21 Apr 2021

Federal Budget 2021: Ottawa opens the floodgates of economic support but lacks a plan for paying down the pandemic debt.

Raymond Chabot Grant Thornton has responded with mixed feelings to the first federal budget presented by Canada’s Finance Minister, the Honourable Chrystia Freeland, due to concerns that it could result in a heavy financial burden for future generations.

“The firm welcomes the numerous investments aimed at supporting businesses and various economic sectors. The pandemic forced the government to take action in order to prevent devastating consequences,” said Emilio B. Imbriglio, President and Chief Executive Officer at Raymond Chabot Grant Thornton. “However, these massive investments should be followed by a plan to reduce the astronomical pandemic-related deficit with ambitious measures—even temporary ones—like those recommended by Raymond Chabot Grant Thornton. We could still experience additional financial turbulence caused by the pandemic.”

Having published a tax bulletin highlighting the budgetary and tax measures announced by the government, the firm wishes to share its views on the federal budget and reiterate certain recommendations.

Relying on vaccines and a strong economic recovery

Vaccines and a strong economic recovery will be vital to ending the crisis. The federal budget includes a number of measures that promise to stimulate the economy by providing effective growth levers to Canadian businesses.

“Considering that so many small- and medium-sized businesses continue to face challenging conditions, it makes sense to extend the Canada Emergency Wage Subsidy, the Canada Emergency Rent Subsidy and the Lockdown Support for Businesses until September 25, 2021, in addition to extending the Canadian Emergency Business Account,” said Sylvain Gilbert, a partner and tax specialist at the firm. Extending these programs amounts to an additional $12.1 billion in support.

The government has also announced a new accelerated capital cost allowance, which is something Raymond Chabot Grant Thornton has been recommending since 2020. “We’re pleased that the government will be allowing for the immediate expensing of up to $1.5 million of eligible investments of Canadian-controlled private corporations, every year for the next three years,” said tax partner Patrick Delisle. These deductions will help approximately 325,000 businesses make critical investments and generate $2.2 billion in total savings over the next five years.

Reducing the pandemic debt without raising taxes

The issue of public finances also requires special attention. While protecting the health of Canadians and ensuring a strong economic recovery remain the top priorities, it’s also important to consider the potential for higher interest rates and a widening deficit, as well as the need to protect future generations from inheriting a heavy financial burden. Budget projections remain fragile. Growth is expected and should lead to job creation.

However, if growth forecasts prove to be too ambitious and targets aren’t met, public finances will be further compromised. For this reason, Raymond Chabot Grant Thornton expected the federal government to take quick action and address the exceptional deficit associated with the pandemic.

Given the size of the debt, the firm believes the government should have developed special budgetary measures aimed specifically at reducing the deficit and debt generated by assistance programs, and it should have presented them separately from regular budgetary measures.

“By introducing bold measures, like the ones we’re proposing, the government could generate additional revenues to reduce the deficit. Raymond Chabot Grant Thornton’s recommendations include giving taxpayers the opportunity to immediately pay deferred taxes—amounts that would nonetheless be owed at a later date—but at a reduced rate. We also suggest reopening the immigrant investor program to bring in new foreign capital,” stated Mr. Imbriglio.

In its 2021 prebudget proposal to the federal government, Raymond Chabot Grant Thornton also suggested allowing taxpayers to withdraw funds from their RRSPs at a combined tax rate of 15%, payable immediately, by establishing a structured mechanism to ensure the sound management of the retirement fund. The firm also recommended allowing taxpayers to pay capital gains tax on assets (shares, revenue properties, etc.) at a combined tax rate of 15%.

“We know that drastic action is needed to protect future generations. The Governments of Canada and Quebec should consider options like these to take pressure off public finances. Applying special measures on a temporary basis would help prevent a public finance crisis and ensure intergenerational equity for young people, who are tomorrow’s leaders,” added Mr. Imbriglio.

