A new income source for the government? How about a new tax on the sale of select goods?

A new “luxury” tax could apply as of January 1, 2022 on the retail sale of new personal cars and aircraft with a retail sale price over $100,000 and new boats with a retail sale price over $250,000. Importing such “designated property” will also be subject to this tax.

Here is a brief summary of the rules for vehicles covered by this new tax.

 

 

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It is possible to transfer funds accrued in a foreign pension plan to Canada with zero tax impact, provided the transfer is well planned.

If you have lived and worked abroad, you may have contributed to a retirement plan. For example, in the U.S., there is the Individual Retirement Account (IRA) and 401(k) and 403(b) plans. However, before you decide to move these retirement savings to Canada, there are several factors to consider. It is therefore important to consult an international tax expert in order to define the strategy best suited to your situation and properly plan the transfer.

Why transfer the funds?

While transferring the funds to Canada is not mandatory, there may be several benefits to this process, such as:

  • Simplifying wealth management by consolidating all retirement savings in Canada;
  • Avoiding complications at the time of death (transferring the funds could be complicated);
  • Avoiding U.S. estate tax and high legal fees at the time of death;
  • Minimizing the risk of exchange rate fluctuations.

Transferring funds to your RRSP

When you become a Canadian resident again, you can transfer a lump sum to your RRSP in Canada. Under certain conditions, you then have an equivalent deduction that does not take into account your RRSP deduction limit.

  • The amount transferred to your RRSP must be included in your taxable income in Canada, but the equivalent amount can be deducted, as is the case with a standard RRSP contribution.
  • To be entitled to the deduction in the year of transferring a foreign plan, you have to make the RRSP contribution no later than 60 days after the end of the year of transfer and the transfer must occur before December 31st of the year you turn 71 years of age (transfers to a registered retirement income fund (RRIF) do not qualify).• Transfers to a spouse’s RRSP are not permitted.
  • In Canada, with proper tax planning, you may be able to recover up to all of the foreign tax by claiming a foreign tax credit. This will avoid double taxation, i.e., not having to pay both the foreign tax and the Canadian tax that will be due when you start withdrawing funds from your RRSP.

Transferring with zero tax impact: Example of a U.S. plan

Let’s say that you have a U.S. pension plan valued at US$100,000. If you withdraw the full amount to transfer it to an RRSP in Canada, you will pay US$30,000 in U.S. tax (30% of US$100,000). You will then have a US$70,000 balance to transfer. Nevertheless, you will be able to contribute up to US$100,000 to your RRSP by designating this contribution as a qualifying transfer (the allowable tax deduction is equal to the total amount withdrawn from your U.S. plan).

Ideally, in order to contribute the full amount allowed, you will also need to have income from other sources, since the U.S. tax authorities will have withheld 30% of the amount from your retirement plan. Note that if you are under age 59 1/2 at the time of withdrawal, you may be subject to an early withdrawal penalty of 10% of the amount withdrawn.

To achieve zero tax impact, you have to be able to claim the highest possible foreign tax credit to recover U.S. tax paid and avoid double taxation. This requires having sufficient other income to report in Canada.

Periodic payments on retirement

Another option is to leave the funds in the foreign plan until retirement and then make periodic withdrawals as permitted under tax rules.

  • Under this option, you cannot transfer the amounts to your RRSP in Canada, unless you have contribution room.
  • The withdrawn amounts are added to your taxable income in Canada.
  • In Canada, you could recover any foreign tax paid by claiming a foreign tax credit on your tax return.

Regardless of the solution you choose, there are several other important considerations to ensure that there is zero tax impact and to avoid double taxation. That’s why solid planning with a tax expert is essential before you start transferring funds from your foreign pension plan.

Do you have questions? Our team of international taxation experts can support you in making the choice and implementing the most beneficial tax strategy. Contact us to talk to one of our specialists.

This article was drafted in collaboration with Julie Barma, Senior Consultant, Tax.

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Katy Langlais
Manager | CRHA, MBA | Human resources consulting

Mobilization has always been a key challenge for companies. With the shift to remote work, they will need to make it an even bigger priority.

Since the start of the pandemic, companies have seen an erosion of employee engagement. Meanwhile, the labour shortage has opened new opportunities for workers, resulting in turnover within teams. Employees who stay on have to fill the void left by their departing colleagues. As they await new resources, fatigue sets in and many begin to reconsider their options.

Since the hybrid work model—combining on-site and off-site work—is here to stay, companies need to think about what defines them and how they can create a welcoming and stimulating environment for their employees, even when they are working remotely.

