Ethics is more than a moral issue. A strong code of ethics fosters employee commitment and supports appropriate decision-making, no matter what the context. It’s in an organization’s best interest to establish clear measures.

Ethical violations of any kind tend to have a snowball effect in a work environment. When employees see others breaking the rules without consequences, they might think it’s okay for them to do so as well. An organizational culture in which misconduct is tolerated can lead to increased turnover, decreased productivity, and even damage the organization’s reputation and profitability.

What situations require ethical rules?

An organization should have a comprehensive code of ethics that addresses all the scenarios that may affect it, including the following:

Harassment and discrimination

Harassment and discrimination are perhaps the most significant ethical issues affecting businesses today. It is imperative to protect employees from unfair treatment based on age, gender, race, religion, disability.

Fraud and other forms of financial manipulation

Organizations must maintain good accounting practices and avoid any real or perceived conflicts of interest. No organization wants to be caught up in a financial scandal.

Technology and privacy practices

Developments in artificial intelligence and technological security raise privacy concerns for both clients and employees. While electronic monitoring of employees is intended to ensure efficiency and productivity, it can sometimes border on invasion of privacy. With telework, confidential client information is being circulated outside the organization. How can this new dynamic be managed?

Social media whistle-blowing

Another challenge is knowing where to draw the line between firing or penalizing an employee over online whistle-blowing. Usually, it’s when the employee’s behaviour is considered disloyal to their employer. How does this play out in the real world?

What are the benefits of having and following a clear code of ethics?

Improved organizational image

A code of ethics promotes a positive public image by conveying values of integrity, respect for the environment, inclusion, etc.

Enhanced teamwork and cooperation

Introducing a workplace code of ethics helps to create consistent employee behaviour, which in turn promotes openness and trust. As a result, because employees know where they stand, they often perform better.

Safeguarded organizational assets

A clear code of ethics helps prevent theft or the fraudulent use of the organization’s resources.

Improved market positioning

Currently, environmental, social and governance (ESG) criteria are considered important. Organizations with ethical business practices are better positioned in the marketplace.

What should be included in a code of ethics?

A code of ethics should include a statement of the values shared by all staff members. It should also contain:

• the rules and behaviours expected of everyone;
• the mechanisms and measures to ensure compliance;
• the penalties for non-compliance.

What should be done to ensure the code of ethics is clearly understood and applied?

Involve all parties

While it is helpful to have an ethics advisor help develop the code of ethics, it is also important to ensure that all stakeholders in the organization are represented: managers, executives, employees, etc. It is easier to have standards and values respected when they are chosen instead of being imposed from outside.

Draft a concise, specific code of ethics

Does anyone remember reading the employee handbook when they were hired? Keep the code of ethics concise and to the point in a page or two:

• What does the code mean to employees?
• Why is it important?
• What does it mean for them in terms of procedures?

Be specific and avoid legalese. Tailor the code of ethics to the employees’ duties. Beyond common values, someone working in business development needs more specific or different rules than someone working in an assembly room, for example.

Focus on continuous development

Conduct several communication and awareness campaigns throughout the year, and use different media to present the information: short videos, real-life scenarios, focus groups, etc. Not everyone learns the same way.

Bring the code of ethics to life

• Set up an integrity committee that employees can turn to and make sure that there is a follow-up.
• Set up integrity lines where people can report concerns anonymously.
• Communicate to staff the actions taken in response to misconduct.
• Review the code regularly and adapt it when new ethical issues arise.

Establishing a clear code of ethics has become increasingly important in recent years. It is a key factor in dealing with major societal issues and ensuring the organization’s long-term viability. Do not hesitate to contact our experts for support in developing your code of ethics.

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 30^th of the following year.

What you need to know

Regardless of the option selected, NR4 and NR4 Summary statements must be filed by March 31^st 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.

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.