01 Dec 2011

Montréal, December 1, 2011 – As part of pre-budget consultations, Raymond Chabot Grant Thornton wishes to remind Canada’s Minister of Finance, the Honourable James Flaherty, of the importance of taking immediate action to make the tax system equitable for intergenerational business transfers.

“In a context where entrepreneurship in this country is declining and where we must constantly search for ways to encourage the next generation to take over the reins of a business, no business owner must be at a tax disadvantage when selling a business. It’s no wonder, then, that today we are again calling for legislative changes,” said Firm President and CEO, Jean Robillard.

Canadian Firm Grant Thornton LLP is also calling for this change. “We are very pleased that Raymond Chabot Grant Thornton is taking a leadership role on this strategic issue. It is also clear to us that Canadian tax policy should further encourage intergenerational entrepreneurship to thrive in Canada,” added Executive Partner and CEO, Phil Noble.
“An owner who sells his company shares to a third party or to foreign interests rather than to a family member’s company, always has a greater tax advantage because he can claim a capital gains exemption of up to $750,000, which is certainly not negligible, especially considering that proceeds from the sale of an enterprise are often used as a retirement nest egg”, noted tax Partner, Jean Gauthier.

To counteract this tax disadvantage, on December 2, 2010, Raymond Chabot Grant Thornton sent a report to the Finance Ministers of Quebec and Canada entitled, Business Transfers: Problems and Suggested Solutions (www.rcgt.com/business-transfers), which sets out 10 solution options.

Solution options that would be easy to apply

“The advantage of the Raymond Chabot Grant Thornton report is that it not only identifies the sources of the problem, it provides relevant solutions to counteract this tax inequity. The solution options were designed to correct the incongruity between the business world’s reality and the current tax system to encourage intergenerational transfers while addressing an economic need,” said the report’s main author, Suzanne Landry, University Partner at Raymond Chabot Grant Thornton and Tax Professor at HEC Montreal.

Results that are a long time coming

Even after calling for legal adjustments during the recent tabling of the Canadian and Quebec budgets and proposing solution options to representatives of the Quebec and Canada Finance Departments in meetings held this fall, Raymond Chabot Grant Thornton has still not been informed whether this problem was on its way to being resolved. “To make local businesses sustainable by encouraging family successors and thereby contributing to our economic growth, these changes are not an option, they’re a necessity,” concluded Jean Robillard.

About Raymond Chabot Grant Thornton

Founded in 1948, Raymond Chabot Grant Thornton is a leader in the fields of assurance, taxation, consulting and recovery and reorganization services. The Firm owes its success to over 2,000 employees, including more than 225 Partners in over 90 offices in Quebec, Eastern Ontario and New Brunswick. The scope of its network makes it a leader in its business segment. For the past 30 years, Raymond Chabot Grant Thornton has been a member of Grant Thornton International Ltd, providing its clients with the expertise of the member and correspondent firms in more than 100 countries.

– 30 –

For more information:

Francis Letendre
Public Relations Consultant
Raymond Chabot Grant Thornton
Tel.: 514-390-4201
Cell.: 514-554-1685
[email protected]
www.rcgt.com

Next article

18 Nov 2011

MONTRÉAL, November 18, 2011 – As the Government of Quebec’s Minister of Economic Development, Innovation and Export Trade, Sam Hamad, takes the podium today at the Board of Trade of Metropolitan Montreal to talk about entrepreneurship, Raymond Chabot Grant Thornton applauds the new government measures to develop a true Quebec culture of entrepreneurship.

“The Quebec entrepreneurship strategy (Stratégie québécoise de l’entrepreneuriat) announced by Quebec Premier, Jean Charest, among others, is certainly a positive development in supporting business successors and a key issue for our competitiveness,” said Chief Executive Office, Jean Robillard.

Given the importance of business succession to Quebec’s prosperity, the Firm has developed a Businses Succession and Continuity practice, which brings together several Firm network specialists. “For a successful business transfer, it is imperative to consider all issues, that is, tax-related, strategic, human, legal and financial. This is why our practice includes experts in human resources, management, financing, accounting and taxation,” noted Management Consulting Partner, Éric Dufour, adding that, “the government’s strategy to give business leaders the tools to develop best practices that may increase their business’s future profitability and its skills investment measure (Investissement–compétences) are of particular interest for business transfers.”

