Bill C-52 (Historical)
Budget Implementation Act, 2007
An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007
This bill was last introduced in the 39th Parliament, 1st Session, which ended in October 2007.
Jim Flaherty Conservative
This bill has received Royal Assent and is now law.
This is from the published bill. The Library of Parliament often publishes better independent summaries.
Part 1 implements income tax measures proposed or referenced in Budget 2007 to
(a) introduce a tax on distributions from certain publicly traded income trusts and limited partnerships, effective beginning with the 2007 taxation year;
(b) reduce the general corporate income tax rate by one half of a percentage point, effective January 1, 2011;
(c) increase the age credit amount by $1,000 from $4,066 to $5,066, effective January 1, 2006;
(d) permit income splitting for pensioners, effective beginning in 2007;
(e) introduce a new child tax credit of $2,000 multiplied by the appropriate percentage for a taxation year, effective beginning in 2007;
(f) increase the spousal and other amounts to equal the basic personal amount, effective beginning in 2007;
(g) increase the age limit for maturing registered retirement savings plans, registered pension plans and deferred profit sharing plans to 71 years of age, effective beginning in 2007;
(h) expand the types of investments eligible for registered retirement savings plans and other deferred income plans, effective March 19, 2007; and
(i) increase the contribution limits for registered education savings plans and expand eligible payments for part-time studies, effective beginning in 2007.
Part 1 also amends the Canada Education Savings Act to increase the maximum annual grant payable on contributions made to a registered education savings plan after 2006.
Part 2 amends the Excise Tax Act to clarify the legislative authority that allows the Canada Revenue Agency to pay refunds of excise tax directly to end-users, where fuel subject to excise has been used in tax-exempt circumstances. It also amends that Act to repeal the excise tax on heavy vehicles and to implement the Green Levy on vehicles with fuel consumption of 13 litres or more per 100 kilometres. It also provides an authority for the Canada Revenue Agency to pay a refund of the Green Levy for vans equipped for wheelchair access.
Part 3 implements goods and services tax/harmonized sales tax (GST/HST) measures proposed or referenced in Budget 2007. It amends the Excise Tax Act to exempt midwifery services from the GST/HST and to zero-rate certain supplies of intangible personal property made to non-GST/HST registered non-residents. It also amends that Act to repeal the GST/HST Visitor Rebate Program and to implement a new Foreign Convention and Tour Incentive Program, which provides rebates of tax in respect of certain property and services used in the course of conventions held in Canada and the accommodation portion of tour packages for non-residents, and establishes new information requirements in the case where rebates are credited by the vendor.
Part 4 implements other measures relating to taxation. It amends the Customs Tariff to increase the duty-free exemption for returning Canadian residents, from $200 to $400, for absences from Canada of not less than 48 hours. It amends the Federal-Provincial Fiscal Arrangements Act to clarify that when a federal corporation listed in Schedule I to that Act pays provincial taxes or fees, wholly-owned subsidiaries of that corporation also pay provincial taxes or fees. It also authorizes the Minister of Finance to make payments totaling $400 million out of the Consolidated Revenue Fund to the Province of Ontario to assist the province in the transition to a single corporate tax administration. This last measure is consequential to the October 6, 2006 Canada-Ontario Memorandum of Agreement Concerning a Single Administration of Ontario Corporate Tax.
Part 5 enacts the Tax-back Guarantee Act, which legislates the Government’s commitment to dedicate all effective interest savings from federal debt reduction each year to ongoing personal income tax reductions. That Part also commits the Minister of Finance to report publicly at least once a year on personal income tax relief provided under the Guarantee to Canadians.
Part 6 amends the Federal-Provincial Fiscal Arrangements Act to set out the amounts of the fiscal equalization payments to the provinces and the territorial formula financing payments to the territories for the fiscal year beginning on April 1, 2007 and to provide for the method by which those amounts will be calculated for subsequent fiscal years. It also authorizes certain deductions from those amounts that would otherwise be payable under that Act. In addition, it makes consequential amendments to other Acts.
Part 6 also amends that Act to provide increased funding for the Canada Social Transfer beginning on April 1, 2007, and to provide for the method by which the Canada Social Transfer and the Canada Health Transfer amounts will be calculated for subsequent fiscal years, including per capita cash allocations. It also provides for transition protection.
Part 7 amends the Financial Administration Act to modernize Crown borrowing authorities.
Part 8 amends the Canada Mortgage and Housing Corporation Act to permit the Minister of Finance to lend money to the Canada Mortgage and Housing Corporation.
Part 9 amends the Bankruptcy and Insolvency Act, the Canada Deposit Insurance Corporation Act, the Companies’ Creditors Arrangement Act, the Payment Clearing and Settlement Act and the Winding-up and Restructuring Act to allow the Governor in Council to prescribe the meaning of “eligible financial contract”. Those Acts are also amended to provide that, after an insolvency event occurs, a party to an eligible financial contract can deal with supporting collateral in accordance with the terms of the contract despite any stay of proceedings or court order to the contrary. This Part also includes amendments to the Bankruptcy and Insolvency Act and the Winding-up and Restructuring Act to provide that collateral transactions executed in accordance with the terms of an eligible financial contract are not void only because they occurred in the prescribed pre-insolvency or winding-up period.
