2. CONTENTS
‣ Canada at a glance
‣ Montreal: a snapshot
• Quality of life
• Talent advantage
• Montreal’s financial sector
• Low operating costs
‣ IFC/The value-added proposition
• Proximity to markets
• THE IFC incentive
‣ A winning combination
• Case study
• Testimonials
2
3. CANADA’S COMPETITIVE
POSITION
Size and opportunity in Access to US market
local market: (NAFTA)
‣ One of the world’s largest
economies – larger than India’s High capability for
‣ Outperforms the rest of the G8
innovation (generous
R&D tax credit)
‣ Ranked by the Economic
Intelligence Unit as the #1 place to
do business in the G8 for the next
5 years*
‣ Canada ranks #2 in the G8 as
regards the generosity of total R&D
tax incentives*
‣ Forecast to have fastest economic
growth in G8 over next years
‣ Growth in labour market forecast
to be amongst highest in Large base of existing
developed world 2009-2013 – 25%
higher than USA
investors
* Source: International Financial Consulting Ltd
3
4. CANADA’S COMPETITIVE
POSITION
High credit rating Quicker and cheaper to
‣ Canada has been enjoying a Triple start a business than in
A international credit rating from USA and UK
Moody’s since 2002*
‣ KPMG surveys highlight Canada
leading the G8 in low business costs,
Well-educated especially taxes *
workforce ‣ The World Economic Forum placed
Canada at the top of the rankings for
‣ Canada’s educated workforce ranks
#1 in the OECD for college streamlined procedures to set up a
completion rates, #7 for university business
completion rates*
‣ The World Economic Forum ranked
Canada #3 for the quality of its
management schools in 2010 *
* Source: International
Financial
Consulting Ltd
4
5. CANADA LEADING AFTER
THE FINANCIAL CRISIS
In 2010, and for the 3rd Market capitalization
consecutive year, the of TSX listed companies
World Economic Forum jumped from 2% to 4%
ranked Canada's banking of world market
system as the healthiest capitalization in 2009
in the world
‣ In terms of banks’ soundness,
Canada ranks at the 1st position,
followed by New Zealand and
Australia (NB: Hong Kong and
Singapore rank 8th and 9th In 2010, the TSX
respectively) registered a record
‣ Federally regulated banking sector number of trades,
with 72 banks jumping 4% from the
‣ During the recent crisis, no banks
previous year
failed, none required injection of
public capital and interbank money
market continued to function
5
6. WHAT YOU WON’T HAVE IN
CANADA
Stricter regulation
Tougher banking Canadian Finance Minister
Jim Flaherty has no intention
regulations like in of heading down the same
the US path as the US or UK: “WE
have not had financial
institutions fail in Canada and
cost taxpayers billions of
Risk of higher taxes dollars”
on financial
institutions and Report on Business,
bonuses January 13, 2010
6
7. MONTREAL
A SNAPSHOT
2nd largest city in Recognized Canadian
Canada leader in:
‣ Population of 3.8M,
‣ Aerospace
GDP of $125 ‣ Life sciences
billion ‣ Larger proportion of employment in
pharma than Boston and San Diego
‣ 9% of Canada’s GDP ‣ Information & communications
technologies
‣ Finance
Strong professional ‣ R&D
services support ‣ Quebec has the highest proportion of
employment in R&D in Canada
‣ (accounting, legal, engineering,
asset services)
AN optimum
location
‣ Approx. 1 hour flight to New York,
Boston, Toronto, Washington, and
Philadelphia and 2 hour flight to
Chicago.
