Emilio B. Imbriglio
President and Chief Executive Officer | FCPA, FCA, MBA, CFE, ICD.D.

For Canadian companies to become increasingly competitive, a major review needs to take place. And not just any review: that of the Canadian tax system.

According to Emilio B. Imbriglio, President and Chief Executive Officer of Raymond Chabot Grant Thornton, “It’s time for our tax system to align with current entrepreneurial dynamics, since it’s become obsolete in many respects. The taxation of SMEs must be fair and efficient so that they can perform better, and it needs to foster innovation by more efficiently meeting the needs of 21st century businesses. Furthermore, why should our SMEs still pay income tax?”

Tax system adapted to globalization and business families

These days, countries and organizations do much to ensure that multinational taxation is competitive on an international scale. “While the effective tax rate of SMEs is higher now than that of certain Canadian multinationals, it’s essential to perform a thorough review of SME taxation to ensure that it’s competitive and allows today’s SMEs to become the major companies of tomorrow,” asserts Jean-François Thuot, firm Partner and Tax Leader.

The firm is calling for the total elimination of the business tax for SMEs with annual revenues below $500,000, provided that the amounts saved will be reinvested into productivity, employment and innovation.

Year after year, Raymond Chabot Grant Thornton does a great deal to ensure that SMEs benefit from a fair and efficient tax system that is competitive. “The firm supports CPA Canada’s recommendation to undertake a comprehensive review of the country’s tax system to reduce its complexities and inefficiencies,” adds Imbriglio. Such a review would clearly make the Canadian tax system more efficient. In his opinion, “tax incentives can only be achieved by reviewing the current system. We need to act quickly. And, in Quebec, why are we waiting to apply the Godbout Commission’s measures?” While this strategic exercise has proved to be extremely relevant, we are still waiting for more structuring measures to be applied.

A total overhaul is necessary. Currently, laws encourage our entrepreneurs to sell their business to the highest bidder rather than their children. Serge Godin, founder and Executive Chairman of CGI Group, recently challenged this issue publically. Jean-François Thuot, Partner, was quoted in this major La Presse article which detailed Mr. Godin’s appeal.

Tax unfairness in intergenerational business transfers needs to become a thing of the past

Raymond Chabot Grant Thornton is keenly interested in intergenerational transfer tax unfairness. The firm has been calling for changes to the Income Tax Act with respect to intergenerational business transfers since 2010, the year in which it sent a detailed report regarding this issue with possible solutions to the Canadian and Quebec Ministers of Finance. Since then, the firm has been regularly holding presentations with the governments so that they will quickly take action.

Emilio Imbriglio recently reiterated his call for the federal government to take action to support local business sustainability. In the pre-budget notice sent in February 2016 to Canadian Finance Minister, Bill Morneau, he mentioned specifically:

“In its 2015-2016 budget, the Government of Quebec adopted measures that would largely address this issue. As you know, in Quebec, business owners will benefit from the capital gains exemption [note: as of the tabling of the 2016-2017 budget, instead of January 1, 2017, as originally planned] if they sell their primary sector or manufacturing business to a company held by their children. In our opinion, this tax equity must also extend to all companies from the range of Quebec’s economic sectors. We believe it’s the federal government’s turn now to act quickly in this respect so that tax measures across Canada can generate a significant and durable impact.”

According to Raymond Chabot Grant Thornton, it’s apparent that the federal government needs to reach consensus with the Quebec government so that tax legislation regarding this issue can be quickly harmonized. Canadian business owners need to stop being penalized for selling their business to their son or daughter rather than a stranger.

This transaction type causes the seller to lose out on the capital gains deduction, representing nearly $825,000, which is not the case for third party transactions. “We will continue to hold the required presentations to encourage family business transfers and foster the success of our dynamic businesses from all economic sectors,” stated the firm’s President and Chief Executive Officer.

24 May 2016  |  Written by :

Mr. Imbriglio is partner and the President & CEO of Raymond Chabot Grant Thornton. He is in charge...

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April 2016

Overview

The Grant Thornton International Ltd IFRS Team has published Telling your story: Making your financial statements an effective communication tool.