Reopening the immigrant investor program to attract foreign investment

Invest in Canada and several other organizations across the country work actively to attract foreign capital and businesses. “If Canada’s efforts to attract foreign investment were supported by the reopening of an immigrant investor program, the government could use these funds to reduce the pandemic debt and pay for various economic initiatives and government programs,” said Marc Audet, President of AURAY Capital, a subsidiary of Raymond Chabot Grant Thornton that specializes in business immigration.

In 1985, Canada was the second country in the world to introduce a program allowing wealthy families to immigrate in exchange for a substantial investment. These investments were redistributed to participating provinces and territories in order for them to develop their economies. Unfortunately, Canada stopped recruiting this class of newcomers in 2012 and officially ended its immigrant investor program in 2014. Now that economic recovery is a priority, a program of this nature would be particularly helpful as it would drive considerable economic benefits.

It’s worth noting that between 2015 and 2020, the United States recruited more than 55,000 investors through their Immigrant Investor Program (EB-5), thereby bolstering its economy by more than $27 billion. Meanwhile, foreign investors injected nearly €22 billion in Europe’s various jurisdictions between 2015 and 2019 through this type of immigration program.

“Canada already has the infrastructure needed for this type of program. We just need to re-examine which types of investors are most desirable and what their contribution requirements should be. The federal government should act quickly to update and reopen the immigrant investor program. If we establish the right criteria, their financial contributions could amount to more than $1 billion annually,” concluded Mr. Audet.

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29 Mar 2021

Updated on February 22, 2023

Hard hit by the pandemic, environmental issues and labour shortages, organizations and businesses in the tourism, leisure and culture industries must sometimes review infrastructures and business plans. They need financial assistance to do this.

A number of financial aid programs have been adopted by governments and regional bodies to help organizations in Québec and Canada get through this period of change.

Consult the support measures for tourism businesses.

Where to start?

Each program has its own special features. Getting a good understanding and making sure you meet all the criteria can be somewhat complicated.

So, how can you be sure you’re taking full advantage of available financial assistance programs?

The key is to prepare a strong application so that government analysts can process your file quickly. You should:

  • Provide a statement of your situation;
  • Include a revised business plan that is both concise and convincing;
  • Demonstrate that your business is viable.

How to prepare a good case?

Funding agencies generally receive 10 times more applications than available subsidies. It’s important to stand out to increase your chances of being selected.

Before you start filling out forms, take the time to review the eligibility criteria. You want to have the right information on hand and provide the best possible answers to their questions. A carefully crafted application will increase your chances of receiving a fast response and getting approved.

Preparing applications for financial assistance can be difficult and complicated for managers who are already overwhelmed with decisions to make.

Our tourism, leisure and culture team is familiar with all currently available relief programs, as well as their specific eligibility criteria, and the key issues in various sectors and regions. Contact our experts. We’re here to help.

Here are some of the programs available to help you implement your projects and undertake your transformation when necessary.

Support measures in tourism
Support measures for the arts
Support measures for restaurant industry
Regional economic development

Support measures in tourism

Programme d’aide à la relance de l’industrie touristique (PARIT) to support sustainable, innovative projects

The purpose of this program is to support the development and consolidation of an innovative, progressive and sustainable tourism offer to ensure the sustainability and competitiveness of the Québec tourism industry. A 10% top-up of the financial assistance is possible for projects with an eco-responsible theme. The program is in place until March 31, 2024, depending on the availability of funds.

Explore Québec program

The Explore Québec program is a subsidy that makes it possible for receptive travel agencies, tour operators and agencies to offer interesting, reduced-rate packages to Quebeckers.

The program comprises three components: On the road packages, Air packages, Electric packages. It ends on March 31, 2023 or on depletion of the budget envelope. For more information, go to the Québec government website.

Programme Explore Québec sur la route

This program offers financial support of up to $10 million to travel agencies, tour operators and incoming agencies holding a regular permit from the Office de protection du consommateur that wish to offer travel packages in Québec.

