Bill C-48 (Historical)

Technical Tax Amendments Act, 2012

An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation

Part 1 of this enactment implements, in accordance with proposals announced in the March 4, 2010 Budget and released for comment on August 27, 2010, amendments to the provisions of the Income Tax Act governing the taxation of non-resident trusts and their beneficiaries and of Canadian taxpayers who hold interests in offshore investment fund property.
Parts 2 and 3 implement various technical amendments in respect of the Income Tax Act and the Income Tax Regulations relating to the taxation of Canadian multinational corporations with foreign affiliates. The amendments in Part 2 are based on draft proposals released on December 18, 2009. Among other things, Part 2 includes the amendments to the foreign affiliate surplus rules in the Income Tax Regulations that are consequential to the foreign affiliate changes to the Income Tax Act announced in the March 19, 2007 Budget. The amendments in Part 3 are based on draft proposals released on August 19, 2011. Among other things, Part 3 includes revisions to the measures proposed in a package of draft legislation released on February 27, 2004 dealing primarily with reorganizations of, and distributions from, foreign affiliates.
Part 4 deals with provisions of the Income Tax Act that are not amended in Parts 1, 2, 3 or 5 in which the following private law concepts are used: right and interest, real and personal property, life estate and remainder interest, tangible and intangible property and joint and several liability. It enacts amendments, released for comments on July 16, 2010, to ensure that those provisions are bijural, in other words, that they reflect both the common law and the civil law in both linguistic versions. Similar amendments are made in Parts 1, 2, 3 and 5 to ensure that any provision of the Act enacted or amended by those Parts are also bijural.
Part 5 implements a number of income tax measures proposed in the March 4, 2010 Budget and released for comment on May 7, 2010 and August 27, 2010. Most notably, it enacts amendments
(a) relating to specified leasing property;
(b) to provide that conversions of specified investment flow-through (SIFT) trusts and partnerships into corporations are subject to the same loss utilization restrictions as are transactions between corporations;
(c) to prevent foreign tax credit generators; and
(d) implementing a regime for information reporting of tax avoidance transactions.
Part 5 also implements certain income tax measures that were previously announced. Most notably, it enacts amendments announced
(a) on January 27, 2009, relating to the Apprenticeship Completion Grant;
(b) on May 3, 2010, to clarify that computers continue to be eligible for the Atlantic investment tax credit;
(c) on July 16, 2010, relating to technical changes to the Income Tax Act which include amendments relating to the income tax treatment of restrictive covenants;
(d) on August 27, 2010, relating to the introduction of the Fairness for the Self-Employed Act;
(e) on November 5, 2010 and October 31, 2011, relating to technical changes to the Income Tax Act;
(f) on December 16, 2010, relating to changes to the income tax rules concerning real estate investment trusts; and
(g) on March 16, 2011, relating to the deductibility of contingent amounts, withholding tax applicable to certain interest payments made to non-residents, and certain life insurance corporation reserves.
Finally, Part 5 implements certain further technical income tax measures. Most notably, it enacts amendments relating to
(a) labour-sponsored venture capital corporations;
(b) the allocation of income of airline corporations; and
(c) the tax treatment of shares owned by short-term residents.
Part 6 amends the Excise Tax Act to implement technical and housekeeping amendments that include relieving the goods and services tax and the harmonized sales tax on the administrative service of collecting and distributing the levy on blank media imposed under the Copyright Act announced on October 31, 2011.
Part 7 amends the Federal-Provincial Fiscal Arrangements Act to clarify, for greater certainty, the authority of the Minister of Finance and of the Minister of National Revenue to amend administration agreements if the change in question is explicitly contemplated by the language of the agreement and to confirm any amendments that may have been made to those agreements. Part 7 also amends the Federal-Provincial Fiscal Arrangements Act and the First Nations Goods and Services Tax Act to enable the First Nations goods and services tax, imposed under a tax administration agreement between the federal government and an Aboriginal government, to be administered through a provincial administration system, if the province also administers the federal goods and services tax.
Part 8 contains coordinating amendments in respect of those provisions of the Income Tax Act that are amended by this Act and also by the Jobs and Growth Act, 2012 or that need coordination with the Pooled Registered Pension Plans Act.

Technical Tax Amendments Act, 2012

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Mr. Speaker, I would like to thank my colleague for her question.

Yes, in fact, for us in the NDP, the issue of tax evasion and tax havens is extremely important. This is why we were the ones who moved the motion to ask the Standing Committee on Finance to consider the matter. The NDP would also like to thank the other parties for agreeing to look into the whole issue of tax evasion and tax havens.

