An Act to amend the Income Tax Act (exemption from taxation of 50% of United States social security payments to Canadian residents)

This bill was last introduced in the 39th Parliament, 2nd Session, which ended in September 2008.

This bill was previously introduced in the 39th Parliament, 1st Session.

Sponsor

Jeff Watson  Conservative

Introduced as a private member’s bill. (These don’t often become law.)

Status

Not active, as of Dec. 4, 2006
(This bill did not become law.)

Summary

This is from the published bill. The Library of Parliament often publishes better independent summaries.

The purpose of this enactment is to reduce from 85% to 50% the inclusion rate on United States social security payments received by Canadian taxpayers.

The “inclusion rate” is the percentage of United States social security payments to be included as income by a Canadian taxpayer. The Canada-United States Tax Convention Act, 1984 provides for 15% of such payments to be non-taxable in the hands of Canadian residents, thus resulting in an 85% inclusion rate.

This enactment provides for an additional 35% of United States social security payments to be excluded from taxable income. The enactment therefore increases the exemption to 50% and decreases the inclusion rate to 50%.

Elsewhere

All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.

Finance
Committees of the House
Routine Proceedings

June 17th, 2008 / 6:50 p.m.
See context

Conservative

James Bezan Selkirk—Interlake, MB

Mr. Speaker, I am pleased to rise and speak on the seventh report of the Standing Committee on Finance and the recommendation on Bill C-305, as presented by my colleague from Essex.

In light of the ruling that you just made, Mr. Speaker, I would like to submit a new amendment. I move:

That the motion be amended by deleting all the words after the word “That” and substituting the following:

the seventh report of the Standing Committee on Finance (recommendation not to proceed further with Bill C-305, An Act to amend the Income Tax Act (exemption from taxation of 50% of United States social security payments to Canadian residents)), presented on Wednesday, May 7, 2008, be not now concurred in, but that it be recommitted to the Standing Committee on Finance.

Finance
Committees of the House
Routine Proceedings

June 17th, 2008 / 6:25 p.m.
See context

Liberal

John McCallum Markham—Unionville, ON

Mr. Speaker, I am pleased today to debate Bill C-305, An Act to amend the Income Tax Act (exemption from taxation of 50% of United States social security payments to Canadian residents).

Tax fairness is what we should consider when contemplating this bill. The question is whether Bill C-305 would deliver fairness tax fairness between Canadian residents who receive Canada pension plan payments and Canadians who live in Canada but, due to their previous employment, receive social security payments from the United States.

I will begin with a bit of the complicated history that surrounds this bill. Under a 1984 tax treaty with the United States, Canadians who receive U.S. social security payments were only required to claim 50% of their social security payments as taxable income in Canada.

In 1996, the treaty changed allowing the country, in this case the United States, to tax social security payments that were sent north of the border, rather than these payments being taxed in the country of residence. It instituted a 25.5% withholding tax at the time. This was good news for pensioners with high incomes as the 25.5% withholding tax by the United States was lower than their marginal tax rate in Canada and they saved money. However, for lower income Canadians the rate would have been higher than their marginal tax rate and, therefore, they were left worse off.

Partly as a result of this unfairness for lower income pensioners, the treaty changed again in 1997 when the U.S. stopped the 25.5% withholding from social security recipients and taxation power once again returned to the country of residence, which was Canada. The Government of Canada agreed at the time to make only 85% of the social security income taxable in the hands of pensioners living here.

What BillC-305 proposes to do is to turn back the clock by returning to the 1984 formula whereby only 50% of social security payments would be considered taxable income by the Canada Revenue Agency.

This is a very quick summary but with our limited time it does some justice to this very complicated issue. During the second reading of the bill, the Liberal members of Parliament agreed that the bill should go to committee so that it could be determined if there were a tax unfairness here and if the bill would appropriately rectify the problem.

During consideration of Bill C-305, the members of the Standing Committee on Finance determined that the bill would not lead to equitable tax treatment between Canadian CPP recipients and Canadian social security recipients. As a result, the committee recommended to the House that the bill not proceed.

I was pleased to see that the Conservative members of the committee were very sensible and pragmatic in their approach to this bill, although this recent amendment might suggest some reversal.

Yes, all members of the committee and all members of the House want to help Canadian seniors to make ends meet. On the surface, it seemed as though this bill might have been a way to do just that. Unfortunately, upon closer inspection of the bill, it became evident that it would create an unfairness in terms of how one group of seniors was taxed compared to another group of seniors. What it would have accomplished is to level the playing field between social security recipients in 1984 and social security recipients in 2008. Suddenly one group of pensioners receiving social security would have been taxed much less than those who receive Canada pension plan, even if they had similar levels of incomes.