Part 10 authorizes payments to provinces and territories.
Part 11 authorizes payments to certain entities.
Part 12 extends the sunset provisions of financial institutions statutes by six months from April 24, 2007 to October 24, 2007.
Part 13 amends the Department of Public Works and Government Services Act to provide the Minister of Public Works and Government Services with the power to authorize another minister, to whom he or she has delegated powers under that Act, to subdelegate those powers to the chief executive of the relevant department. That Act is also amended with respect to the application of section 9 to certain departments.
Part 14 amends the Financial Consumer Agency of Canada Act to allow the Minister of Finance to provide funding to the Agency for activities related to financial education.
- June 12, 2007 Passed That the Bill be now read a third time and do pass.
- June 12, 2007 Passed That this question be now put.
- June 12, 2007 Passed That, in relation to Bill C-52, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007, not more than one further sitting day shall be allotted to the consideration of the third reading stage of the Bill; and That, 15 minutes before the expiry of the time provided for Government Business on the day allotted to the consideration of the third reading stage of the said Bill, any proceedings before the House shall be interrupted, if required for the purpose of this Order, and, in turn, every question necessary for the disposal of the said stage of the Bill shall be put forthwith and successively, without further debate or amendment.
- June 5, 2007 Passed That Bill C-52, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007, as amended, be concurred in at report stage with further amendments.
- June 5, 2007 Passed That Bill C-52 be amended by deleting Clause 45.
- May 15, 2007 Passed That the Bill be now read a second time and referred to the Standing Committee on Finance.
- May 15, 2007 Passed That the question be now put.
Royal Recommendation--Bill C-290
Points of Order
June 18th, 2009 / 10:40 a.m.
Tom Lukiwski Parliamentary Secretary to the Leader of the Government in the House of Commons
Mr. Speaker, I rise on a point of order.
On June 9, 2009 you made a statement with respect to the management of private members' business and noted the spending provision in three private members' bills appeared to infringe on the financial prerogative of the crown. At that time you invited members to make arguments on whether these bills required a royal recommendation.
One of the bills is Bill C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income), which will be debated later today. Notwithstanding the possible merits of Bill C-290, the bill would create a new refundable tax credit for the loss of retirement income, and I believe it would require a royal recommendation.
Refundable credits are direct benefits paid to individuals regardless of whether tax is owed or not and are paid out of the consolidated revenue fund, also known as the CRF. As a result, any legislative proposal to create a refundable tax credit requires a royal recommendation.
Two recent rulings in the House of Commons and the Senate concluded that creating or increasing a refundable tax credit would require a royal recommendation.
On June 4, 2007 the Speaker of the House ruled that a proposed amendment to Bill C-52, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007, to create a refundable tax credit could not be selected at report stage because the amendment required a royal recommendation.
On May 11, 2006 the Speaker of the Senate ruled that private member's Bill S-212, an Act to Amend the Income Tax Act (Tax Relief) was out of order because it would have increased a refundable tax credit. The Speaker of the Senate stated:
--bills proposing to alter refundable tax credits need a royal recommendation. This is because the payouts that will be made to taxpayers who are entitled to claim them must be authorized. This authorization is the royal recommendation. These payments can only be made from the CRF; they are expenditures of public money.
Since Bill C-290 would create a new refundable tax credit, it must be accompanied by a royal recommendation.
Bill C-445—Speaker's Ruling
Points of Order
May 2nd, 2008 / 10 a.m.
The Speaker Peter Milliken
I am now prepared to rule on the point of order raised by the government House leader and minister for democratic reform on April 8, 2008 concerning the requirement for a royal recommendation for Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income) standing in the name of the member for Richmond-Arthabaska.
In his intervention, the hon. government House leader stated that refundable tax credits are direct benefits paid to individuals regardless of whether tax is owed or not and are paid out of the consolidated revenue fund. He argued that a legislative proposal creating such a tax credit therefore needed to be accompanied by a royal recommendation.
In support of his argument, he pointed to a Speaker's ruling of June 4, 2007, which did not select a report stage amendment to Bill C-52, the Budget Implementation Act, 2007, that sought to create a refundable tax credit because it required a royal recommendation. He also referred to a ruling of May 11, 2006 from the Speaker of the Senate that ruled out of order Bill S-212, an Act to amend the Income Tax Act (tax relief) on the basis that it increased a refundable tax credit.
In response, the hon. member for Richmond--Arthabaska argued that legislation proposing a reduction in taxes has always been permitted under our parliamentary rules, even if this leads to reimbursements being made to taxpayers.
To support his arguments, he pointed to a ruling by Mr. Speaker Parent of October 16, 1995 regarding Bill S-9, An Act to amend the Canada-United States Tax Convention Act, 1984.
The Chair has carefully reviewed Bill C-445, the previous rulings that were cited as well as the comments from the hon. members and believes that the central issue in the present case is whether the creation of the tax credit found in Bill C-445 is strictly an alleviation of taxation or an authorization to spend for a new and distinct purpose. If it is the latter, the bill would need to be accompanied by a royal recommendation before the third reading motion can be proposed to the House.
