Pierre Bourgeois
Partner | CPA, CA | Tax

The Organisation of Co-operation and Economic Development (“OECD”) has published on October 9, 2019 its Secretariat Proposal for a “Unified Approach” under Pillar One.

This document is part of the work performed by the OECD on the tax challenges arising from the digitalisation of the economy, and follows a Program of Work that was published earlier this year. The Secretariat Proposal addresses the question of income allocation rules to market jurisdiction, and the revision of the Nexus rules.

More to read on GTI site.

17 Oct 2019  |  Written by :

Mr. Bourgeois is a partner at Raymond Chabot Grant Thornton. He is your expert in taxation for the...

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Christiane Caisse
Senior Manager | CPA, CA, M. Sc. | Financial advisory

Costing is of paramount importance to any company, including service companies, and helps to improve profitability.

Like manufacturing companies, service companies are constantly evolving and managers must have all the information they need to make informed decisions and ensure the company’s financial performance.

By definition, costing is the sum of all expenses needed for producing a good and finalizing a service.

Establishing costs for informed decisions

There are several advantages to knowing and controlling the cost of your services, such as:

• Determining the sales price of services;
• Making informed decisions about contracts (because in negotiations with the client, the manager is better able to understand the available margins);
• Recognizing the difference between profitable and non-profitable services.

In many companies, costing is a neglected management tool, either because of lack of time or lack of knowledge.

As a result, many managers navigate rough waters and cannot rely on costing in the many strategic decisions they must make.

Here are some points indicating that you would need to update or review your costs:

  • Your costs were last updated more than a year ago;
  • Significant changes were made within your business;
  • Your range of services has increased and you don’t know how to price your new services;
  • You’re not sure you included all of the relevant costs in your costing;
  • Your profit margin does not reflect the estimated profit margin at the time of a tender.

Calculating costs

To evaluate the cost of a service, you have to understand that it is composed of several elements:

  • Salaries;
  • Subcontracting;
  • Operating costs;
  • Sales expenses;
  • Administration expenses.

When determining your costs, one of the most common pitfalls is to evaluate a resource’s hourly rate based on hours worked rather than taking into account productive hours (vacation and other days off, breaks and training).

For example, if we take an employee with a $25 hourly rate including benefits, this is equivalent to an annual salary with benefits of $52,000 per year. This annual expense, based on the number of productive hours per year ($52,000/1,660 hours in our example), gives us a productive hourly rate of $31.33. It is this rate that should be taken into account when assessing a service contract and not the $25 hourly rate.

When assessing your services, you will be confronted with several traps . One of the most important ones to avoid is postponing the project or waiting for 100% accurate information to determine the cost price. Remember that, like your company, costing is a constantly evolving process.

16 Oct 2019  |  Written by :

Christiane Caisse is your expert in Financial advisory for the Sherbrooke office. Contact her today!

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Mylène Tétreault
Senior Manager | M. Fisc., B.B.A. Fin. | Tax

Persons who have relinquished or intend to relinquish their U.S. citizenship can, under certain conditions, benefit from a new tax relief program.

This temporary program, with no specific termination date, provides some U.S. citizens living abroad – including in Canada – to correct their tax situation and avoid significant penalties.

Note that all U.S. citizens are required to report their world income and pay U.S. tax, regardless of where they live and work.

The new program, Relief Procedures for Certain Former Citizens, was announced on September 6, 2019 by the Internal Revenue Service (IRS). It is more generous than other similar programs.

Eligible persons will be exempt from paying any tax due, along with applicable interest and penalties. This includes expatriation tax and penalties for failing to file certain tax and financial information returns.

The expatriates tax relief is a significant benefit, because individuals who have relinquished their U.S. citizenship but failed to complete form 8854 (Initial and Annual Expatriation Statement) are usually subject to this tax.

New program: eligible persons

The program applies solely to U.S. citizens, not to green card holders.

