Raymond Chabot Grant Thornton has published the 2021 French version of IFRS Example Consolidated Financial Statements 2021, a publication by Grant Thornton International IFRS team entitled États financiers consolidés types conformes aux IFRS 2021.

États financiers consolidés types conformes aux IFRS 2021 have been updated to reflect changes in IFRS that are effective for the year ending December 31, 2021. No account has been taken of any new developments published after October 31, 2021.

Given that the global COVID-19 pandemic still impacted several reporting entities during 2021, the 2021 version comments on information that might be relevant to disclose around the COVID-19 in the financial statements.

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Updated on February 19, 2024

Canadian non-residents are taxed on rental income from their properties in the country. What about their tax obligations?

A non-resident (for tax purposes) who earns rental income must meet certain obligations with the Canada Revenue Agency (CRA). These tax obligations are the same whether the non-resident owns a single home for rent or several rental properties in the country. However, they only apply for federal purposes: there is no tax to pay or return to file for this income for provincial purposes.

There are ways to reduce this tax burden, as discussed later on, but here is the basic rule: a 25% deduction at source of the gross monthly rental income must be remitted to the CRA each month, no later than the 15th day following the payment of rent. Failure to withhold or late remittance of the deduction would result in a penalty of up to 10% of the amount of tax that should have been withheld.

Non-residents have two years after the end of the year to file a tax return to deduct rental income expenses. They will then be taxed on the net rental income (income minus expenses), based on the tax rates applicable to individuals.

The 25% monthly withholding tax will be considered an instalment on the tax liability. The CRA will then refund any overpayment.

Please note: if the tax return is not filed, the non-resident will not be able to deduct expenses and the 25% withholding on gross income will be considered a final tax.

A more advantageous solution

Another option, which is usually more advantageous for cash management, is for the non-resident to pay withholding tax based on 25% of estimated net rental income, rather than gross income.

Again, the withholding will be treated as an instalment, but will generally be much lower because it will be based on net income (i.e., income minus expenses).

To take advantage of this solution, the following conditions must be met:

  • The tax obligations should be delegated to a paying agent in Canada, who is a trusted Canadian resident and who pays the tax on behalf of the non-resident;
  • NR6 form and an estimate of the next year’s rental income and expenses to must be sent to the CRA before the first rent payment date. The withholding tax payment must be attached;
  • Undertake to file a Canadian federal income tax return (T1159) by June 30th of the following year.

What you need to know

Regardless of the option selected, NR4 and NR4 Summary statements must be filed by March 31st of the year following the end of the taxation year or penalties may apply. These statements show the gross rental income and the tax paid to the government.

In addition, non-residents who own several rental properties in the country must include all of their rental income and expenses in the required documents.

Please note that in some countries, such as the United States, non-residents can deduct the actual tax paid in Canada from their tax return.

Finally, for individuals who have failed, in good faith, to declare their rental income earned in Canada, there is always a way to get their affairs in order while avoiding late penalties if they meet certain conditions.

Do you have any questions? Our team of international tax experts can help you meet your tax obligations and choose the most advantageous solutions. Contact us to speak with one of our specialists.

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The pandemic has proven that organizations have been able to handle a major crisis…or not. If there was another crisis, would you be ready?

Proactive organizations prepare for potential risks that could impact their business. They implement an essential service continuity plan to mitigate the impact and duration of a crisis that could be caused by an unexpected threat or accident. This plan is accompanied by tools and training for work teams.

During the current health crisis, public institutions, in particular, made a tremendous effort to sustain and resume their operations and provide citizens, businesses and the government with the services they needed.

Nearly two years later, a new labour market reality is emerging. Employment and economic growth levels are enviable. A large percentage of the population is vaccinated. Does this mean you are immune to further shocks?

The health crisis is not over yet, and we know that other crises are possible. You need to be prepared for any eventuality in order to reduce the initial impact of a threat to your operations and enhance your ability to take back control of your organization.