The average length of financial statements prepared under IFRS has been growing for many years as a result of new standards and amendments published by the IASB. In the coming years, new standards on revenue, financial instruments and leasing will add even more disclosures.

All this increases the burden on you when preparing financial statements. Disclosures are added for good reasons – they enable investors to understand complex transactions within the Financial statements. However, as a result financial statements are becoming cluttered, making truly important information hard to find.

The standards are only one issue – companies are struggling to apply the materiality concept to their disclosures. This lack of clarity on how to apply materiality to financial statements is perceived as one of the main reasons for overloaded financial statements.

With support from regulators and standard setters, many companies are revising their approach to Financial statement preparation – and looking for innovative ways to improve the look and feel of their financial statements. Companies are recognizing that financial statements are not merely a compliance document but also a critical means for communicating with investors.

This publication explains and illustrates four key tools you can use to make your financial statements an effective communication tool.

 

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March 2016

Overview

The Grant Thornton International Ltd IFRS Team has published Get ready for IFRS 9 – The impairment requirements, the second issue in a series of publications intended to help you prepare for IFRS 9 (2014) Financial Instruments.

IFRS 9 (2014) fundamentally rewrites the accounting rules for financial instruments. While IFRS 9’s mandatory effective date of January 1, 2018 may seem a long way off, companies really need to start evaluating the impact of the new standard now. As well as the impact on reported results, many companies will need to collect and analyze additional data and implement changes to systems.

Under IFRS 9, recognition of impairment no longer depends on a reporting entity first identifying a credit loss event. IFRS 9 instead uses more forward-looking information to recognize expected credit losses. The second issue in the series of publications has been written to assist companies in understanding the impairment requirements under IFRS 9 and to provide practical insights related to these requirements. This edition includes the following sections:

  • Scope of the new impairment requirements;

  • The general (or three-stage) impairment approach;

  • Simplified model for trade receivables, contract assets and lease receivables;

  • Purchased or originated credit-impaired financial assets;

  • Presenting credit losses;

  • Disclosures; and

  • Practical insight – next steps.

 

 

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Federal Budget, March 22, 2016

The Trudeau government’s first budget follows through on several election promises. Its main objective is stimulating growth. However, the significant deficit, which we can expect in coming budgets as well, is a call to prudence, in particular to avoid generating negative impacts on how Canada is being evaluated, especially by credit rating agencies.

Infrastructures

According to the government, boosting the Canadian economy can be achieved through a series of measures designed to assist the middle class and communities. One key measure is a $11.9B injection in the first phase of a five-year infrastructure plan, with $3.4B over three years to modernize and rehabilitate public transit and $5B over five years for green infrastructure projects, water and wastewater systems across Canada.

In this respect, Raymond Chabot Grant Thornton wishes to point out, that for such projects, considering each project’s life cycle cost should be an integral part of its evaluation. To maximize the returns on all strategic projects, it’s essential to ensure that the construction budget takes account of operating, maintenance, financing and other costs to ensure they are a long-lasting success in Canadian communities.

Postsecondary education and research institutions

The government also considers institutional research a key issue. It has therefore increased financing for fundamental research by $95M annually and is investing $2B over three years in a new Post-Secondary Institutions Strategic Investment Fund to modernize on-campus research, commercialization and training facilities.

On the innovation front, the government has also opted to invest $800M over four years for innovation networks and clusters designed to increase collaboration and create value through innovation.

Moreover, the Canada Student Grant will be increased by 50%, from $2,000 to $3,000 per year for students from low-income families, and from $800 to $1,200 per year for students from middle-income families.

Culture

As arts and culture are a driving force in the economy, the government has announced investments of about $1.9M over five years. These targeted investments will be provided to, among others, the Canada Council for the Arts, Telefilm Canada, the National Film Board and unique programs that will allow our artists to shine on the international stage.

Labour-sponsored venture capital corporation tax credit

Lastly, the government has decided to restore the labour-sponsored venture capital corporation tax credit, an initiative Raymond Chabot Grant Thornton applauds as an efficient measure to boost business growth.