What it would have accomplished is to level the playing field between social security recipients in 1984 and social security recipients in 2008. That is not tax fairness and it is not an appropriate tax policy for Canada.

I understand that there is often an almost irresistible urge to simply vote yes on a bill such as this. It seems so easy: lower the tax burden for some of Canada's seniors who happened to spend most of their working lives in the U.S. instead of Canada. However, when we lower the tax burden for one group of people, it means that other Canadians, including other seniors, will need to fill that void in order to provide the services on which so many Canadians rely.

Once again, I congratulate the members of the Standing Committee on Finance, particularly the Conservative members who, in this circumstance, were able to look beyond the surface of the bill and see that in the larger scheme of things the bill would have created a tax unfairness.

Therefore, I will be supporting the committee's recommendation that Bill C-305 not proceed further. With the committee having debated this matter at some length and reflected upon it, I really do not see the need to return the bill to committee.

Finance
Committees of the House
Routine Proceedings

June 17th, 2008 / 6:15 p.m.
See context

Blackstrap
Saskatchewan

Conservative

Lynne Yelich Parliamentary Secretary to the Minister of Human Resources and Social Development

Mr. Speaker, I want to thank the member for Essex for bringing forward this proposal. We all recognize the laudable intent behind this proposal is helping seniors. Accordingly, we applaud the government for bringing it forward. Indeed, the member for Essex has been a strong advocate on behalf of his constituents ensuring their issues and concerns are well represented in Parliament since his initial election in 2004.

Because of the member's hard work, he is able to spotlight this issue, surrounding the United States social security payments to Canadian residents, for parliamentarians. We have been able to discuss and debate it both on the floor of the House of Commons and at the Standing Committee on Finance.

A decision was made by the majority of members on the standing committee to not go forward with this proposal at the present time. However, by facilitating the debate on the matter, the member for Essex has raised the profile of the issues and concerns. Hopefully, some of the matters and concerns that we have had a chance to review in our debates will be considered as we go forward and in future debates.

This government stands for responsible leadership. We need to be prudent during these times of global economic uncertainty and we need to be responsible for determining fiscal policy and how best to manage the competing priorities of Canadians.

That is what budgets are all about and the integrity of the budget process is important to Canada. It allows us to ensure spending decisions and tax measures are thoroughly discussed, debated and considered in a thoughtful manner, where options can be weighed to determine how best to manage competing Canadian priorities, all of which are fighting for scarce resources.

The budget process enables the government to fully consider such factors and to balance priorities and undertake new fiscal commitments only to the extent that they are affordable. Accordingly, the House should return Bill C-305 to the House finance committee for more thorough discussion, debate and consideration, especially as we enter the period of prebudget consultations.

Therefore, I would like to move the following amendment. I move that the motion be amended by deleting all the words after the word “That” and substituting the following: The seventh report of the Standing Committee on Finance (recommendation not to proceed further with Bill C-305, An Act to amend the Income Tax Act (exemption from taxation of 50% of United States total security payments to Canadian residents)), presented on Wednesday, May 7, 2008 be not now concurred in but that it be recommended to the Standing Committee on Finance with instruction that it amend the same so as to recommend that the committee be authorized to consider Bill C-305 beyond the deadline set out in Standing Order 97.1.

Finance
Committees of the House
Routine Proceedings

June 17th, 2008 / 6:15 p.m.
See context

Conservative

The Acting Speaker Andrew Scheer

Pursuant to Standing Order 97.1(2), the motion to concur in the seventh report of the Standing Committee on Finance (recommendation not to proceed further with Bill C-305, An Act to amend the Income Tax Act (exemption from taxation of 50% of United States social security payments to Canadian residents)) presented on Wednesday, May 7, 2008, is deemed to be proposed.

Business of the House
Government Orders

May 30th, 2008 / 1:30 p.m.
See context

Conservative

The Acting Speaker Royal Galipeau

Before we go to orders of the day, I would like to inform the House that under the provisions of Standing Order 97.1(2) I am designating Tuesday, June 17, as the day fixed for the consideration of the motion to concur in the seventh report of the Standing Committee on Finance.

The report contains a recommendation to not proceed further with Bill C-305, An Act to amend the Income Tax Act (exemption from taxation of 50% of United States social security payments to Canadian residents).

One hour debate on the motion will be held immediately after the usual private members' business hour scheduled for that day, after which the House will proceed to the adjournment proceedings pursuant to Standing Order 38.