The bill standing in the name of the hon. member of Richmond--Arthabaska seeks to amend the Income Tax Act by providing for a tax credit to a taxpayer in respect of whom an employer and the employees failed to make required registered pension plan contributions. Whether or not the tax credit is refundable or non-refundable is the key issue in determining the need for a royal recommendation.
Non-refundable credits are deducted from a person's tax payable rather than being calculated separately: they simply reduce the amount of tax payable by an individual. The amount of the credit is limited to the amount of the tax payable.
This is not the case for refundable tax credits, which are unique in the Income Tax Act: they provide for a taxpayer to receive an amount from the government due to a low amount of taxable income and tax payable. Such credits are calculated separately on an income tax return because they are not simply alleviations of taxes otherwise payable.
Bill C-445 is proposing a refundable tax credit. The Chair is of the opinion that the bill would not only alleviate taxation but also potentially allow monies to be disbursed from the consolidated revenue fund, in the event the taxpayer had taxable income for the year that yielded taxes less than the amount of the credit.
The circumstances of Bill C-445 are quite different from those referred by the hon. member for Richmond--Arthabaska in the ruling concerning Bill S-9. There, reimbursements were limited to tax payable. By making a tax credit refundable, Bill C-445 could lead to refunds that are greater than taxes paid. Such spending, for a new and distinct purpose, would need to be accompanied by a royal recommendation.
Accordingly, the Chair will decline to put the question on third reading of this bill in its present form unless a royal recommendation is received.
The debate, later today or on Monday, is currently on the motion for second reading and, as usual, this motion will be put to a vote at the close of the second reading debate.
Royal Recommendation--Bill C-445 and Bill C-490
Points of Order
April 8th, 2008 / 10:05 a.m.
Peter Van Loan Leader of the Government in the House of Commons and Minister for Democratic Reform
Mr. Speaker, I rise on a point of order. I want to speak to the question of the need for a royal recommendation on two private members' bills.
On March 11, 2008, you noted that the spending provisions in two private members' bills appear to infringe on the financial initiative of the Crown. You invited members to make arguments on whether those bills require a royal recommendation. That is what I intend to do at this time.
The two bills are Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income), and Bill C-490, An Act to amend the Old Age Security Act (application for supplement, retroactive payments and other amendments).
Let me begin with Bill C-445. This bill would create a new refundable tax credit for the loss of retirement income.
Refundable credits are direct benefits paid to individuals regardless of whether tax is owed or not and are paid out of the consolidated revenue fund. As a result, any legislative proposal to create a refundable tax credit requires a royal recommendation.
I would draw to the attention of the House two recent rulings wherein the Speaker of the House and the Speaker of the Senate concluded that creating or increasing a refundable tax credit requires a royal recommendation.
On June 4, 2007, there was a Speaker's ruling that a proposed amendment to Bill C-52 to create a refundable tax credit could not be selected for report stage because the amendment required a royal recommendation.
On May 11, 2006, the Speaker of the Senate ruled that Bill S-212 was out of order because it would have increased a refundable tax credit. The Speaker of the Senate stated:
--bills proposing to alter refundable tax credits need a Royal Recommendation.
This is because the payouts that will be made to taxpayers, who are entitled to claim them, must be authorized. This authorization is the Royal Recommendation. These payments can only be made from the Consolidated Revenue Fund; they are expenditures of public money.
Since Bill C-445 would create a refundable tax credit, it needs to be accompanied by a royal recommendation.
Now, in regard to Bill C-490, this bill proposes a number of changes to the old age security program which would result in increased spending and would therefore require a royal recommendation.
Clause 1 of Bill C-490 would apply to a person who ceases to have a spouse or common law partner because of the spouse's or common law partner's death and would provide that person with the old age security pension that would have been payable to the person's spouse or common law partner, for a period of six months. This extension of benefits would be a new program requirement, which would result in additional spending.
On December 8, 2004, a Speaker's ruling in the case of Bill C-278 concluded that a similar extension of benefits for the employment insurance program constituted a new and additional requirement for spending, and therefore required a royal recommendation.
Clause 2 of Bill C-490 would eliminate the requirement to make an application for a supplement for old age security benefits. Formal application is needed since the information available from the Canada Revenue Agency is sometimes insufficient to determine eligibility. This change would result in benefits under the old age security program being provided to persons who otherwise would not be eligible to receive them. This would be a new program requirement that would require additional spending.
On October 24, 2005, a Speaker's ruling with respect to a provision in Bill C-301, dealing with other proposed retroactive payments under the old age security program, concluded that:
Bill C-301...proposes to alter the process by which compensation is awarded to old age security recipients in the manner that retroactivity is handled.
Clauses 2, 3 and 4 remove the requirement that the recipient must make an application before they can receive a payment...This changes the conditions of the compensation process and creates new or additional spending.
Clause 3 of Bill C-490 would increase the guaranteed income supplement monthly benefit by $110. The Department of Human Resources and Social Development estimates that this change could cost up to $2 billion a year. This would constitute additional spending for a new and distinct purpose and would therefore require a royal recommendation.
Clause 6 of Bill C-490 would provide for retroactive payments where a person has not received a supplement, or a portion of a supplement, to which that person would have been entitled under the act.
