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 April 23, 2021

Hard hit by the pandemic, organizations in the tourism, leisure and culture industries have had to revise their business plans and seek financial assistance.

A number of financial aid programs are available to help Quebec organizations get through the crisis and plan their reopening—and more relief measures are on the way from the government and regional agencies.

Consult the support measures for tourism businesses.

Where to start?

There are more than 20 programs available to help cultural, sports and tourism organizations stay afloat and plan for the future. Additional opportunities could surface in the coming months. But since each program has specific requirements and eligibility criteria, it can be hard to navigate them all.

How can you be sure you’re taking full advantage of available relief programs?

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

  • Provide a financial snapshot that lays out actual and future losses;
  • 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 are currently receiving 10 times more applications than available subsidies. This means businesses and organizations need a strong application if they want to be 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 relief programs can be complicated and time-consuming for managers who are already busy dealing with the impact of COVID-19.

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 weather the pandemic and prepare your post-COVID plan.

Support measures in tourism

Québec government and City of Montréal invest in Montréal Downtown Recovery

In order to attract workers, tourists and students to downtown Montreal, funds will be injected to set up initiatives to alleviate the consequences of health constraints, such as amenities, entertainment, festivals and circus artists, support for local gastronomy and the installation of start-ups. For more information, consult their press release, as well as their document detailing these support measures.

Concerted Temporary Action Program for Businesses (PACTE)

This emergency financing, in the form of a loan guarantee or line of credit guarantee, is intended to provide circumstantial support to businesses operating in Quebec, including cooperatives and other social economy businesses that carry out commercial activities, such as lodging establishments and tourist attractions, and that are in a precarious situation due to the consequences of the pandemic.

The Assistance for Businesses in Regions on Maximum Alert (AERAM) component is designed to help businesses located in the red zone that are affected by a business closure.

For eligibility criteria, please consult the Investissement Québec page.

However, businesses in the tourism sector, except travel agencies, must be registered on the Bonjour Québec website to be eligible.

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 Quebec, as well as recognized Aboriginal 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. More information on the Ministry of Tourism website.

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.

Fonds de développement des entreprises touristiques (FDET)

This fund provides financing to existing or start-up SMEs in the form of loans ranging from $50,000 to $500,000 for projects that aim to attract new customers and significantly extend the operating period of their business. Visit the fund’s website for more information.

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

The Quebec government is providing $8M for the creation and implementation of 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 Quebec and Aventure Écotourisme Québec. Click here for more information.

Passeport Attraits Program

This program reimburses businesses for the discount offered to visitors who purchase a passport for certain tourist attractions. The program is available to eligible businesses that register through Événements Attractions Québec until December 31, 2021 or until the budget is depleted. All the details as well as the participation form for companies are in this document.

Entente de partenariat régional en tourisme (EPRT)

Two components are proposed under this agreement to support tourism businesses that are suffering from the effects of the pandemic.

A third component aims to support projects to develop and structure the tourism offer and a fourth component is designed to support strategic tourism businesses in the downtown areas of Montréal, Québec City and Gatineau. You will find all the details of this regional partnership on the Quebec government website.

Fonds de maintien des actifs stratégiques en tourisme (FMAST)

In order to encourage the development of large-scale projects to promote traffic in downtown Montreal, financial assistance is being provided under Component 4 of the EPRT. A call for projects is underway with a deadline of April 30, 2021. Visit the Ville de Montréal website to learn more or to attend the information webinar on March 30, 2021 for interested organizations.

HST refund

As part of the tourism recovery plan, the Quebec government is providing a subsidy equivalent to the amount of the tax on lodging (TSH) to the businesses concerned. To take advantage of this subsidy, these establishments must apply to the Association Hôtellerie Québec.

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 Quebec government website.

Opportunity for the business and sports tourism industries: Tourism Montréal has launched a call for proposals for the new SITAS fund

Tourism Montréal, in collaboration with the Palais des Congrès de Montréal, has launched a call for proposals as part of the new Soutien aux intervenants en tourisme d’affaires et sportif (SITAS) fund. Eligible projects must be carried out in Montréal before December 31, 2022 by an organization that is legally incorporated in Quebec with a head office in the Metropolitan Region. Proposals may be submitted between April 1, 2021 and May 31, 2021. View the call for proposal details on the Ville de Montréal site.

