Manufacturing enterprises are the pillars of the Quebec economy. Over the years, several tax measures have been announced to encourage investments in this sector.

The following is a summary of the principal tax measures that deal more specifically with manufacturing enterprises in 2019.

Read our On-line Tax Strategies bulletin below.

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This webinar was presented on March 26, 2019 and addresses the main questions regarding the first budget tabled by the Coalition avenir Québec (CAQ) government.

Organized by Raymond Chabot Grant Thornton in association with the Association des professionnels en développement économique du Québec, the webinar was hosted by Jean-Pierre Poulin, Tax Partner, and Jean-Philippe Brosseau, Economist and Senior Manager in Management Consulting from our firm.

Listen to this webinar (in French) that highlights a number of measures related to regional economic development in Quebec.

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The Grant Thornton International IFRS team has published Insights into IFRS 16 – Lease payments.

The bulletin Insights into IFRS 16 – Lease Payments provides guidance on how to determine which lease payments to include in the measurement of the lease liability when accounting for a lease under IFRS 16.

The issue

IFRS 16 requires a lessee to measure the lease liability at the present value of the lease payments that are not paid at that date. This liability includes both fixed lease payments (including in-substance fixed payments) and variable lease payments that depend on an index or rate, and it represents the starting point for the measurement of the related right-of-use asset.

Deciding which payments need to be recognized in the measurement of the liability and how changes in those payments are recognized often involves considerable judgment. The bulletin Insights into IFRS 16 – Lease payments aims to help you with this judgment.

Download the bulletin below.

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Jean-François Rhéaume
Senior Manager | CPA, CA | Tax

The criteria for obtaining SR&ED credits for SMEs have been modified. This was announced with the release of the March 2019 federal budget.

Profitable SMEs have always been at a disadvantage with respect to federal scientific research and experimental development (SR&ED) tax credits because of the famous taxable income test. When taxable income reached a threshold of $800,000, all of the tax credits earned by an SME were then at the same rate as for large businesses.

The March 19 federal budget proposes to correct this injustice. As a result, for all year ends ending after that day, the taxable income test will be removed from the relevant provisions of the SR&ED program. A company would therefore be able to obtain SR&ED credits at the increased rate of 35% on the first $3M of qualified expenditures when it meets the following conditions:

  1. Be a Canadian-controlled private company (CCPS);
  2. Have taxable capital less than or equal to $10M at the end of the previous fiscal year. Remember that the taxable capital of all associated companies must be considered.

When taxable capital is between $10M and $50M, there will be a linear reduction in the expenditure limit for the first $3M. For all expenditures exceeding this reduced limit, the credits granted will be at the rate of 15%.

Furthermore, don’t forget that SR&ED credits earned at a rate of 35% are fully refundable when the federal tax is not sufficient for an SME to use them in full.

26 Mar 2019  |  Written by :

Jean-François Rhéaume is your expert in taxation for the Québec office. Contact him today!

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