Strategies for Success in Challenging Times

1. Margot E. Uson Del Chatterson Marco Della Rocca Terry Fitzpatrick Michael Hiles& Associates Inc. Michael Hiles Chris Murray Brett Maclean Steve Kraml Morrie Weinberg & Associates Inc. SORELLA, LAHAIE Avocats Simon Lahaie Robin Whitrod, CA Vince Santaguida Morrie Weinberg Learn more about our members at: www.psnetwork.ca

2. Strategies for Success in Challenging Times by Morrie Weinberg Michael Hiles Robin Whitrod

3. THE NEW YORKER, Feb.9, 2009

4. Morrie Weinberg and Associates Inc. Business Consultants specializing in: • Government Financial Assistance, • 1% Training Tax & Pay Equity Compliance, • Business Process Re-engineering, • ERP software selection and implementation.

5. GOVERNMENT CAN HELP ! • Federal & Provincial Government Grants • Quebec 1% Training Tax Compliance • SR & ED Tax Credits • Quebec Design Tax Credits

6. Federal & Provincial Government Grants

7. Federal & Provincial Government GRANTS ! • Economic Development Canada • Emploi-Quebec • MDEIE • Investissement Quebec

8. Federal & Provincial Government GRANTS MOST COMMONLY SUPPORTED PROJECTS: • Training (needs analysis and execution) • Technology Improvement (soft costs) • Operational Improvement (consulting, analysis) • Market Development (new initiatives) • Human Resource Management (analysis, coaching) • Hiring (specialized positions, visible minorities).

9. Federal & Provincial Government GRANTS MOST IMPORTANT CONSIDERATIONS: • What “exceptional” activity are you planning? • What is the projected amount of your investment? • What is the timing of your investment? • How will this investment impact your company? • How many people do you employ at present?.

10. Federal & Provincial Government GRANTS TYPICAL FINANCIAL SUPPORT: • 40-75% of eligible consulting expenditures • Up to 100% of eligible training expenditures • Up to 10% on major “capital investments” of $300,000 or more.

11. Quebec 1% Training TaxCompliance

12. Quebec 1% Training Tax Compliance IMPORTANT CONSIDERATIONS: • There are numerous forms of eligible training expenditures • Each type of training expenditure is calculated differently and requires specific documentation and evidence • Excess training may be carried forward indefinitely and used in future years to offset training shortfalls • Unnecessary payments are recoverable for up to 4 years.

13. Quebec 1% Training Tax Compliance THE ULTIMATE GOALS ARE TO: • Ensure you capture and properly document every eligible dollar of training investment every year • Show continuity in training philosophy • Ensure that your historic training declarations are properly supported and documented and that you do not have any unknown financial exposure • Ensure recovery of any training taxes paid unnecessarily.

14. Morrie Weinberg and Associates Inc. THANK YOU. Questions?

15. A. Michael Hiles& Associates Inc. Advising clients on their Compensation and Total Rewards programs.

16. Compensation Strategies for Tough Times Your compensation policy carries the loudest message about what you want your employees to do. It is also your single biggest expense. It deserves your attention.

17. Today’s Agenda • The Competition – intentions, evolution • Compensation Administration • Sharpening the pencil • Variable Pay • Keeping control • Non-traditional ideas • Beyond the numbers

18. Cutting Back in 2009 • Intentions (May 2008) 2.9% to 3.9% (inflation + 1.5% to 2.0%) • Varies by region, industry • Intentions (December 2008) 2.4% to 3.1% (inflation + 0% to 0.6%) • Inflation (Consumer Price Index) Total CPI: 2.0% / Core CPI: 2.4% November Source: WorldatWork, Mercer, Conference Board, Bank of Canada

19. What are Companies Planning? Latest information: Trend continues towards salary freeze

20. Getting This Right Is Important • Cutting Back Too Much: • Become uncompetitive • Tougher to higher/retain strategic employees • Employees have long memories • Cutting Back Too Little: • Positions you too high in the market • Very difficult to recover • Salary costs are too high for too long.

21. Performance Appraisals

22. Performance Appraisals

23. Apply Adjustments Carefully * * Average performance produces a COLA adjustment

24. Combining The Two • Using the illustrations: • Savings of 1.205% of payroll • Requires planning • Include honest communications • Collective agreement.

25. Variable Pay - Creativity • Look at bonuses: • Balance employee incentive with Company ROI • Make bonuses self-funding • Set objectives carefully • Make sure objectives are achieved • Replace base pay increases by one-time bonuses.

26. Variable Pay - Creativity • Annual salary adjustment Profit Sharing • Share the wealth, share the pain

27. Total Rewards – Beyond Pay • Goal – retain best employees • Identify key positions, staff • Foster partnership environment • Look for development opportunities • Creative downsizing • Selective 3-4 day weeks (better than bye-bye) • Maybe an opportunity…

28. Communicate,Communicate, Communicate! • Tell everyone that: • The economy is affecting the company • Pay will reflect company performance • Bonuses, increases etc. are NOT an entitlement • Goal - fairness in a tough economy • Working for the good of all stakeholders.

29. So, More Than Ever… • Manage your compensation effectively.

30. A. Michael Hiles Associates Inc. THANK YOU. Questions?

31. Offering accounting and financial advisory services to a wide range of small and medium sized businesses.

32. TAX STRATEGIES INTOUGH TIMES: • Changes to owner/manager compensation • The new Tax Free Savings Account • Highlights of the most recent Federal Budget

33. Profitable vs. Loss Company

34. Profitable vs. Loss Company

35. TAX FREE SAVINGS ACCOUNT • Annual contribution limit of $5,000 for 2009, indexed post 2009. • Only for “individuals 18 years or older”. • Unused room for any one year carries forward. • Withdrawals regenerate room. …continued KEY HIGHLIGHTS

36. TAX FREE SAVINGS ACCOUNT • Income/capital gains never taxed. • Great for interest and capital gains; lousy for capital losses. Good for dividends when income is above $75,000 and great for seniors who have their OAS payments clawed back. • No attribution if funded by spouse. …continued KEY HIGHLIGHTS

37. TAX FREE SAVINGS ACCOUNT • Upon death a TFSA transferred from 1 spouse to another maintains its tax-free status but no additional contributions can be made for the deceased spouse. • Emigrants can keep a TFSA but cannot make future contributions. Therefore top it up before you go and move to Bermuda… KEY HIGHLIGHTS

38. tax free savings account

39. FEDERAL BUDGET HIGHLIGHTS • Small Business Limit ↑ $500,000 from $400,000 starting 2009 • 100% write-off of computers and software purchased to January 31, 2010 • Mandatory electronic filing of corporate taxes starting 2010 if Revenues > $1 million BUSINESS

40. FEDERAL BUDGET HIGHLIGHTS • Basic exemption increased to $10,320 from $10,100 ($9,600 in 2008) • Bottom bracket widened by 7.5% to $40,726 • Home renovation credit at 15% of costs over $1,000 to a maximum credit of $1,350 (i.e. $9,000 x 15%) • First time home buyer credit of $750 PERSONAL

41. THANK YOU. Questions?

42. Margot E. Uson Merci et Bonne Journée Del Chatterson Marco Della Rocca Terry Fitzpatrick Michael Hiles& Associates Inc. Michael Hiles Chris Murray Brett Maclean Steve Kraml Morrie Weinberg & Associates Inc. SORELLA, LAHAIE Avocats Simon Lahaie Robin Whitrod, CA Vince Santaguida Morrie Weinberg Learn more about our members at: www.psnetwork.ca