On March 19, 2019, Finance Minister Bill Morneau presented the government’s 2019-2020 federal budget. This tax alert provides a summary of the tax measures proposed in the budget.

As many had predicted, this pre-election budget features many fresh spending promises, with little in terms of new tax legislation. Although the budget includes some smaller initiatives and technical changes, there are few surprises.

Overall, the most significant changes focus on:

  • Skills upgrades and training
  • Seniors’ retirement income
  • Home-buying affordability
  • Innovation
  • Regulatory reform
  • Country-wide broadband
    connectivity

Proposals that might be of particular interest to Canadian businesses include the creation of a new national training benefit program, new funds for research and innovation, measures intended to support entrepreneurs and plans to streamline certain areas of federal regulation to reduce regulatory burden. In addition, provisions concerned with tightening international tax rules and increasing beneficial ownership transparency may prompt some companies to review and update their compliance practices.

The budget was relatively silent on matters related to current and pending trade agreements—with the exception of a promise of support for supply-managed farmers impacted by CETA and CTPPP—and it does not contain any proposals to address the gap in corporate tax rates between Canada and the United States, nor the existing tariffs on Canadian aluminum and steel.

A number of measures were announced where the legislative details have yet to be released—such as new limits on stock options and greater support for intergenerational business transfers—that are worth watching closely as the specifics develop.

Access our full Budget 2019 Summary below.

Consult our press release.

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We begin this first edition of 2019 by considering the potential financial reporting implications of the UK leaving the European Union without a transition deal.

As the UK’s exit date of March 29, 2019 draws in closer, this is a scenario which needs to be considered seriously by entities that trade with, or have operations within, the UK.

We then move on to look at proposals the International Accounting Standards Board (IASB) currently has out for comment before looking at thematic reviews of IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers that have recently been published.

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 recently issued standards and a list of IASB publications that are out for comment.

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Emilio B. Imbriglio
President and Chief Executive Officer | FCPA, FCA, MBA, CFE, ICD.D.

There is a marked shift in Quebec’s business landscape as emerging leaders and entrepreneurs begin to take the reins and drive our economy into the future.

During the event highlighting the candidates for the Person of the Year Awards, I had the opportunity to meet these leaders who are changing today and tomorrow’s business world.

In 2018, 75 Quebec companies made the Growth 500 list of fastest-growing companies in Canada. What makes Quebec a conduit for promising start-ups and internationally minded businesses and a breeding ground for top talent? The recipe is simply put: innovation and education.

Innovation: the ability to see beyond what meets the eye

According to the Canada Economic Development for Quebec Regions Strategic Plan 2021, 26% of Canadian R&D expenses are attributed to the province of Quebec. Innovation is tightly woven into the fabric of Quebec. By altering processes and ideas and pushing boundaries, leaders and entrepreneurs apply ingenuity and creativity to address current needs and anticipate future ones. This type of foresight is crucial to creating businesses that will respond to the demographic landscape of the future.

New businesses and leaders are innovating in a variety of ways.

Artificial intelligence and technology for growth

Companies are increasingly relying on artificial intelligence and technology to improve existing processes in traditional sectors. One just has to look at the way the fourth industrial revolution is changing the manufacturing sector. In fact, 73% of manufacturing companies in Quebec are using some type of automation while medium-sized companies surpass this average with 83% of them using automation.

Artificial intelligence and new technologies are also changing the way we do things and think, creating new markets in emerging sectors. Algorithms, virtual and augmented reality, and the Internet of things are some examples. At Raymond Chabot Grant Thornton, we have developed a powerful algorithm that can identify students at risk of dropping out of school, a tool commissioned by the Val-des-Cerfs School Board and gaining attention across the province.

Challenges turned into business opportunities

New entrepreneurs are innovative in considering modern-day challenges as business opportunities. For example, LOOP juices, a division of Courchesne Larose, is creatively repurposing food waste by making cold-pressed juices and other drinks from (yet still edible) outcasts of the food industry.