What can companies do in the current environment to attract engaged employees who will embrace their organizational culture? Here is a four-step guide that will help you get there by leveraging your organization’s strengths.

1. Take the time to review and reassess your company’s culture

The first thing to do is ask yourself key questions about your company’s values and experience. For example:

  • What is your mission?
  • What are your values?
  • What is your management philosophy?
  • What are your HR practices?
  • What kind of activities is your company involved in?

Next, ask yourself if your company truly embodies all these values and ways of action and remains committed to upholding them. Organizational culture needs to evolve to adapt to the changing needs of customers and workers. You also have to ensure that day-to-day life at your organization genuinely reflects your mission and the values you promote in your brand image.

If you “sell” a new employee a certain vision of your organizational culture but the reality turns out to be completely different, there is a strong chance the employee won’t identify with what you initially promised them. You don’t want to be spending human and financial resources on an ineffective onboarding process, especially given the ongoing shortage of workers.

2. Identify your differentiators

Make a list of the things that set you apart from the competition and define your company’s DNA. This can include things like:

  • Working conditions;
  • Work environment;
  • Management practices;
  • Relationships between colleagues and managers;
  • Activities and celebrations.

Set aside a few hours to meet with your most senior employees and try get a sense of why they stay with you. They have the potential to become your best ambassadors and help you craft an employee experience that aligns with your current culture and DNA.

Finally, make a list of the things that make your employees decide to leave your organization and review your HR management practices with the right diagnosis and a survey of your organizational climate.

3. Review your new employee onboarding practices

The importance of effectively integrating new employees is all too often overlooked. However, onboarding is a key part of the employee life cycle that can make or break a new hire’s loyalty and mobilization. An employee’s first experience at the company—how they are welcomed, meeting their manager and the first impressions they take away—will define how engaged or disengaged they will be toward your organization.

Don’t underestimate the impact of a thoughtfully prepared and well planned out onboarding process. If you use the hybrid work model, you should do as much of the onboarding as possible on site at the office in the presence of colleagues. Afterwards, training activities related to the position or organizational matters (workplace health and safety, policies and regulations, tasks and procedures, computer tools, etc.) can be completed remotely.

Find personalized ways to welcome new employees and nurture a sense of belonging with their new team. For example, your team can organize an introduction ritual for new hires by inviting them to lunch or bringing in donuts and muffins on their first day, or by asking them to share their biggest passion. That way, you will get to know your new recruit better in a more laid back setting on their first day.

Since some of your staff will choose to continue to work remotely, you can also send out a welcome email introducing new employees to the group, with anecdotes and funny or interesting facts about them (with their permission) and an invitation to a meet and greet. You can also directly send new employees a small welcome kit with various items to immediately make them feel like an integral part of the team.

These are just a few ideas. Be creative and find an approach that is unique to your own organizational culture.

4. Promote contacts, get managers involved and create events that convey your company’s culture

Fostering a shared organizational culture in a hybrid (on-site and remote) work environment comes down to three essential components: The first is developing an environment grounded in solid relationships and a spirit of learning.

The second is mobilizing work teams to build a strong culture and promote employee engagement.

The third component is fine-tuning the foundations of your organizational culture. For example, this can mean being more engaged in social causes.

Managers play a vital role in achieving this. Without their involvement in the transmission and integration of your values and organizational culture, and without their commitment to creating a sense of belonging among new hires, you will find it difficult to build engagement.

Your managers are key players when it comes to fostering good relationships between employees in a hybrid work environment. They are the catalysts for projects that bring together different employees and they lead the successful integration of remote staff.

Whether you are trying to optimize your performance or meet client needs, working on a meaningful project together helps build team spirit and a sense of belonging to the organization.

Once you have succeeded in attracting employees, don’t miss your opportunity to foster their engagement. Help them transcend the distances created by technology and embrace your company’s culture by leveraging your greatest assets: your core values and humanity.

25 Nov 2021  |  Written by :

Katy Langlais is a recruiting and human resources consulting at Raymond Chabot Grant Thornton.

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Would you like to reduce your income taxes? Proper tax planning should be a year-long activity. However, there is still time to implement a few strategies that could reduce your taxes. Furthermore, certain measures coming into effect as of 2022 should be taken into consideration.

The following are a few simple, effective strategies that can be implemented before the end of 2021 or early in 2022. Don’t hesitate to contact your Raymond Chabot Grant Thornton advisor who can help you determine the measures that apply to your situation.