The Grant Thornton International IFRS team has published the 2017 edition of Navigating the changes to International Financial Reporting Standards: A briefing for Chief Financial Officers. This publication has been designed to provide chief financial officers high-level awareness of the recent changes that will affect companies’ financial reporting in the future.
This publication covers both new standards and interpretations that have already been issued, and new amendments made to existing ones, giving brief descriptions of each.
Navigating the changes – What’s new?
The 2017 edition of this publication has been updated for changes to International Financial Reporting Standards (IFRS) that have been published between December 1, 2016 and November 30, 2017 and now covers the following financial year-ends:
March 31, 2017;
June 30, 2017;
September 30, 2017;
December 31, 2017;
March 31, 2018.
This publication has been designed to help entities planning for a specific financial reporting year-end identify changes mandatorily effective for the first time, changes not yet effective, and changes already in effect. For each change included in the publication, commercial implications are outlined with information on how many entities will be affected, and potential impacts on such entities. A traffic light system indicates the assessment of the answers to these questions.
Do you want to undertake a strategic planning initiative in your business? The first, and certainly, most important step is to complete a strategic diagnosis. This is the foundation that will help any organization get specific insight to clearly identify its priority issues.
Strategic Planning for a Well-Prepared Garden
Consider the example of a well-prepared garden, with enriched soil and appropriate plants—the crop will be all the more plentiful. Similarly, a richer and carefully crafted diagnosis will more clearly define the right course of action and show the next steps a business should take.
An objective and truly honest 360-degree diagnosis is designed to help you analyze your business’s various organizational functions and identify opportunities and threats that are specific to its field of activity. It synthesizes and interconnects strengths and weaknesses (internal environment) as well as opportunities and threats (external environment).
Here is a brief summary of some of the numerous tools and techniques that can be used to complete the diagnosis.
Set up a work plan
To maintain the focus on the main goal and avoid becoming overwhelmed by too much information, it is essential to set up a work plan that sets out the most important questions you may be asking:
What is your market share?
What markets are growing?
What products are the most in demand?
What are the latest consumption trends?
Who are the most innovative players on the market?
How does the market perceive my business?
The next step is to identify what sources of information are available. In some cases, these numerous sources require some resourcefulness. For instance, you may have to search for specific conference papers, or the particular findings of a specialized study on horticultural science. Other sources require a more complex analysis, like the reports published by Statistics Canada;Innovation, Science and Economic Development; or workforce sectorial committees.
However, these data can be highly beneficial to help you get clear insight into your organization and the issues it faces.
Secondary data are external, public or private, available data (whether free or not). They can consist of information gleaned from published studies or research, official statistics, scientific articles, reports, in short, existing literature.
These data are useful for various aspects of the diagnosis, to get a better idea, for example, of:
business trends in a specific sector,
Benchmarking is another tool that helps companies to compare their own situation to that of their main competitors in terms of criteria, such as:
the range of products and services,
If questions remain after consulting secondary data, you could consider collecting your own primary data.
Primary data pertaining to your clients, suppliers, competitors and partners can be directly collected using various techniques, such as interviews, surveys, focus groups, mystery customers, etc. How primary data are collected depends on your business objectives, the level of precision sought, as well as time constraints to collect the information.
Assessing all information collected on the company’s external environment will enable it to capture market opportunities and understand potential threats.
As an example, let’s take a look at how the Lafleur Greenhouses could collect primary data to answer specific questions on the competitive environment (download the example).
When conducting a diagnosis, it is also important to take the internal pulse of the organization by collecting useful information on its main strengths and weaknesses. To objectively assess the current situation, it is essential to have a global vision of the points of view of the employees and not just management.
This part of the investigation can be conducted as interviews or focus groups, but it is paramount to select the right method and ensure that participants can freely speak their mind in a constructive atmosphere to propel the organization forward. Here are a few examples of questions to ask in this context:
What are the company’s main strengths?