Programme d’appui au développement des attraits touristiques (PADAT)

This program supports private investments through loans and loan guarantees. It is intended for for-profit and non-profit organizations (NPFOs) and cooperatives legally constituted in Québec, as well as recognized Indigenous communities and nations.

Part 1: Support for development of tourist attractions

This minimum financial assistance of $150,000 is available in the form of a loan, loan guarantee and grant. The maximum amount awarded is $5,000,000, not to exceed 60% of eligible costs.

Projects funded must be invested in a tourism infrastructure, product, service or equipment with the goal of creating jobs and increasing revenues and visitor numbers.

Part 2: Funds for business tourism financing for hotel establishments

This fund is specifically intended for the renovation and upgrading of ageing hotel infrastructures in order to prepare these businesses for recovery, but projects for the construction of new hotel establishments in tourist regions with a shortage of accommodation units are now eligible.

Funding is in the form of a term loan of a minimum of $100,000 and a maximum of $5,000,000 and could cover up to 90% of eligible work costs.

Go to the Investissement Québec site for more information.

Destination durable et action concertée support mechanism

This measure is intended for not-for-profit and for-profit organizations , municipal entities and recognized Indigenous communities or nations. Its purpose is to better anchor Québec’s tourism offer in the communities and reduce its environmental footprint.

The objective of selected projects must be to counter climate change, increase the resilience and competitiveness of tourism businesses, maximized the tourism industry’s contribution to the social and economic vitality of the communities visited and increase the attraction of Québec and its regions. Consult the website for more information.

Federal government Tourism Relief Fund

The Tourism Relief Fund (TRF), administered by Canada’s regional development agencies and Innovation, Science and Economic Development Canada (ISED), is a new $500-million national program. This fund will help tourism businesses and organizations adapt their operations to meet public health requirements, improve their products and services and position themselves for post-pandemic economic recovery.

A minimum of $50 million of the TRF will specifically support Indigenous tourism initiatives and organisations.

Entente de partenariat régional et transformation numérique en tourisme 2022-2025 (EPRTNT 2022-2025)

The purpose of this program is to renew and enhance the tourism offering in regions. Selected projects must stimulate the local economy and foster the growth of a responsible and sustainable tourism offering. You will find all the details of this regional partnership on the Quéebec government website.

Programme d’innovation touristique

This program is designed to meet the needs of tourism industry businesses by developing solutions to: improve their productivity, competitiveness or efficiency, address the labour shortage, foster their digital shift, reduce the environmental footprint of tourism activities. You can find more information on the government website or on the MT Lab website.

Centrale d’achats en tourisme de l’Alliance de l’industrie touristique du Québec

This sanitation equipment and supplies purchasing group allows all registered tourism businesses to reduce their costs for products that meet the needs of maintenance, protection and compliance with new health safety standards. Visit the Alliance website to learn more and to register.

Programme d’accessibilité aux établissements touristiques (PAET)

To help tourism establishments improve the accessibility of their infrastructures for people with disabilities, this program offers a grant of up to 80% or 90% of eligible costs, depending on the type of establishment, for a maximum amount of $100,000. Consult the details of this grant on the website.

Incubator-accelerator for tourism projects north of the 49th parallel

The Québec government is creating an incubator-accelerator that will help tourism projects north of the 49th parallel. This incubator will be headed by three sector tourism associations, Fédération des pourvoiries du Québec, Indigenous Tourism Québec and Aventure Écotourisme Québec. Click here for more information.

Reconnect Ontario Marquee Event Fund 2022

This fund provides financing to cover up to 50% of eligible costs to support Ontario municipalities and organizations to host major, high-impact events that meet the Department’s definition of a popular event. Consult the site for more information.

Tourism Small Business Assistance Project

The Tourism Small Business Assistance Project provides non-repayable contributions of $45,000 or less per business. These contributions are intended to support small tourism businesses in carrying out small investment projects to adapt or develop their products and services to the needs of their clientele in order to support their development and seize recovery opportunities.

