Morning Agenda

MORNING AGENDA

8:30 – 9:00 a.m. CHECK-IN AND CONTINENTAL BREAKFAST

9:00 – 9:10 a.m. Welcome & Opening Remarks Hedra Saparno, CPA, CMA Senior Manager Baker Tilly Ottawa LLP 9:10 – 10:20 a.m. Working in a Cyber World Erin Carter, CPA, CA · Considerations for remote workers Tax Manager · Payroll issues Baker Tilly Ottawa LLP

· Employed vs self employed Jordan Malone, CPA, CA · Paperless and paperwork Principal · Cyber assets – A&A Issues Baker Tilly Ottawa LLP · Where is your head office David Contant Lawyer Nelligan O’Brien Payne LLP

10:20 – 10:40 a.m. COFFEE BREAK AND NETWORKING

10:40 – 11:10 a.m. Economic Update James Kinkaid · 2020 and long-term return expectations VP & Portfolio Manager RBC Dominion Securities 11:10 - 11:50 a.m. Corporate and Charity Law Update Kim Cunnington-Taylor Lawyer

11:50 –12:45 p.m. LUNCH AND NETWORKING

AFTERNOON AGENDA

12:45 – 1:05 p.m. Tax update Diana Cameron · Quebec registrations Senior Manager · T4As and HST Baker Tilly Ottawa LLP · Home offices – where do you live and where are supplies made 1:05 – 1:30 p.m. How Retirement and Pension Program Michael Wood Delivery is Changing Group Saving and Pension · Design, flexibility, technology Consultant · Not-for-Profit organization adoption RBC Royal Bank

1:30 – 2:15 p.m. Debunking the liability myths of non-profits Kim Cunnington-Taylor · Insurance Lawyer · Risk management · Director's liability

2:15 – 2:30 p.m. COFFEE AND NETWORKING

2:30 – 3:00 p.m. Payment Modernization Stephen Miller Senior Director Cash Management RBC Royal Bank

3:00 – 4:00 p.m. Fraud Issues Jeff Rowsell · Cyber fraud Manager · Fraud Controls and Prevention Baker Tilly Ottawa LLP · Data Analytics · What to do when it happens Benoit Groulx Partner

Baker Tilly Ottawa LLP

David Contant Nelligan O’Brien Payne LLP

4:00 – 4:15 p.m. Q&A – Panel on Fraud Issues

4:15 p.m. Closing Remarks Hedra Saparno, CPA, CMA Senior Manager Baker Tilly Ottawa LLP

Tax Issues for NFPs

• Employed vs. Self-employed • Payroll Issues - Remote Work Arrangements • When to Issue a T4A

Erin Carter, CPA, CA Manager Baker Tilly Ottawa LLP Tel: 613-768-8844 Email: [email protected] EmployeeMain Title vs.of yourContractor Topic

• Need to determine if a worker is a self-employed contractor or an employee

• Impacts deductions required

• Onus on employer to assess relationship, deduct and remit accordingly

• Punitive to employer if incorrect assessment made

• Factors to consider? Main TitleControl of your Topic

Ability, authority, or right of a payer to exercise control over a worker concerning the manner in which the work is done and what work will be done

Employee relationships • Payor controls how and when the work is done • Payor controls the results of the work and method used to do the work • Worker would need to obtain permission before working for other payors

Self-employed relationships • Worker controls when and how the work is performed • Worker performs work independently • Worker can work for multiple payors at once, can accept or refuse more work from the payor Tools and Equipment

Consider who owns and provides tools and equipment to accomplish the work

Employee relationships • Payor supplies most of the tools to perform the work • Payor is responsible for the repair, maintenance, and insurance costs • Worker supplies the tools and payer reimburses the worker

Self employed relationships • Worker provides most of the tools to perform the work • Worker is responsible for the repair, maintenance, and insurance costs • Worker supplies their own workspace Financial Risk

Consider the degree of financial risk taken by the worker. Consider if there are any fixed ongoing costs incurred by the worker or any expenses that are not reimbursed

Employee relationships • Worker is generally not responsible for operating expenses • Payor controls amount and method of payment • Working relationship is continuous

Self employed relationships • Worker is hired for a specific job, rather than an ongoing relationship • Worker is financially liable if they do not fulfill obligations of the contract • Worker advertises and markets their services Opportunity for Profit

Consider whether the worker can realize a profit or incur a loss, as this indicates that a worker controls the business aspects of services rendered and that a business relationship likely exists.

Employee relationships • Worker is not normally in a position to realize a business profit or loss • Worker is entitled to benefit plans (RPP, health, dental etc.)

Self employed relationships • Worker can hire a substitute for themselves, worker pays substitute • Worker is compensated by a flat fee, incurs expenses to perform services Work-space-in-the-home

Conditions to deduct expenses: • The work space is where you mainly (more than 50% of the time) do your work

• The work space is where you mainly (more than 50% of the time) do your work.

• The work space is used on a regular and continuous basis for meeting clients, customers, or other people in the course of your employment duties Work-space-in-the-home

Can deduct part of the cost that relates to the work space such as:

• Electricity • Heat • Maintenance • Property taxes • Home insurance

Cannot deduct:

• Mortgage interest Work-space-in-the-home

• Deduction based on a “reasonable basis” ex: % of square feet occupied by work space compared to that of entire home.

• Cannot use work space expenses to create or increase a loss from employment

• Requires Form T2200, Declaration of Conditions of Employment that has been completed and signed by employer. When to Issue a T4A

• You are a payer that is paying any of the following types of income:

• Self-employed commissions • Fees or other amounts for services • Pension or superannuation • Others

AND one of the following applies to the payment:

• The total of all payments in the calendar year was more than $500 • You deducted tax from any payment Payroll – Province of Withholding

Determine employee’s province of employment to withhold the proper deductions.

Employee reports to establishment in person – province of employment is the one in which the establishment is located.

"establishment of the employer" is any place or premises in Canada that is owned, leased or rented by you and where one or more employees report to work or from which one or more employees are paid Payroll – Province of Withholding

• Head office is in Ontario, but employee reports to place of business in Manitoba

• Employee lives in Quebec, but is required to report to place of business in Ontario Payroll – Province of Withholding

• Employee works from home in Alberta, occasionally reports to place of business in Alberta, is paid from head office in Ontario

• Employee lives in Ontario, does not report to any physical location, is paid from the head office in Quebec Questions

Information is current to November 1, 2019. The information contained in this presentation is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. Paperless

• How to implement a paperless process • CRA requirements • Intangible capital assets

Jordan Malone, CPA, CA Principal Baker Tilly Ottawa LLP Tel: 613-768-7603 Email: [email protected] 4 simple steps to going paperless

• Step 1 – Change one paper based process 4 simple steps to going paperless

• Step 2 – Software selection Step 2 considerations

CRA Requirements

• “Records kept outside of Canada and accessed electronically from Canada are not considered to be records kept in Canada” Step 2 considerations

CRA will not give permission to keep records outside of Canada to: • registered charities • registered Canadian amateur athletic associations • Canadian municipalities • public bodies performing a function of government • housing corporations exempt from tax CRA requirements

CRA may accept copies if: • the CRA is satisfied that the copies of the records are true copies • they are made available to CRA officials in Canada in an electronic format readable by CRA software • they show enough details to support the returns filed with the CRA 4 simple steps to going paperless

• Step 3 – Organizational change 4 simple steps to going paperless

• Step 4 – Start over until all processes are paperless Intangible assets

• Considerations for intangible capital asset vs expense – Software – Website development Questions

• Nature of working relationship • Working from home • Confidentiality

David Contant Lawyer & Certified Specialist in Civil Litigation Nelligan O’Brien Payne LLP Tel: 613-231-8354 Email: [email protected] Working in a Cyber World

Governing Law

• Where does the employee conduct their work? • Is there a forum selection clause? • What is the nature of the claim (i.e. breach of contract versus tort)? Working in a Cyber World

Contractor or Employee?

