21 Mar 2019

2019-2020 Quebec Budget: Raymond Chabot Grant Thornton Publishes Its Tax Bulletin and Voices Its Opinion

Québec City, March 21, 2019 – The tabling of the Quebec budget today once again brings Raymond Chabot Grant Thornton to issue comments and publish its tax bulletin, which was drafted during the day by a team of tax experts present at the lock-up in Québec City.

Welcomed measures, but insufficient for addressing short-term labour shortage

From the outset, the firm would like to underline the measures for stimulating investments and inciting workers to remain longer in the labour market of Quebec businesses. Tax Partner Luc Lacombe stated: “The $1B increase in share capital from Investissement Québec, bringing the amount to $5B, is good news for businesses, as is the creation of a $1B envelope from the government to support the strategic development of our businesses and protect the presence of head offices.”

Lacombe adds: “Increasing the tax credit for experienced workers and lowering the age of eligibility to 60 years, as well as reducing payroll costs for workers 60 years and older, are also promising measures for our businesses. However, we would have expected more for increasing their competitiveness, particularly from a tax standpoint, and accelerating the integration of foreign talent into the workforce.”

President and CEO, Emilio B. Imbriglio pointed out: “The announcement to better integrate immigrants within communities and into employment, with an additional contribution of $146M per year, for the next five years, is very good news indeed. However, our short-term challenge is to ensure that our businesses from every corner of the province, no longer put contracts on ice or refuse projects due to a labour shortage. According to Emploi Québec, in the next few years, immigration will represent a 22% inflow of labour, the second most important source for our Quebec businesses. It is therefore urgent to accelerate the integration of temporary and permanent workers into the workforce for our businesses to succeed.”

Marc Audet, President of AURAY Capital, a subsidiary of Raymond Chabot Grant Thornton, made it clear that: “While Quebec’s permanent economic immigration is very important and should be better adapted, temporary immigration is necessary to quickly fill key positions across the province. It’s obvious that the process is too long and there’s still too much red tape in a world where unemployment rates are at their lowest. Moreover, government programs such as the Business Assistance – Immigrant Investor Program, the Employment Integration Program for Immigrants and Visible Minorities and the one relating to the Innovative Manufacturer need to be more interrelated. Why can’t we use part of the funds generated by the immigrant investor program envelope, which is not subsidized by the State, to cover part of our businesses’ onerous costs for recruiting abroad? Surely, such small adjustments would help support the growth of businesses in Quebec.”

Further tax cuts needed

Even with the tax cuts already announced by the provincial government, Quebec businesses will not regain the tax advantage they enjoyed vis-à-vis the United States. With a 4% tax rate for all SMEs in Quebec by 2021, they will not be able to stand out from the other provinces either.

Lacombe also raised this issue: “Our firm continues to demand the elimination of tax on SMEs’ first $500,000 of taxable income.They must be able to use these savings to produce more, innovate and recruit more talent, here and abroad. If the government increased the accelerated capital cost allowance to 100% for the first year on all business investments, as is the case in the United States, this would have a very positive effect on our businesses’ competitiveness.”

More succession plans and less restrictions on intergenerational business transfers: A necessity for Quebec

How can we ensure the success of the next generation if only 8% of all entrepreneurs have a formal succession plan?

According to the firm’s Regional Vice-President and National Business Transfer Leader, Éric Dufour: “Specific measures are needed, such as the creation of a fund to support businesses in order for professionals to assist them implement a succession plan that takes into account all issues, whether they are of a fiscal, strategic, human, legal or financial in nature. The challenge is too great to delay the introduction of structuring measures, such as the certification of stakeholders to accompany entrepreneurs in their transfer process, the endorsement of these plans by a government authority or even an increase in the new Quebec Business Transfer Fund.”

In addition, even if Quebec has loosened the tax law to make things fairer for intergenerational business transfers, unlike the federal government where the issue remains unresolved, the firm highlights that very restrictive conditions persist that do not always favour family takeovers. Dufour concludes: “Restricting transferors from making complete, and not partial, business transfers, and preventing them from receiving post-sale interest, which would protect them from being taxed on the transaction’s capital gain, hinders the long-term existence of our family businesses and Quebec entrepreneurship.”

Please consult the pre-budget recommendations submitted to the Canada and Quebec Finance Ministers by Raymond Chabot Grant Thornton.

About Raymond Chabot Grant Thornton

Founded in 1948, Raymond Chabot Grant Thornton has become a Canadian leader in the areas of assurance, tax, advisory services and business recovery and reorganization, with more than 2,500 professionals, including approximately 200 partners. Together, Raymond Chabot Grant Thornton and Grant Thornton LLP, another Canadian member firm of Grant Thornton International Ltd, comprise more than 4,400 professionals and close to 170 offices across Canada to help Canadian organizations achieve their full growth potential both locally and globally. Grant Thornton International Ltd provides clients with the expertise of member and correspondent firms across more than 135 countries and more than 50,000 professionals.