 

Culture

Québec financial assistance for festivals and tourist events

In order to position Québec as a tourist destination on the national and international scene, the Québec government supports festivals and major tourist events with assistance of up to 50% of eligible costs. This program promotes the development of festivals and tourist events in a responsible and sustainable manner. Consult the government’s information site.

Federal Support – Major Festivals and Events Support Initiative

To support Canadian festivals and events hard hit by the economic impacts of COVID-19 to adapt and enhance their activities, Canada Heritage has a budget of $200M over two years. Eligible organizations organize major recurring festivals and events with annual revenues exceeding $10M. Go to the government website for more information.

Montréal’s Assistance Program for Events and Festivals

Consult Tourism Montréal’s Assistance Programs for Events and Festivals for more information on their assistance programs for one-time initiatives or festivals and events.

Restaurant industry

Free training program on digital transformation in restaurant and hotel services

The Québec government is awarding a grant of up to $3,550,235 to the Institut de tourisme et d’hôtellerie du Québec (ITHQ) to support the implementation of a training program and a center of excellence in artificial intelligence. Offered free of charge, this training program will allow restaurant and hotel owners to learn about the best business practices and inform them about the methods and tools available in Québec, as well as the contribution of artificial intelligence in optimizing the management of their activities. Consult the announcement to learn more.

Regional Economic Development

Programme d’appui aux actions régionales

With a $10.2M annual envelope, the objective of the Programme d’appui aux actions régionales (PAAR) is to support the realization of projects that help promote community vitality, and the attraction and growth of the National Capital region. Consult the site for more information.

Programme de développement de l’offre touristique des parcs régionaux (DOTPR)

This program offers financial assistance of up to $250,000 to support the development of activities and infrastructures in regional parks. For more information on this program, go to the website.

Regional innovation ecosystems

Through the Regional Economic Growth through Innovation (REDI) program, Canada Economic Development (CED) supports projects that help create a regional entrepreneurial environment conducive to innovation and promote business development, growth and competitiveness. Consult the website for more information.

Attracting investments or tourists from outside Québec

Through the Québec Economic Development Program (QEDP), CED also supports projects aimed at promoting the regions in order to increase the presence of international organizations or encourage increased spending by tourists from outside the province. Consult the website for more information.

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26 Mar 2021

Quebec Budget 2021-2022: Economic stimulus and deficits for at least 7 years

Raymond Chabot Grant Thornton wishes to share its views on the Quebec budget tabled on March 25. This follows the tax bulletin the firm’s experts published on Finance Minister Éric Girard’s third budget.

Accelerating Quebec’s economic recovery: the budget sends a strong message

Raymond Chabot Grant Thornton applauds the stimulus measures designed to revive the economy and provide some relief to small and medium-sized enterprises (SMEs) across the province. Specifically, the firm highlights three important tax measures.

“Doubling the C3i investment and innovation tax credit over the next two years; increasing the tax credit for on-the-job training; and reducing the small business tax rate from 4.0% to 3.2% on the first $500,000 of income eligible for the small business deduction—which is the same as the rate in effect in Ontario—as of March 26, 2021; we believe that these are key measures for supporting growth,” said Sylvain Gilbert, Tax Partner at Raymond Chabot Grant Thornton.

In addition, “injecting an additional $4.5 billion into Quebec’s 2021-2031 Infrastructure Plan, bringing the total to $135 billion, is an excellent idea, as is the decision to accelerate these investments, with 60% to be made over the next 5 years. Infrastructure projects will get underway quickly and stimulate the economy across all Quebec regions,” added Patrick Delisle, Tax Partner at Raymond Chabot Grant Thornton.

Raymond Chabot Grant Thornton also welcomes the following measures, which promise to help Quebec’s regional economies recover and support some of the province’s key industries, such as culture and tourism, that were particularly hard hit by the pandemic:

  • $404 million over 5 years to support the requalification of workers and help immigrants integrate into the labour market;
  • $392 million and $204 million over 9 years for culture and tourism, respectively;
  • An extra $523 million for regional economic development.