• Employee, contractor, or dependant contractor? • A dependant contractor is a contractor economically dependant upon its principal • Keenan (c.o.b. Keenan Cabinetry) v. Canac Kitchens, a Division of Kohler Ltd (“Canac”) 2016 ONCA 79 Working in a Cyber World

Employee or contractor? Working in a Cyber World

• Exclusive service? • Subject to control? • Who owns the “tools”? • Who undertakes the risk/who has an expectation of profit? • Whose business is it? Working in a Cyber World

Working From Home Working in a Cyber World

Policies and Contracts

• The importance of clarity in employment contracts • Can an employee insist on the right to work from home? • Can an employer eliminate the ability to work from home? • Confidentiality issues Working in a Cyber World

Hagholm v. Coreio Inc., 2017 ONSC 7713 (CanLII)

• Employee resided in Waterloo • Employer’s office in Vaughan • Employee worked from home for 22 years • Working from home was an essential term of employment Working in a Cyber World

Confidentiality Issues

• Cybersecurity • Protection of sensitive information • When can records removed? • How must they be stored? Questions

Economic Update 2020

James Kinkaid, CFP, CIM VP & Portfolio Manager Menard Kinkaid Wealth Management of RBC – Dominion Securities www.menardkinkaid.com Macroeconomic & Investment Management Update

Agenda

. Introduction

. Economic Update

. Roles & Responsibilities of Signing & Trading Officers

. Key Takeaways Macroeconomic & Investment Management Update

Menard Kinkaid Wealth Management

. 15 team members RBC . > $1.25B of assets under management Wealth Management . > 150 years of investment management experience

. Specialized in working / reporting to staff, boards, Menard Kinkaid and committees Wealth Management . Access to 150+ institutional investment managers Macroeconomic & Investment Management Update

Macroeconomic Update

Alex Bellefleur, M.Ec., CFA Chief Economist and Strategist, Mackenzie Multi-Asset Strategies Team Some of our current macro views

• The U.S. is in slowdown mode, but the economy should be able to avoid recession • Fed likely to step up its monetary easing into 2020, partly on framework changes • Manufacturing/industrial side of the economy more hit by trade wars, but domestic/consumption side remains resilient • China is refraining from injecting large stimulus due to its reform commitments – This is preventing a larger rebound of the Chinese economy, but policymakers unlikely to let economy deteriorate much further • The Eurozone needs significant stimulus, fiscal or monetary. The ECB likely will have to get creative about additional stimulus • The Canadian picture is mixed at the moment, but the country’s economy seems more resilient than many want to believe – The BOC probably will follow the Fed in easing, but not to the same extent Current tactical positioning: Mackenzie Multi-Asset Strategies Team

Max underweight Neutral Max overweight Slight equity overweight Equities • The U.S. avoiding recession + additional Fed easing should help financial conditions and equities Fixed Income We added to our fixed income position in Q2 CAD • We thought central bank stimulus, steeper curves would benefit fixed income returns. Duration USD continues to remain a strong diversifier of equity risk EUR Overweight CAD and USD, underweight EUR • GBP The Canadian and U.S. economies are more resilient than the Eurozone, which needs significant JPY additional unconventional stimulus

8/13/2019 2019 YTD: so far, so good for most asset returns, with a few exceptions

2019 YTD Total Return (%)

WTI Crude Oil Nasdaq Gold S&P 500 S&P/TSX Eurostoxx 50 Dow Jones US Investment Grade S&P/TSX Small Cap MSCI All-Country World (in USD) Shanghai Composite Russell 2000 EM USD debt FTSE 100 US High Yield MSCI EAFE (in USD) Canadian Bond Aggregate US Treasuries EM Local Currency Debt CAD v. USD Nikkei JPY v. USD MSCI EM (in USD) Broad USD trade-weighted Hang Seng China Enterprises CNY v. USD EUR v. USD Copper GBP v. USD -10 -5 0 5 10 15 20 25 30 The U.S. economy

• The resilience is being tested, but we continue to think that growth, while slowing down, will continue roughly at trend (around 2%) • Expect a change in Federal Reserve framework sometime next year with a focus on making up for past inflation ‘misses’. This is likely to mean more easing. • The U.S. dollar looks expensive, but there isn’t much of an alternative when compared to other developed market currencies The global manufacturing slowdown: coming to America

• The U.S. is not immune. U.S. U.S. Manufacturing Sector Growth manufacturing is also showing signs of 75 slowdown 70 • U.S. manufacturing / capital goods are 65 considerably more exposed to global 60 trade tensions than the consumer side 55 of the economy. This is where you 50 would tend to see the greatest impact. 45 • This happened in 2011 and 2016, yet Diffusion Index Diffusion 40 the expansion managed to continue

35 Manufacturing survey 30 New orders sub-index 25 Mackenzie Investments (ISM data via Datastream). Shaded areas = U.S. Recession. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Despite everything, U.S. consumers are chugging along…

• Retail sales have actually bounced U.S. Retail Sales Growth back so far in 2019 10 • With employment and wage growth at 8 current levels, consumers still feel OK 6 • Collapse in bond yields will lead to 4 some mortgage refinancings, freeing

2 up some consumer cash in the next

% several months. This is an easing in 0 financial conditions. -2

-4

-6

-8 Mackenzie Investments (U.S. Census Bureau data via Bloomberg). Shaded areas = U.S. Recession. 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 The lack of inflation is the real story in the U.S.

• Core PCE inflation has averaged a U.S. Wage Growth versus Core Inflation mere 1.6% since 2009, far below the 4.0 Fed’s 2% target Average hourly earnings 3.5 • The Fed is beginning to worry more Core PCE deflator clearly about the risks of persistently 3.0 low inflation

2.5 • The last time the U.S. had a genuine

% inflationary scare was… 1992! 2.0 • The Fed has started to respond – 1.5 slowly! – to this lack of inflation. But much more could be coming next year 1.0 with a change of framework.

0.5 Mackenzie Investments (BLS data via Bloomberg). Shaded areas = U.S. Recession. 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 This explains the bond market rally

• If the Fed moves to a different U.S. 10y Government Bond Yield framework next year (a more 3.5 symmetric inflation target that makes up for past misses), then Fed Funds 3.0 sub-1% and a 10y yield sub-2% make perfect sense 2.5 • To protect against this scenario, we

% added to our fixed income holdings in

2.0 Q2 • This scenario is not a bad one for

1.5 equities, especially if the U.S. economy avoids recession (our central scenario)

1.0 Mackenzie Investments (data via Bloomberg). Shaded areas = U.S. Recession. 15 15 16 16 17 17 18 18 19 19 Apr- Apr- Apr- Apr- Apr- Jan- Jan- Jan- Jan- Jan- Jul-15 Jul-16 Jul-17 Jul-18 Jul-19 Oct-15 Oct-16 Oct-17 Oct-18 China: Stuck between stimulus and reform

“Over the past 10 years, China’s incremental dollar GDP growth (around USD 900 billion a year on average) has been greater than the sum of the combined increases in the dollar GDP of the US and the Eurozone (around USD 750 billion a year on average).” Source: Stephen Jen, Eurizon SLJ How is China faring amid trade tensions?

• Chinese growth data is well below Alternative Data: Tracking Chinese Growth trend, suggesting that it is hit by the 2 trade war with more intensity than the

1 United States • This makes sense, given that China is 0 more focused on goods production and

-1 exports than the U.S. (services and

% consumption) -2 • That being said, we are not at 2015

-3 levels

-4

-5 Mackenzie Investments (data via DeepMacro). Shaded areas = U.S. Recession. 2011 2012 2013 2014 2015 2016 2017 2018 2019 A bit of history: the three waves of Chinese stimulus post-2008

• Since the Global Financial Crisis, there China: All-System Financing were three waves of Chinese stimulus: 1,800 2009, 2012 and 2016 1,600 • In 2009, China responded forcefully to

1,400 the global recession • In 2012, it was clear that the Chinese 1,200 3 economy had slowed in 2011 as a 1,000 result of the Eurozone debt crisis and 2 CNY billions 800 U.S. slowdown • In 2016, the Chinese stock market had 600 1 struggled and property was peaking; 400 authorities responded strongly

200 Mackenzie Investments (PBOC data via Bloomberg). Shaded areas = U.S. Recession. 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 China is focused on reforms and deleveraging

• The main factor constraining China’s China Total Debt as a % of GDP ability to stimulate is its commitment to 290 reforms and the significant debt that

270 has been buildup in previous stimulus pushes 250 • Because China wants to reduce its

230 reliance on debt and to increase its

% focus on domestic consumption, the 210 country is holding back from stimulating massively 190 • In other words, Beijing is able to 170 stimulate, but mostly unwilling at the

150 moment Mackenzie Investments (data via Bloomberg). Shaded areas = U.S. Recession. 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Canada: not as bad as it seems?