Finance
Committees of the House
Routine Proceedings

May 7th, 2008 / 3:20 p.m.
See context

Conservative

Rob Merrifield Yellowhead, AB

Mr. Speaker, I have the honour to present, in both official languages, the seventh report of the Standing Committee on Finance in relation to Bill C-305, An Act to amend the Income Tax Act (exemption from taxation of 50% of United States social security payments to Canadian residents).

May 6th, 2008 / 12:30 p.m.
See context

Conservative

The Chair Rob Merrifield

I call the meeting to order, seeing the clock at 12:30.

Pursuant to our order of reference of October 16, 2008, the committee will now proceed to a clause-by-clause study of Bill C-305, an act to amend the Income Tax Act.

Mr. Wallace has a motion he would like to deal with that's just been put on the table.

Go ahead.

April 30th, 2008 / 5:20 p.m.
See context

Conservative

The Chair Rob Merrifield

We'll now move on. I'm just going to make one notification. We're planning to go clause-by-clause on Bill C-305 on Monday. It shouldn't take very long. We'll take a quick look at it, and we have until Wednesday to report it back to the House. I believe it's Mr. Watson's private member's bill, just to let the committee know.

Finance
Committees of the House
Routine Proceedings

March 4th, 2008 / 10:10 a.m.
See context

Conservative

Rob Merrifield Yellowhead, AB

Mr. Speaker, pursuant to Standing Order 97.1, I have the honour to present, in both official languages, the fifth report of the Standing Committee on Finance, requesting an extension of 30 sitting days to study Bill C-305, An Act to amend the Income Tax Act.

March 3rd, 2008 / 4:15 p.m.
See context

Conservative

Mike Wallace Burlington, ON

I did some checking since our last meeting, and I would like to put on the floor again, and make sure it's on the floor, the 30-day extension for private member's bill C-305.

February 27th, 2008 / 3:40 p.m.
See context

Bloc

Robert Bouchard Chicoutimi—Le Fjord, QC

Thank you, Mr. Chairman.

Accompanying me today are Mr. Marc-André Roche and Mr. Alexandre Cliche. I wish to thank you for welcoming me today to discuss Bill C-207, a bill concerning tax credits and amending the Income Tax Act.

In concrete terms, the goal of this bill is to reverse the exodus of young graduates who are moving to large urban centres and to encourage them to begin their professional careers in the regions which would benefit from skilled labour.

During second reading of this bill, certain members of Parliament asked questions. I would like to take a few moments to address their concerns with respect to Bill C-207.

According to the Emploi-Québec economist, Mr. Clément Desbiens, all regional employment sectors will be increasingly affected over the years to come. In a document entitled “Employment Perspectives 2005-2009”, it was stated that in the Province of Quebec alone, there will be 251,000 positions to fill during this period. In my region of Saguenay—Lac-Saint-Jean, Emploi-Québec estimates that 18,000 new positions will have to be filled during the same period of 2005 to 2009.

In addition, some colleagues have pointed out that this bill should be accompanied by an overarching plan for regional development. I am in full agreement with these statements; however, Bill C-207 is simply a starting point which will allow our regions and regional companies to recruit and retain skilled workers.

In fact, a similar tax credit has proven to be successful for the Government of Quebec. This tax credit was implemented in 2003 and provides assistance to new graduates who are settling in regions that have been designated by the Government of Quebec. The number of young people benefiting from this tax credit has gone from 2,000 to 9,000 between 2003 to 2007. Obviously, this program has proven to be successful in Quebec.

In 2006, the program was launched at a cost of $30 million to the Government of Quebec. If the program were nationalized, this program would cost the federal government $90 million in 2006, which is a small investment if we want to encourage young people to migrate to the regions.

This bill, therefore, seeks to create a non-refundable tax credit. A young person must pay taxes prior to receiving a tax credit of a maximum of $8,000 for a given period.

I therefore ask the members of the Committee on Finance to help our regions support our young people. We must put a stop to the demographic hemorrhaging and the exodus of our young people to major urban centres. We must foster development of our manufacturing and processing industries, by opening the pool of skilled labour to our entrepreneurs.

In conclusion, I wish to add that young graduates in remote areas are fewer and far between. The regions are suffering as a result of the exodus of young people and specialized workers. The acceleration of the aging of the population in our regions is just one of the problems that is the result of this exodus. When a region loses its young people who have special training in specific sectors, a region's vitality diminishes. The exodus of young people undermines a region's ability to innovate. Indeed, young people with specialized training are better educated than those who stay behind.

That concludes my presentation. I am ready to answer your questions. The two people accompanying me will also assist me.

February 27th, 2008 / 3:40 p.m.
See context

Liberal

Massimo Pacetti Saint-Léonard—Saint-Michel, QC

Mr. Chairman, I move that Bill C-305 not be adopted by the committee.

