The Canadian Revenue Agency treats cryptocurrencies as commodities for Canadian tax purposes.

This poses a problem for cryptocurrencies which must be valued at each trade. Unlike standard commodities, their price is volatile with markets differing around the planet.

Under the Income Tax Act, cryptocurrencies present new challenges in reporting. In addition, due to the nature of foreign currency exchanges, there are legal quagmires surrounding the purchase of crypto assets abroad. While cryptocurrencies are generally taxed as capital gains, businesses profiting from their trade may see gains taxed as business income. Demonstrating this distinction may require expertise, particularly in the case of masternode maintenance.

Cryptocurrencies and tax strategies

You are considered to be running a business if:

• You have a history of trades;
• Those are rapid purchases;
• You commit an important part of your time to the analysis of the market;
• You do the research;
• You finance your transactions.

We will highlight available tax strategies for you, such as incorporation.

The various requirements can be challenging to identify. For instance, taxpayers are required to file Form T1135 with CRA if they own specified foreign property that in the aggregate cost more than $100,000.

In the case of crypto assets, when these are held by third-parties in a foreign state, they may subject to that form. Failure to file results in a minimum automatic penalty of $2,500 for each annual failure to file.

Our tax experts and lawyers will help work through your obligations.

Over time, strong growth periods have always been characterized by major revolutions, particularly in the manufacturing industry.

Whether it’s called manufacturing 4.0, industry 4.0, digital transformation or smart manufacturing, the most recent industrial revolution provides Quebec businesses with a multitude of opportunities… until 5.0 makes its appearance. Industry 4.0 is not an end in and of itself, it’s an evolution to increase competitiveness and maintain added value in the marketplace.

Considered to be the fourth industrial revolution, following mechanization, mass production in the 19th century and production automation in the 20th century, industry 4.0 integrates digital technologies into the manufacturing process.

Undertaking the digital shift can provide numerous benefits to businesses, from improved process agility and data usage to cost reductions. It may even become a necessity to remain competitive and maintain business relationships with clients.

Entrepreneurs who want to undertake this shift are often hindered from doing so because of myths or concerns they’ve heard that impact how they perceive such a project. Here are some of them.

Myth no. 1: integrating 4.0 is an intimidating task

What you hear:
Many of the entrepreneurs we meet tell us they’re uncertain about undertaking the digital shift because, in their minds, it’s a colossal task. Despite its advantages, the process seems arduous because of the major changes involved, the significant investments in time and money required in the short term and because the overall transformation process is misunderstood.

What you should know:
The biggest mistake you can make in a digital shift is wanting to do it all at once, as this often leads to failure. The transformation must be carefully prepared, with each step progressively planned. Conducting an in-depth analysis of the company with an industry 4.0 audit and reviewing the objectives provide a clearer understanding of the projects to be implemented in an industry 4.0 transformation.

This analysis will also help define a project hierarchy to capitalize on the results and impact of each step and ensure greater control by spreading costs over time. This action plan will maximize the return on the investments in the medium term.

What you should do:

Our experts can assist all types of businesses (transport, services, manufacturing, etc.) in their digital transformation and they are now accredited by the Ministère de l’Économie et de l’innovation (MEI) as part of the program Audit industrie 4.0. Investissement Québec acts as the agent for this program and grants are available for businesses for all industries, including cooperatives and social economy enterprises, to enable them to begin the process and to benefit from the support of accredited experts.

Trusts are a tax option with numerous benefits to plan the transfer of assets to family successors.

A business transfer is a process that should be initiated several years in advance and generally includes the transfer, first, of knowledge, then power then equity.

Benefits of a trust

Using a trust can be an interesting alternative from a legal perspective. Because equity is separated, it provides better protection. The trust terms include instructions for replacing trustees and identifying the beneficiaries, which is not the case with a company’s shareholders.

When using a trust in a business transfer to family successors, the owner-manager can transfer future value to the children without having to immediately determine how and to whom shares will be attributed.

A trust can be useful if the shareholder is ready to transfer the future appreciation in value to his or her children who are too young to have an interest in managing the business. It can also be a good option if the children aren’t sure yet about whether they want to take over the family business.

Looking at the options

If an owner-manager plans to withdraw from the business and his or her child will be taking over its operation, there are two options:

• The family trust allocates common shares to the child and there are no tax consequences on the transfer;
• The business exchanges common shares held in the family trust for non-participating shares and the child subscribes for the business’s new common shares.

There are a number of prerequisites to setting up a family trust in an organizational structure, which include:

• Analyzing the current organizational structure;
• Evaluating the shares of the company where the trust will be integrated;
• Setting up the trust;
• Preparing any tax forms required;
• Reviewing the various legal documents.

Our team of tax specialists can advise you on setting up a trust as part of the transfer of a business to family successors. Contact us today for personalized support in this initiative.