7
8. AN OUTSTANDING
QUALITY OF LIFE
MONTREAL: GLOBAL FINANCE AT HOME
‣ Housing costs among North
America’s lowest: ‣ More than 10,000 international
restaurants
‣ Affordable single family house within
20 mins of downtown for less than
500k ‣ Low crime rate
‣ Rent for housing: under $1000 for 2 ‣ Home to:
bedrooms, garden, 5 mins to
subway, within 20 mins of downtown ‣ Grand Prix
‣ Lakefront country house for less than ‣ NHL
500k – 60 mins from downtown
‣ Canadian Football League
‣ 7$ a day for daycare ‣ Rogers Cup (Tennis)
‣ Access to free healthcare ‣ Nascar Nationwide
‣ Affordable university tuitions ‣ International Jazz Festival
‣ Cirque du Soleil
8
9. SHAPING YOUR NEW TALENT
STRATEGY
‣ CFA Association is the 10th
YOUR TALENT ADVANTAGE largest worldwide with more
IN A CHANGING WORLD than 2,000 members (highest
rate per capita)
‣ Highly educated workforce and
diverse talent (+/- 50,000 ‣ Approximately 40,000
accountants accredited in
immigrants per year)
Quebec
‣ Strong support from universities ‣ In Montreal, over 16,000 (CA > 7,131;
(COOP programs, placement) CMA > 4,600; CGA > 4,725)
‣ Centre for Innovation: ‣ Ranks 1st in North America for
‣ Ranks first in Canada for amount of the number of university
research funding students per capita
‣ 30 units of academic research ‣ 168,000 university students,
specifically in the areas of derivative including 20,000 foreigners of
products, portfolio management, which:
finance engineering, and financial
accounting ‣ 8,000 students enrolled in finance
related programs each year
‣ 400 graduate diplomas given every
year (Masters and Ph.D.)
McGill University is the HEC Montréal MBA John Molson School of
best public university in Makes the Forbes Top Business / Concordia
North America and 10 University ranked 1st in
ranks 18th among the The Only Canadian Quebec & 4th in
world’s top 200 school in the top one- Canada in the
universities* year program ranking Corporate Knight
School Ranking 2010
Source: Times Higher Education Supplement survey 2009
9
10. YOUR TALENT ADVANTAGE
60
LANGUAGES SPOKEN IN
MONTREAL
‣ 80 languages spoken
45
‣ The most trilingual population in
Canada: nearly 20% of the
population is fluent in at least
three languages
‣ Over 50% is fluent in both
French and English
30
15
0
Toronto Calgary Vancouver
Ottawa Québec Winnipeg
Montréal
Biliguism Trinliguism
Source: Statistics Canada, 2006 Census and Association of Canadian Studies
10
11. MONTREAL’S FINANCIAL
SERVICES INDUSTRY
3,000 companies OTHER Local giants
Over125,000 jobs include:
‣ 40% in securities, pension
funds, and fund management
‣ 38% in banking
‣ 22% in insurance
Home to: 11
‣ The derivatives arm of the TMX Group which recently partnered with the
London Stock Exchange
‣ The Investment Industry Association of Canada (IIAC) chose TMX’s
CDCC (Canadian Derivatives Clearing Corporation) to develop a central
counterparty facility for the fixed income market
‣ Finance related IT expertise thanks to CGI and Morgan Stanley (Over
7,000 jobs)
‣ Large talent pool in financial and actuarial mathematics
11
12. COST QUALITY FOR
FINANCIAL SERVICES
IBM-PLI LOCATION BENCHMARKING TOOL - NORTH
AMERICA
Source : March 2010
12
13. LOW OPERATING COSTS
BENEFITS IN KIND
Gross earning $30,000 $50,000 $75,000
(annual) 7 & 8
Deductions
QPP1 $1,311.75 $2,118.60 $2,118.60
QPIP2 $145.20 $242.00 $300.08
EP3 $414.00 $583.74 $583.74
Federal Taxes $2,127.38 $5,150.91 $9,736.13
Quebec Taxes $2,545.00 $6,169.00 $11,169.00
$6,543.33 21.81% $14,264.25 28.53% $23,907.55 31.88%
Net earnings $23,456.67 $35,735.75 $51,092.45
Employer’s Contributions
QPP1 $1,311.75 $2,118.60 $2,118.60
QPIP2 $203.10 $338.50 $419.74
EP $579.60 $817.24 $817.24
HSF4 $810.00 $1,350.00 $2,025.00
LSC5 $24.00 $40.00 $48.40
OHS6 $180.00 $300.00 $363.00
$3,108.45 10.36% $4,964.34 9.93% $5,791.98 7.72%
Total Cost $33,108.45 $54,964.34 $80,791.98
1: Québec Pension Plan (4.95%) 5: Labour Standards Commission (0.08%)
