Financial reporting and accounting advisory services
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Accounting Standards for Private Enterprises
Get the clear financial picture you need with the accounting standards team at Grant Thornton LLP. Our experts have extensive experience with private enterprises of all sizes in all industries, an in-depth knowledge of today’s accounting standards, and are directly involved in the standard-setting process.
International Financial Reporting Standards
Whether you are already using IFRS or considering a transition to this global framework, Grant Thornton LLP’s accounting standards team is here to help.
Accounting Standards for Not-for-Profit Organizations
From small, community organizations to large, national charities, you can count on Grant Thornton LLP’s accounting standards team for in-depth knowledge and trusted advice.
Public Sector Accounting Standards
Working for a public-sector organization comes with a unique set of requirements for accounting and financial reporting. Grant Thornton LLP’s accounting standards team has the practical, public-sector experience and in-depth knowledge you need.
Tax planning and compliance
Whether you are a private or public organization, your goal is to manage the critical aspects of tax compliance, and achieve the most effective results. At Grant Thornton, we focus on delivering relevant advice, and providing an integrated planning approach to help you fulfill compliance obligations.
Research & development, government incentives
Are you developing innovative processes or products, undertaking experimentation or solving technological problems? If so, you may qualify to claim SR&ED tax credits. This Canadian federal government initiative is designed to encourage and support innovation in Canada. Our R&D professionals are a highly-trained, diverse team of practitioners that are engineers, scientists and specialized accountants.
Keeping track of changes and developments in GST/HST, Quebec sales tax and other provincial sales taxes across Canada, can be a full-time job. The consequences for failing to adequately manage your organization’s sales tax obligations can be significant - from assessments, to forgone recoveries and cash flow implications, to customer or reputational risk.
US corporate tax
The United States has a very complex and regulated tax environment, that may undergo significant changes. Cross-border tax issues could become even more challenging for Canadian businesses looking for growth and prosperity in the biggest economy in the world.
Cross-border personal tax
In an increasingly flexible world, moving across the border may be more viable for Canadians and Americans; however, relocating may also have complex tax implications.
While there is great opportunity for businesses looking to expand globally, organizations are under increasing tax scrutiny. Regardless of your company’s size and level of international involvement—whether you’re working abroad, investing, buying and selling, borrowing or manufacturing—doing business beyond Canada’s borders comes with its fair share of tax risks.
Transfer pricing is a complex area of corporate taxation that is concerned with the intra-group pricing of goods, services, intangibles, and financial instruments. Transfer pricing has become a critical governance issue for companies, tax authorities and policy makers, and represents a principal risk area for multinationals.
Succession & estate planning
Like many private business owners today, you’ve spent your career building and running your business successfully. Now you’re faced with deciding on a successor—a successor who may or may not want your direct involvement and share your vision.
Tax Reporting & Advisory
The financial and tax reporting obligations of public markets and global tax authorities take significant resources and investment to manage. This requires calculating global tax provision estimates under US GAAP, IFRS, and other frameworks, and reconciling this reporting with tax compliance obligations.
Our transactions group takes a client-centric, integrated approach, focused on helping you make and implement the best financial strategies. We offer meaningful, actionable and holistic advice to allow you to create value, manage risks and seize opportunities. It’s what we do best: help great organizations like yours grow and thrive.
We bring a wide range of services to both individuals and businesses – including shareholders, executives, directors, lenders, creditors and other advisors who are dealing with a corporation experiencing financial challenges.
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Your company plays a key role in the success of landlords, investors and owners, but who is doing the same for you?
There’s no business quite like mining. It’s volatile, risky and complex – but the potential pay-off is huge. You’re not afraid of a challenge: the key is finding the right balance between risk and reward. Whether you’re a junior prospector, a senior producer, or somewhere in between, we’ll work with you to explore, discover and extract value at every stage of the mining process.
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The oil and gas industry is facing many complex challenges, beyond the price of oil. These include environmental issues, access to markets, growing competition from alternative energy sources and international markets, and a rapidly changing regulatory landscape, to name but a few.
Existing alternative minimum tax (AMT) rules are intended to ensure that Canadians pay their fair share in tax by preventing certain individuals and trusts from claiming exemptions, deductions, and tax credits that would generally be available under ordinary income tax rules. Recent changes to these rules, introduced in Federal Budget 2023, would result in certain high-income taxpayers paying more taxes, but fewer middle-income taxpayers being subject to the regime.
With these changes on the horizon, taxpayers that could be subject to the AMT should prepare for the new rules and talk to their advisors on potential steps to reduce AMT or use expiring AMT credits. These changes will be effective for taxation years that begin after 2023, if enacted.
