QUEBEC CITY, March 17, 2016 – Raymond Chabot Grant Thornton publishes its budget tax bulletin containing a summary of the main tax measures announced by Finance Minister, Carlos Leitão. This document, prepared by a team of tax specialists in the lock-up, provides a broad view of the main tax measures and may be consulted at www.rcgt.com/2016-2017QCBudget.
The firm wishes to highlight a number of budget measures while emphasizing the need to implement new ones to further stimulate the economy.
Yes to the balanced budget…
First, Raymond Chabot Grant Thornton acknowledges the strategic measures to support economic growth. “Education is the cornerstone of societal development and the Firm is pleased to see more extensive government investment in our up-and-coming talent. The $500M increase in student services over the next three years is an effective way to support the success of future generations and tomorrow’s leaders who’ll be heading our economic drivers, our businesses,” stated Emilio B. Imbriglio, President and CEO.
We also cannot deny the contribution of measures to support businesses. “Our businesses have a significant tax burden, SME leaders will be happy to learn that they will benefit from additional payroll tax relief. This reduction will represent a total of $94M starting this year and $385M by 2021, $101.5M more than previously announced. Moreover, the tax reduction for income attributable to marketing a Quebec-developed patent, which drops from 11.8% to 4%, will provide some breathing room for innovative corporations,” added Tax Partner Luc Lacombe.
Yes to stimulating the growth potential of businesses
According to Raymond Chabot Grant Thornton, in this budget, the balance sought between living within our means and stimulating economic growth should have given more weight to the latter option to avoid further hampering the growth potential of Quebec and its wealth creators.
The Firm believes that reducing corporate tax rate is more than a necessity, particularly in light of the difficult economic situation being experienced by many SMEs.
The Firm therefore reiterates its recommendation to eliminate income tax on the first $500,000 of an SME’s income. “If Manitoba could do it for small businesses in 2010, Quebec could also introduce such measures. The resulting savings should be invested in upgrading equipment, improving performance, creating jobs or any type of innovation program that improves productivity and methods. It would be a growth-generating approach to reduce SMEs’ tax burden and provide the means to invest where they need it most,” stated Jean-François Thuot, Tax Partner and Tax Services Leader.
Introduction of an innovation tax credit would have also benefitted entities wishing to introduce innovations and modernize their equipment. As a reminder, the current tax credit for scientific research and experimental development is only available to entities conducting research. Implementation of such a credit would support business growth, as the Firm recently reminded the government.
Succession and business transfers
Raymond Chabot Grant Thornton invites the government to quickly set up a fund to assist businesses so they can call upon external professionals to support them in their transfer and success plan process. “Our businesses need to prosper over the long term. It’s important that business sellers be properly supported to ensure an efficient succession. Succession planning spans many years and, unfortunately, only 9% of business owners have a formal, written plan. Quebec can no longer afford to lose its wealth creators,” emphasized Saguenay-Lac-Saint-Jean region Vice-President and National Business Transfer Leader, Éric Dufour.
“When it comes to intergenerational business transfers, the Quebec and Canadian governments need to act quickly to harmonize their legislation to create a true impact for our wealth creators. In fact, the Québec government needs to go a step further and amend article 517.1 of the Quebec Taxation Act for all businesses in all industry segments. This is essential if business transfers are to be more effective,” added Imbriglio.
The President and CEO concluded saying “The government made a very good decision by implementing the new rules for transferring family businesses in the primary and manufacturing sectors immediately rather than waiting until January 2017. This should now be done for all businesses in all sectors.”
The measures proposed to the Quebec government in a letter addressed to Finance Minister Carlos Leitão may be viewed at the following address: www.rcgt.com/consultation-budgetqc-2016-2017 (French only).
About Raymond Chabot Grant Thornton
Founded in 1948, Raymond Chabot Grant Thornton has become a leader in the fields of assurance, tax, consulting services, and business recovery & reorganization. Its strength is based on a team of over 2,500 people, including some 230 partners. Together, Raymond Chabot Grant Thornton and Grant Thornton LLP, another Canadian member firm of Grant Thornton International Ltd, help dynamic Canadian organizations unlock their potential for growth with over 4,300 people and some 140 offices across Canada. Grant Thornton International Ltd provides clients with the expertise of member and correspondent firms in more than 130 countries, with over 40,000 people.
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