The International Accounting Standards Board (IASB) has published Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16), finalizing its response to the ongoing reform of interest rate benchmarks around the world. The amendments aim to assist reporting entities to provide investors with useful information about the effects of the reform on their financial statements.

Many interbank offered rates (IBORs) are expected to be replaced by new benchmark risk-free rates (RFRs) in future reporting periods. This has resulted in the IASB needing to address potential financial reporting implications for both before and after the reform of an interest rate benchmark. The IASB has completed this project in two stages, the first one focussing on providing relief for hedging relationships before the reform takes place, which was finalized in September 2019, by publishing Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7). This second set of amendments focuses on issues arising post replacement, i.e., when the existing interest rate benchmark is actually replaced with alternative benchmark rates.

Download the IFRS Adviser Alert for more information.

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

Here is an excerpt of the letter sent by Emilio B. Imbriglio, our President and CEO, to the Honourable Chrystia Freeland, Minister of Finance of Canada, on September 25, 2020.

Subject: Public finance and the recovery: Overcoming two challenges for competitiveness and prosperity in Canada

Dear Minister,

On behalf of Raymond Chabot Grant Thornton, I would first like to extend our warmest congratulations on your recent appointment as Minister of Finance. I wish you every success in your new position, particularly in the current context, which requires structural actions for the Canadian economy and its wealth-creating businesses. Your leadership and talent will certainly contribute to giving our economy and Canada’s economic drivers the momentum they need to succeed.

Further to the Throne Speech, where economic recovery is a priority, I would like to share with you some thoughts that aim to contribute to the competitiveness and sustainability of businesses, especially SMEs, while fostering a more competitive business climate. Raymond Chabot Grant Thornton has been acting as a trusted advisor to entrepreneurs and leaders for over 70 years, and particularly since Day 1 of the pandemic. Our team of 2,800 professionals in more than 100 offices across Quebec and in the Ottawa and Edmundston regions share the same ambition: to give local businesses the means to achieve their ambitions.

You can read the full letter (in French) in our pages.

25 Sep 2020  |  Written by :

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

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How should employers consider Canada’s Emergency Wage Subsidy in setting their transfer prices?

As of September 13, 2020, close to 1.1M Canadian employers had applied for the Canada Emergency Wage Subsidy (“CEWS”) to cope with the effect of the Covid19 pandemic and the subsequent lockdown. This wage subsidy is available for Canadian companies that experienced significant decrease in revenues since March 2020.

According to the most recent version of the CEWS, Canadian employer can be eligible to the wage subsidy if the decrease in their qualifying revenue meet the required threshold for the period, even if all or substantially all of their revenues are from sales to a non-resident corporation, who then sells to arm’s length customers.

Consequently, it is important for these Canadian eligible employers to understand how to treat the wage subsidy for transfer pricing purposes.

TPM-17: CRA’s Position on the Treatment of Government Assistance for Transfer Pricing Purposes

CRA’s position on the treatment of government assistance in the context of a transfer pricing analysis is described in a transfer pricing memorandum (TPM-17) that was published back in March 2016.

According to TPM-17, when a taxpayer receiving governmental assistance uses a cost-based transfer pricing methodology to determine the transfer price of goods, services, or intangibles sold to a non-arm’s length non-resident person, the cost base should not be reduced by the amount of the government assistance received, unless there is reliable evidence that arm’s length parties would have done so given the specific facts and circumstances.

CRA has confirmed that its position has not changed because of the COVID-19 pandemic at a roundtable held on September 15 by the Canadian branch of International Fiscal Association.

In fact, a representant of the Competent Authority Services Division mentioned that CRA expected the temporary assistance provided to Canadian taxpayers to remain in Canada, and not be used to reduce the transfer prices charged to foreign entities. He also did not provide examples of the market evidences that CRA expected from a taxpayer that decides to offset its costs against the assistance received in determining its transfer prices.

In light of this, it seems that it will be very difficult for a Canadian employer that receives the CEWS or other COVID-19-related government assistance to justify a reduction of the transfer prices charged to a related non-resident.

Reliable Evidence?

One of the biggest complain about TPM-17 is that the term “reliable evidence” is not defined in the document, and that there is no clear indication on how to demonstrate that cost-base used in the calculation of the transfer prices should be reduced by the amount of the assistance received because arm’s length parties would have done so. This critic is often heard from multinational group that have invested in R&D service center in Canada to benefit from the tax incentives provided by all levels of governments.

Although not specifically mentioned in TPM-17, it is reasonable to think that a reliable evidence would be a situation where a taxpayer that provides services to both related and arm’s length parties is able to demonstrate that its profitability on services provided to related parties is in line with the profitability on services provided to arm’s length parties.