• Canadian economic data has been mixed lately • The Bank of Canada hasn’t given indication that it will follow the Fed in monetary easing, but we believe it would be unlikely to stand pat while the Fed cuts rates 3+ times • The housing market appears to be in a soft landing • Overall, we think CAD is slightly undervalued The labor market remains solid: strongest wage growth since 2008

• Despite many observers’ worries about Canadian Wage Growth the Canadian economy, the country 6 has defied expectations and performed Annual growth in average hourly earnings, private sector better. This is in line with our 5 expectations, as we were not in the bearish camp when it comes to 4 Canada.

3 • Job creation has remained robust and wage growth is over 4% per year y/y % change 2

0 Mackenzie Investments (StatsCan data via Datastream). Shaded areas = U.S. Recession. 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Housing appears to be in a soft landing

• After peaking in 2017, the Toronto Canadian House Prices by City housing market seems to be picking up 240 again 11-City Composite Index 220 • The Canadian housing market looks Calgary Index more like a soft landing than a crash. 200 Doomsday scenarios on Canadian Montreal Index 180 housing are exaggerated. Toronto Index • Lower interest rates should further help Index 160 this trend Vancouver Index 140

120

100 Mackenzie Investments (Teranet data via Bloomberg). Shaded areas = U.S. Recession. 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 But will the Bank of Canada cut rates as much as the Fed?

• Canadian core inflation is exactly on Canada: Measures of inflation the 2% target 5 • Will the BoC match the Fed’s rate

4 cuts? • We think this is relatively unlikely. The 3 BoC might be tempted to cut rates 2 once, but we see it as unlikely to follow y.y the Fed with 3+ rate cuts. % 1 • Ultimately, this should support the CAD 0 near its current value Canada headline CPI inflation Core inflation, common component -1 Core inflation, median Core inflation, trimmed mean -2 Mackenzie Investments (StatsCan, Bank of Canada data via Bloomberg). Shaded areas = U.S. Recession. 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Macroeconomic & Investment Management Update

Considerations for your organization

. Signing & Trading Officers – Roles & Responsibilities

. Investment Policy Statement (IPS) . Objectives . Disbursements . Asset Allocation . Authorized Investments . Risk Guidelines . Monitoring Macroeconomic & Investment Management Update

Potential Problem Potential Solution

. We are currently the trading . Engage a Portfolio Manager with fiduciary officers for our long-term portfolio responsibilities to manage assets in-line with IPS

. We regularly redeem capital from . Develop an IPS with a cash-flow / disbursement plan, our long-term portfolio specific to your organization’s requirements

. Board / Committee turnover . Develop an IPS, with a robust framework for authorized investments and risk guidelines to ensure transfer of corporate knowledge Macroeconomic & Investment Management Update

Key Takeaways

. Interest Rates: Lower for Longer, making it challenging to find yield . Business cycle: We are in the late stage, but not the end

. Seek a solution to your trading officer / fiduciary responsibility potential “problem” . Review your Investment Policy Statement on a (minimum) 36-month basis Macroeconomic & Investment Management Update

Thank you

James Kinkaid, CFP, CIM VP & Portfolio Manager Menard Kinkaid Wealth Management of RBC – Dominion Securities www.menardkinkaid.com Disclaimer

FOR ADVISOR USE ONLY. No portion of this communication may be reproduced or distributed to the public. Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns as of April 30, 2019 including changes in unit value and reinvestment of all dividends and do not take into account sales, redemption, distribution, or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. The content of this presentation (including facts, views, opinions, recommendations, descriptions of or references to, products or securities) is not to be used or construed as investment advice, as an offer to sell or the solicitation of an offer to buy, or an endorsement, recommendation or sponsorship of any entity or security cited. Although we endeavour to ensure its accuracy and completeness, we assume no responsibility for any reliance upon it. Standard deviation is a measure of historical risk; future risk may be different. Index performance does not include the impact of fees, commissions, and expenses that would be payable by investors in the investment products that seek to track an index. This document includes forward-looking information that is based on forecasts of future events as of August 22, 2019. Mackenzie Financial Corporation will not necessarily update the information to reflect changes after that date. Forward-looking statements are not guarantees of future performance and risks and uncertainties often cause actual results to differ materially from forward-looking information or expectations. Some of these risks are changes to or volatility in the economy, politics, securities markets, interest rates, currency exchange rates, business competition, capital markets, technology, laws, or when catastrophic events occur. Do not place undue reliance on forward-looking information. In addition, any statement about companies is not an endorsement or recommendation to buy or sell any security. Not-for-Profit Sector LAB Update

Have a question? St. Elias Wifi Passcode: stelias2014 [email protected]

To download today’s material: https://www.bakertilly.ca/en/ottawa-ontario/events-with-baker-tilly-ottawa Corporate and Charity Update

Kimberley A. Cunnington-Taylor, B. Soc. Sc., LL.B. Barrister ▪ Solicitor ▪ Notary Public

(613) 898-4572 [email protected] www.cunnington-taylor.ca Agenda

• CNCA News

• ONCA News

• CRA News

• Case Law CNCA News

• Updated Fees • When? As of January 15, 2020 • What are the changes? – filing for an annual return is being reduced to $12 (instead of $20) – ordering copies of corporate documents will now be free (instead of $1 per page) – Articles of Amendment to change the number of directors and the province of the corporation will be free (instead of $200) • as long as these are the only change to articles CNCA News, cont’d.

• Certificates of Compliance and Certificates of Existence – Used to provide independent evidence that the corporation exists, and in the case of a compliance, that the corporation not only exists but is up-to-date in the filing of its annual returns – Typically used in transactions, to provide to banks and other third parties in support of financing, funding contracts, etc. • As of October 4, 2018, you can obtain a certificate of compliance or a certificate of existence for a not-for-profit corporation governed by the Canada Not-for-profit Corporations Act through the Online Filing Centre. ONCA News

• ONCA still not in force

• If it is not in force by end of 2020, the legislation will be vacated, UNLESS – Ontario government takes steps to maintain the legislation • Possibly could pass legislation to maintain it • Could include some sort of extension in an omnibus bill or a red tape reduction act, etc. ONCA News, cont’d.

• Still working on developing its new database • The issues do not relate to the legislation, they relate to the technical issues related to the new database • Reminder: – Ontario typically brings in legislation on January 1st and July 1st • They will definitely not be ready for January 1st, 2020 • Unsure if they will be ready by July 1st, 2020 • No new updates on the Ontario Ministry’s website ONCA News, cont’d.

• Still status quo • Ontario corporations still governed by the Corporations Act (Ontario) (“OCA”) • Reminder of changes to OCA in 2017: – a meeting of members may be held by telephonic or electronic means, unless the by-laws of a corporation provide otherwise – corporations are given the capacity, rights, powers and privileges of a natural person • The section expressly provides that a corporation’s acts are valid even if the corporation acted contrary to its instrument of incorporation, its by-laws or the Act – a corporation may sell, lease or exchange all or substantially all of its undertaking or all or substantially all of a part of its undertaking, if authorized to do so by a special resolution Problems

• Business Name Registrations – Not-for-profit corporations and charitable corporations are allowed to register a business name under the Business Names Act – The Ontario Ministry were rejecting business name registrations because they said there must be a profit motive – This is completely WRONG • Note, this issue does not just apply to Ontario corporations; it applies to all corporations carrying on their activities in Ontario Ontario Specific Problems

• The Ontario Ministry has dealt with their backlog • No longer taking 6 months to get applications processed • But, it still takes about 4 – 6 weeks • And, if you are an Ontario charity and need approval of the PGT – Processing time takes an additional 2 or 3 months Ontario Specific Problems, cont’d.