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Source:

Francis Letendre
Head, Public Affairs
Raymond Chabot Grant Thornton
Tel.: 514-390-4201
[email protected]

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19 Mar 2019

2019 Federal Budget: Raymond Chabot Grant Thornton Responds and Publishes Its Tax Summary

Ottawa, March 19, 2019 – Raymond Chabot Grant Thornton releases its tax bulletin drafted today by a team of experts present at the lock-up and makes a number of comments pertaining to the tabling of the federal budget.

We cannot but acknowledge that the purpose of this last budget, before the major electoral rendez-vous for this fall, was to satisfy many members of society, and more specifically, the middle class. With regard to announcements to make Canadian businesses more competitive, the firm would like to commend the following measures in particular: the measure eliminating the taxable income threshold so that private corporations can benefit from increased research and development tax credits and the one providing accelerated capital cost allowance for zero-emission vehicles.

Corporate tax: Stronger tax measures should have been included

While this budget does include measures that are favourable for businesses, the firm would have liked to see more forceful measures for stimulating their growth. President and CEO, Emilio B. Imbriglio, said: “In a context where our economic drivers have to deal with a highly competitive business environment and where the labour shortage affects us all, it would have been especially appropriate to significantly reduce corporate tax, or even eliminate it on a portion of their revenues, as we have been recommending for several years now. Moreover, the tax advantage previously enjoyed by Canadian businesses vis-à-vis the United States is long gone; this could seriously undermine Canada’s economic development.”

Innovation through tax credits: Foreseeable, recurring sources of revenue

While innovation remains weak across the country, as reported by the Fraser Institute in January 2019, and the 4.0 transformation to which several businesses had committed requires technological investments, the firm remains confident that credits are the best financing tool suited for this purpose. Tax Partner Pascal Perreault added: “This is why we believe that the principal innovation program in the country, that is, the scientific research and experimental development (SR&ED) tax credit, should have been further increased. Similarly, introducing a tax credit for innovation would enable SMEs that do not conduct research and development to increase their investments in technologies and foster their growth.”

Business succession: Awaiting adjustments to promote family business takeovers

Entrepreneurial succession is also a major challenge for ensuring the longevity of Canadian businesses, particularly family-owned businesses. Tax Partner Sylvain Gilbert stated: “The existence of tax unfairness in the Income Tax Act (ITA 84.1), pertaining to intergenerational business transfers, continues to dissuade Canadian entrepreneur transferors from investing in their business, especially if they sell it to a company held by a family member, due to the capital gains taxation, which can reach close to $870,000. The Quebec government has already made adjustments to render business transfers fairer tax-wise. While we applauded all exchanges with players in the field to develop new proposals that would better consider intergenerational business transfers for tax purposes, it’s now up to the federal government to take action. These tax measures must have a lasting, significant impact everywhere in Canada.”

Canada taxation is obsolete: A major review is needed!

Canadian taxation has not undergone an in-depth review since 1971. Tax Partner Luc Lacombe specified: “Family tax is no longer adapted to today’s family situations, as demonstrated in a recent study we collaborated on with the ESG-UQAM.”

Given that the tax burden remains quite heavy for businesses, Canada lost the corporate tax advantage it had been enjoying ever since the United States and other countries reduced their corporate tax rates and enhanced their tax competitiveness, and that a low corporate tax rate helps attract new investments and create new jobs, Raymond Chabot Grant Thornton reiterates to the federal government the need to review the Canadian tax system.

Urging the federal government to establish a plan to restore budget balance in Canada, Imbriglio added: “For the benefit of all taxpayers, the time has come to quickly announce a tax system review process led by independent experts. This review would lead to a major revamping of the tax system that aligns with the principles of equity, simplicity, competitiveness and efficiency. Taxation must evolve to better suit the realities of today’s organizations. The Budget should have contained targets, especially given increasing interest rates; this would have sent a positive signal to financial donors and rating agencies and make planning the budget easier for the government.”

Consult the pre-budget recommendations submitted to the Canada and Quebec Finance Ministers by Raymond Chabot Grant Thornton.

About Raymond Chabot Grant Thornton

Founded in 1948, Raymond Chabot Grant Thornton has become a Canadian leader in the areas of assurance, tax, advisory services, and business recovery and reorganization, with more than 2,500 professionals, including approximately 200 partners. Together, Raymond Chabot Grant Thornton and Grant Thornton LLP, another Canadian member firm of Grant Thornton International Ltd, comprise more than 4,400 professionals and close to 170 offices across Canada to help Canadian organizations achieve their full growth potential, both locally and globally. Grant Thornton International Ltd provides clients with the expertise of member and correspondent firms with more than 50,000 professionals across more than 135 countries.