Mitigate the effects of a crisis thanks to an essential service continuity plan

When it comes to disasters that can disrupt an organization’s operations, a few examples immediately come to mind: a fire, an earthquake or a pandemic like COVID-19.

However, other events, with varying degrees of risk, can also disrupt your operations, from an Internet outage or environmental disaster to a sudden loss of leadership or large-scale fraud. Think, for example, about what would happen to your business and personal life if you were to go a few days without Internet service. You would instantly run out of information, communication methods and, probably, cash.

Organizations, including public institutions, should therefore not neglect preparing for these different types of events.

The purpose of an essential service continuity plan in the event of a disaster is to:

  • Mitigate the initial impact of the event;
  • Accelerate recovery and reduce the timeline for a return to normality.

How can this be accomplished? The short answer: imagine the worst outcome and document the measures to take.

In fact, well-prepared organizations have mechanisms in place to respond to a major event by preparing their staff and developing the necessary skills to manage the crises generated by the different types of catastrophes:

  • The line of authority in case of disasters is well defined;
  • The crisis unit composition is known;
  • The location for the physical or virtual crisis and succession rooms is known;
  • The telephone and email lists have already been shared;
  • The communication plan to the authorities, employees, the public or clients, has already been prepared.

Often, organizations perform these tasks in a perfunctory manner or put them off until tomorrow. The COVID-19 crisis reminds us about the importance of these tasks.

The assistance of a professional firm could be useful to accelerate the process and mobilize your organization’s members. Where appropriate, they should help you diagnose your readiness, make quick wins, and implement your essential service continuity plan.

Five other keys for successfully surviving a crisis

Beyond this preparation, in the turmoil generated by a crisis of any kind, there are five key elements that can contribute to the success of your efforts.

Stay informed

Plan for ways to recognize how the situation is progressing every day.

• How are you affected?
• How many people are involved today?
• What are the new government guidelines?
• What are your clients saying?
• Etc.

Communicate

Maintain constant, clear lines of communication with the authorities, and with your teams and clients.

Seize opportunities

Times of crisis can accelerate decision-making and reduce the number of stakeholders and levels of authority. In many organizations, the conditions associated with the pandemic provided the impetus to move forward in a matter of weeks in areas that would otherwise have taken years to take hold, such as telework.

Rely on your team members

In times of crisis, your contacts are also affected and will therefore often be unable to support you quickly. You need to find those people, within your internal resources, who make the difference. They exist and will stand out from the crowd; hierarchical status is no longer important.

Save key resources

Crisis management often takes place over a long period of time. After the initial sprint, turn into a marathon runner.

By combining these five key elements with the tools of a good continuity plan and your experience of the COVID-19 pandemic, you will optimize your crisis management.

Analyzing your level of preparedness

Even if you’ve learned from the current pandemic, are you prepared for new threats that may be quite different in nature? It’s best to invest time now to prepare for any eventuality. If a major new crisis arises, you will be equipped to respond.

Not sure where to start? Conduct a diagnostic of your essential service continuity plan readiness using a structured tool. You will discover your strengths, weaknesses and, most importantly, the actions that will bring you the fastest gains. Our experts can assist you.

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Eric Dufour
Vice-President, Partner | FCPA | Management consulting

Whether we like it or not, businesses are no longer being managed in the same way. The “theory of evolution” also applies to management.

The management profession is undergoing a major transformation. Not only has the pandemic accelerated change, but it has also forever transformed the way things are done, particularly in terms of organizational governance.

To lead teams with efficiency and agility while mobilizing them to make the organization innovative and competitive, managers must adapt and avoid setting old, more paternalistic vertical management practices into stone. They need to evolve towards a horizontal, more engaging approach, where the collective takes precedence over the individual.

Today and tomorrow’s leaders must therefore acknowledge the facts and seek to adapt quickly, lest they become fossils!