On October 24, 2005, a Speaker's ruling on the retroactivity of payments in the case of Bill C-301, respecting the monthly guaranteed income supplement under the Old Age Security Act, concluded that:
--retroactivity is limited by the date upon which the application was made. Late applicants may only be eligible for the period dating from the application. It would appear then that this modification authorizes increased spending which would require a royal recommendation.
The Department of Human Resources and Social Development estimates that Bill C-490's provision of unlimited retroactivity for guaranteed income supplement monthly benefits could represent an initial lump sum payment to beneficiaries of up to $6 billion.
In conclusion, Bill C-490 would result in increased spending for the old age security program in the new and distinct ways I have just outlined. The bill therefore requires a royal recommendation.
Motions in Amendment
Income Tax Act
Private Members' Business
November 28th, 2007 / 6:35 p.m.
Ted Menzies Parliamentary Secretary to the Minister of Finance
Mr. Speaker, my colleague has always spoken very positively about the need for education, the need for students in Canada to have access to good education and, in our discussions in the foreign affairs and international development committee, the need to incent young students coming from other parts of the world to get their education in Canada.
However, we have some very grave concerns with Bill C-253, which initially contemplated that the deduction would be limited to an RESP annual contribution limit of $5,000, indexed after 2006. However, budget 2007 eliminated the RESP annual contribution limit and raised the lifetime contribution limit to $50,000 from $42,000.
Amendments to the Income Tax Act to implement these changes were made in Bill C-52, which was assented to in June 2007, to which the hon. member has alluded.
These changes were extremely well received. Indeed , Peter Lewis, chair of the Registered Education Savings Plan Dealers Association of Canada, called the changes “a very positive leap forward for Canadian families”. He went on to say:
These improvements will benefit all Canadian families, and provide even greater incentive to invest in their children's college or university education. And that's good for everyone.
We sincerely commend [the] Finance Minister...for recognizing the value and importance of encouraging families to save for post-secondary education.
The proposed amendments adjust the bill to reflect the elimination of the RESP annual contribution limit. The effect of the proposed amendments would be to allow a taxpayer to claim a deduction for RESP contributions of up to $50,000. The amount of the deduction would be reduced by the total RESP contributions made by the taxpayer in previous years.
As we have stated in analysis provided previously, the behavioural impact is uncertain. If the RESP contributions were to increase by 20%, the total fiscal cost of Bill C-253 would be $765 million per year, including a CESG cost increase of $85 million per year.
The proposed amendments, if adopted, would not allow RESP contributors any more leeway in allowing up to an annual $50,000 deduction for their contributions.
While it is uncertain how much this would exactly increase total RESP contributions and the specific long term costs of Bill C-253, it is likely the proposed changes could again increase the cost of the deduction in the early years following implementation.
Therefore, we will not be supporting Bill C-253.
Motions in Amendment
Income Tax Act
Private Members' Business
November 28th, 2007 / 6:25 p.m.
Dan McTeague Pickering—Scarborough East, ON
Motion No. 1
That Bill C-253, in Clause 2, be amended by deleting lines 10 to 24 on page 1.
Motion No. 2
That Bill C-253, in Clause 2, be amended by replacing lines 8 and 9 on page 2 with the following:
“(b) the RESP lifetime limit minus the total of all contributions made by the taxpayer into a registered education savings plan in previous taxation years.”
Mr. Speaker, I am pleased to speak today. If I may, I will take the opportunity to congratulate you on what I believe is a very well deserved citation by all your colleagues in the House as the most honourable of our members. I realize that you have said you will be leaving at some stage, but clearly you are just coming into your own stride and I suggest that you may want to reconsider that position.
Bill C-253, now at report stage, is an act to amend the Income Tax Act in relation to the deductibility of RESP contributions by the contributor.
As colleagues know, I have proposed two amendments to this bill as a result of changes in the RESP regime created by the 2007 budget. People who are watching and in fact listening will know that there were changes made subsequent to changes in the RESP regime, as well as with respect to the last budget.
I will discuss these changes and the necessity of my amendments in a moment, but I note that registered education savings plans allow taxpayers to accumulate funds for their children to use toward the high costs often associated with obtaining post-secondary education.
Technically, an RESP is a contract between an individual, the subscriber, and a person or organization, the promoter. I should point out that the subscriber or the person acting for the subscriber generally makes contributions to an RESP, and the contributions, as we know, earn an income. The subscriber names one or more beneficiaries, one's child or children who are eventually going to attend post-secondary institutions, and agrees to make these contributions ultimately for them.
These contracts are then registered with the Canada Revenue Agency. From a tax perspective, which should be known, contributions made to an RESP are not deductible by the subscriber. Further, leftover funds in an RESP, after amounts are paid to a beneficiary, that are returned to the subscriber are not included in the subscriber's taxable income. Instead, contributions that are paid to a beneficiary of an RESP become taxable income of the beneficiary.
Before the 2007 budget, subscribers were limited in both the annual and the lifetime amounts they could contribute to an RESP. I should point out that after the 2007 budget implementation act, Bill C-52, was passed in the first session of this Parliament, the RESP annual limit was removed and only the RESP lifetime limit remained.
