Bill C-59

Fall Economic Statement Implementation Act, 2023

An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023

Part 1 implements certain measures in respect of the Income Tax Act and the Income Tax Regulations by
(a) limiting the deductibility of net interest and financing expenses by certain corporations and trusts, consistent with certain Organisation for Economic Co-operation and Development and the Group of Twenty Base Erosion and Profit Shifting project recommendations;
(b) implementing hybrid mismatch rules consistent with the Organisation for Economic Co-operation and Development and the Group of Twenty Base Erosion and Profit Shifting project recommendations regarding cross-border tax avoidance structures that exploit differences in the income tax laws of two or more countries to produce “deduction/non-inclusion mismatches”;
(c) allowing expenditures incurred in the exploration and development of all lithium to qualify as Canadian exploration expenses and Canadian development expenses;
(d) ensuring that only genuine intergenerational business transfers are excluded from the anti-surplus stripping rule in section 84.1 of the Income Tax Act ;
(e) denying the dividend received deduction for dividends received by Canadian financial institutions on certain shares that are held as mark-to-market property;
(f) increasing the rate of the rural supplement for Climate Action Incentive payments (CAIP) from 10% to 20% for the 2023 and subsequent taxation years as well as referencing the 2016 census data for the purposes of the CAIP rural supplement eligibility for the 2023 and 2024 taxation years;
(g) providing a refundable investment tax credit to qualifying businesses for eligible carbon capture, utilization and storage equipment;
(h) providing a refundable investment tax credit to qualifying businesses for eligible clean technology equipment;
(i) introducing, under certain circumstances, labour requirements in relation to the new refundable investment tax credits for eligible carbon capture, utilization and storage equipment as well as eligible clean technology equipment;
(j) removing the requirement that credit unions derive no more than 10% of their revenue from sources other than certain specified sources;
(k) permitting a qualifying family member to acquire rights as successor of a holder of a Registered Disability Savings Plan following the death of that plan’s last remaining holder who was also a qualifying family member;
(l) implementing consequential changes of a technical nature to facilitate the operation of the existing rules for First Home Savings Accounts;
(m) introducing a tax of 2% on the net value of equity repurchases by certain Canadian corporations, trusts and partnerships whose equity is listed on a designated stock exchange;
(n) exempting certain fees from the refundable tax applicable to contributions under retirement compensation arrangements;
(o) introducing a technical amendment to the provision that authorizes the sharing of taxpayer information for the purposes of the Canadian Dental Care Plan;
(p) implementing a number of amendments to the general anti-avoidance rule (GAAR) as well as introducing a new penalty applicable to transactions subject to the GAAR and extending the normal reassessment period for the GAAR by three years in certain circumstances;
(q) facilitating the creation of employee ownership trusts;
(r) introducing specific anti-avoidance rules in relation to corporations referred to as substantive CCPCs; and
(s) extending the phase-out by three years, and expanding the eligible activities, in relation to the reduced tax rates for certain zero-emission technology manufacturers.
It also makes related and consequential amendments to the Excise Tax Act and the Excise Act, 2001 .
Part 2 enacts the Digital Services Tax Act and its regulations. That Act provides for the implementation of an annual tax of 3% on certain types of digital services revenue earned by businesses that meet certain revenue thresholds. It sets out rules for the purposes of establishing liability for the tax and also sets out applicable reporting and filing requirements. To promote compliance with its provisions, that Act includes modern administration and enforcement provisions generally aligned with those found in other taxation statutes. Finally, this Part also makes related and consequential amendments to other texts to ensure proper implementation of the tax and cohesive and efficient administration by the Canada Revenue Agency.
Part 3 implements certain Goods and Services Tax/Harmonized Sales Tax (GST/HST) measures by
(a) ensuring that an interest in a corporation that does not have its capital divided into shares is treated as a financial instrument for GST/HST purposes;
(b) ensuring that interest and dividend income from a closely related partnership is not included in the determination of whether a person is a de minimis financial institution for GST/HST purposes;
(c) ensuring that an election related to supplies made within a closely related group of persons that includes a financial institution may not be revoked on a retroactive basis without the permission of the Minister of National Revenue;
(d) making technical amendments to an election that allows electing members of a closely related group to treat certain supplies made between them as having been made for nil consideration;
(e) ensuring that certain supplies between the members of a closely related group are not inadvertently taxed under the imported taxable supply rules that apply to financial institutions;
(f) raising the income threshold for the requirement to file an information return by certain financial institutions;
(g) allowing up to seven years to assess the net tax adjustments owing by certain financial institutions in respect of the imported taxable supply rules;
(h) expanding the GST/HST exemption for services rendered to individuals by certain health care practitioners to include professional services rendered by psychotherapists and counselling therapists;
(i) providing relief in relation to the GST/HST treatment of payment card clearing services;
(j) allowing the joint venture election to be made in respect of the operation of a pipeline, rail terminal or truck terminal that is used for the transportation of oil, natural gas or related products;
(k) raising the input tax credit (ITC) documentation thresholds from $30 to $100 and from $150 to $500 and allowing billing agents to be treated as intermediaries for the purposes of the ITC information rules; and
(l) extending the 100% GST rebate in respect of new purpose-built rental housing to certain cooperative housing corporations.
It also implements an excise tax measure by creating a joint election mechanism to specify who is eligible to claim a rebate of excise tax for goods purchased by provinces for their own use.
Part 4 implements certain excise measures by
(a) allowing vaping product licensees to import packaged vaping products for stamping by the licensee and entry into the Canadian duty-paid market as of January 1, 2024;
(b) permitting all cannabis licensees to elect to remit excise duties on a quarterly rather than a monthly basis, starting from the quarter that began on April 1, 2023;
(c) amending the marking requirements for vaping products to ensure that the volume of the vaping substance is marked on the package;
(d) requiring that a person importing vaping products must be at least 18 years old; and
(e) introducing administrative penalties for certain infractions related to the vaping taxation framework.
Part 5 enacts and amends several Acts in order to implement various measures.
Subdivision A of Division 1 of Part 5 amends Subdivision A of Division 16 of Part 6 of the Budget Implementation Act, 2018, No. 1 to clarify the scope of certain non-financial activities in which federal ‚financial institutions may engage and to remove certain discrepancies between the English and French versions of that Act.
