |  Written by :

Rémi Fortin is your tax expert at Raymond Chabot Grant Thornton for the Sherbrooke office. Contact...

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Welcome to IFRS Newsletter – a newsletter that offers a summary of certain developments in International Financial Reporting Standards (IFRS) along with insights into topical issues.

We begin this second edition of 2018 with the revised Conceptual Framework for Financial Reporting.

We then move on to look at two other recent International Accounting Standards Board (IASB) publications: Amendments to IAS 19 Employee Benefits and the Exposure Draft Accounting Policy Changes (Proposed amendments to IAS 8).

We then consider European  Securities and Markets Authority (ESMA)’s recent report on what European accounting enforcers have been doing during the past year.

Further on in the newsletter, you will find IFRS-related news at Grant Thornton and a general round-up of financial reporting developments.

We finish with a summary of the implementation dates of newer standards that are not yet mandatory and a list of IASB publications that are out for comment.

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Alexandros Gamaletsos
Partner | Tax

Historically, non-US corporations with nexus in New Jersey (“NJ”) have been required to file NJ Corporation Business Tax (“CBT”) returns and calculate their NJ taxable income on a worldwide basis. This requirement stems from New Jersey’s Division of Taxation’s (“DoT”) position/interpretation that under N.J. Rev. Stat. Sec. 54:10a-4(k), non-US corporations are required to include all of their foreign sourced gross income and deductions, including their otherwise treaty-protected income, in their calculation of NJ taxable income. The DoT issued N.J. Admin. Code 18:7-5.2(xi) formalizing its position with respect to the inclusion of foreign-sourced income, which put NJ on the list of “non-treaty” states (i.e. a state that does not follow income tax treaties signed by the US federal government) along with California, New York, Pennsylvania and others.

Infosys decision

On November 28th, 2017, the NJ Tax Court (the “Court”) issued its decision in Infosys holding that the DoT was unable to impose CBT on the portion of a foreign corporation’s income that was not subject to federal income tax. Specifically, the Court held that Infosys, which had been filing federal Form 1120-F, was not required to include worldwide income excluded from its federal Form 1120-F because of application of the treaty in computing its CBT liability. In its analysis of N.J. Rev. Stat. Sec. 54:10a-4(k), which defines entire net income (“ENI”) for CBT purposes, the Court concluded that the NJ legislature’s clear intent was to pair ENI to federal taxable income with enumerated exceptions and that the DoT’s position to require the add-back of foreign sourced gross income and deductions, otherwise excluded from federal taxable income by application of a treaty, was invalid.

On March 19th, 2018, the Court accepted DoT’s motion to reconsider its Infosys decision originally issued on November 28th . In its motion for reconsideration, the DoT argued that the Court did not specifically analyze N.J.S.A. 54:10A-4 (k)(2)(A) in its November 28, 2017 decision, which the DoT asserts requires the add-back of foreign income that is exempted under federal law. The Court granted NJ’s motion for reconsideration. Following an in-depth analysis of N.J.S.A. 54:10A-4 (k)(2)(A), the Court stated: “Had the Legislature wished to provide for the add-back of foreign income excluded by treaties of the United States, it could have done so. The Legislature chose to equate CBT entire net income with “the taxable income, before net operating loss deduction and special deductions, which the taxpayer is required to report… to the United States Treasury Department for the purpose of computing its federal income tax” subject only to specific add-back provisions. To interpret N.J.S.A. 54:10A-4 (k)(2)(A) as broadly as is argued by the Director would be to undercut the Legislature’s clearly stated intent and render it meaningless when determining entire net income of foreign corporations.”

It’s worth noting that, in its analysis, the Court held that i) treaty provisions are not laws of the United States and ii) I.R.C. § 6114 itself distinguishes “a treaty of the United States” from “an internal revenue law of the United States.”

The Infosys decision effectively invalidates N.J. Admin. Code 18:7-5.2(xi), which required the add-back of all foreign-sourced (and otherwise treaty-exempt income), providing CBT relief for nonresident corporations with treaty-protected income.

Refund opportunity

Historically, NJ taxable income has been calculated by apportioning worldwide income. The Infosys decision provides the opportunity for claiming refunds for non-statute barred years for taxpayers that included treaty-exempt income in ENI for those years. Please review your clients’ filings to determine opportunities for filing amended returns and claiming refunds based on the NJ Tax Court ruling in Infosys.

08 Jun 2018  |  Written by :

Alexandros Gamaletsos is a tax expert at Raymond Chabot Grant Thornton. Contact him today!

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