2: Québec Parental Insurance Plan (employee 0.484%; employer 0.677%) 6: Occupational Health and Safety (0.6% in the services sector)
3: Employment Insurance (employee 1.38%; employer 1.932%) 7: Vacations are a minimum of 4%
4: Health service Fund (2.7% of total payroll is below $1 million) 8: Gross earnings include holidays (+/- 10 days = 4%)
13
14. LOW OPERATING COSTS
REAL ESTATE & WAGES
Weighted Average Class A Gross Rental Rate
City (CBD) Rent ($/sq. ft./annum) Price difference
New York - Midtown 64.51 63.65%
Toronto 59.86 51.85%
Boston 40.52 2.79% One US$ = C$ 1.02 as of March 2010
Montreal 39.42 Base Source: CBRE May 2010
Estimated Median Annual Salary - Financial Services
(Without benefits, in $CAD)
Back office employees Montreal Chicago % Diff
Computer Operations Manager $96,754 $107,113 10.71%
Business Manager $91,701 $101,477 10.66%
Risk Management Manager $94,641 $103,113 8.95%
Financial Analysis Manager $96,445 $109,768 13.81%
Financial Analyst $74,571 $77,746 4.26%
Economic Analyst Superviser $89,846 $92,373 2.81%
Database administrator $88,014 $96,549 9.70%
Credit Manager $84,995 $92,413 8.73%
Quality Assurance Programmer $82,088 $85,072 3.64%
Account Manager Sales $79,345 $86,247 8.70%
Account Supervisor $70,385 $74,335 5.61%
Marketing Representative $61,773 $62,058 0.46%
‣ The average median Public Relations Representative $59,947 $60,106 0.27%
base salary in Systems analyst $70,874 $76,211 7.53%
Budget analyst $66,558 $70,431 5.82%
Montreal is over 6% Benefits analyst $58,138 $61,984 6.62%
lower than in Market Research Analyst $67,677 $70,002 3.44%
Chicago Payroll Supervisor $62,945 $68,544 8.90%
Accounting Supervisor (Professional) $78,645 $85,634 8.89%
‣ For executive Accountant $55,583 $59,292 6.67%
poisitions, the Foreign-Exchange Trader $92,011 $99,838 8.51%
difference is much Funds Electronic Transfer Clerk $43,340 $43,746 0.94%
Administrative assistant $46,516 $48,449 4.16%
greater Average difference 6.51%
14
15. LOW OPERATING COSTS
CORPORATE TAX RATES
A NORTH AMERICAN COMPARISON OF 2011 CORPORATE
TAX RATES (Effective Tax Rate %)
Difference with
Federal Province/State City TOTAL
Montreal
Montreal 16.50* 11.90 -- 28.40 base
Toronto 16.50* 12.00 -- 28.50 0.35%
Chicago 32.45 7.30 -- 39.75 39.96%
Boston 31.94 8.75 -- 40.69 43.27%
New York 29.00 7.10 10.05 46.15 62.50%
Corporate tax rate in Chicago
40% higher than in Montreal
*The federal tax rate in Canada will go down to 15% in 2012 Source: January 2010
15
16. WHY IFC MONTREAL?
IFC - MONTREAL IS A PRIVATE CORPORATION DEDICATED
TO DEVELOPING THE FINANCIAL SERVICES SECTOR OF THE
CITY OF MONTREAL
Determining whether your Connecting you to our
company is eligible for the IFC network of partners and
measure collaborators to optimize
your business
Guiding you through the opportunities
application process
Answering your requests
Providing expertise and for information
counselling on financial tax
incentives
16
17. THE IFC INCENTIVE:
CORPORATIONS
Corporate incentive ELIGIBILITY
‣ Activities must involve at least one of
the 25 Qualified International
An unlimited* annual refundable tax Financial Transactions (QIFT) – see
credit of 30% on salaries paid to appendix
employees of an IFC (capped at $20,000
per job per year representing a salary of ‣ The Financial Transaction must cross
$66,667). a border:
*unlimited in time and amount ‣ For local client > transaction
regarding foreign product
‣ For foreign client > transaction
regarding either local or foreign
product
‣ The transactional decision process
Fiscal impact for the must be conducted in Montreal
corporation (over 1 year) ‣ The operations must be conducted
by a corporation and employ at least
6 employees
Salary paid $40K $50K $66.67K $75K
Tax credit per job $12K $15K $20K $20K
Tax credit for 100 employees $1,2M $1,5M $2,0M $2,0M
Tax credit for 200 employees $2,4M $3,0M $4,0M $4,0M
Tax credit for 300 employees $3,6M $4,5M $6,0M $6,0M
17
18. THE IFC INCENTIVE
HOW TO QUALIFY?
