2016-2017 federal budget highlights

Mar 22, 2016

On March 22, 2016, the Minister of Finance, Bill Morneau, presented the 2016-2017 budget in the House of Commons. In its first budget, the new government has expressed a commitment to growing the economy, creating jobs and strengthening the middle class.

The budget proposes $120 billion of investment in infrastructure and job creation over the next ten years, including significant investments in public transit, clean technology, and First Nations, Inuit Peoples and the Metis Nation.

Some of the key features of the budget plan were:

  • Mr. Morneau indicated that the deficit for 2015-2016 will be $5.4 billion while a deficit of $29.4 billion is predicted for 2016-2017. The deficit is projected to decline gradually reaching $14.3 billion by 2020-2021.
  • This budget proposes to keep the small business tax rate at 10.5 percent after 2016 rather than reducing this rate to 9% by 2019 as announced in the previous budget.
  • Where the exception to the deemed association corporation rules applies (i.e., an election not to be associated is made or the third corporation is not a CCPC), the budget proposes to make investment income derived from an associated corporation’s active business ineligible for the small business deduction and taxable at the general corporate tax rate.
  • This budget contains proposals regarding certain recommendations of the Organisation for Economic Co-operation and Development (OECD) as set out in its final reports on its base erosion and profit shifting (BEPS) initiative, released in October 2015. 

A summary of the economic and tax highlights contained in the budget is outlined in our Canadian tax alert

For further details, we refer you to the Ministry of Finance website.

A happier horizon, a short paper from CDSB and CDP

Sep 19, 2016

On September 19, 2016, the Climate Disclosure Standards Board (CDSB) and the Carbon Disclosure Project (CDP) released a short paper where they consider how the reporting community could work together to support the successful implementation of climate-related financial disclosure through mainstream reporting channels.

This short paper discusses the preparation of the reporting infrastructure, practical integration of climate change information into mainstream reports, and materiality. In conclusion the paper identifies that there is a crucial role for the reporting community to play to ensure the success of the TCFD’s recommendations.

Please click for the press release and the publication on the CDSB's Web site.

Analytics – Moving from Hindsight to Foresight

Nov 25, 2016

The appetite for information has been increasing across most organizations, and we’re not talking about just any old historical information, we’re talking about information that can help make timely, informed business decisions and provide real value to an organization.

In our CFO’s corner series, Jerome Townsend, Senior Manager in Deloitte’s Audit - Public practice, who also helped establish Deloitte’s internal Audit Analytics team, discusses how in the spectrum of hindsight - insight - foresight, the information we rely on often resides squarely within the hindsight category, leaving the insight and foresight components to individual interpretation and ‘gut feeling.’ Many organizations have survived and even flourished in this respect, but as technology, data and talent continue to expand and evolve, the competitive advantage continues to shift to those who know how to turn information into intelligence. Organizations that do this well are known as Insight Driven Organizations (IDOs).

Visit the CFO’s corner in Deloitte’s Centre for Financial Reporting to read this editorial as well as any previous articles that you may have missed.

Are Mandatory Gender Diversity Targets Coming for Public Companies in Ontario?

Jun 14, 2016

On June 14, 2016, Blake Cassels & Graydon LLP released an article on how the Ontario government announced that it has accepted all 11 recommendations set forth in Catalyst Canada’s report, "Gender Diversity on Boards in Canada: Recommendations for Accelerating Progress" (Report).

Catalyst Canada is a non-profit organization whose mission is to accelerate progress for women through workplace inclusion. The Report was commissioned by the Government of Ontario and is intended to advance gender balance on boards through providing recommendations to companies and business leaders as well as the Ontario government.

The Report notes that while some indications of momentum exist, with 15% of TSX-listed issuers having added one or more women to their boards between the 2014 and 2015 proxy seasons, there is still much progress to be made in terms of gender balance, as women currently comprise 20.8% of the members of such boards and half of TSX-listed issuers do not have any women on their boards.

Review the report and the article on the Blake Cassels & Graydon LLP's Web site.

Are today’s CFOs ready for tomorrow’s demands on finance?

Dec 30, 2016

In December 2016, McKinsey released their latest Global Survey on the role of the CFO. Survey results show that as their role expands to include ever more non-financial demands, CFOs know they must build new skills to lead.

In the survey, finance leaders report that while newer responsibilities, such as digitizing critical business activities and managing cybersecurity, present opportunities for finance leaders to differentiate themselves—and their companies—from competitors, many CFOs believe their companies are not yet prepared to manage these challenges.

These nonfinancial responsibilities are putting many CFOs on alert. Less than one in three believe their companies have the capabilities they need to be competitive in their digitization of business activities.

On the whole, CFOs recognize the need to move beyond traditional or textbook practices. But few say their companies use innovative methods to make decisions. Roughly two in three CFOs say their companies do not yet have the capabilities for agile decision making, scenario planning, and decentralized decision making they’ll need to be competitive in the coming years.

In response to some of the challenges that the survey results revealed, a few steps that CFOs and their companies can take have been identifed:

  • Assert proactive and strategic leadership
  • Adopt an investor’s mind-set—and more innovative practices
  • Embrace technological advances

Review the full survey on the McKinsey's website.

Audit Committee Oversight of IT Risk

Mar 31, 2016

On March 31, 2016, the Canadian Public Accountability Board (CPAB) released a publication where it discusses the audit committee concerns related to IT risks and the role the external auditor and others could play in assisting the audit committee.