Who pays AMT and how does it work?
The AMT rules generally apply to certain individuals, estates, and trusts that receive a significant portion of their income as dividends or from capital gains or use deductions or tax credits to significantly reduce their regular tax payable. These taxpayers are required to calculate their federal tax owing under the regular method and under the AMT method and must then pay the higher of the two amounts. The AMT method requires taxpayers to calculate their “AMT base” (i.e., adjusted taxable income over the basic exemption amount) before applying the AMT tax rate. For example, AMT could apply where a taxpayer claims the capital gains exemption on the sale/transfer of their small business shares or claims significant deductions from investments such as flow-through shares.
However, if a taxpayer pays the AMT for a specific year, they can carry forward the difference between the AMT they paid and their regular tax as a credit for up to seven years. As such, AMT paid can offset future taxes owing under the regular system, but any unused amount after that seven-year period is permanently lost.
Provincial AMT may also apply and is generally calculated as a percentage of the federal AMT amount.
How will the AMT change?
Under the proposed changes, the AMT rate increases to 20.5% (from 15%) so that taxpayers subject to AMT pay more taxes. In addition, the exemption amount increases to $173,000 (from $40,000) so that middle-income taxpayers are no longer subject to the tax. The new exemption amount is based on the start of the fourth federal tax bracket in the 2024 tax year.
The proposed AMT rules also broaden the scope of the AMT to:
- include 100% (from 80%) of capital gains in the AMT base
- reduce deductions for capital losses and allowable business investment losses to 50% deductible (from 80%)
- include 100% (from 80%) employee stock option benefits in the AMT base
- include 30% (from 0%) of capital gains on donations of shares or employee stock options of publicly listed securities
- reduce certain deductions to 50% deductible (from 100%) (e.g., interest or carrying charges to earn property income, certain employment expenses, non-capital loss carryovers)
- reduce deductions for most non-refundable tax credits to 50% deductible (from 100%) (e.g., basic personal amount, medical expense credit, disability credit, tuition credit)
Let’s consider how changes to the AMT could affect two different taxpayers. In these examples, we make certain assumptions for illustration purposes. For example, we assume that the tax deductions and credits for 2024 are equal to the 2023 amounts (i.e., not adjusted for indexation) and the AMT basic exemption amount is approximately $173,000.
Scenario 1: An individual with significantly higher AMT under proposed changes
Ms. Y is a BC resident whose only income in 2024 is a capital gain of $2M on the sale of marketable securities. Ms. Y applies unused capital losses of $1.8 million from prior years against the gain.
Under the proposed AMT rules, Ms. Y would pay about $252,000 in total taxes for 2024 (instead of approximately $22,000 under the existing rules). The taxes owing under the proposed rules includes about $172,000 in federal AMT and $58,000 in BC AMT (up from about $450 and $150 respectively) that would be available for carry forward to reduce any regular taxes owing for up to seven years.
Ms. Y would owe significantly more taxes under the proposed AMT rules because her AMT base would be higher. When calculating the AMT base under the proposed rules, Ms. Y would have to include 100% of the capital gain (up from 80%) and would only be able to deduct 50% of the capital losses applied (down from 80%). Additionally, Ms. Y would apply an AMT rate of 20.5% (instead of 15%). BC AMT would also increase significantly, as it’s based on a percentage of federal AMT.
Scenario 2: An individual who will no longer pay AMT under proposed changes
Mr. X is a BC resident and realizes a capital gain of $300,000 in 2024 on the disposition of shares in a holding corporation. The disposition doesn’t qualify for the lifetime capital gains exemption and Mr. X has no unused capital losses from prior years. Other than an RRSP deduction of $50,000, Mr. X has no other income or deductions in 2024.
Under the proposed AMT rules, Mr. X would pay about $21,000 in total taxes for 2024 (instead of approximately $28,000 under the existing rules, which includes $7,000 in federal and BC AMT in excess of regular taxes). Mr. X would pay no AMT under the proposed new rules because the higher exemption amount (i.e., $173,000 instead of $40,000) would offset the impact of having to include 100% of the capital gain (up from 80%) in the AMT base.
The proposed rules are complex, and there may be steps you can take to reduce AMT or utilize expiring AMT credits. Contact your local advisor or reach out to us here to learn more about the proposed changes to AMT and how you can plan accordingly.
The information contained herein is general in nature and is based on proposals that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice or an opinion provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, specific circumstances or needs and may require consideration of other factors not described herein.
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