This is really all about fairness. It is about saving money. Corporations that use tax havens and avoid paying taxes should pay their fair share. This is completely normal and acceptable. However, in concrete terms, the government is not taking the necessary measures to address this scourge. This is why it took an NDP motion to make progress on the issue.

Let us hope that once the Standing Committee on Finance has completed its study, the government will finally take action and force corporations to abide by every aspect of tax law.

[Joy Smith, Conservative, Kildonan—St. Paul, MB]

Mr. Speaker, I have been listening very carefully, but there is something I would like to hear a clear answer to.

In the House we often hear about the NDP's $21-billion carbon tax scheme. It has been in the NDP platform. Also, on September 14, in a Financial Post interview of the NDP caucus chair, he expressed his frustration that our government has rejected a carbon tax policy, which we do. We do not believe it would do anything to help our country.

Would the member please clarify this $21-billion carbon tax scheme, because it was in the election platform of the NDP.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Mr. Speaker, I really do not know what that has to do with C-48, the issue on which I was speaking. This is an important bill. However, I would like to respond to my colleague’s question.

During the election campaign, we put forward the same idea as the Conservatives did in 2008, regarding what is called a carbon exchange. My colleague does not understand the difference. I would love to explain it but unfortunately I do not have the time.

She should look at the her party’s election platform in 2008. There is a difference between a carbon tax and a carbon exchange. Perhaps my colleague should read about it and find out more about the issue. I would happily provide her with information about it.

[The Acting Speaker, Conservative, Bruce Stanton]

Before resuming debate, I would like to inform hon. members that there have been more than five hours of debate on this motion. Consequently, the maximum time allocated for all subsequent interventions shall be ten minutes for speeches and five minutes for questions and comments.

Resuming debate. The hon. member for Dartmouth—Cole Harbour.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Mr. Speaker, I am pleased to have the opportunity to weigh in, for a few moments anyway, on Bill C-48. I commend the member for Brossard—La Prairie, not only for his speech but also for the incredibly valuable work he performed as a member of the Standing Committee on Finance. Not to put too fine a point on it, he is a brilliant deputé and made an important contribution. I know that he will make a similar type of contribution on the justice committee, where he is now focusing his attention.

We are dealing with a bill that is nearly a thousand pages long. As others have said, it deals with a huge number of needed amendments that have been outstanding for nearly 15 years. They were announced but were not enacted in legislation, creating great confusion and problems for tax practitioners and individual Canadians.

The point made by one of the groups we spoke to, and that I am sure he heard from, Blakes, was that as a result of allowing this backlog of amendments to build up, the government has increased the complexity of the tax system. That flies in the face of everything the government has claimed it stands for as it relates to things such as reducing red tape and simplifying the tax system to make it easily accessible and understood by Canadians. That is another example of how the government tells Canadians one thing and goes ahead and does something else.

We heard from other members of this caucus that the Auditor General, in 2009, reported to the House that there were upwards of 400 tax amendments that had been proclaimed and were being carried forward but they had not been codified and enacted in legislation. That was creating a problem, a sense of confusion and an added level of complexity. He said it was simply bad practice and was not the way to run something as technical and important as the tax system under the finance acts.

Bill C-48, I understand, deals with about half of those. It does not deal with the additional ones that have been announced by the government since 2009. Therefore, even though we are dealing with a piece of legislation that is 1000 pages long and is extraordinarily complex, we will not have time to go through it in the kind of detail with which we probably should go through it. The government is still not dealing with all the changes in the tax system that have been enacted already but that have yet to be codified.

That is why the experts, such as the Certified General Accountants-Canada and the Auditor General, have said it is so important. We have comments from Thomas McDonnell, from Thorsteinssons LLP tax lawyers, and others who have said it is important to make sure that, for the tax changes that are proposed, announced and put in place by the Minister of Finance or the government, whether at budget time or at other times during the year, the government should be introducing legislation annually in the House to make sure that happens.

In 2007 the Conservatives introduced Bill C-10, which was an attempt to try to catch up to the backlog. Members will know that in 2008, they pulled the plug, because they felt that they might be able to get a majority government at the time. Even though they were flying in the face of fixed-term legislation that the Prime Minister himself lauded, they went to the polls in the fall of 2008. As a result, Bill C-10 died on the order paper.

The point is that they should not be waiting years to take care of business that should be looked after on an annual basis. It would give legislators here and experts across the country an opportunity to take a small chunk of legislation and amendments and to have a full discussion about their implications. That would be a sign of good governance.

If Parliament were up to date on those kinds of legislative changes, and the government of the day decided to prorogue the House or call an election or whatever, we would only be dealing with one year of changes next time around and would not be participating in a buildup of a backlog.