Bold solutions for wiping out the pandemic debt

It is clear that, to varying extents, each of these measures will contribute to Quebec’s economic recovery, provide valuable support to SMEs, which are a key economic driver, and promote development across all of the province’s regions.

“The government has made sound decisions on how to address the exceptional economic situation. Where public finances are concerned, it would have been strategic to introduce bold, temporary measures, like the ones recommended by our firm, to bolster public coffers and bring down the pandemic debt faster,” said Emilio B. Imbriglio, President and Chief Executive Officer at Raymond Chabot Grant Thornton.

Raymond Chabot Grant Thornton published its 2021-2022 prebudget proposals (in French) in February. The firm had proposed giving taxpayers the opportunity to pay deferred taxes—amounts that would nonetheless be owed at a later date—immediately but at a reduced rate, so that the government could generate additional revenues to pay off public debt more quickly and thereby reduce the burden on future generations. Another suggestion presented by the firm was to allow taxpayers to withdraw funds from their RRSPs at a combined tax rate of 15%, payable immediately, by establishing a structured mechanism to ensure the sound management of the retirement fund. Raymond Chabot Grant Thornton also recommended allowing taxpayers to pay capital gains tax on assets (shares, revenue properties, etc.) at a combined tax rate of 15%.

“Drastic action is needed to protect our future generations. The governments of Quebec and Canada should consider options such as these to remove pressure off public finances. Applied for a temporary period, such measures could prevent a public finance crisis, especially if interest rates go up and the pandemic drags on, which would unfortunately leave certain key economic sectors in a difficult position for longer than expected,” added Mr. Imbriglio.

Comprehensive assistance for entrepreneurs: a solution for many ills

Raymond Chabot Grant Thornton would have also liked to see, as outlined in its pre-budget solutions, more done to support entrepreneurs on both the professional and personal levels. This should be a priority, as it would promote a true, healthy economic recovery.

“The pandemic took a major toll on the mental health of business owners. By providing them with support, we can help them make better decisions. There are currently many issues keeping them awake at night. In addition to personal problems, a lot of entrepreneurs are extremely worried about things like cash flow, revenue, profit and expenditure management. Unfortunately, these concerns will negatively impact the way they manage their businesses,” said Éric Dufour, Regional Vice-President and National Business Transfer Leader at Raymond Chabot Grant Thornton.

An assistance program, supported by external experts, would allow entrepreneurs to obtain a comprehensive business diagnosis to make informed decisions and manage their organizations more effectively, particularly in a fast-changing business context. This type of support is needed and should be made available quickly.

“We appreciate that the Government of Quebec is faced with a complex and unusual situation. We applaud its skillful handling of the situation and believe that the measures announced on March 25 will actively contribute to the recovery that our economy needs. Since Raymond Chabot Grant Thornton is a trusted source of expertise for the government, as well as for public and private businesses across the province, our 2,700 professionals remain committed to offering Quebec businesses—which are, after all, the drivers of our economy—all the support they need to get through the crisis. Together, we can come out ahead!” concluded Mr. Imbriglio.

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18 Mar 2021
David Mayrand
Partner | CPA | Management consulting

Increase your budget efficiency with a management system technology upgrade that optimizes Excel.

In the last two years, finance teams have been dealing with a flurry of forecast recalculations:

  • What will be the activity stream for the next six months?
  • How can expenses be optimized while maintaining a sustainable activity level?
  • What will cash resources be like in a week, a month, a quarter?

These issues have resulted in the proliferation of Excel files with their associated errors: corrupted links, difficult-to-follow versions, formula errors, etc. This can lead to poor analysis and incorrect decision-making.

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21 Apr 2021  |  Written by :

David Mayrand is a management consulting expert at Raymond Chabot Grant Thornton. Contact him today!

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