• Names – The Ontario Ministry has been rejecting name changes – Not sure why • If you want to change your name, be careful not to do too much before the name is approved by the Ontario Ministry • Many organizations have spent considerable money to update their brand only to have to fight with the Ontario Ministry to have their name approved CRA News

• Application Form T2050 to be Phased Out – This is the application form filed to apply for registration as a charity • CRA has been working on a modernization project for charities • Called CHAMP (the Charities IT Modernization Project) • Has been under way since June 1, 2019 • The new application form is filed through CRA’s My Business Account • The Form T2050 can no longer be filed by paper CRA News, cont’d.

• CRA has produced a guide to assist applicants through the application process • The guide includes – information includes directions on setting up a My Business Account – tips about the online application form – tips to avoid delays • Examples: the CRA guide says that – applicants will need to provide detailed information for each charitable activity, either currently carried out or proposed to be carried out – multiple individuals can take turns logging in to complete different sections of the form – once an application has been submitted, applicants will be able to log into My Business Account to review their application status • See the guide at: https://www.canada.ca/en/revenue-agency/services/charities- giving/charities/registering-charitable-qualified-donee-status/submit- application.html?utm_source=charities&utm_medium=eml&utm_campaign=charities myba CRA News, cont’d.

• A new regime, called “public policy dialogue and development activities” (PPDDA) has replaced the political activity regime • The online application form had not been updated to reflect the changes • The form is supposed to be updated by November, 2019 CRA News, cont’d.

• Lawyers can set up accounts with CRA similar to the accounts / access accountants have set up • Some glitches • CRA’s My Business Account is meant more for individuals or businesses, not third party intermediaries CRA News, cont’d.

• T3010s can also be completed and filed online • As of June 1, 2019 • Can still file T3010s in paper • Any director registered with My Business Account, or an authorized representative registered with Represent a Client, can complete your charity return entirely online. • https://www.canada.ca/en/revenue-agency/services/charities- giving/charities/operating-a-registered-charity/t3010-charity- return-filing-information.html CRA News, cont’d.

• Remember, – Director does not mean executive director – If you have problems, don’t listen to CRA if they tell you to add yourself to Industry Canada’s list of directors (assuming you are a federal corporation)

• Registered charities can also update their account information online and correspond with the Charities Directorate electronically through My Business Account

• Early days but, keep in mind: – Ensure that proper employees, volunteers, etc. have proper access to electronic account – Different access for different CRA programs (i.e. GST/HST, payroll vs. charitable filings) Charitable Status

• Annulment vs. voluntary revocation • As part of your annual review, – Review your charitable purposes vs. what you are actually doing – Have you changed the organizational structure to the point that you no longer qualify for charitable status • Annulment is an option but it is discretionary – CRA gets to decide • Voluntary revocation can be very expensive as you must divest all assets to avoid paying revocation tax • Be careful Case Law

• Governance issues (Bose: https://www.canlii.org/en/on/onscdc/doc/2019/2019onsc5625/ 2019onsc5625.pdf) • Who is the rightful board of directors? • Another case where one group took control of the corporation and deemed themselves the rightful board of directors, nullified an election of directors and refused to hold a members’ meeting so the members could elect directors • Court said that members must be given a say – this is the members fundamental right Case Law, cont’d.

• Lessons learned – Proper corporate governance is key – Make sure that your organization is properly organized (i.e. know who the members are, hold proper elections, have a by-law, keep meeting minutes, etc.) • Remember, – The board of directors have the legal authority to manage or supervise the management of the corporation – If you don’t know who the directors are, or are concerned that directors are not properly elected, there can be widespread ramifications, such as • Bank freezing accounts • Invalid contracts • Etc. Case Law, cont’d.

• Discipline Section of CNCA interpreted (Wattco: https://www.canlii.org/en/ca/fct/doc/2019/2019fc1024/201 9fc1024.pdf) • The Federal Court held that section 158 of the CNCA does not restrict the power to discipline a member or to terminate their membership to only “the directors, the members or any committee of directors or members of a corporation”. Case Law, cont’d.

• Section 158 of the CNCA says The articles or by-laws may provide that the directors, the members or any committee of directors or members of a corporation have power to discipline a member or to terminate their membership. If the articles or by-laws provide for such a power, they shall set out the circumstances and the manner in which that power may be exercised.

• Discipline of members is a standard provision in CNCA by- laws Case Law, cont’d.

• Many organizations want to include advisors or qualified professionals to sit on their discipline committee • This case dealt with immigration consultants, which are self- regulated • The court reviewed other sections of the CNCA, as well as other provincial statutes and found that section 158 was not as restrictive as other sections are and said that if the government wanted to restrict discipline committees to only directors and/or members of the organization, it would have said so Case Law, cont’d.

• In my view – It is important that a discipline committee include one or more directors and/or members of the organization – But, some organizations may benefit from outside assistance – This case confirms that this is allowed • Recommendation to review your by-laws and articles • Review the discipline of members section • Confirm that the make up of any discipline committee is right for your organization About

Kim Cunnington-Taylor is an Ottawa lawyer. Her practice focuses on not-for-profit and charity law, and business law, working primarily with small and medium organizations. Kim provides advice on a wide range of matters including formation, corporate governance and compliance, risk management, corporate structure, and dispute resolution. Kim also advises on transactional matters including mergers and amalgamations, purchases and sales, financing, winding-down of corporations and charities, and voluntary revocations of charitable status.

Kim is very involved with the Ontario Bar Association (OBA), and is currently CPD Liaison of the Charity and Not‐for‐Profit section and a member-at-large of the Business Law section as well as a member-at- large of the Business Law section of the Canadian Bar Association. Her work with the OBA includes participation in legislative reform in respect of both not‐for‐profit and charity legislation, and business related corporate legislation. Kim is frequently invited to present at OBA hosted conferences and seminars. She also speaks regularly about not‐for‐profit and business law issues.

Kim is also a member of the Canadian Bar Association, the Canadian Tax Foundation and the County of Carleton Law Association. She received her LLB. from the University of Ottawa in 2008 and is a sole practitioner. Tax Update

• Quebec Registrations • T4As and HST • Home offices – where do you live and where are supplies made?

Diana Cameron, CPA, CA Senior Tax Manager Baker Tilly Ottawa LLP Tel: 613-768-7606 Email: [email protected] QST REGISTRATION – OLD SYSTEM QST Registration – Old System (still exists)

Every person who makes a taxable supply in Québec in the course of a commercial activity engaged in by the person in Québec is required to be registered except where (1)The person is a small supplier; (2)The only commercial activity of the person is making supplies of immovables (land, building) by way of sale otherwise than in the course of a business; or (3)The person is not resident in Québec and does not carry on any business in Québec. QST Registration – Old System (still exists)

Supplier of admissions not resident in Québec Every person who enters Québec for the purpose of making taxable supplies of admissions in respect of an activity, seminar, event or place of amusement is required to be registered and shall, before making any such supply, apply to the Minister for registration. QST Registration – Old System (still exists)

HOW? – Complete form LM-1-V, Application for Registration

WHEN? – Must apply before first taxable sale in Québec (unless small supplier) – Small supplier threshold not applicable if non-resident supplier of admissions – must register before first taxable supply QST Registration – Old System (still exists)

• Exceptions: • Charity – Exempt – Taxable if admission in respect of a place of amusement unless the maximum consideration does not exceed $1. • Not for Profit – Taxable – Exempt where maximum consideration of admission does not exceed $1. Services – Location-Specific Event

• Place of supply – Location-Specific Event

• “A supply of a service in relation to a performance, athletic or competitive event, festival, ceremony, conference or similar event is made in a province if the service is to be performed primarily at a location of the event in the province”

• Direct connection between the service and the event Supplier of Admissions – Filing Requirement