As everyone who knows about this system has said, it is extraordinarily complex. Allowing this backlog to build and bringing in amendments this way to an extraordinarily technical piece of legislation of almost 1,000 pages does not provide the clarity and opportunity for simplifying the tax system that we should be looking for. It is in the interest of all Canadians.

Since my time is winding down, I will make three points. I have said already that the bill is extremely technical. New Democrats think it does not need to be so technical.

In respect of good governance and legislative management, it should be done on an annual basis. Let me be clear that we on this side believe in cracking down on both tax avoidance and tax evasion while ensuring the integrity of our tax system. We support these changes, but we want to ensure that they happen on a more manageable basis.

This is an omnibus bill of sorts, but as opposed to Bills C-45 and C-38, it does not bring 60 pieces of legislation together with nothing that ties them together. It deals with changes to closely related pieces of legislation.

Finally, the massive size of this bill demonstrates that there is still work to be done in getting technical changes legislated in a timely fashion. As I have said and will reiterate, failing to do so hurts the business community. It makes it difficult for proper evaluation by Parliament. Ultimately, it impacts the economy of this country and individual Canadians who are trying to work with an increasingly complex tax system as they go about their business and their daily lives making sure they provide for themselves and their families and build stronger communities and a stronger country.

That is our goal. Those are the measures we would like to see the government move forward with.

We will be supporting the legislation. I urge the government to ensure that this is done on an annual basis from here on in.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Mr. Speaker, I thank my colleague for his speech.

He did a good job of explaining why these measures should have been in place many years ago. It is clear that, over the years, several experts, including the auditor general of Canada, have raised the issue of considerable delays.

As the member clearly explained, we are now dealing with an extremely large and complex document, and conducting a thorough review of it is no easy feat.

Nevertheless, I would like my colleague to talk about the important provisions of Bill C-48 that the NDP supports.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Mr. Speaker, let me say that the question of tax avoidance is an issue we take very seriously. It is something our colleague from Brossard—La Prairie focused on as a member of the finance committee. I know that our members of the finance committee will continue that initiative.

There are provisions in the bill that deal with tax avoidance, and we support them. Let us be clear. We want to close the loopholes. We want to ensure that people pay their fair share, that companies that are obligated to pay taxes to the Government of Canada in fact do so.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

Mr. Speaker, I did not rise immediately after the member's speech, because I actually had to think about exactly how I would phrase this with dignity.

I listened to the member's speech of balderdash for the entire time. He said very little about the bill but went back to 2008. It was kind of a cathartic exercise about how the election happened. Of course, he forgot to mention the fact that it was a minority government and that the opposition, actually, was in charge of having the government fall and having us go to an election. He also failed to mention that after the election, we actually were in government again.

At the end, he mentioned three issues and said his party would support the bill. He talked about how inefficient we were in getting these measures through and about wanting to do it annually. If that is the case, and they want to support it and make it happen, would they be prepared to go ahead, finish their speakers' list today, and move the bill into committee? Let us get it done. Let us work together as the loving partners we are so that we can get the--

[The Acting Speaker, Conservative, Bruce Stanton]

Order, please.

The hon. member for Dartmouth—Cole Harbour.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Mr. Speaker, that is an interesting intervention, with the member trying, again, to rewrite history. When the election was called in 2008, it was a decision made by the Conservative government, by the Prime Minister. It was not a decision forced by the opposition.

However, the opposition did force the government to bring in a stimulus package, a stimulus plan, to deal with the economic troubles facing this country. In fact, the opposition put so much fear into the government that it prorogued the House. Let us not forget that the Conservative government prorogued the House. It ran in fear from this place, because it was afraid that it would be defeated democratically by this Parliament.

In answer to that question, let me say that we agreed that we would support this legislation. However, we are not going to give up our right to stand up and represent our constituents, my constituents from Dartmouth—Cole Harbour, just because members opposite are in a hurry.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Mr. Speaker, this is the time of year when Canadians are going to have to start thinking about completing their income tax returns. It is not something Canadians necessarily enjoy doing, but whether we like it or not, it is a tradition. Sharing wealth is also one of Canada's traditions. Doing so enables us to have social programs so that when people fall ill, they can seek the help of a doctor, go to the hospital, and receive universal health care that is both free and accessible.

Our taxes also provide us with programs such as employment insurance. This program ensures that if a person is unfortunate enough to lose his or her job or get laid off during a plant closure—as we have seen occur over recent years—the family will still have an income. Single people will still have a roof over their heads and be able to purchase essential items, such as groceries.

Our taxes and laws also make it possible to have shared programs with the provinces for infrastructure and public transport. All of this contributes to the common good.

I am very pleased, therefore, to rise to speak about C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.