What that meant was the occasion to necessitate an amendment, and an amendment to Bill C-253 put forward by the House of Commons Standing Committee on Finance created a deduction for the subscriber, the contributor, for the taxable income for contributions made to an RESP.
This deduction, however, was limited to the RESP annual limit as defined in the former provisions of the Income Tax Act and prior to the passage of the budget in 2007.
Finally, Bill C-253 ensured that leftover funds in an RESP that are returned to the subscribers become taxable income of the subscribers themselves. The amendments I have proposed simply remove the proposed provisions in the bill that contain a reference to the RESP annual limit.
Bill C-253 nonetheless retains the tax deduction for contributions made to an RESP, but this annual deduction amount is now limited by the RESP lifetime limit, rather than the RESP annual limit.
That annual limit, for the benefit of all my colleagues here, will remain, and under the pre-RESP regime it was certainly there, at $50,000. A provision, paragraph 2(4)(2.01)(b), is also added for accounting purposes to ensure that contributions made in previous years are taken into account in determining the annual contribution deduction so that the RESP lifetime limit is not exceeded.
Members will know that in my last speech on Bill C-253 I made it abundantly clear that existing provisions of the Income Tax Act as concerns RESPs provide harsh penalties for anyone who tries to use an RESP as a tax shelter. Let us be clear on that. One cannot use this as an RESP shelter, much in the same way that the guidelines exist with respect to RRSPs.
While I will not rehash the details as I have only a limited amount of time, I must point out and will again repeat that should a beneficiary of an RESP, a child, not attend a post-secondary institution, in this case the funds accumulated in that RESP account are returned to the contributor and the moneys earned beyond the actual contributions made are indeed taxed. They are taxed significantly.
The tax rate, so everyone will know, would be 20% over and above the regular tax paid on the income. Like many other people, I feel that rate more than adequately deters anyone from using the RESP as some scheme or tax shelter. The lifetime limit of $50,000, in addition to the 20% penalty, further detracts from the usage of an RESP as a vehicle to avoid taxes.
I also mentioned in my previous remarks the soaring costs of post-secondary education in Canada. I did put a great deal of emphasis on that then and it clearly has not changed. By some estimates, there is now a cost of over $100,000 by the year 2010 for a four-year degree program.
That is a lot of money. I cannot see how families are going to be able to make ends meet without having some kind of opportunity, one that does not take away from the public treasury but in fact contributes to the development of our young by providing them access to post-secondary education in a way that uses the existing system but builds and improves on it.
There is also the issue of the fact the RESP is not being used by a majority of Canadian families to offset the rising cost of post-secondary education. I should point out, as all of this has been taking place in the past, that we have seen a number of examples where Canadians have not had the benefit or the opportunity of ensuring their positions and their ability to become more meaningful members of society in terms of adequate attention to education. It has not been made available, as we can certainly see by the fact that many have not had an opportunity to provide the savings.
While a large number of savings opportunities exist for parents and families, they are always, frankly, after-tax opportunities. Therefore, I am looking to Parliament to look much deeper, to use an existing system that I believe works for all Canadians. I believe we need a system so that Canada is able to meet the competitive edge, as so many are pointing out we will need to do in order to provide a continuous education and a reformed idea in terms of our education system. We need to allow young people and people throughout the course of their lives to make the kinds of transitions that I think are very much a necessity in terms of building a modern, adaptable and flexible society.
In the two minutes I have left, I would also like to point out that a few other areas have come to our attention very recently. One is with respect to the ability of many of our universities to continue to attract high calibre and state of the art types of equipment and technologies and to bring in professors and staff who will allow our young people to benefit at our universities and at any post-secondary level of education and to get the very best. To do that, I note, we are living in an increasingly competitive international market. It can hardly be blamed on our universities, colleges or polytechnical schools if they do not have the ability to bring in these people without higher tuition fees.
The reality is that post-secondary education is not accessible to a vast majority of our students. For a good many, it is a challenge that they will never be able to take on.
I was speaking earlier with a few members of this House who are concerned about this limit. With the amendments I am proposing here today, which affect the annual limit for contributions, I wanted to do everything I could. In the end, the clerks informed me that it would be impossible for me as a backbencher, through a private member's bill, to amend a budget that was adopted by a vast majority of members. Thus, I cannot repeal the legislation to change the limit, which is currently set at $50,000. However, the principle remains.
Access to higher education is limited to some 20% of students. That number should be 100%. This bill proposes ways to improve the system to ensure that people can contribute to their RESP. I look forward to hearing other members' comments.
November 27th, 2007 / 5:10 p.m.
Margaret Lefebvre Executive Director, Canadian Association of Income Funds
Thank you very much. The Canadian Association of Income Funds has been before this committee on several occasions in the last year, and we're glad to be here again regarding the income trust policy announced on October 31, 2006.
Bill C-52, the first Budget 2007 implementation bill, which contained the income trust legislation, did not in fact address significant implementation issues that require immediate attention. It is to address these issues that we appear before you today.