Darwinisme Management - RCGT

Taking stress factors into account

The time has come to accept the fact that not acting will inevitably force all entrepreneurs and managers to consciously or not, take a huge step back. Leaders must quickly become aware of the stressors they face and take them into account, not only for themselves, but also in the way they manage their organization.

Below are some of the findings that reflect how management has evolved.

Pressure on labour shifts

With the pandemic, humans have had an unexpected encounter with themselves. They have returned to their deepest values and exploratory instinct, resulting in pressure on labour shifts, which is far from over.

Emotional intelligence and responsibilities

Humans want to be part of tomorrow’s solution, which forces managers to think more collectively. Emotional and strategic intelligence, as well as responsibilities, must now be expressed and distributed horizontally, which promotes a spirit of collaboration and openness.

Organizational structures must become more agile, innovative and motivating for employees. With the labour shortage, it is essential to involve players to retain key employees.

Progressive transition of power

In terms of change management, the gradual transition of power is forcing leaders to rethink their governance and communication strategies to make them more linear. It is important to recognize that more transparent and inclusive governance encourages staff engagement and facilitates decision-making.

Skills, attitudes and promising personalities

Supporting ambitions to advance will trigger a numbers game that can foster a more natural selection of skills, attitudes and personalities that can provide managers with local solutions.

Evolving towards a horizontal decision-making process

Lastly, the managerial and entrepreneurial species is evolving rapidly towards a reverse management model that better leverages grassroots skills in its decision-making process. The vertical will become more horizontal and the power pyramid will become flatter. Managers will focus more on gathering ideas and solutions from their resources with a governance that integrates a variety of experts.

Key considerations for future managers

Beyond these observations, how can leaders avoid fossilizing their management? Here are some considerations that our experts can help you with in order to make your management evolve towards the managers of tomorrow.

Ensure overall managerial health

Ensure the business’s (managers, company and employees) overall health by identifying the new stressors caused by the major changes experienced. It is essential to target the key issues that can compromise your organization’s growth and sustainability.

Review your governance by maximizing the components of your ABCD

Review your governance by maximizing the components of your ABCD (Agility, Benevolence, Collective, Diligence). This governance review ensures, among other things, that business leaders are not isolated and that part of the burden of responsibility is taken off their shoulders. If you are well surrounded and if everyone understands their role, you encourage agility and thus promote the growth and sustainability of the organization.

This will make it possible to implement a matrix of the necessary competencies and review the delegation of authority matrix to move towards a more collective and horizontal allocation of responsibilities.

Shock treatment for HR component

Initiate a shock treatment of the entire HR function (surveys, engagement, overall health, total remuneration, flattening of authority, structure and coaching, etc.).

Implement a strategic and technological plan

Implement a strategic and technological plan so that your organization can innovate, remain competitive and increase the engagement and commitment of all teams. The digital age has replaced the old ways of doing things. It’s time to evolve!

Adapt your organization to an accelerated evolution

We support many organizations in their transformations, whether it be in terms of entrepreneurial succession, governance renewal, technological levers, strategic HR advice or overall entrepreneurial health, to name a few. The pace of these types of transitions must accelerate.

In 2022, our firm invites managers and entrepreneurs to quickly take up the transformation challenge of adapting their organization to the accelerated evolution of management. The organization’s Darwinian transformation is no longer a choice, it’s a necessity to remain at the forefront and ensure its sustainability.

Take control of your organization’s destiny by consulting an experienced consultant who can help you implement a structured approach and by appointing an internal team to ensure the transformation’s pace and success.

Contact us today to find out how we can help you take the steps necessary to adapt and successfully carry out your business plans.

It’s time to evolve and adapt to avoid fossilization!

Together, let’s ensure our collective success!

25 Jan 2022  |  Written by :

Éric Dufour is a management consulting expert at Raymond Chabot Grant Thornton.

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