Which ones can be further developed to increase leverage?
What are the company’s main weaknesses?
What could potentially impede its growth?
Are all company products and services relevant?
Are you successful at fulfilling your mission?
What could you improve?
What do you know about your clients’ needs, satisfaction and expectations?
What should you improve?
A neutral and objective external party could be useful in facilitating the exchange of ideas and information during this process.
Consulting other stakeholders could enhance your internal profile of the company. This could include suppliers, financial or strategic business partners, your Board of Directors. They can provide different, impartial insight—as external players they may compare your situation to that of competitors they deal with.
The focus of an internal diagnosis is to address all your organization functions, including sales and marketing, finances, operations, human resources, etc. Thus, it’s important to ask questions to address all aspects, in order to draw the most exhaustive profile possible of the company.
Preparing the global diagnosis
Many tools are available to analyze the information collected, and guide you through an in-depth analysis of interrelations between your findings. The most famous is the SWOT method, which provides a global, internal and external, profile of the organization.
For strategic planning purposes, it is important to understand what strengths to leverage, what weaknesses to work on, what opportunities to capture and what threats to consider and to define a strategy that reflects all of these factors. It is also important to connect each aspect by answering certain questions, which can provide very important insight:
What strategies are based on your strengths to leverage opportunities?
What strategies help offset your weaknesses and leverage opportunities?
What strategies enhance your strengths to address threats?
What strategies minimize your weaknesses to avoid threats?
Lastly, the diagnosis helps outline your true ability to implement your growth vision . Organizations may sometimes have high ambitions, but a careful analysis can reveal specific obstacles to overcome before they can reach their objectives. This is the purpose of the diagnosis.
Canadians who own real estate in the United States may be subject to estate tax. There are a number of factors related to such property that must be considered in order to fully understand what is involved.
Here are answers to some frequently asked questions our U.S. tax experts have received on this topic.
Q: What is the U.S. estate tax?
A: The U.S. estate tax is a tax that is payable by non-residents of the U.S. who own property in the U.S. at death. This estate tax is calculated on the fair market value of property located in the U.S. at the time of death.
Q: If at the time of my death I own real estate in Florida valued at $1,000,000, do I have to pay the U.S. estate tax?
A: For the year 2018, if the value of your worldwide estate is less than $11,200,000 (including your RRSPs), no estate tax is payable upon death. However, if the value of your worldwide estate is greater than this amount, you should consult a tax adviser from Raymond Chabot Grant Thornton.
Q: If at the time of my death, I own real estate in the U.S. but no estate tax is payable, do any U.S. tax forms still have to be filed?
A: Yes. The requirement to file form 706-NA is mandatory if, at the time of your death, you own property in the U.S. valued at over US$60,000.
Q: What is the best way to own real estate in the U.S. (condo/house)?
A: It all depends on the facts at hand, and as such, each case must be assessed individually. You should always consult your tax adviser before buying property in the U.S.
Q: Could other fees be payable at the time of my death if I own real estate in the U.S.?
A: Yes, probate fees could be payable to the State. Some planning options can make it possible to avoid probate fees.
Q: Should I prepare a mandate in case of incapacity if I own real estate in the U.S.?
A: The Canadian mandate in case of incapacity is not recognized in the U.S. You should therefore have a durable power of attorney which is recognized in the U.S.
Q: Should I amend my Canadian will if I own real estate in the U.S.?
A: In some cases it would be preferable to have a specific, English-language will for that property. Such a specific will could make it easier to transfer the property to the heirs at the time of death.
Electric cars are certainly a positive addition to the world of automobiles in the current ecological and economic context: reduced greenhouse gas emissions, public health benefits, and, for the consumer, no need to fill up at the gas station.
Despite these benefits, there are still a number of obstacles to the mass use of electric cars. The most significant challenges are the limited range compared to internal combustion vehicles and the long refuelling time.