Reliable evidence is even harder to demonstrate when a Canadian taxpayer acts as a service provider for the exclusive benefit of related entities. In that situation, one way to demonstrate that the profit earned by the service provider is arm’s length could be to calculate the markup on total costs (not reduced by the amount of government assistance received), and see if this lower markup on costs is still within an arm’s length range of markup on costs earned by comparable service providers.

22 Sep 2020  |  Written by :

Marie-Pierre Pelletier is a taxation expert at Raymond Chabot Grant Thornton. Contact her today!

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Jean Martel
Senior Manager | M. Ps., Psychologist | Management consulting

Look beyond your workforce’s current skills to assess their potential and you might just find a diamond in the rough.

Gone are the days when workers spent their entire career within a single organization. According to a 2018 report from the recruitment firm LiveCareer, today’s workers spend an average of 3.8 years with an employer. This number is even lower among younger generations like millennials. In fact, while the average employment duration was 8 years for baby boomers, it was just 5.4 years for generation Xers and a mere 2.4 years for millennials.

This mobility creates major recruitment and retention issues for employers, and the COVID-19 pandemic hasn’t helped ease the pressure. An Angus Reid survey found that in Quebec, 41% of respondents who are currently employed are either actively looking for a new job or plan to do so within the next year, once market conditions improve. Here’s what workers are looking for:

  • Personal development opportunities;
  • Sense of belonging within the workplace;
  • Recognition from the employer;
  • Being given responsibilities;
  • Good relationships with colleagues and managers;
  • Competitive compensation.

Now more than ever, organizations are faced with the challenge of helping employees achieve their professional development goals, even though workers are increasingly inclined to change employers regularly. At the same time, organizations have to promote a management philosophy that encourages professional wellbeing. So, what’s the best strategy for meeting these goals? It can start as early as the recruitment phase.

Recruiting for today—and tomorrow

Traditionally, recruitment specialists review resumes to see whether candidates meet the criteria for a specific position. Do they have the right level of education? Will they bring the right skills to the table? Is their past experience relevant to the challenges that the job entails?

Next, recruiters interview candidates to further assess their skills and compatibility with the manager, team, workplace and conditions. The purpose of all this is to find someone who meets a clearly defined need. But what happens if the employee wants to grow within their role after a few years?

There are ways to help workers develop their professional potential within an organization—and boosting their job satisfaction at the same time.

Assessing potential in addition to skills

A person’s potential is their aptitude for developing new competencies in order to assume more complex roles within an organization. It’s important not to confuse an individual’s potential with their current job performance.

Performance assessments measure whether a worker is successfully completing their tasks. These evaluations don’t usually provide any indication of whether the worker has the potential to take on different or more complicated responsibilities.

There are three key factors that can influence a worker’s development potential within their organization:

Good match between the individual and the organization

The worker’s values are aligned with the company’s. People who are naturally curious, independent and looking for challenges will want to advance their careers in companies that promote innovation and accountability.

Ability to learn

Given the fast pace of change in today’s workplace, workers who are willing and able to learn new things tend to be more agile, credible and adaptable.


When determining what roles and responsibilities a candidate is suited for, some points to consider include their self-reliance, ambition, leadership skills, priority management capabilities, personal interests and ability to manage stress.

Is there a diamond in the rough within your ranks?

Could your next manager already be working for your company? Are there people within your teams who can help your organization meet its medium and long-term goals? Evaluating a person’s potential can help you answer these questions and more. By assessing each candidate’s potential, you can:

  • Make an informed choice based on a deeper understanding of the candidate and their potential to help the organization grow;
  • Understand their aspirations in order to provide them with professional development opportunities and boost their engagement;
  • Help the worker make a smooth transition into their new role or team;
  • Find out what motivates workers and how to engage them;
  • Prevent unpleasant surprises and dodge costly recruitment mistakes.

By gaining insights into each candidate’s personality, interests and values, you’ll be able to gauge whether they can grow into more complex roles. You’ll also get a better idea of how the organization can help them advance their career.

Our human resources professionals have developed a candidate potential assessment model that’s backed by a range of helpful tools. These include skills and aptitude tests, as well as personality, interest and values inventories.

Interested in learning more? Contact us to inquire about our personalized recruitment services. Our multidisciplinary team will be pleased to connect you with the right solutions for your needs.

This article was written in collaboration with Mathieu Beaudoin, Human Resources Advisor.

22 Sep 2020  |  Written by :

Mr. Martel is your expert in potential assessment at the Sherbrooke office. Contact him today!

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