Subdivision B of Division 1 of Part 5 amends the Trust and Loan Companies Act , the Bank Act and the Insurance Companies Act to, among other things, permit federal financial institutions governed by those Acts to hold certain meetings by virtual means without having to obtain a court order and to permit voting during those meetings by virtual means.
Division 2 of Part 5 amends the Canada Labour Code to, among other things, provide a leave of absence of three days in the event of a pregnancy loss and modify certain provisions related to bereavement leave.
Division 3 of Part 5 enacts the Canada Water Agency Act . That Act establishes the Canada Water Agency, whose role is to assist the Minister of the Environment in exercising or performing that Minister’s powers, duties and functions in relation to fresh water. The Division also makes consequential amendments to other Acts.
Division 4 of Part 5 amends the Tobacco and Vaping Products Act to, among other things,
(a) authorize the making of regulations respecting fees or charges to be paid by tobacco and vaping product manufacturers for the purpose of recovering the costs incurred by His Majesty in right of Canada in relation to the carrying out of the purpose of that Act;
(b) provide for related administration and enforcement measures; and
(c) require information relating to the fees or charges to be made available to the public.
Division 5 of Part 5 amends the Canadian Payments Act to, among other things, provide that additional persons are entitled to be members of the Canadian Payments Association and clarify the composition of that Association’s Stakeholder Advisory Council.
Division 6 of Part 5 amends the Competition Act to, among other things,
(a) modernize the merger review regime, including by modifying certain notification rules, clarifying that Act’s application to labour markets, allowing the Competition Tribunal to consider the effect of changes in market share and the likelihood of coordination between competitors following a merger, extending the limitation period for mergers that were not the subject of a notification to the Commissioner of Competition and placing a temporary restraint on the completion of certain mergers until the Tribunal has disposed of any application for an interim order;
(b) improve the effectiveness of the provisions that address anti-competitive conduct, including by allowing the Commissioner to review the effects of past agreements and arrangements, ensuring that an order related to a refusal to deal may address a refusal to supply a means of diagnosis or repair and ensuring that representations of a product’s benefits for protecting or restoring the environment must be supported by adequate and proper tests and that representations of a business or business activity for protecting or restoring the environment must be supported by adequate and proper substantiation;
(c) strengthen the enforcement framework, including by creating new remedial orders, such as administrative monetary penalties, with respect to those collaborations that harm competition, by creating a civilly enforceable procedure to address non-compliance with certain provisions of that Act and by broadening the classes of persons who may bring private cases before the Tribunal and providing for the availability of monetary payments as a remedy in those cases; and
(d) provide for new procedures, such as the certification of agreements or arrangements related to protecting the environment and a remedial process for reprisal actions.
The Division also amends the Competition Tribunal Act to prevent the Competition Tribunal from awarding costs against His Majesty in right of Canada, except in specified circumstances.
Finally, the Division makes a consequential amendment to one other Act.
Division 7 of Part 5 amends the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act to exclude from their application prescribed public post-secondary educational institutions.
Subdivision A of Division 8 of Part 5 amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to, among other things,
(a) provide that, if a person or entity referred to in section 5 of that Act has reasonable grounds to suspect possible sanctions evasion, the relevant information is reported to the Financial Transactions and Reports Analysis Centre of Canada;
(b) add reporting requirements for persons and entities providing certain services in respect of private automatic banking machines;
(c) require declarations respecting money laundering, the financing of terrorist activities and sanctions evasion to be made in relation to the importation and exportation of goods; and
(d) authorize the Financial Transactions and Reports Analysis Centre of Canada to disclose designated information to the Department of the Environment and the Department of Fisheries and Oceans, subject to certain conditions.
It also amends the Budget Implementation Act, 2023, No. 1 in relation to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and makes consequential amendments to other Acts and a regulation.
Subdivision B of Division 8 of Part 5 amends the Criminal Code to, among other things,
(a) in certain circumstances, provide that a court may infer the knowledge or belief or recklessness required in relation to the offence of laundering proceeds of crime and specify that it is not necessary for the prosecutor to prove that the accused knew, believed they knew or was reckless as to the specific nature of the designated offence;
(b) remove, in the context of the special warrants and restraint order in relation to proceeds of crime, the requirement for the Attorney General to give an undertaking, as well as permit a judge to attach conditions to a special warrant for search and seizure of property that is proceeds of crime; and
(c) modify certain provisions relating to the production order for financial data to include elements specific to accounts associated with digital assets.
It also makes consequential amendments to the Seized Property Management Act and the Forfeited Property Sharing Regulations .
Division 9 of Part 5 retroactively amends section 42 of the Federal-Provincial Fiscal Arrangements Act to specify the payments about which information must be published on a Government of Canada website, as well as the information that must be published.
Division 10 of Part 5 amends the Public Sector Pension Investment Board Act to increase the number of directors in the Public Sector Pension Investment Board, as well as to provide for consultation with the portion of the National Joint Council of the Public Service of Canada that represents employees when certain candidates are included on the list for proposed appointment as directors.
Division 11 of Part 5 enacts the Department of Housing, Infrastructure and Communities Act , which establishes the Department of Housing, Infrastructure and Communities, confers on the Minister of Infrastructure and Communities various responsibilities relating to public infrastructure and confers on the Minister of Housing various responsibilities relating to housing and the reduction and prevention of homelessness. The Division also makes consequential amendments to other Acts and repeals the Canada Strategic Infrastructure Fund Act .
Division 12 of Part 5 amends the Employment Insurance Act to, among other things, create a benefit of 15 weeks for claimants who are carrying out responsibilities related to
(a) the placement with the claimant of one or more children for the purpose of adoption; or
(b) the arrival of one or more new-born children of the claimant into the claimant’s care, in the case where the person who will be giving or gave birth to the child or children is not, or is not intended to be, a parent of the child or children.
The Division also amends the Canada Labour Code to create a leave of absence of up to 16 weeks for an employee to carry out such responsibilities.