QUALIFIED INTERNATIONAL FINANCIAL
TRANSACTIONS (QIFT)
1. Dealing in securities 14. Fiduciary services
2. Clearing house services 15. Factoring services
3. Investment advising and 16. Financial leasing
portfolio management 17. Organization of a qualified
4. Deposits investment fund
5. Loans 18. Administration of a qualified
6. Loans and deposits among investment fund
IFCs 19. Management of a qualified
7. Acceptance or issuance of investment fund
letters of credit 20. Distribution of the shares of a
8. Financing by means of a bill qualified investment fund
of a exchange 21. International treasury management
9. Foreign exchange operations 22. Back-office operations
10. Financial packaging 23. Documentary collection
(engineering) 24. Activities performed under the
11. Development or design of Quebec Immigrant Investor
new financial products Program
12. Insurance brokerage 25. Discount operations carried out
13. Reinsurance regarding a letter of credit or a
commercial instrument
18
19. THE IFC INCENTIVE:
FOREIGN EXPERTS
deduction in the calculation of all taxable income
Year 1 100%
Year 2 100%
Year 3 75%
Year 4 50%
Year 5 37.5%
Hypotheses
‣ $250,000 annual base salary
‣ 2009 income tax rates have been applied to the 5 year payroll computation
‣ Income tax rates have been computed assuming the employee has a spouse and
four children as dependents
You could save $176,136.80 over
5 years by working out of
Montreal instead of Toronto*
19
20. THE VALUE-ADDED
PROPOSITION
‣ Proximity to large markets
‣ Local market potential
‣ Montreal’s pension funds among largest in Canada
‣ Strategic location
Access to
International
65% of North
Financial
American ‣ Low cost rent
Centre Status
Markets
‣ Low salaries
‣ International
city ‣ Among lowest
corporate
‣ Large talent income tax
pool INTERNATIONAL rates in North
‣ Centre for FINANCIAL CENTRE America
(29.9%)
innovation
STATUS ‣ An appealing
business case
Your talent Low operating
advantage costs
‣ 30% refundable tax credit
‣ 37.5 - 100% personal income tax
exemption for foreign specialists
‣ Approx. 40% higher corporate tax rate in
Chicago compared to Montreal
20
21. OTHER INCENTIVES
LABOUR TRAINING PROGRAM
The financial assistance Grant allowed for the
offered by Emploi- creation of more than 50
Québec is flexible jobs
‣ For example, it can apply to either ‣ Up to 25% of eligible training
labour force training costs or expenses (max $2M)
recruitment expenses. ‣ Up to 50% of human resource
‣ The financial assistance will vary management services (max
between 25% to 50% of eligible $100,000)
expenses depending on the number
of jobs created and location.
21
22. AN IFC BUSINESS CASE
COST COMPARISON
FOR A 25 FTE FINANCIAL SERVICES BACK OFFICE IN MONTREAL
Canada US
Montreal Toronto NYC Boston Chicago
Revenues 3 279 3 548 4 207 3 886 3 628
Costs 2 523 2 729 3 236 2 989 2 791
Net profit before corporate income taxes 757 819 971 897 837
Corporate income tax
National tax 125 135 282 286 272
Provincial/State tax 90 98 167 78 61
Total income taxes 215 233 448 365 333
Total costs, including income taxes 2 737 2 962 3 685 3 354 3 124
Total costs including MTL IFC measure 2 377
Revenues: "Cost-plus 30%" -- normal corporate income tax rate (‘000 USD)
Montreal Toronto NYC Boston Chicago
% difference between MTL & other cities base 8,21% 34,60% 22,52% 14,10%
With MTL IFC measure 24,60% 54,98% 41,07% 31,38%
22
23. AN IFC BUSINESS CASE
EMPLOYEE INCENTIVES
FOREIGN EXPERTS AND LOCAL EMPLOYEES
Year 1 Year 2 Year 3 Year 4 Year 5
QUEBEC PERSONAL TAX Total
(A) (A) (B) (C ) (D)
Gross earnings $250,000 $250,000 $250,000 $250,000 $250,000 $1,250,000
Deductions
Quebec pension plan $2,119 $2,119 $2,119 $2,119 $2,119
Quebec parental insurance plan $300 $300 $300 $300 $300
Unemployment insurance contribution $584 $584 $584 $584 $584