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Source:

Francis Letendre
Head, Public Affairs
Raymond Chabot Grant Thornton
Tel.: 514-390-4201
[email protected]

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07 Mar 2019

International Women’s Day, March 8, is an opportunity to take stock: what about the representation of women in senior management positions?

According to Louise Martel, Partner in Human Resources Consulting, while the current situation does not yet reflect the acknowledged determination regarding women in senior management positions, a balance should be achieved in the not-too-distant future. What’s more, companies seem to be more likely to recruit women to occupy the highest levels of management.

Several studies indicate that Canada is a leader when it comes to gender equality. For its part, Quebec is among the most equalitarian societies on the planet. Despite the similar results of numerous studies in this area, as shown in a study published by Grant Thornton International, Women in business: building a blueprint for action, it’s important to temper these findings with the following data.

Women’s roles:

  • 34% are chief financial officers (CFO);
  • 20% are chief marketing officers (CMO);
  • 18% are chief operating officers (COO);
  • 16% are chief information officers (CIO);
  • 15% are chief executive officers (CEO);
  • 7% are partners.

What’s noticeable about these numbers is that the percentage of women in senior management positions drops as you move up the hierarchy, even though women are just as ambitious as men.

The glass ceiling that seems to be preventing women from reaching the highest levels is primarily due to archaic structural phenomena still present in today’s society. For example, restricted networking opportunities and caring responsibilities outside work are hurdles that women have to overcome.

On the other hand, men are three times more likely than women to move from manager to vice-president. To say the least, we still have a long way to go before full gender parity is achieved.

Another fact that modifies the picture: in the past 20 years, there has been virtually no progress in gender parity and, if things don’t change, it will take more than 30 years to bridge the gender parity gap.

The winds of change are blowing, the profile of tomorrow’s business leaders is evolving

Organizations, whether they are in the public, parapublic or private sector, want to hire women for senior management positions. Many businesses are preparing for tomorrow’s leaders. The next generation of leaders will be more eclectic and the presence of women will be stronger. The growing awareness of diversity has led organizations to review their positioning and consider that tomorrow’s leader may well be a woman.

Diversity is good for business

It seems that women’s representation on boards of directors helps increase profitability. Although the cause-and-effect has not been proven, some experts have proposed the following explanation: the diversity in expertise, culture and points of view helps improve the quality of discussions on social issues and, hence, leads to better decision making.

The skills women bring to the table complement those of men. Generally, women are more objective when making decisions. They use a methodology that meets the organization’s needs. They are able to take a step back and have the ability to question themselves, which fosters innovation. Several studies show that a gender mix on a board of directors has a significant impact on business growth.

Evolving behaviours

Men’s behaviour and perceptions have evolved considerably in recent years. You will recall the #MeToo social movement that shed light on the full extent of the problem of the relationship between men and women. This collective awareness has not escaped the notice of the business world.

We are seeing that a number of economic players are starting to adopt new measures, such as flexible working hours, to attract women who want to build a career and still maintain a family life.

What actions can businesses put into place?

Businesses must assume their responsibility and play a key role in this initiative. This must be reflected in and conveyed by the corporate culture. Businesses must support women talent internally, hold awareness meetings with senior management, define quantifiable objectives and implement measures to help women reach their full potential and advance their career internally. One such tool could be mentoring.

The next few years promise to be exciting for women’s place in the highest corporate levels. If businesses implement certain measures, women’s representation in senior management should improve. Nevertheless, women must overcome certain preconceived ideas and learn to put themselves forward more than ever, because great business opportunities await them.

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06 Mar 2019

Just in time for tax season, Protégez-vous magazine published an article with the main tax credits and deductions available for homeowners.

These credits and deductions apply to buying or selling a property, renovations and rental income.

Christian Menier, Tax Partner at Raymond Chabot Grant Thornton, contributed to the article with useful advice and reminded new homeowners of the importance of submitting claims or notifying their accountant about their new status.

“As surprising as it may seem, some clients forget to let us know they’ve become homeowners. We only notice the change because they’ve changed their address.”

Christian explains that there are two interesting measures for new owners: the federal home buyers’ amount and, since 2018, the Quebec first-time home buyers’ credit. Terms of eligibility are similar to those of the Home Buyers’ Plan (HBP), that is, you did not own a home in the previous four years.

He goes on to say that these tax measures help cover some of the costs associated with buying a home: transfer fees (welcome tax), inspection, notary, moving, etc.

Read the article in Protégez-vous (for subscribers only).

For assistance in completing your tax returns, consult the online Tax Planning Guide.

To get the help of a professional, use our taxo.ca service, an online accounting service for individuals that is available all year long. You can quickly enter your data, at any time, and let our professional handle the calculations for you.

Remember that the tax filing deadline is April 30, 2019.