Education: the genesis of the entrepreneurial journey

Innovation alone already sets us apart, but coupled with education, its power is exponential. In Quebec, we have the foundation for innovative ideas to become thriving businesses, thanks to world-class universities and training programs in arts, design, hi-tech and sciences, and the support of both the business world and government. In fact, Montréal produces one of the largest number of new university graduates in Canada. Close to 50% of the city’s population possesses a university certificate or diploma (Institut de la statistique du Québec, Panorama des régions du Québec 2017, p.45).

We need to assert the importance of education whenever the opportunity arises and to enhance the status of apprenticeships, recognize the work of educators, encourage young people to stay in school and support sports-study and arts-study initiatives. Promoting academic achievement is the key to success for all Quebeckers and for an innovative, creative and competitive province.

What’s in store for the future?

Quebec’s entrepreneurial ambition is driven by equal doses of innovation and education. It is what propels the province and sets it apart. Our skilled leaders and entrepreneurs are innovating in a myriad of ways and are consistently staying one step ahead, foreseeing what will be important to people in the coming years. These are not just trends, they are shaping our province, one idea and one business at a time.

11 Mar 2019  |  Written by :

Mr. Imbriglio is partner and the President & CEO of Raymond Chabot Grant Thornton. He is in charge...

See the profile

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There are numerous tax impacts that must be very carefully considered when deciding to leave Canada to live elsewhere.

Analyzing the termination of your tax residence is a question of fact. Generally, the Canada Revenue Agency will consider that you have left Canada if you sever your residential ties with Canada to create new ones in the host country.

Analyzing your residential status generally involves examining your significant and secondary residential ties.

Significant residential ties are:

  • The location of your dwelling place;
  • The location of your spouse’s and dependents’ dwelling place.

Secondary residential ties include:

  • Economic and social ties with Canada (such as employment, financial accounts, interests in Canadian companies, social and recreational activities);
  • Personal property in Canada (such as furniture, clothing, automobiles);
  • Other ties (such as medical insurance coverage, drivers license, etc.).

Severing Ties with Canada, the Tax Implications

Departure tax

When you leave Canada, you are deemed to dispose of all of your property at its fair market value immediately before you cease to reside in Canada (even if you have not actually sold it). This deemed disposition triggers a departure tax on the gain accrued on this property before your departure.

Some property is specifically excluded from the deemed disposition rule, such as your residence, pension plans (including RRSPs and RRIFs), RESP and stock options.

Home Buyers’ Plan

If you withdrew funds from your RRSP as part of the Home Buyers’ Plan (HBP), the balance is payable at the earliest of the following two dates:

  • Before the date you file an income tax return for the year you become a non-resident;
  • 60 days after leaving Canada.

What do I need to do before leaving Canada?

1. List your property at the time of departure from Canada

If the fair market value of the property you own when you leave Canada is more than $25,000, you have to report this property to the Canada Revenue Agency or, failing this, you could be liable for a penalty of up to $2,500.

Some property is excluded from the mandatory reporting requirement, including:

  • Cash;
  • Pension plans (including RRSPs and RRIFs);
  • RESPs;
  • Personal use property (such as clothing, household effects, automobiles) with a fair market value of less than $10,000.

2. Notify Canadian payers of your change of tax residence status

If you plan to keep financial accounts in Canada that generate passive income (interest, dividends), you need to notify your financial institutions of your non-resident status so they can ensure appropriate deductions at source are made on income paid after you leave Canada and issue the appropriate tax slips at year-end.

3. Repay your Home Buyers’ Plan balance

You can repay your HBP balance by making RRSP contributions before you leave Canada. Otherwise, the HBP balance will be included in your taxable income in the year of departure.

4. File a departure tax return

You have to file a tax return by April 30th of the year following the year of your departure from Canada.

The purpose of this tax return is to:

  • Record the date you leave Canada and change your residence status;
  • Report property you own at the time you leave Canada;
  • Prepare the appropriate tax election forms;
  • Report and pay the departure tax or elect to defer payment of the tax by providing a sufficient guarantee to the tax authorities.

5. Talk to an international tax expert

Our team of international taxation experts can support your emigration process by providing integrated consulting and tax compliance services tailored to your situation.

This article was drafted with the assistance of Kais Yousfi.