$3,002 $3,002 $3,002 $3,002 $3,002
Salary before income tax deductions $246,998 $246,998 $246,998 $246,998 $246,998
Federal income tax $48,427 $48,427 $48,427 $48,427 $48,427
Quebec income tax $0 $0 $6,578 $20,965 $28,465
Net earnings $198,571 $198,571 $191,993 $177,606 $170,106 $936,845
Hypothesis
‣ (A) 100% Quebec tax exemption on salary earned from an IFC for years 1 & 2
‣ (B) 75% Quebec tax exemption on salary earned from an IFC for year 3
‣ (C) 50% Quebec tax exemption on salary earned from an IFC for year 4
‣ (D) 37.5% Quebec tax exemption on salary earned from an IFC for year 5
‣ 2009 income tax rates have been applied to the 5 year payroll computation
‣ Income tax rates have been computed assuming that the employee has a spouse and 4 children as dependents
23
24. AN IFC BUSINESS CASE
EMPLOYEE INCENTIVES
FOREIGN EXPERTS AND LOCAL EMPLOYEES
Year 1 Year 2 Year 3 Year 4 Year 5
ONTARIO PERSONAL TAX Total
(A) (A) (B) (C ) (D)
Gross earnings $250,000 $250,000 $250,000 $250,000 $250,000 $1,250,000
Deductions
OPP $2,119 $2,119 $2,119 $2,119 $2,119
EI $732 $732 $732 $732 $732
$2,850 $2,850 $2,850 $2,850 $2,850
Salary before income tax deductions $247,150 $247,150 $247,150 $247,150 $247,150
Federal income tax $58,019 $58,019 $58,019 $58,019 $58,019
Ontario income tax $36,989 $36,989 36 989 36 989 36 989
Net earnings $152,142 $152,142 $152,142 $152,142 $152,142 $760,708
Hypothesis
‣ 2009 income tax rates have been applied to the 5 year payroll computation
‣ Income tax rates have been computed assuming that the employee has a spouse and 4 children as dependents
TOTAL NET SAVINGS OF $176,137 OVER 5 YEARS
24
25. AN IFC BUSINESS CASE
MAPLES FINANCE
On october 1st 2009, MAPLES
Finance, an independent global
MaxiNe Rawlins, CEO
fund administrator that provides of MAPLES Finance
fiduciary, accounting and
administrative services,
described the
announced the opening of a montreal office as “a
montreal office to service the
north american region and its
long-term investment
growing fund administration in developing a
business. regional hub that
expands MAPLES
MAPLES Finance selected Finance’s global
Montreal for its position as a
global financial centre and
footprint.”
gateway to north american
markets. The resources and
advantages the city offers global
financial service companies
include: a base of highly trained
local financial services and
technology professionals; a large
cosmopolitan city with a well-
educated population; a diverse
demographic and multi-lingual
capabilities; and world-class
universities.
25
26. TESTIMONIALS
“We are delighted to expand our
internal operations in Montreal, one
of Canada’s leading financial
centers that is well regarded for its
highly skilled talent base”
Jim Rosenthal, Managing
Director
Morgan Stanley, May 2008
“Compared to other large
centres, Montreal is cost-
effective, plus the quality of life
is excellent. It helps us attract Gregory Chrispin, Managing Director
talent.” State Street Global Advisors
Canada, December 2008
“We will look to grow our onshore fund
administration business particularly in
North America. Opening an office in
Montreal expands Maples Finance’s
Maxine Rawlins, Chief global presence. With offices in seven
Executive Officer jurisdictions, we decided to expand into
Maples Finance Fund Montreal for its highly trained workforce,
Administrator, May 2009 its established financial expertise and
proximity to North American financial
centres.”
« Montreal is the Joseph Iannicelli,
country’s best- President & CEO
kept secret » Standard Life Canada,
May 2008
26
27. THANK
YOU
John Rooke
Vice-President,
Business Development
JOHN.ROOKE@CFIMONTREAL.COM
INTERNATIONAL
FINANCIAL CENTRE
MONTREAL
1130 Sherbrooke West, 16th floor
MONTREAL (QC)
514-287-1540
WWW.IFCMONTREAL.COM