However, the committee should also be aware that the damaging consequences of the government's actions continue. Since October 31, 2006, there have been more than 42 transactions that involved the selling, merging, or acquisition of income trusts with an enterprise value in excess of $31 billion. The majority of these transactions by dollar value involved foreign buyers of Canadian assets. Most have gone into the hands of private equity and pension funds. Virtually all of these entities will pay little or no tax to either to the federal or provincial governments.
In addition, ordinary Canadians are frozen out of participating in the potential investment benefits of not only our own natural resources but also a diverse and entrepreneurial business trust sector. Many small and medium-sized Canadian businesses have had their access to capital severely impaired. This makes them vulnerable to takeover and leaves them powerless to compete.
At best, the estimates of tax leakage at the time this bill was put forward were $500 million at the federal level and potentially $300 million at the provincial level. Together that makes $800 million. In 2006, the trust distributions from the sector totalled $16 billion. To recover totally would have required a tax rate of no more than 5%; instead we are faced with 31.5%.
Let me now turn to our technical recommendations. The following sets out some of the issues and deficiencies, although this list is not intended to be exhaustive.
No certainty or legal clarity has been given in the legislation for the transition period in the guidelines issued December 15. This clarity is urgently needed in some form, whether through the release of further policy guidance or another mechanism available to the government.
For example, under the existing guidelines, it is not clear whether issuing equity to replace debt--convertible or not--that was outstanding as of October 31, 2006, will be considered growth for the purposes of the guidelines, and whether equity issued to replace outstanding lower-tier debt will be excluded from the growth in equity capital.
In many circumstances, a trust has borrowings and lower-tier entities in which it has a direct or indirect interest, and such debt should be considered the same as replacement of the debt of the trust.
Also, no legislative framework was included in the legislation to facilitate conversion back to corporate status on a tax-deferred basis, similar to other tax-deferred rollover rules that already appear in the tax act.
By opposing the high level of statutory corporate tax rates on trusts, and especially on the distributions, the government has clearly signalled the elimination of the trust sector. There was no legislative mechanism in the bill to eliminate the remaining trust vehicle in a tax efficient manner after conversion to a corporation.
Such rules are necessary to remove uncertainty and provide an orderly transition. Furthermore, the trust rules have such breadth of application as to bring within their ambit non-publicly traded units under certain circumstances, which surely could not have been the intent.
This matter has been brought to the attention of the Department of Finance by this association, a host of income trusts, and the joint committee of the CICA and the Canadian Bar. We urge this committee to move quickly on recommendations to rectify these issues so the businesses can make informed decisions during the transition period.
We welcome the direction of the reduction in the corporate tax rate in the economic statement. Within this paradigm we are anxious to sit down with the government and find an appropriate resolution to the damaging consequences outlined today within the government's stated corporate tax policy. CAIF is ready to sit down with the finance department as soon as possible.
November 1st, 2007 / 11:50 a.m.
Mike Wallace Burlington, ON
Mr. Speaker, I just want to ensure that the House is aware and clear on the facts. I also have a question that goes along with the facts.
A number of members have made mention, including the previous speaker, that we have not been investing federally as a government in child care spaces. If they disagree with the $100 per child, per family, under the age of six, that is fine.
However, I want to point out that Bill C-52 was passed in the House on June 22, 2007 and received royal assent. A section in the act, if they would care to read it, is called child care spaces. The finance minister is authorized to give $250 million to the provinces to create child care spaces in the provinces. It was set up. The provinces have the responsibility and the expertise for developing child care spaces.
The question should be: Where did the money go? It was included in the social transfer; $250 million annually.
My question is for the member. Can you remember what the Liberals put in their implementation bills--
Opposition Motion--The Economy
Business of Supply
October 25th, 2007 / 11 a.m.
Mike Wallace Burlington, ON
Mr. Speaker, I thank the Parliamentary Secretary to the Minister of Finance for sharing his time with me and congratulate him on his new role. I know he will do a fantastic job in that office.
I welcome the opportunity to speak to the motion of the hon. member for Markham—Unionville.
At the outset, it is important to acknowledge my colleague's recognition of our government's efforts to lessen the tax burden on Canadian families, individuals and businesses. His motion correctly highlights that we have significantly reduced both personal and corporate taxes, as well as the national debt, in order to increase the competitiveness of Canada's economy.
Clearly, as an economist by training, he has a fine eye for effective economic policy. We appreciate his support and trust that there may well be others across the aisle who share his views but are somewhat resistant to be overly positive.
Accordingly I will take a little time today to reiterate what we have done so far on both tax and on the debt side of the ledger, with the hope that others might find the courage exhibited by my friend opposite to speak positively and publicly about the government's accomplishments.
It would appear, given the second portion of the motion, that the member for Markham—Unionville may be unaware of the positive work we have done with respect to investing in infrastructure, post-secondary education and so on. Therefore, I also will take some time to address what we have done in these areas.
With respect to reducing taxes, our credentials are solid and have been from the moment we assumed office. We have provided more than $41 billion over three years in tax relief for individuals and businesses. As the Minister of Finance has noted often, there is more still to come.
We will build on the efforts and continue to create a tax advantage for Canada, which will fuel economic growth, investment and the creation of wealth. It started less than 18 months ago, in May 2006, with the 2006 federal budget. For those who have not read it, I have it here with me.