The CPAB has heard from audit committees that IT risk is a growing priority for boards and audit committees, yet they often feel ill-equipped to perform their oversight role in this area. Understanding the risks of the organization and asking the right questions of external auditors, internal auditors and management can help audit committees manage its IT risks and protect its information assets more effectively.

Review the publication on the CPAB's Web site.

BEPS Project advances tax certainty agenda with the launch of global review of MAP programmes

Oct 31, 2016

In October 2016, the Organisation for Economic Co-operation and Development (OECD) released key documents, approved by the Inclusive Framework on BEPS that will form the basis of the Mutual Agreement Procedure (MAP) peer review and monitoring process under Action 14 of the BEPS Action Plan.

The Action Plan on Base Erosion and Profit Shifting identified 15 actions to address BEPS in a comprehensive manner. Recognizing that the actions to counter BEPS must be complemented with actions that ensure certainty and predictability for business, Action 14 calls for effective dispute resolution mechanisms to resolve tax treaty-related disputes. The BEPS package endorsed by the G20 Finance Ministers in October 2015 contains the report on Action 14 (Making Dispute Resolution Mechanisms More Effective), which outlines the minimum standards and best practices for resolving treaty-related disputes under the Mutual Agreement Procedure (MAP).

The documents released form the basis on which this process will be moving forward. The compilation includes the Terms of Reference which translate the minimum standard approved in the final Action 14 report into a basis for peer review; the Assessment Methodology for the peer review and monitoring process and the MAP statistics reporting framework which reflects the collaborative approach competent authorities will take to resolve MAP cases and will ensure greater transparency on statistical information relating to the inventory, types and outcome of MAP cases through common reporting of MAP cases going forward and Guidance on information and documentation to be submitted with a MAP request.

Through rigorous peer reviews and continual collection of data, the Action 14 BEPS deliverables seek to eliminate taxation not in accordance with treaty provisions and help resolve any tax-treaty related disputes in a timely and efficient manner. The involvement of the Inclusive Framework throughout the peer review process ensures that the effort to streamline MAP incorporates the experience of both developing and developed countries. The peer review and monitoring process will be conducted by the FTA MAP Forum, with all members participating on an equal footing.

The review will take place on the basis of the existing treaties and there is no requirement for jurisdictions to negotiate any new treaties. Furthermore, the methodology released contains the possibility for developing countries to defer the peer review, recognizing their capacity constraints and often relatively small MAP pipeline.

Consistent with its efforts to enhance transparency, the OECD will also publish updated MAP profiles of all members of the Inclusive Framework, which contain information about each member's Competent Authorities' contact details, domestic guidelines for MAP and other useful information for both tax authorities and taxpayers. The actual peer reviews will be conducted in batches, with the first batch commencing in December 2016. We will be seeking taxpayer input before the launch of these reviews and a questionnaire for taxpayer input seeking such input will be published shortly, together with a schedule for review.

Review the key documents on the OECD's website.

Big Four Accounting Firms Meet to Consider Blockchain Consortium

Aug 11, 2016

On August 11, 2016, the Blockchain representatives from each of the 'Big Four' accounting firms are set to meet with the American Institute of Certified Public Accountants to discuss establishing a distributed ledger consortium.

Held at Microsoft's headquarters in New York City, the event marks the first meeting between blockchain specialists from Deloitte, Ernst & Young, KPMG and PwC. According to ConsenSys head of blockchain accounting, Griffin Anderson, the series of roundtable discussions will center on how the accounting industry could work together to develop new blockchain standards.

While organizers say the accounting consortium effort is in its early stages, the concept itself has proven to be a popular way for established players to work with the potentially disruptive technology.

Review the full article.

CBCA Reforms: Shareholder Meetings and Diversity Disclosure

Dec 14, 2016

On December 14, 2016, the federal government made progress towards modernizing the Canada Business Corporations Act by publishing proposed regulations under the framework bill that was tabled on September 28. The reforms are aimed, in part, at reducing regulatory discrepancies between the CBCA and Canadian securities laws, TSX rules and certain international best practices.

Part 1 amends the Canada Business Corporations Act, the Canada Cooperatives Act and the Canada Not-for-profit Corporations Act to, among other things,
  • reform some aspects of the process for electing directors of certain corporations and cooperatives;
  • modernize communications between corporations or cooperatives and their shareholders or members;
  • clarify that corporations and cooperatives are prohibited from issuing share certificates and warrants, in bearer form; and
  • require certain corporations to place before the shareholders, at every annual meeting, information respecting diversity among directors and the members of senior management.

Part 2 amends the Competition Act to expand the concept of affiliation to a broader range of business organizations.

Review the proposed regulations on the Canadian Parliament's website.

CDSB publishes review of environmental reporting by FTSE 350 companies

Feb 04, 2016

On February 4, 2016, the Climate Disclosure Standards Board (CDSB) published a review of the annual reports of FTSE 350 companies, looking at how these companies incorporate environmental issues into their strategic reports.

The publication identifies reporting trends and showcases examples of best practice from published reports. It also sets out the CDSB's views on how regulators can enhance the enabling environment for disclosure. At the launch of the report, Stephen Haddrill, CEO of the Financial Reporting Council (FRC), gave his perspective on the CDSB's findings.

The press release and full report are available from the CDSB website. The full text of Mr Haddrill's speech is available from the FRC website.

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