Additionally, at this time, a fully electric car costs considerably more than an internal combustion vehicle, due in particular to the high cost of an electric vehicle battery. A study by the major automobile manufacturers reveals that the following criteria must be met for an electric vehicle to directly replace an internal combustion model:
Have a range of 320 km;
Have a battery with a cost under $100/kWh;
Refuel in under 10 minutes.
To achieve these objectives, several initiatives have been taken in recent years to provide greater refuelling flexibility and reduce the purchase price differential with an internal combustion vehicle.
The Tesla Supercharger Network and the Electric Circuit
As of mid-2017, there were only four Tesla Superchargers in Québec. Tesla plans to open ten more locations during 2018, bringing the total to about 15 across the province. Tesla also has a network of Destination Charging Partners, that is, businesses having obtained two Tesla dedicated charging stations (8 kW or 16 kW) at a low price that allow Tesla owners to refuel at these locations. Since mid-2017, 59 stations have been in operation, providing Tesla with a total of 63 refuelling locations in Québec.
The Electric Circuit has been constantly expanding since it was introduced on March 30, 2012. There are currently 961 charging stations in Québec, including eighty-one 400-volt fast-charge stations. Businesses, municipalities and institutions install charging stations on their premises at their expense, with the assistance of the Québec government, and collect the revenues.
Financial incentives to purchase an electric car
The Transportation Electrification Action Plan provides for the addition of 100,000 electric vehicles in Québec by 2020. To achieve this objective, purchase rebates of up to $7,000 have been provided and charging station installation support is offered for individuals and on the road network.
Electric vehicle charging stations
Ford recently undertook a study to resolve the issue of refuelling time. The solution is obvious: increase the power of charging stations. Their study related to 400 kW stations (eight times more powerful than current stations). There are a number of technical issues with charging stations this powerful: activating the station uses up considerable energy in the electrical network and there is an overheating problem.
A number of technologies are currently being studied, such as backup batteries in a trailer, that could be used when needed and charging the rest of the time. This could address the problem of energy consumption peaks due to high voltage charging stations.
Québec’s place in the electrical transportation industry
Québec is in the niche vehicle sector of the electrical transportation industry, that is, school (Autobus Lion) and city (Novabus) buses and work vehicles (Hydro-Québec bucket trucks and industrial assembly line vehicles). These are ideal applications for electric technology, since work cycles make it easier to recharge vehicles.
There are potentially significant financial gains for operators, given that fuel-related operating costs are so high. Consumers can be sure of one thing, while they may not plan to purchase an electric car, this technology will have an impact on their daily lives in the near future.
Despite the initiative, the general public is slow to adopt electric vehicles. The number of charging stations may be increasing, but the fact remains that refuelling takes far too much time for most people (best case scenario: 30 to 60 minutes, often much longer).
Hybrid cars for the general public?
According to many car manufacturers, plug-in hybrids will likely be the route taken at this time. They believe that a fully electric vehicle will be a hard sell to the general public, but selling plug-in hybrids will be easier. With a 40-50 km range, many such vehicles are already available from some manufacturers, who are targeting this market for the near future.
This strategy is based on extensive studies showing that, for the average North-American driver, a range of 75 km meets 75% of the needs for individual transportation. Most manufacturers are therefore opting for this compromise in order to offer a less costly solution with a smaller battery. In the Montréal region, for example, such a solution would make it possible to travel back and forth from the suburbs to the city centre on a daily basis, without using any gas, at an initial purchase price that is far more affordable than an electric vehicle with a range of a few hundred kilometres.
There are still many unanswered questions about the general public opting for fully electric cars. Would consumers be inclined to adopt this technology if the charge time were reduced and the range increased? What if it were just a matter of rethinking how we see transportation, would consumers be prepared to compromise on some things to take advantage of the many benefits of electric cars? Is the solution plug-in hybrids?
And what about you, are you prepared to use an electric vehicle as your means of transportation?