This bill is large and contains over 1000 pages. I have often risen in this House to denounce large bills, including the omnibus bills that the government has introduced as so-called budget implementation bills. The NDP has taken a strong stand against this type of legislation because many of the measures are not necessarily related to the budget. They contain any number of amendments to various pieces of legislation, and there is not sufficient time to review the measures in committee. In any event, we have been denied the opportunity to study these omnibus bills in specific committees. We have voiced our opposition to this and we shall continue to do so as much as possible in the House.

The difference in this case is that the bill amends acts that are similar and that deal with related issues. The reason it is so bulky is that over the years—in fact, since 2001—previous governments dragged their feet. They did not follow the sound advice of the Auditor General to correct things. They should have acted, they should have amended acts, but they waited and let the years go by. That is why we now have such a bulky bill. Such changes should be done on an ad hoc basis, but we did not do our homework. We did not do what should have been done.

The NDP supports Bill C-48 because it is important that this legislation continues to focus on compliance to guarantee the integrity of the tax system.

We say that tax loopholes must be eliminated in a timely fashion. This bill is very important to protect the integrity of our tax system and to have all the winning conditions.

I want to underline three points. We must fight tax avoidance and tax evasion while preserving the integrity of our tax system. This bill is a step in the right direction.

We support the changes proposed in this bill, including those that seek to reduce tax avoidance.

Again, this is a bulky bill. I explained why earlier. I believe we can do better, and Canadians deserve better. Over the years, it will be important to conduct regular and ad hoc reviews of the tax system.

Unlike the previous omnibus bill that brought major changes to all sorts of acts, this legislation proposes technical amendments to a number of acts that are closely related. We will have to ensure that ad hoc reviews are conducted.

In 2009, the Auditor General of Canada was concerned about the fact that at least 400 technical amendments had not been enacted through legislation.

Bill C-48 enacts more than 200 of these changes. There is still work to be done. It can be done, but we need to ensure that our tax system is fair and that all of the loopholes have been eliminated.

The bill has a number of parts. I would like to speak specifically about part 5 of the bill, which would implement various technical amendments, some from as far back as 2002.

I am not going to go into the history of these changes, but part 5 includes anti-avoidance measures for specified leasing property, measures to ensure that income trusts and partnerships are subject to the same loss utilization restrictions as transactions between corporations, measures to limit the use of foreign tax credit generators for the purpose of avoiding foreign tax, and measures to clarify rules on taxable Canadian property for non-residents and migrants. It also provides an information regime for tax avoidance.

Any tax avoidance transaction, that is, any transaction that is intended to obtain a tax advantage, must now be reported, even if it is not abusive. Additional reporting will be required in cases where the transaction raises red flags about its legitimacy.

According to experts, the majority of these changes were already in place and should have been even earlier. We hope that this bill will provide effective measures for fighting tax evasion. A review mechanism should also be put in place so that we do not find ourselves with another bill of this size in 10 years.

Canadians will appreciate it and it will make our work as parliamentarians easier.

[Sadia Groguhé, NDP, Saint-Lambert, QC]

Mr. Speaker, I would like to begin by congratulating my hon. colleague on her speech.

Several members, including the member who just spoke, have mentioned the huge size of the bill. A great deal of legislative work remains to be done on this bill.

What does the member think of the repercussions this will have on both the assessment work and on the business community?

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Mr. Speaker, definitely, the fact that this bill is so huge implies a certain complexity. We hope that this complexity will actually lead to greater clarity, and that all taxpayers will find the system easier to understand. What we really want to emphasize here is the importance of establishing clear rules and preventing tax evasion.

[Colin Carrie, Conservative, Parliamentary Secretary to the Minister of Health]

Mr. Speaker, I have listened to the NDP speeches throughout the morning.

I want to thank NDP for supporting our government in trying to close these loopholes. However, I have not received a straight answer from the NDP as far as what it feels overall on taxes for Canadians and where it stands.

As members know, we have decreased the GST from 7% to 6% to 5%, and the NDP voted against that. We lowered taxes 140 times, and the NDP voted against it. We decreased taxes for families, $3,000 per year for a family of four, and the NDP voted against that.

The NDP has $65 billion of unfunded promises it made to the Canadian people. We have heard about the $21 billion carbon tax that the NDP wants, but that is still a $40 billion discrepancy.

Therefore, could the NDP let Canadians know where it is going to get that money? If the NDP really cares about Canadian families, when is it going to put its money where its mouth is and let them know where it is going to get the money?

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Mr. Speaker, I wish to thank my hon. colleague for the question.

In fact, what I noted and what I would like to point out about this bill is the fact that it closes the loopholes in the current taxation system that people and corporations were using to avoid paying income taxes. Those individuals and corporations will now have to pay their share and comply with the Income Tax Act. I think this bill is a good way to settle these technical issues so that the Government of Canada can collect the taxes it is owed.