• Supplier of Admissions not resident in Québec may be required to file QST return earlier than usual filing deadline • Return must be filed and amounts remitted on the earlier of – Regular filing deadline – The day the person, or one or more of his employees who are involved in the commercial activity in which the supply was made, leaves Québec SPECIFIED QST REGISTRATION – NEW REGISTRATION SYSTEM Specified QST Registration – New Registration System New Definitions • Specified supplier – A supplier who does not carry on business in Québec, does not have a permanent establishment in Québec and is not registered for the QST • Canadian specified supplier – Specified supplier who is registered for GST/HST Specified QST Registration – New Registration System • Specified digital platform – A digital platform for the distribution of property or services that enables specified suppliers to make taxable supplies in Québec of incorporeal movable property or a service, provided that the digital platform controls the essential elements of the transaction such as billing, the terms and conditions of the transaction and the terms of delivery. • Specified Québec consumer – A person who is not registered for the QST and whose usual place of residence is situated in Québec Specified QST Registration Requirements

• Mandatory registration for Canadian specified suppliers if sales of IPP, services or TPP made to Québec consumers exceed $30,000 (CAD) – Sales of associated persons are not considered – $30,000 (CAD) threshold is calculated based on previous 12 months – Does not include IPP and services provided through a specified digital platform

• Effective Sept 1/19

• The QST will have to be collected and remitted when the supply is made: – In Québec; – To specified Québec consumers Specified Quebec Consumer

• Defined above – not registered for QST (individual or other) and usual place of residence is in Québec • Determined by supplier at time of supply • Recipient must provide QST number if does not want to be charged • Validate usual place of residence by two non- contradictory pieces of information Reporting and Remitting the Specified QST

• Reporting – Calendar quarters – In the month following each period – Online only – Conversion into Canadian dollars • Remitting – By the filing deadline for the return – Online Adjustment or Refund

• Collection of the tax where the recipient is a QST registrant: – Supplier has to refund or credit any tax charged in error (within two years). – Supplier has to issue credit note – Supplier has to deduct the amount from the specified net tax – Recipient cannot request a rebate under section 400 of the AQST Other Matters

• Indicating the tax – Suppliers must clearly indicate the amount of tax or that an amount includes the tax. – The tax must be referred to by its name, an abbreviation, or a similar designation. Surprises

• The Specified QST is not quite a QST: – No input tax refunds (“ITR”) available to QST registrants if specified QST is paid in error to a supplier registered under the specified QST system. – The QST paid by a supplier registered under the specified QST system cannot be claimed as an ITR. ITRs are available to “registrants” only. – A registrant under the QST general regime must inform a specified supplier of its registration number (the recipient’s number) to attest of the fact that they are not a specified Quebec consumer in order to avoid being charged otherwise unrecoverable QST. – No rebate for QST paid in error, only credit or refund from the supplier if QST registrant T4AS AND HST T4As and HST

• You are a payer that is paying any of the following types of income: • Self-employed commissions • Fees or other amounts for services • Pension or superannuation • Others • T4As issued for self-employed commissions and fees for services are exclusive of GST/HST charged HOME OFFICES – WHERE DO YOU LIVE AND WHERE ARE SUPPLIES MADE? Resident in a Province

• Relevance? – Tax filing obligations – Place of supply Resident in a Province

• For GST/HST purposes, a person is deemed to be resident in a province if the person is resident in Canada and – In the case of an unincorporated society, a club, an association or an organization, or a branch thereof, the member, or majority of members, having management and control thereof is or are resident in that province; – In the case of a labour union, it is carrying on activities as such in that province and has a local union or branch in that province. Rebate Applications

• Qualifying NPOs and charities can apply for a Public services bodies’ (PSB) rebate – Federal rebate of 50% of the federal part of the HST for qualifying NPOs – Federal rebate of 50% of the federal part of the HST for charities – Provincial rebate of the provincial part of the HST when resident of a participating province – rates vary by province Place of Supply

• Place of supply rules determine the rate of GST/HST, provincial sales tax applied to a supply • Different rules depending on the type of supply – Tangible personal property (TPP) – Intangible personal property (IPP) – Services Questions

Michael Wood, M.A.. (Econ.), PFP Group Consultant RBC Group Advantage “More than a third of Canadians have no retirement savings, half live paycheque to paycheque, poll finds”*

“More money in your pocket ? Poll suggests people would rather have money in their retirement fund”**

*BDO Canada Affordability Index, September 2019

**Rob Carrick, Globe & Mail (Oct 7,2019)”HOOPP Survey”, 2019 Survey Results

HOOPP BDO Affordability Index

• 75% of Canadians worried about • 39% of Canadians have no savings for retirement savings (compared to retirement 55% for personal debt) • 53% live paycheque to paycheque • 8 of 10 prefer a better pension over higher salary • 69% say they won’t have enough savings to last through retirement • 81% believe less workplace pension coverage will reduce quality of life Ottawa Association Exchange – 2019 Survey

Pension Plans

25% DC

48% None 5% DB

23% RRSP Plan Design – Structure & Flexibility

Defined Contribution Group RRSP Group TFSA Pension Contribution Flexibility Sponsor – 1% of salary Sponsor discretion Sponsor discretion minimum Vesting Ontario – immediate full N/A N/A vesting

Member Withdrawals N/A Taxable as income (except No restrictions Home Buyers/Learning) Sponsor tax implications Sponsor contributions tax Employee salary – tax Employee salary – tax deductible; exempt from deductible expense; CPP/EI deductible expense; CPP/EI CPP/EI premiums premiums premiums Member tax implications Contributions not taxable; Contributions reduce income Tax sheltered growth only reduces RRSP contribution for taxation room Regulation Pension Benefits Standards & Income Tax Act (CRA) Income Tax Act (CRA Income Tax; CAPSA/FSRA Plan Design Challenges

• Employee demographic & engagement

• Flexibility vs. Intent

• Affordability

• Program Administration Tax Free Savings Accounts(TFSA)

More Canadians have a TFSA than RRSP (57% vs. 52%)

Participation in savings plans follows strong life cycle patterns. Under age 35 35 – 54 Over age 54 TFSA RRSP TFSA NPO Retirement Initiatives

Common Good OPTrust

• National Initiative • Ontario DB Plan sponsored by • Portability in NPO sector OPSEU • TFSA focus 3% matching contribution (6%) • Digital offering • Pension formula • Economies of scale .6% per year of service Member Engagement – Trends & Tools

• Enrolment & Nudges Balancing customization with administration

• Online Financial Planning/Literacy Accessibility

• Robo Advisors

• Decumulation (Retirement Income) How can the NPO Employer Help ?

• Develop a “structured” program with “matching” incentives

• Facilitate access to holistic financial advice

• Survey your staff regularly “consider your demographic”

• Regular reassessments of your program Questions ? Debunking the Liability Myths of Not-for-Profits and Charities

Kimberley A. Cunnington-Taylor, B. Soc. Sc., LL.B. Barrister ▪ Solicitor ▪ Notary Public Tel: 613-898-4572 Email: [email protected] www.cunnington-taylor.ca Agenda

• News Stories

• Tips and Essential Policies

• Directors Liability / Responsibilities

• Risk Management / Corporate Compliance Overview and Stories

• News Article on CBC: BC retiree loses tens of thousands of dollars from fraudsters pretending to be his real estate agent • Both he and his bank missed red flags • E-mail address had been slightly altered so it looked like his real estate agent’s address – Instead of “[email protected]” the e-mail address read “[email protected]” • Who got hacked? the real estate agent? the person who lost funds to the fraudster? More Stories

• News Articles: couple loses rent monies by sending rent through e-transfer from bank • The funds were diverted to a different bank account • The couple lost at least two months’ rent by having spouse send second rental payment • Who got hacked? – the landlord – It is possible that no one in the scenario had secure enough passwords; or, had security questions the answers to which were easily guessed Final Story (I promise)

• News Article: City of Ottawa accounting staff wires funds to a fraudster in e-mail phishing scam [Global News, April 8, 2019: https://globalnews.ca/news/5141545/ottawa-treasurer-tricked-email-city- manager/] – She received an e-mail purportedly from her superior asking her to wire funds – Not unusual, except the method of transfer requested – Did not raise red flags

• Office of the Auditor General (OAG) called it the fake CEO scam • The spoofed email addresses prey on senior or high-profile executives with access to company resources and research “relationships, authority levels and writing styles to make the email appear as effective as possible” Lessons from City of Ottawa

• The OAG investigation found weaknesses in the controls for the city’s wire transfer process, including – the absence of any “formal written City authorization limits” on wire transfers and that any one of five authorized employees could, on their own, “both create and release a wire transfer up to $25 million.” – Lack of fraud awareness amongst the staff

• The City took action: – implemented a policy to ensure that no one individual can both create and approve the same transaction – began reviewing the monetary limits for wire transfers – regular fraud awareness messaging for staff” – including automatic warnings about external email senders – launched a “corporate-wide, mandatory cyber awareness training program” What is Going On?

