Prepared in the context of a health crisis, the Legault government’s third budget focuses on three priorities: health, education and the economy.

As the Quebec government expected in the fall of 2020, the 2020-2021 deficit remains at $15B. After using the stabilization reserve, the current year’s deficit is $6.2B. For the next two years, the deficits are estimated to be $12.3B (2021-2022) and $8.5B (2022-2023), with the objective of balancing the budget in seven years, at the end of the 2027-2028 fiscal year. Since the deficits will continue for more than five years, the Balance Budget Act must be temporarily updated.

The underlying objective of those budget announcements is to avoid increasing taxes (individuals and corporations) and cutting back on public services. From an economic perspective, there are several noteworthy measures, including the three tax measures below.

Enhancing the investment and innovation tax credit (C3i)

In order to encourage businesses to accelerate their new technology investment projects, the government is announcing that the C3i rates will be doubled for a two-year period, that is, to December 31, 2022. That means the rates will go:

• from 10% to 20% for investments in the Montréal and Québec City metropolitan communities;
• from 20% to 40% for investments in territories where economic vitality is low;
• from 15% to 30% for investments in other territories or regions.

That temporary increase, which will cost close to $290M over five years, will help more than 10,000 businesses complete their investment projects more quickly.

Reducing the tax rate for SMEs

In the 2021-2022 budget, the government is announcing a reduction of the tax rate for all SMEs eligible for the small business deduction (SBD) from 4.0% to 3.2%, the same level as Ontario, starting March 26, 2021.

Improving the tax credit for on-the-job training

This five-year, $14.1M measure, combined with other measures to help young Quebecers integrate the job market, is part of initiatives totalling almost $97M, including $31.4M in 2022-2023, to support young people who are neither in studies, employment or training, in their integration into the labour market.

Other Measures

In terms of economic support, the 2021-2031 Quebec Infrastructures Plan (QIP) will be increased by $4.5B to $135B, together with a 60% increase in investments in the next five years, providing a powerful driver of economic vitality. The budget is also adding $404M over five years to support the requalification of workers and the integration of immigrants into the labour market. Additional support is being provided for culture and tourism with $392M and $204M respectively in new funds over five years. Furthermore, an additional envelope of $523M and $218M is being provided for economic development in the regions and innovation, respectively.

For more information on the tax measures announced in the 2021-2022 budget, please download our document.

On March 24, 2021, Finance Minister Peter Bethlenfalvy tabled Ontario’s 2021-22 budget (Budget 2021). The two
main anchors for Budget 2021 are health and the economy.

Corporate tax rates

No further changes to the corporate tax rates or the $500,000 small business limit are proposed.

Ontario Small Business Support Grant

Budget 2021 announces that the government will be providing a second round of Ontario Small Business Support Grant payments. Eligible small businesses that received the first payment will automatically qualify for the second round of support grant for a minimum of $10,000 and up to $20,000. The government will provide more details on the second grant application.

Download the pdf below for more details.

The restaurant industry has been particularly hard hit by the pandemic. What should you do to plan for your business’ future?

Nobody knows how long the pandemic will last or what the fallout will be over the medium and long terms. Faced with ever-changing public health and government restrictions, as well as major changes in consumer habits, restaurant owners have to make tough decisions about the future of their operations. That’s why it makes sense to review your business practices now and create a reopening plan.

Is it time to review your business’ strategic plan?

In times of crisis, it’s common for people to reassess their future on both the personal and professional levels. The pandemic prompted many restaurant owners to adapt to new market trends by offering online ordering and sales, delivery and curbside pick-up. Now that those changes are in place, it’s time to take a step back and re-examine your procedures, work methods and maybe even your core business.

To do so, you’ll need to ask yourself important questions like:

• Is my dining room too big?
• Should I build or expand my outdoor patio?
• Are my menu items aligned with new market trends?
• Should I consider bringing in a new shareholder?
• Can my bank representative help me plan new projects?
• Is my current financial structure need to be optimized?
• Can I change the rates, terms and repayment dates of my existing loans?

What do your partners and employees have to say?

Since your business’ future is at stake, be sure to seek input from your shareholders, banker, accountant and key employees. Based on these conversations, you should be able to come up with a plan to help your restaurant get through this challenging period and adjust to today’s new realities.

The situation is a difficult and delicate one. However, there are options out there—including some highly innovative solutions—that could give your business a brighter future. For instance, an external expert in business consulting could provide you with a fresh perspective on the situation and offer an assessment based on facts and figures.

Should I consider a turnaround plan?

Are you worried about your business’ financial situation? Rest assured that no matter how complicated things are right now, there are solutions that can help you plan for the future with peace of mind. A turnaround plan can provide you with an assessment of your strengths, weaknesses and business opportunities, so that you can make informed decisions on how to improve your prospects. With clear diagnostics and guidance, you’ll have a better idea of where your business stands and which solutions are best for you and your organization.

After a tough year, is hope on the horizon?

If anything, the past year has forced the hospitality industry to think outside the box and prove its ability to respond to consumer demands.

Despite the uncertainty of fast-changing restrictions, it’s clear that many new consumer habits are here to stay. Restaurant owners need to take customer needs into consideration when developing their long-term strategy, while also adjusting their business plan to capitalize on new opportunities.

This article is written by Christine Brosseau. You can watch this video (in French) to learn more about those issues.