Almost $3.6M to create the Fonds des actifs stratégiques du centre-ville de Québec

In order to help tourism businesses in downtown Québec City, which have been particularly hard hit by the drop in tourist numbers, the Quebec government is granting $3,570,000 in financial assistance to the Office du tourisme de Québec (OTQ). This money will be used to create the Fonds des actifs stratégiques du centre-ville de Québec. See the announcement for more details.

Keeping seasonal employees employed: Pilot project extended

The Quebec government has confirmed a $6.6M investment to support this project that keeps seasonal workers employed through off-season training. Employers can obtain financial assistance to set up in-house training. Consult the announcement to find out more.

Culture

Support for workers in Live Arts and Music Sectors Funds

The purpose of this fund is to support the arts and culture sector by immediately engaging artists and cultural workers to provide public and virtual arts and culture experiences to help overcome the effects of the pandemic. Applicants must first apply for regular funding under the Local Festivals component of the APCD or the Developmental Support component of the CAPF. Visit Canadian Heritage for more information.

Additional support for the presentation of Quebec shows – Addition under the Economic Recovery Plan for the Cultural Sector

In March 2021, the Minister of Culture and Communications announced the addition of $18 million to the measure to support the presentation of Quebec shows. This measure allows for compensation of up to 75% of the box office revenues that could not be collected due to health measures during the period from October 1, 2020 to June 30, 2021. Visit the Conseil des arts et des lettres du Québec (CALQ) website for details.

Presenting physically distanced performances: Measure for artists and arts organizations reintroduced

The Quebec government has announced it is reintroducing the assistance provided by the Conseil des arts et des lettres du Québec (CALQ) with $5M in funding in connection with the presentation of physically distanced performances.

Available to artistic organizations in the summer of 2020, the measure will now be accessible to professional artists in all fields supported by CALQ who wish to present a show (public reading, concert, performance, walking tour or any other form of live art). Go to the CALQ site for more information.

$11.8M in Financial Aid for Circus Arts

This assistance from the Quebec government is intended to support training, the resumption of activities on international markets, the presentation of circus projects throughout Quebec and to promote research and creation. Read the announcement to learn more.

Restaurant industry

Bill to limit meal delivery fees in time of pandemic passed

Assented to on March 16, 2021, the bill is intended to support restaurant owners already greatly affected by COVID-19-related sanitary measures by limiting the delivery fees charged. The law goes into effect on March 22. Visit the MAPAQ website for more information (in French). You can also consult the document presenting the details of Bill 87 (in French).

Free training program on digital transformation in restaurant and hotel services

The Quebec 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 Quebec, as well as the contribution of artificial intelligence in optimizing the management of their activities. Consult the announcement to learn more.

Regional Economic Development

Regional Air Transportation Initiative (RATI)

This Government of Quebec initiative complements Transport Canada’s initiative to assist inter-regional air transportation affected by the economic impact of COVID-19 and allow this ecosystem that contributes to regional economic growth to remain operational. Assistance will be available until March 31, 2022. Consult the website for more information.

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 Quebec

Through the Quebec 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

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

In the past year, 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.

Our financial planning experts can help you through this period of uncertainty by working with you to review your budgeting process and modernize your management system.

Our team of former financial controllers, experienced consultants and technical experts will accompany you in this digital transformation by presenting an efficient functional vision that meets your operational needs.

Thanks to our partnership with the Canadian software publisher VENA, we can offer an Excel integrated management solution that meets your needs.

VENA adopts and strengthens Excel seamlessly

Created to help companies work smarter, VENA uses a surprisingly practical methodology to simplify complex processes. VENA transforms Excel into a true financial and operational solution: budgeting, forecasting, reporting, consolidation, analysis and more.

VENA offers a simple, yet effective approach: it builds on Excel’s strengths while compensating for its shortcomings: centralized database, files and management rules, application security.

This cloud-computing solution is a complete, scalable and easy-to-use platform that connects all the players in your forecasting processes (document-sharing, discussion thread within a report) and uses a technical architecture in which VENA plays a central role (native connectivity with several ERPs on the market, integration of ETL [extract-transform-load] allowing you to import and export all types of data from your operating systems, etc.).

For more information and to watch the video, click here.