• Too much reliance on e-mails? • Lack of follow up by telephone? • Too much trust? • Lack of suspicious nature? • Not paying attention to warning signs? • Trying to do too many things at once? • All of the above? What Can We do About it?

• Diligence, diligence, diligence • Policies: signing authority, IT and security, off-site use, etc. • STICK TO THE POLICIES • Invest in reputable software to ward off ransomware, viruses, malware, spyware, unwanted programs, etc. – not just for the computers at the office – make sure installed on all computers, including laptops and personal computers – budget for it – spend the funds to properly protect everyone in the organization Essential Policies

• While it is crucial to establishing policies for the protection of the organization, no policy will be effective unless it is used, relied on and enforced • Going through the educational process of putting the policy together is a very important step to understanding the importance of not only drafting the policy, but enforcing the policy • Annual review of policies – make sure they are working and everyone is following them Essential Policies, cont’d.

• Essential policies include: – Signing authority and disbursement of funds – Fiscal management – Collection of personal information – Privacy and all matters related, including • data breach policy and • privacy breach reporting obligations – Computing – Acceptable use of technology equipment – Fraud prevention Electronic Systems Audit

• Is it time for your organization to undertake an electronic systems audit? • Cost / benefit analysis • Will the cost of bringing in specialists to audit your system reap rewards in the future by saving money down the road? • Asking for help from specialists is never a bad thing • Could help with insurance costs • Where is the funding going to come from for such an audit? Board of Directors – Governance

• Practical questions: – Who is in charge? the Board, the Executive Committee, the Executive Director, the staff? – Are the lines of authority between the board and the staff clearly defined? – Who has signing authority? – Who reviews the expenses and contracts? – Does the organization have an audit and/or finance committee? – Does the organization vet its directors and proposed directors, officers, and staff? – When was the last time the organization had an IT / technical / systems audit? Board of Directors – Governance, cont’d.

• Practical questions, cont’d.: – How often are the insurance needs reviewed? – Who does the review? – Where are the policies? Is the organization keeping all historical policies? – What types of insurance does the organization have? • Commercial • Directors and officers liability • Data breach or other security type insurance • Special event insurance – Does the organization provide full written disclosure each year of all risks to its insurer to avoid denial of coverage? – Does the organization request regular written reports from its insurance broker on existing coverage, exclusions from coverage and recommendations to enhance coverage? Fiduciary Duty

• It is the board of directors that has ultimate responsibility for the management or supervision of the management of the organization

• Regardless of type of management, the Board is still responsible for the decisions of the organization

• Each director is a fiduciary to the organization

• Directors are responsible for all aspects of the organization’s operations on a joint and several basis Fiduciary Duty, cont’d.

• When an individual consents to act as a director of a corporation,

– The individual

• accepts a personal duty to act in the best interests of the organization

• takes on all of the personal risk and liability associated with acting as a director of an organization Fiduciary Duty, cont’d.

• A director

– cannot delegate his or her legal duties and obligations to another person

– owes a personal duty towards the corporation

– is personally responsible for the actions of the board as a whole Corporate Compliance

• In order to fulfil their duties, the directors need to understand what it means to be a director, what it means to be part of a board of directors (a “collective”) and what it means to participate in the governance of an organization (and supervision of employees) and when it is necessary and appropriate to delegate (not abdicate but delegate)

• The role of the Board of Directors is not just to work on operational matters or to review reports and recommendations of the staff. The directors need to be involved and understand the complexities of running an organization

• Boards of Directors need to deal with: – compliance with the law – fraud and abuse matters –ethics – privacy and security requirements – respecting confidentiality – corporate governance Corporate Compliance, cont’d.

• Committees can be crucial • Committees can investigate, research, educate, and report back to board of directors with recommendations – Review policies – Ensure policies are followed – Review budgets – Keep abreast of new or emerging risks the organization could face • A properly structured committee could be invaluable to a board of directors Corporate Compliance, cont’d.

• The Board should also

– Provide adequate training opportunities for staff and volunteers

– Work with staff and volunteers to ensure that all computer systems are protected, the website has adequate security, any donor, member or customer’s information is adequately protected Corporate Compliance, cont’d.

• The organization can be at risk in the event of a data breach – Financial risk to the organization – Litigation from affected individuals or third parties – Exposure to personal liability for the directors – Reputational damage –etc. Risk Management

Due diligence = good governance

• How to minimize potential liability of directors – Ensure the board is carrying out its responsibilities – Ensure individual directors are exercising their fiduciary duty and duty of care – Operate like a business • Indemnification of directors and officers • Adequate insurance Effective Governance

•Factors – Competency and integrity of directors – Structure of the board – Structure of board committees

• Recruitment • Commitment to cause • Integrity • Good judgment Effective Governance

• The job of being a director of a corporation carries the potential risk of exposure to personal liability

• It is important for individuals to be aware of what it means to be a director of an organization

• Due diligence is the best defence • Due diligence not the same as micro-managing • But, it is crucial for an individual to be able to show that he/she was doing his/her job Tips

• Virus scanning, plus more on all computers, whether in the office or outside the office • Be suspicious until there is reason not to be • Policies, policies, policies AND stick to the policies • Call the person if you aren’t sure (but don’t call the number in the e-mail) • Check, check and double check the FULL e-mail address • Trust your instincts About

Kim is very involved with the Ontario Bar Association (OBA), and is currently CPD Liaison of the Charity and Not-for-Profit section and a member-at-large of the Business Law section as well as a member-at- large of the Business Law section of the Canadian Bar Association. Her work with the OBA includes participation in legislative reform in respect of both not-for-profit and charity legislation, and business related corporate legislation. Kim is frequently invited to present at OBA hosted conferences and seminars. She also speaks regularly about not-for-profit and business law issues.

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Stephen Miller The transformation of Business Payments RBC Royal Bank November 18, 2019 Payment Trends: Canada 2014-2018

Canadian Retail Payments Credit Cash Cheque Volume Falling Canadian consumers & businesses sent

Billion Transactions 30% Million Wires worth 2.1 36% ↓9 % 9.5 $ 9.9 Trillion Dollars y/y retail & business $ 45.6 Trillion Dollars±

Interac eTransfer Volumes* Cash Use Falling Nearly 35% Debit 2018: Record Volumes Cash use for transit & taxi POS Payment Volumes Payment POS down ↓20% ^ 50 % Remote Transactions of consumer Cash use for low value (Non POS Payments) debit transactions were Credit Card Online Transfers coffee & food ↓20% ^ 6% Cheque & Paper 12% contactless (tap) ^compared to 2012 2015 2016 2017 2018

Together EFT and • 2018 Volume: 371 million Commercial Cheques Are 17% Shift to Digital Payments Cheque account over 2017 Retail for ↑54% 98% 82% • Cash volumes down ↓9% • 2018 Value: $132 billion of value and dominate 65% remote transactions. EFT • Prepaid card use ↑9% ↑45% over 2017 70% • Sources: All data sourced from of volume Debit card use ↑9% Payments Canada’s 2018 methods and eCommerce Transactions trends report unless otherwise noted. • >35% of consumers made a *Source: Interac media releases. 98% ±Source: Payments Canada LVTS $118 Billion mobile credit card transaction Reporting, Sent Transactions 2018 Commerical 2 INTERAC e-Transfer is a registered Trade-mark of Interac Corp. Used under licence. Canada has established ambitious goals to modernize our payments infrastructure

