QUÉBEC CITY, March 28, 2017 – In response to the Quebec budget tabled today by Finance Minister, Carlos Leitão, Raymond Chabot Grant Thornton publishes its summary of the main tax measures announced with a number of observations. The reference document prepared by a team of tax specialists in the lock-up may be consulted here. Additionally, the firm highlights some budget measures and invites the government to act on a number of issues.
A budget focussing on services to the population…
Raymond Chabot Grant Thornton lauds significant investments in health and education and public transit that will foster job creation.
“There is no doubt about the benefits of additional investments of $289M for labour development measures. Additionally, improvements to two measures to support businesses, i.e. three-year extension of the tax holiday eligibility period for large investment projects and the introduction of an additional capital cost allowance—representing tax relief of $165M over five years—should bring a breath of fresh air,” indicated Tax Partner, Luc Lacome.
“In a context where entrepreneurs—our wealth creators—need additional means to help them excel in line with their ambitions, we applaud these measures. The government is continuing its tight public fund management while investing in education and health, pillars of our growth. The government is also focussing on the “4Es”: the entrepreneurship, employment, exploiting natural resources and education. However, this budget could have lightened the tax burden of our SMEs, since only those in the primary and manufacturing sector benefit from a 4% tax rate while all others are taxed at 8%, the highest rate in the country,” stated President and CEO, Emilio B. Imbriglio.
Measures We Would Have Liked to See to Further Support Businesses and Investments!
To further stimulate the Quebec economy, Raymond Chabot Grant Thornton, among others, incites the Quebec government to abolish corporate income tax on the first $500,000 of an SME’s taxable income, provided that the savings be invested in productivity, employment and innovation in a manner that avoids abuse. Investments could be subject to accelerated CCA or to a tax credit.
“Another major issue for the firm is the preparation of succession plans. First, we salute the additional measures announced today for entrepreneurs, in particular those in the upcoming Action plan for entrepreneurship. The recent announcement of the Caisse de dépôt et placement du Québec’s (CDPQ) creation of the Fonds Relève is excellent news to support successful business transfers,” commented Éric Dufour, Regional Vice-President and National Business Transfer Leader.
While the CDPQ has elected primarily to invest in businesses by way of an equity investment, when they have a well-defined transition plan, the Quebec government should also be supporting businesses that, in fact, want to develop this type of formal business plan. “Since the key to successfully passing the torch and ensuring our businesses’ longevity is a business transfer plan, the government would do well to create a fund to support businesses so they can get professional support in preparing a formal and comprehensive business transfer plan. Only 9% of business owners have a formal, written succession strategy, which is a cause for concern. Moreover, the government should relax the eligibility criteria for various business transfer measures,” added Dufour.
In the case of business immigration, Raymond Chabot Grant Thornton urges the Quebec government to increase (or abolish the quota system) for the Immigrant Investor Program (IIP). “Until 2011, under the IIP, foreign business people could invest in Quebec in accordance with certain criteria, while benefitting from permanent resident status. Since the introduction of the quota system, processing costs have skyrocketed. This strategic and highly beneficial program for the Quebec economy should be supported, particularly with the growing need for public and private investments, notably in infrastructure,” concluded Marc Audet, President and CEO of Auray Capital, a subsidiary of Raymond Chabot Grant Thornton.
Consult measures proposed to the Quebec government in the firm’s pre-budget notice click here.
About Raymond Chabot Grant Thornton
Founded in 1948, Raymond Chabot Grant Thornton has become a Canadian leader in the fields of assurance, tax, consulting services, and business recovery & reorganization. Its strength is based on a team of over 2,300 professionals, including some 200 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 4,100 professionals 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 42,000 professionals.
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