The document proposed 29 personal and business tax relief measures that provided more than $20 billion of personal tax relief alone. That sum, which represents more than the four previous federal budgets combined, helps me to better understand the praise of my friend of whom I referred to earlier. Clearly, he probably wishes that the previous government had taken similar action on behalf of Canadian taxpayers.
For example, he no doubt recognizes the wisdom of providing tax relief for each and every working Canadian through the introduction of the Canadian employment credit. I say this with all sincerity, who can argue with providing a tax credit to recognize the cost of work related expenditures such as home computers, uniforms and supplies?
Similarly, who among us would oppose the creation of the children's fitness tax credit as a means to encourage healthy, active kids by helping to cover the eligible fees up to $500 for enrolment in physical activity programs? Who would oppose the new textbook credit for students to help offset the cost of textbooks? Who would oppose increasing the basic personal amount that an individual can earn every year before paying federal income tax? Who would oppose a 1% point reduction in the GST that benefits all Canadians, including those who do not earn enough to pay personal income tax?
Who, one may ask? That would be the members of Her Majesty's Loyal Opposition. That would be the same party that opposed the government's fair tax credit plan, a plan proposed with significant measures to help Canadian seniors. As hard as it is to believe, the Liberals opposed tax fairness. In doing so, that means they are opposing helping Canadian seniors plan for a better retirement through an increase in the age credit amount and the historic action of permitting income splitting for Canadian pensioners. Frankly, it is very hard to fathom.
It should therefore not be so hard to believe that the same group of folks has not supported the long term plan to build a strong economy for Canadians, “Advantage Canada”, by creating key advantages, including a tax advantage that would set Canada apart from our competitors around the world.
Maybe it is a little hard to believe that Liberal members are opposed to creating a tax advantage for Canada to help us attract and maintain the workers and the capital investment that Canada requires to succeed and prosper in the 21st century.
Maybe it is a little hard to believe that Liberal members oppose a tax advantage that is fiscally responsible and that will build a stronger Canada and help to improve the quality of life for all Canadians.
It is also hard to believe, at least for those of us on this side of the House, that responsible people could oppose the creation of other key advantages envisioned under “Advantage Canada”, a fiscal advantage, an entrepreneurial advantage, a knowledge advantage and an infrastructure advantage.
How else are we to explain that at the first opportunity they had to show their support toward creating comprehensive advantages for Canada, the vote on Bill C-52 in the last session, Liberals said nay.
Those members said nay to the creation of the tax back guarantee, through which all interest savings from the reduction of national debt would be returned to taxpayers in the form of income tax redemptions.
Liberals said nay to the working families tax plan and the creation of a $2,000 child tax credit that would provide up to $310 per child of tax relief to more than three million Canadian families starting this year.
Liberals said nay to increasing spousal and other deductions in order to provide up to $209 in tax relief starting this year for a supporting spouse or a single taxpayer who was supporting a child or relative.
Liberals said nay to reducing the general corporate tax rate by 0.5% effective January 1, 2011.
Liberals said nay to establishing a federal foreign convention and tourism incentive program.
Liberals said nay to the introduction of the green levy on inefficient fuel vehicles.
Liberals said nay to predictable long term funding to the Canada social transfer to support post-secondary education, social assistance and social services.
I could go on, but I trust the general idea that I am trying to put forward here is very clear to everybody in the House.
The fact is the opposition tries to make all the right sounds and hit all the right buttons about lowering taxes, increasing productivity, investing in infrastructure and R and D, but when it comes to actually doing something about it and following through and doing the right thing, those members abdicate. It hardly inspires confidence in Canadians that they will actually do the right thing when they next get a chance. Let us hope that is many years away.
However, given the wording of the motion before us today, I am willing to give the opposition the benefit of the doubt. Soon the government will introduce the 2007 budget implementation bill. Members opposite will have the opportunity to walk the walk or talk the talk. They will be able to tangibly demonstrate that they mean business by voting yea and not nay to the tax measures that will benefit Canadians and help create the Canadian tax advantage.
For example, among other measures the Liberals can say yea to is the introduction of the working income tax benefit to help people who are out of work get back to work and over the welfare wall.
Liberals could say yea to expanding the scope of the public transit credit to better encourage individuals to make a sustained commitment to public transit use.
Liberals could say yea to increasing the lifetime capital gains exemption to $750,000 to increase the rewards for investing in small business, fishing and farming.
I look forward to the pending debate on these important matters. I hope I am not wrong in giving the benefit of the doubt to my friends across the way.
Message from the Senate
June 22nd, 2007 / 12:20 p.m.
The Speaker Peter Milliken
I have the honour to inform the House that when the House did attend Her Excellency the Governor General in the Senate chamber Her Excellency was pleased to give, in Her Majesty's name, the royal assent to the following bills:
Bill S-6, An Act to amend the First Nations Land Management Act--Chapter 17;
Bill C-277, An Act to amend the Criminal Code (luring a child)--Chapter 20;
Bill C-18, An Act to amend certain Acts in relation to DNA identification--Chapter 22;
Bill C-14, An Act to amend the Citizenship Act (adoption)--Chapter 24;
Bill C-47, An Act respecting the protection of marks related to the Olympic Games and the Paralympic Games and protection against certain misleading business associations and making a related amendment to the Trade-marks Act--Chapter 25;
Bill C-42, An Act to amend the Quarantine Act--Chapter 27;
It being 12:23 p.m., the House stands adjourned until Monday, September 17, 2007, at 11 a.m., pursuant to Standing Orders 28(2) and 24(1).