Despite these announcements, Raymond Chabot Grant Thornton believes that true entrepreneurship success in Quebec and Canada depends on tax equity for business transfers. In its entrepreneurship strategy, the government of Quebec emphasizes the idea of reviewing family business transfer taxation in coordination with the government of Canada. “We will continue to lobby for this because, remember, an owner who sells his company shares to a third party or to foreign interests rather than to a family member’s company always has a greater tax advantage because he can claim a capital gains exemption of up to $750,000,” concluded Jean Gauthier, Tax Partner.

About Raymond Chabot Grant Thornton

Founded in 1948, Raymond Chabot Grant Thornton is a leader in the fields of assurance, taxation, consulting and recovery and reorganization services. The Firm owes its success to over 2,000 employees, including more than 225 Partners in over 90 offices in Quebec, Eastern Ontario and New Brunswick. For the past 30 years,

Raymond Chabot Grant Thornton has been a member of Grant Thornton International Ltd providing its clients with the expertise of the member and correspondent firms in more than 100 countries.

– 30 –

For more information:

Francis Letendre
Public Relations Consultant
Raymond Chabot Grant Thornton
T.: 514-390-4201
C.: 514-554-1685
[email protected]
www.rcgt.com

 

Next article

17 Nov 2011

Good news for our Recovery & Reorganization Group! On November 8, 2011, Raymond Chabot inc. acquired Serge Morency et Associés inc., better known as Morency Conseil, a firm specializing in insolvency since 1988.

“This acquisition reinforces our presence in the Québec City region with a new office on Charest boulevard that gives us great visibility,” said André Champagne, Recovery & Reorganization Partner in the Québec City office.

As a result, Raymond Chabot inc. is pleased to welcome Pierre Lortie, Trustee, on board as a Senior Director. He will be working for both Québec City offices (on Grande-Allée and Charest boulevards) as well as the Vanier office. Serge Morency will be involved in the transition over the next two years.

Welcome to all and much success at Raymond Chabot inc.!

Next article

02 Nov 2011

On October 17, 2011, this group of experts released its report to the public entitled: Innovation Canada: A Call to Action. The objective of the Jenkins panel is to promote the innovation of local businesses, without generally impacting the government of Canada’s research and development (R&D) funding. The group of experts, therefore, made recommendations on the effectiveness of Federal R&D funding programs.

Among the six recommendations to promote business innovation, only one would have specific impacts on scientific research and experimental development (SR&ED) tax credits being claimed by SMEs: Simplify the tax credit incentive used to support small- and medium-sized enterprises.

Three of the suggested measures to achieve this recommendation would have a direct impact on the administration of the SR&ED program:

 Measures  Current Situation  Impacts of Proposed Recommendations
 1. Improve the Preclaim Project Review Service (PCPR) A preliminary review does not guarantee that a project will be eligible for the SR&ED credit once completed. Results in entities receiving prior approval as to their eligibility for the tax credit.
 2. Simplify the base on which the credits are calculated Credits are calculated on the costs of internal and external labour, the material consumed and on equipment used 50% and more on SR&ED.Complex calculations and eligibility that is difficult to estimate and predict Calculate the credits only on the costs related to internal and external labour and gross-up the rate. Simplified calculations and savings for the government. These savings will be redeployed to finance direct support measures for SMEs.
 3. Introduce incentives that encourage SME growth The refundable portion of the credit is paid out, even if the enterprise does not generate taxable income. The refundable portion should be decreased so that a portion of the savings is redeployed to increase the enterprise’s profitability.For those entities in the pre-start-up phase, the refundable tax credit on labour-related costs would be guaranteed for a specific number of years.

 

In conclusion, if the government accepts the key conclusions of the Jenkins report, the program will maintain its status as a cornerstone of R&D financing in Canada and be available to enterprises of all sizes and in every sector. In this case, the program’s eligibility and spirit will remain intact.

To consult the Expert Panel Review report on R&D, go to:
http://rd-review.ca/eic/site/033.nsf/eng/home