Payments Canada’s modernization program consists of multiple streams of work: Retail Payments Settlement Optimization Reduce risk on variety of retail payments Funds Future Same Day availability Overlay Dated Settlement in Payments Automated Funds Transfer (AFT) Services 1 hour An enhanced direct debit system with greater funds availability ISO 20022

Wire - LYNX API’s API’s 1. a NEW continuously settled system Enhanced Funds Immediate Collateral for high value payments Risk availability Funds Management Management in 2 hrs 24 / 7 / 365 Immediate Real Time Rail (RTR) Funds 1. a NEW real-time payment system for low Retail Real Automated value payments available 24/7/365 Wire Payments Time Funds Transfer 3 INTERAC will introduce a new payment that focuses on commercial business needs that also meet the Real-Time Payment requirements

 Real-time Single Credit Transfer New!  Account Number Based Routing  ISO 20022 structured and unstructured data  Higher Limit - $25,000  Final payment  Sender & receiver notifications Instant  Businesses can send and receive. Consumers will receive only  Ubiquitous – all financial institutions/participants will receive and display data  Rules to support Service Level Agreements, security, liability etc.

× No account registration required to receive × No “Question & Answer” INTERAC e-Transfer is a registered Trade-mark of Interac Corp. Used under licence. 4 Register for Autodeposit on RBC Online Banking Mobile and RBC Express

• Link your email address & SMS to your account • One time set up (renewed annually) • Enables ease of Deposit • Added security Interac e-Transfer® Bulk Disbursements for Business is available now. Uses email addresses or SMS numbers to pay consumers/small businesses; up to $10,000 by uploading a file of payments in RBC Express or on our File Services.

Interac e-Transfer® Bulk Request Money for Business (coming soon!)

INTERAC e-Transfer is a registered Trade-mark of Interac Corp. Used under licence. Interac Bulk Request Money – January 2020

We are developing Request Money which will enable businesses to send request for payment with payment information for the recipient.

1 Create Request Money . RBC Commercial Client creates a Request Money in RBC Express or in a RBC 2 Bulk Request Money file Commercial 1 Payor with a payment request and Client Create RBC Interac Receive & Fulfil invoice details 2

Bank Receive and Fulfill Request Money

Funds . Payor receives the request Received and reviews the request and can accept to pay and

3 3 complete fulfilment through from their account

Funds Received . RBC Commercial client receives funds along with 7 payment details for reconciliation 7 Roadmap of Features

New! • Receive Interac Instant API’s to connect to RBC’s • Send Interac Instant real time payment services

Instant

Improved Person to Business payment – such as Interac® services to simplify “bill payment” needs for businesses

Single Interac e-transfers in RBC Express Confirmation of Payee or account owner display for digital payments to mitigate fraud risks

INTERAC e-Transfer is a registered Trade-mark of Interac Corp. Used under licence. 8 API evolution

Expand into new eco-systems

Platform APIs Self-Service APIs (WayPay) Eco-system / ERP APIs RBC permissioned clients (Treasurers, IT) would External APIs connecting to WayPay RBC branded ‘apps’ that could be embedded access a range of API fed RBC products and platform to enable orchestration of data to within accounting systems / ERPs services. ‘sync’ with client systems / ERP

RBC Client effort to build their own Augmented ERP / Account system RBC-branded ‘Apps’ for out-of-the integrations experience to assist clients using box use with Industry ERP systems RBC portals

(One-to-one integration) (One-to-many integrations – RBC (One-to-many integrations – Broader ecosystem) eco-system

9 Transformation of traditional payment types

For payments that have been released by RBC and are destined for an external beneficiary bank. The tracking page will identify where the payment in the payment flow, identifying timing, fees, and other relevant information. Integrated Receivables Solution Capabilities

1 DELIVER INVOICES Publishes invoices & supporting documentation online and delivers electronically 2 COLLABORATE Quickly and easily communicates with customers online 3 COLLECT Tracks and manages customer commitments and follow ups 4 ACCEPT PAYMENTS Supports EFT and Credit Card payments in a PCI compliant manner

5 MATCH AND RECONCILE Automatically matches payments and remittance data and applies cash

11 Automated payments & reconciliation

EFT

Chequ ACH Payment Made To e Approved invoices & bills are • Login to WayPay with your AP credentials Any Employee, generated in your AP, as they are • All approved invoices from AP will sync Business or currently. with WayPay Contractor WayPay features pre-built integration with: • Access & combine major bank accounts Wire FX Quickbooks Desktop, Quickbooks Online and line of credit Sage 300, Sage Accounting Sage Financials, Concur Invoice, & Xero After Payment Has Been Made AUTOMATIC RECONCILIATION BACK INTO AP

12 Next Steps

RBC will keep you updated so Stay in Touch with your relationship team • Watch for our Interac® product releases • Consider how you want to manage 24/7/365 customer payments utilizing a suite of payment options? • Consider if your current infrastructure can take advantage of incoming information – and how it might improve your cash processes? • Consider what operational processes might change as real time payments are introduced? • Need More:

Payments Canada’s Website https://modernization.payments.ca/the-plan/real-time-rail/ Payments Canada’s Methods & Trends Report https://www.payments.ca/sites/default/files/12-Dec-18/paymentscanada_trendsreport2018_13_0.pdf

13 Cyber Fraud

How does it happen and what does that mean for your organization?

Jeff Rowsell, CPA, CA Manager Baker Tilly Ottawa LLP Tel: 613-768-7545 Email: [email protected] Threat by Numbers

• 6.4 billion: The number of fake emails sent worldwide — every day

• 1.95 billion: The total number of records containing personal and other sensitive data compromised between January 2017 and March 2018

• 550 million: The number of phishing emails sent out by a single campaign during the first quarter of 2018 More Prevalent than Ever More Recently MacEwan University

In August 2017, MacEwan University was a victim of a cyber attack.

• Emails sent to university staff from a vendor (local construction firm) – looked legitimate; • Emails requested a change in banking information; • After this change - 3 payments made were processed in a span of 9 days.

By the end, the University had been defrauded of $11.8 million. City of Ottawa

In July of 2018, the city treasurer received an email she thought was from the city manager.

It asked her to: • Transfer $97,797.20 USD to a U.S.-based firm for a deposit on a contract the city had been negotiating for a while; • “take care of this personally”; • Not to discuss with anybody and to email him if there are any questions. City of Ottawa (continued)

Unknown to the treasurer, that email was a spoof of the city manager’s real email address. There was also an element of urgency to it (asked on a Friday).

The treasurer took the following steps: – Searched the internet for the firm (web page design company); – Checked that the payment could be sent that day (as requested); – Replied by email to the “city manager”; – She did send a confirmation of the transfer to the real city manager once completed (who meant to follow up but didn’t). City of Ottawa (continued)

One week later…

The treasurer received another wire transfer request for the balance but this time was with the city manager at the time, so asked him about it.

That’s when she found out the city manager had not authorized any wire transfer. All Different Sizes

These are some more publicized cases but they can affect any size of entity.

We have seen instances locally of: – Ransomware attacks; – Trojan malware attacks; – CEO fraud; – Among others. Cyber Attacks

It is not a matter of IF but WHEN. Malware (or malicious software)

• Software used to spy on you and steal your information

• Some can log keystrokes

• Some take over your computer and can spy on you Trojan

Powerful malware that hides itself on your computer and allows criminals to run their software on your computer. Ransomware

Ransomware is another form of malware that holds files hostage. Ransomware (continued)

Some little-know facts:

– 70% of infected businesses opted to pay the ransom and recover their files. – More than half of those businesses had to pay a ransom worth $10,000 to $40,000. – Only 42% recovered all their data.