The first session of the 39th Parliament was prorogued by royal proclamation on September 14, 2007.
Message from the Senate
June 22nd, 2007 / 12:05 p.m.
The Speaker Peter Milliken
I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed the following bills:
Sittings of the House
Business of the House
Private Members' Business
June 20th, 2007 / 6:15 p.m.
Peter Van Loan York—Simcoe, ON
Mr. Speaker, I would be happy to assist the Liberal House leader.
In terms of the precedent, the whole nature of this motion is, of course, an amendment to Standing Order 28. The same constraints that are being applied to the Speaker's discretion with regard to a recall of Parliament, in that it provides for it, are the same type of directions that are being provided in terms of the royal assent ceremony, which is the second aspect of this motion.
The intent of the motion and as it is drafted it would only create a right of recall for the government in relation to Bill C-52, the budget implementation bill.
Sittings of the House
Business of the House
Private Members' Business
June 20th, 2007 / 6:15 p.m.
Ralph Goodale Wascana, SK
Mr. Speaker, in order to have complete clarity with respect to the motion that the government House leader has just put forward in the House, I wonder if the government House leader could indicate to us the availability of precedents with respect to the constraint upon your discretion, which is involved in the reference in the motion to Standing Order 28(4).
That necessarily imposes a restraint on your discretion, Mr. Speaker, and substitutes instead the discretion of the government. I would be interested to know, since that is a serious matter in our Standing Orders, if the government House leader can inform the House, after consultation with the Table, which I am sure he has had, whether there are in fact the appropriate precedents for this type of provision to be included in an adjournment motion.
Mr. Speaker, I wonder if we have the clear assurance, because the wording of this motion is somewhat complex, that the special provisions being referred to here apply only in relation to this adjournment and only in relation to matters pertaining to Bill C-52.
Sittings of the House
Business of the House
Private Members' Business
June 20th, 2007 / 6:10 p.m.
Peter Van Loan Leader of the Government in the House of Commons and Minister for Democratic Reform
Mr. Speaker, I have another motion but I will read this one a little more slowly. I move:
That, notwithstanding any Standing or Special Orders or usual practices of the House, when the House adjourns on Wednesday, June 20, 2007, it shall stand adjourned until Monday, September 17, 2007, provided that, for the purposes of Standing Order 28, it shall be deemed to have sat on Thursday, June 21, and Friday, June 22, 2007; and, for the period of this adjournment only, in relation to Bill C-52, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007, Standing Order 28(3) shall read:
“Whenever the House stands adjourned, and at the request of the Government that the public interest requires that the House should meet at an earlier time, the Speaker shall give notice that the House shall meet for the sole purpose of considering Bill C-52, and thereupon the House shall meet to transact this said business. In the event of the Speaker being unable to act owing to illness or other cause, the Deputy Speaker, the Deputy Chair of Committees or the Assistant Deputy Chair of Committees shall act in the Speaker's stead for all the purposes of this section”, Standing Order 28(4) shall be amended by replacing the word “may” with the word “shall” and Standing Order 32(1.1) shall be amended by deleting “to be given royal assent”.
Statements By Members
June 15th, 2007 / 11:15 a.m.
Guy Lauzon Stormont—Dundas—South Glengarry, ON
Mr. Speaker, this week Bill C-52, legislation implementing budget 2007, passed third reading in the House.
This is a great budget that stands to benefit all Canadians in all provinces. There is $1 billion in health care funding, $1.5 billion in clean air funding, $225 million for the nature conservancy of Canada, $614 million for federal-provincial infrastructure projects, $30 million to protect British Columbia's Great Bear Rainforest, $30 million for Rick Hansen's foundation, and $133 million in new aid to help the people of Afghanistan rebuild their lives and their country.
A majority of democratically elected members passed this legislation. Why then is an unelected Liberal dominated Senate holding up the passage of Bill C-52, a bill that Canadians want and need?
A leader gets the job done. Why can the Leader of the Opposition not get the job done by insisting his Liberal senators approve this great budget?
Statements By Members
June 15th, 2007 / 11:10 a.m.
Gary Goodyear Cambridge, ON
Mr. Speaker, just as they did on Senate term limits, the unelected, clearly unaccountable Liberal senators are trying to hold up passage of Bill C-52, which could cost Canadians almost $4 billion, money the region of Waterloo and my riding of Cambridge desperately needs, money for our environment, spinal cord research, and our labour training initiatives.
It is bad enough that the Liberals and NDP members voted against money for women and girls with cervical cancer in Cambridge and North Dumfries, but in doing so they said no to their own women and girls. They also said no to firefighter training in their own ridings. They said no to money for school boards in their own ridings.
The Conservative government has clearly delivered for Canadians. It is time the Liberals and the Liberal senators do the same. I urge the Liberal interim leader to stand up to his Liberal senators for Canadians and stop these selfish political games for power.