February 27th, 2008 / 3:35 p.m.
See context

Conservative

The Chair Rob Merrifield

We have one other motion we would like to present.

If you two have anything further to discuss you need to do it outside, but if you're at the table I wish you'd pay attention to the business of the committee.

This is a motion with regard to a private member's bill. I talked to the mover, and he wanted to examine whether he can bring forward another amendment, one he didn't want us to look at at this time. We have the option to ask for a 30-day extension. So it's a 30-day extension on the private member's bill, Bill C-305.

We have the motion. Mike moves it.

Now we'll open debate on that motion with Mr. Pacetti.

Business of the House
Opening of the Second Session of the 39th Parliament

October 16th, 2007 / 6:45 p.m.
See context

Liberal

The Speaker Peter Milliken

Order. It appears we have a few moments and to save time later I will inform members of something they are just aching to hear about now.

As hon. members know, our Standing Orders provide for the continuance of private members' business from session to session within a Parliament.

The list for the consideration of private members' business established on April 7, 2006, continues from the last session to this session notwithstanding prorogation.

As such, all items of private members' business originating in the House of Commons that were listed on the order paper during the previous session are reinstated to the order paper and shall be deemed to have been considered and approved at all stages completed at the time of prorogation of the first session.

Generally speaking, in practical terms, this also means that those items on the Order of Precedence remain on the Order of Precedence or, as the case may be, are referred to committee or sent to the Senate.

However, there is one item that cannot be left on the Order of Precedence. Pursuant to Standing Order 87(1), Parliamentary secretaries who are ineligible by virtue of their office to be put on the Order of Precedence will be dropped to the bottom of the list for the consideration of private members' business, where they will remain as long as they hold those offices.

Consequently, the item in the name of the member for Glengarry—Prescott—Russell, Motion M-302, is withdrawn from the Order of Precedence.

With regard to the remaining items on the order of precedence let me remind the House of the specifics since the House is scheduled to resume its daily private members' business hour starting tomorrow.

At prorogation, there were seven private members' bills originating in the House of Commons adopted at second reading and referred to committee. Therefore, pursuant to Standing Order 86.1:

Bill C-207, An Act to amend the Income Tax Act (tax credit for new graduates working in designated regions), is deemed referred to the Standing Committee on Finance;

Bill C-265, An Act to amend the Employment Insurance Act (qualification for and entitlement to benefits), is deemed referred to the Standing Committee on Human Resources, Social Development and the Status of Persons with Disabilities;

Bill C-305, An Act to amend the Income Tax Act (exemption from taxation of 50% of United States social security payments to Canadian residents), is deemed referred to the Standing Committee on Finance;

Bill C-327, An Act to amend the Broadcasting Act (reduction of violence in television broadcasts), is deemed referred to the Standing Committee on Canadian Heritage;

Bill C-343, An Act to amend the Criminal Code (motor vehicle theft), is deemed referred to the Standing Committee on Justice and Human Rights;

Bill C-377, An Act to ensure Canada assumes its responsibilities in preventing dangerous climate change, is deemed referred to the Standing Committee on Environment and Sustainable Development; and

Bill C-428, An Act to amend the Controlled Drugs and Substances Act (methamphetamine), is deemed referred to the Standing Committee on Justice and Human Rights.

(Bills deemed introduced, read the first time, read the second time and referred to a committee)

Furthermore, four Private Members' bills originating in the House of Commons had been read the third time and passed. Therefore, pursuant to Standing Order 86.1, the following bills are deemed adopted at all stages and passed by the House:

Bill C-280, An Act to Amend the Immigration and Refugee Protection Act (coming into force of sections 110, 111 and 171);

Bill C-292, An Act to implement the Kelowna Accord;

Bill C-293, An Act respecting the provision of official development assistance abroad; and

Bill C-299, An Act to amend the Criminal Code (identification information obtained by fraud or false pretence).

Accordingly, a message will be sent to inform the Senate that this House has adopted these four bills.

Hon. members will find at their desks an explanatory note recapitulating these remarks. The Table officers are available to answer any further questions that hon. members may have.

I trust that these measures will assist the House in understanding how private members' business will be conducted in this second session of the 39th Parliament.

(Bills deemed adopted at all stages and passed by the House)

March 20th, 2007 / 1 p.m.
See context

Tax Policy Officer, Corporate and International Tax, Tax Legislation Division, Tax Policy Branch, Department of Finance

Andrew Auerbach

We haven't done a cost on a per-taxpayer basis, but we estimate that the cost overall would be approximately $37 million. That does not include an additional $29 million in entitlement to the guaranteed income supplement that would stem from Bill C-305. And there's an additional $20 million cost to the provinces, assuming Quebec follows suit.