To avail themselves of the program, individuals have to meet several conditions, they:

  • relinquished their U.S. citizenship after March 18, 2010;
  • have never filed the U.S. general tax return (Form 1040); however, to submit their application, they must file this form and the required international information forms for the year of expatriation and for the five previous years;
  • do not owe more than a total of US$25,000 in federal taxes in the year of expatriation and in the five previous years, excluding taxes and penalties;
  • have a net worth of less than US$2 million at the expatriation date and at the date of making a submission under the program;
  • have completed and filed form 8854 for the year of expatriation;
  • failed to satisfy their tax obligations involuntarily, based on the good faith assumption.

Note that there is no restriction on the number of days the person stayed in the United States.

Failing to satisfy U.S. tax requirements is risky. Note as well that Canadian financial institutions are required to communicate some of your financial information to the IRS. It’s very important to correct your tax situation or you could be exposed to significant penalties.

How to I apply for this program?

One of the benefits of the new program, unlike other tax exemption programs such as Streamlined, is that it’s not necessary to have a U.S. Social Security Number (SSN). This simplifies the process for individuals who do not have an SSN.

However, the program has a strict process that requires various forms to be submitted, including those mentioned above. Since this is a temporary program, we recommend that you take the required steps as soon as possible.

Our International Mobility team can help by taking charge of your file. We’ll ensure you satisfy the program criteria and file the necessary documents.

We invite you to contact our team if you have any questions in this regard.

09 Oct 2019  |  Written by :

Mylène Tétreault is your expert in taxation for the Québec office. Contact her today!

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With the ongoing workforce shortage, the employer brand is a key factor to recruit and retain competent staff for your business.

How can you recruit new staff with the requisite qualifications for the positions to be filled? How do you keep your current employees when there is a labour shortage and extensive competition?

Enterprise leaders must adapt to this new reality and take the volatility of human resources into consideration in their decision process.

The employer brand is more than an image

Using the employer brand is gaining momentum among Quebec enterprises and can be an efficient solution to offset some of the human resource issues they are facing.

Before developing an effective employer brand, your organization must first analyze its identity.

  • What image does it project outside the organization?
  • What is its intrinsic DNA?
  • What sets the organization apart, makes it unique?

Once the identity has been defined, a marketing team will determine the most appropriate tools to promote and showcase it.

This approach makes it possible to target potential employees. The objective is not to please everyone, but rather to draw those workers whose profile meets your organization’s needs.

However, the employer brand is not just a hiring method. It must also be an integral part of the organization’s philosophy and the employee experience.

Finding the right profile is key

Traditionally, recruiting involved posting the greatest number of job openings on the greatest number of channels. This approach could be frustrating for both recruiters and potential employees.

The objective of using the employer brand is to make the organization attractive for the desired profiles. Better targeting makes staff recruiting and retention more effective. It helps to develop digital tools that are consistent with the brand and will work on their own, without the need for advertising. This increases your chances of attracting a steady stream of qualified candidates.

The employer brand must be authentic: the employer’s discourse must reflect the employees’ reality. This is why there must be a strong focus on internal communications. They ensure that employees are understood and shown consideration, while keeping them informed about the organization’s latest news.

From this point of view, what employees say carries a lot of weight. In this age of social media, information about negative experiences travels much faster than good news. Also, a job offer posted by the organization and shared by employees on their social media will have much better visibility, because, let’s face it, information shared by an organization’s employees inspires trust. It provides even more incentive for potential candidates to apply.

The interview shift

Lastly, recruiters must always keep in mind that it is now employees who have the upper hand. It is no longer employees who are interviewed so much as the organizations themselves, employees now have a lot of choice. It is therefore in an organization’s interest to be attractive.

The employer-brand approach can be much less costly than one might think, especially for small businesses that have the advantage of being flexible.

Our experts offer support services for all of the steps of this transition, from the first reflection to adopting the employer brand.