*Facts quoted from Baker Tilly Canada Lawyers Alert: Data Breaches and Ransomware - dated April 29, 2019 Social Engineering (“SE”) Pretexting

Creating a fake scenario to: • Gain your trust; and • Get information from you.

On the rise so it's important to be vigilant and never give information over the phone or in person unless you have confirmed their identity. SE- 3 Types of Attacks

1. Digital Attacks (Phishing and Spear Phishing)

2. In-Person (Tailgating and USB attacks)

3. Phone (Vishing and Smishing) Digital Attacks Phishing

• Most common digital attack

• Need to take an action for them to take effect

• Example – email from IT Department indicating a password reset is needed Spear Phishing

• Small focused attack via email on a specific person/organization • Goal – get into the network • Invest time to researching specific target (social media, other open sources of information) • Personalized message to trick you into taking an action • Always think before you click that link/open attachment CEO Fraud

One trick that criminals use often is called CEO Fraud.

CEO Fraud involves: • Impersonate executives in order to fool an employee into executing unauthorized wire transfers, or sending out confidential tax information. • A sense of urgency is usually employed, pressuring the victim to act before thinking.

According to FBI statistics, CEO fraud is now a $12 billion scam. In-Person Attacks

Instead of hacking your systems they try to “hack” humans. Tailgating

• Scouts an area where they “participate” in normal social interactions (example: the smoking area) • Then “tailgate” staff back into the building • Looks for a work station that he can hack and gain access to your network USB Attack

The goal of this attack is to get someone to insert the USB into their computer, giving the attacker access to your network.

1. Leave USB in an ease to find location (parking lot, restrooms, lobby) and label it as something enticing (example: payroll); 2. Send to the office by courier as though it is from a customer or vendor. Phone Attacks

SE attacks where the attackers use the phone as a means of communication to initiate the attack. Vishing (Voice Phishing)

• Also called Voice-Phishing • Similar to phishing – goal is to obtain personal information • Example: – Call with pre-recorded message saying there is a problem with your account; – Require you to call a specific number to resolve; – At which point they will go through “security questions” to ensure your identity; – Giving them access to your account and money Smishing (SMS Phishing)

• Occurs through text messaging • Example: – A text alert from your “bank” – “your account has been compromised!” • Could include real information obtained from another data breach – Ask you to call a number or click a link

Can come in many forms BUT they still require action! Personal Mobile Device Use

Laptops Smartphones Tablets

50% 68% 69% File Types

Which file types are safe to open no matter what? File Types (continued) No such thing as a safe file type.

• Files may be safe to open if they are: – From someone you know; and – You are expecting them.

Still always good to verify the file is legitimate. Websites and Wi-Fi

• All websites can be potentially dangerous but some more than others. – Example: gambling and sites with free downloads – Drive by downloads

• Always make sure you are connected to secure internet (never use open Wi-Fi) Social Media Sharing

• Big threat and easy target for cyber criminals • Abundance of shared information – examples: – Travel plans, – employer name and job titles.

• Criminals use fake profiles to gain access and trust Protecting Yourself

There is a lot to think about when protecting against a cyber attack and even mitigating the impact if one occurs.

Here are a few easy things to consider as low hanging fruit. Passwords vs. Passphrase

• Common password suggestions are based on old technology – Combinations in the hacking “dictionaries” – can be hacked quickly.

• Safer to use passphrases – significantly more difficult to crack. Passwords vs. Passphrase (continued)

Passwords Passphrase

P@5sw0rd 1CantWaitUntilAuditTime2019

Can be cracked in as little as Would take a long, long time a minute. to crack

*Do not use this passphrase Backups

Backup your data (financial and non- financial) and test the backups. Security Awareness Training

According to Chris Mathers, former undercover officer for RCMP and expert in the field:

It doesn’t matter how good your IT security is, how much money you spend on it, or who's in charge. If the people who are working in your office don’t know how to detect things you are going to get infected. Let’s take a look back…

How Did Our 2 Cases Happen? How Did Our Cases Happen?

MacEwan University City of Ottawa • Change was not expected • Email address appeared real… but • Did not call to confirm change with not checked; vendor contact • Few controls about processing a wire transfer; • No mandatory fraud awareness training for staff.

Among other potential reasons. Questions

What can you do to protect yourself from fraud?

Benoit Groulx, CPA, CA, Licensed Public Accountant Partner Baker Tilly Ottawa LLP Tel: 613-768-8842 Email: [email protected] Types of Controls

• Preventive • Detective Preventive Controls

• Access restrictions – Physical and electronic • Use of strong passwords • Use of security software – Malware, ransomware, viruses • Keep software updated Preventive Controls (continued)

• Firewalls • Encryption • Daily backups Other Preventive Controls

• Segregation of duties • Double signature for payments (cheques or electronic transfers) Detective Controls

• Review bank transactions and bank reconciliations • Review access logs • Perform physical inventory count • Review monthly financial statements • Use of data analytics Red Flags – Occupational Fraud

• Employee is living beyond their means • Employee has financial difficulties • Employee is unusually close with a vendor or customer • Employee is controlling and/or unwilling to share duties • Employee is experiencing divorce or other family problems • Employee subverts standard processes and acts as if the rules don’t apply to them

* From CPA Canada publication: Know the red flags of occupational fraud to protect your business by Daphne Gordon (1.10.2019) Best Practices

• Don’t give out passwords • Don’t lend access passes • Don’t use USB sticks of unknown origin • Don’t provide personal information on social media • Don’t disclose location on social media • Don’t open links from emails of unknown sender Best Practices (continued)

• Be skeptical of unusual requests • Use strong passwords and change them regularly • Check links by using cursor – move cursor over links to determine actual website, etc. • Check with IT specialist if you suspect fraud or security issues Cyber Fraud Humour Questions

What is data analytics and what can it do for you?

Benoit Groulx, CPA, CA, Licensed Public Accountant Partner Baker Tilly Ottawa LLP Tel: 613-768-8842 Email: [email protected] What it is

• Process of examining and analysing data to draw conclusion about the information it contains Where we can use it

• Part of audit • Specialized and value added services • Detect errors and/or fraud • Analyze patterns • Identify anomalies • Provide information to make better decisions Specific use for audit

• Identifying risk of material misstatement areas • Journal entry testing • Sampling • Analytical / trend analysis Examples

• Review access log for unauthorized access • Review access at non-standard times (nights, weekends, etc.) • Review journal entries with round numbers • Review “explosion” journal entries • Review entries that do not match responsibilities – A/R clerk posting entries in payable accounts • Review transactions over specified amount Examples (continued)

• Identify: – Duplicate accounts – Duplicate customer or vendor – Suppliers with same HST number – Employees with invalid SIN number – Suppliers and employees with same address Examples (continued)

• Determine level of transaction with a particular customer or supplier • Compare margins of products • Report costs associated to projects Tools

• Various softwares with different capabilities • Common software used: – Excel – ActiveData – ACL – IDEA Challenges

• Obtaining the data • Usability / quality of data Data Analytics Humour Questions

Fraud – What to do when it happens

David Contant Lawyer & Certified Specialist in Civil Litigation Nelligan O’Brien Payne LLP Tel: 613-231-8354 Email: [email protected] Cyber Fraud

Gone Phishing…

• Examples of phishing scams • What are the “red flags”? • Password “hygiene” Cyber Fraud

Am I Covered?

• Transfer of funds may be “intentional” and therefore not covered by crime insurance (Brick v. Chubb Insurance) • Fraud insurance versus social engineering insurance (Dentons v. Trisura) Cyber Fraud

Civil Remedies

• Be mindful of limitation periods (Sorenson and Brost) • Mareva injunctions, Norwich orders, CPLs • Practical considerations – are there assets? • Claims against “secondary defendants” (Schokking v. Kelford) Cyber Fraud

Other Remedies

• Criminal prosecution • Civil Remedies Act, 2001 • Ontario (Attorney General) v. $163,015.29 in Canadian Currency (In Rem), [2019] O.J. No. 3655 Cyber Fraud

Termination of Employees

• Should you terminate an employee? • What type of evidence is required? • Is an investigation necessary? • What are the pitfalls? Questions