21 Feb 2014

Montréal, February 20, 2014 – A mere few days after the federal budget was tabled, Raymond Chabot Grant Thornton is proud to again release its post-budget tax bulletin on the Quebec budget for individuals and businesses. To view the main fiscal measures from the second budget released by Minister of Finance and the Economy Nicolas Marceau, go to: www.rcgt.com/en/2014-Quebec-budget.

A Precursor to the Elections

Before calling a possible spring election, the Quebec government has chosen to table a budget that should serve as an economic and financial platform for the next campaign.

The budget confirms the state of public finances while recalling certain measures from various policies unveiled in recent months. New budget measures are also announced that should encourage the growth of Quebec businesses. “Noteworthy measures include an additional $25 million investment in the Anges Québec Capital fund, the authorization granted to Capital régional et coopératif Desjardins to issue $150 million in shares in 2014, and the launching of initiatives to create a new fund of venture capital funds in Quebec,” stated Bernard Poulin, Tax Partner.

While already announced, the support given to 300 high-performing businesses, nicknamed “gazelles,” has already shown promise in accelerating the growth of these businesses. The call for candidates will be open from February 24 to March 28, 2014.

With respect to the mining and forestry sectors note, the government intends to raise its financial participation in mining companies developing resources in Québec, by using, in particular, the $1 billion in capital from the Capital Mines Hydrocarbures fund, and investing $10 million in the forestry industry through a new fund to speed up development of the residual biomass sector, with a view to energy production.

Business transfers: Putting an end to tax inequity

Raymond Chabot Grant Thornton welcomes the work led by the Task Force on the Protection of Québec Businesses, chaired by Claude Séguin. The Minister of Finance and the Economy publically released the Task Force’s report during the budget announcement. We hope that many of these measures will become official in the near future.

“We welcome the tax measures, especially that which makes it possible to defer capital gains when transferring a business to the next generation upon the death of a manager-shareholder. For several years, the firm has been actively interested in the tax fairness of intergenerational business transfers, and this recommendation is a first encouraging step towards achieving this fairness. We strongly hope that the Québec government will act swiftly in this regard,” added Bernard Poulin.

Therefore, Raymond Chabot Grant Thornton continues to urge the Quebec and Canadian governments to enact laws to ensure the fairness of our tax system and encourage business transfers among family members.

An exclusive RCGT-mandated survey on the matter, conducted by CROP on November 29, 2013, confirmed the economic consequences related to successions and business transfers. With the imminent retirement of over a third of Quebec entrepreneurs, the province is currently faced with the largest turnover of SME executives in its history.

A recent study by the Fondation de l’entrepreneurship revealed that individuals looking to start their own business were far more interested in creating their own rather than buying out and taking over an existing one. Consequently, we need to search for ways to support our entrepreneurs and encourage them to take over existing businesses; otherwise many SMEs will close or be bought out by foreign interests. This condition is important to ensure our collective prosperity.

“Our tax system should stop penalizing Quebec entrepreneurs; otherwise we will continue to threaten the longevity of Quebec businesses. Tax equity for intergenerational business transfers is essential to encourage the next generation of entrepreneurs. Currently, this inequity causes sellers to lose out on the $800,000 capital gains deduction, a condition that doesn’t apply to third-party transactions,” reiterated Jean Gauthier, Partner and National Head of Tax.

According to Emilio B. Imbriglio, President and CEO, “This situation needs to be addressed quickly, in the interest of Quebec and Canadian entrepreneurs, who act as an important leverage for our economic development. We need to strive to prevent offshoring and relocations, maintain control over our dynamic businesses and assist them in achieving their full potential. We need to help entrepreneurs who wish to transfer their business to their children come out on the winning end. Quebec needs to give entrepreneurs the means to succeed.”

To view the full report Business Transfers: Problems and Suggested Solutions, go to: http://www.rcgt.com/en/news/business-transfers-report/.

About Raymond Chabot Grant Thornton

Founded in 1948, today Raymond Chabot Grant Thornton is a leader in the fields of assurance, tax, consulting services, business recovery & reorganization. Its strength is based on a team of more than 2,400 people including some 230 partners in more than 100 offices in Quebec, eastern Ontario and New Brunswick. For the past 30 years, Raymond Chabot Grant Thornton has been a member of Grant Thornton International Ltd providing its clients with the expertise of the member and correspondent firms in more than 100 countries.

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Francis Letendre
Senior Consultant – Public Relations
Raymond Chabot Grant Thornton
Tel.: 514-390-4201