Fall Economic Statement Implementation Act, 2023

[Sean Casey, Liberal, Charlottetown, PE]

Mr. Speaker, my colleague is right. Things are really very difficult here in the House. There is not a lot of collaboration. In the last parliamentary period, a lot of legislative acrobatics went on to delay the progress of any bill introduced by the government.

I look forward to seeing this bill pass. I am sure it will benefit my constituents and Canadians as a whole. However, the pace of this whole process depends on all of the members here. The lack of co-operation is real, and sometimes I think it does not necessarily serve the best interests of Canadians.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Mr. Speaker, in his comments, the member mentioned just how long it has been taking for the Liberal government to take action on employment insurance reform. Recently, there was a social services tribunal ruling that says that denying women access to their regular employment insurance benefits for having taken employment insurance maternity leave is a case of clear gender discrimination within the employment insurance system. Would the member agree that this is something that should also be fixed on an expedited basis?

[Sean Casey, Liberal, Charlottetown, PE]

Mr. Speaker, one of the reasons I am repeatedly told as to why the zoning problem in Prince Edward Island has not been fixed is that the government is intent on a major overhaul of the entire EI system. That, for me, is frustrating, but that would give the chance to solve my problem and the problem identified by the hon. member.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Mr. Speaker, the federal government and the Prime Minister has been trying to work with municipalities. We have had the Minister of Housing going across the entire country, talking to mayors and to councils to work out deals on how the federal government can support building housing throughout our country and yet we see the Leader of the Opposition trying to bully mayors, calling them incompetent and subjecting them to ridicule through his platforms at every opportunity he gets. Which approach does the member think is better and more constructive at getting houses built across the country in a way that will benefit Canadians?

[Sean Casey, Liberal, Charlottetown, PE]

Mr. Speaker, this confrontational approach has no place here. It has no place anywhere. It certainly has no place in intergovernmental relations.

The model that was used by the Minister of Housing, Infrastructure and Communities to urge Charlottetown along to get on board with the housing accelerator fund is one that is going to bear fruit, and it is one that displays a level of respect that is merited among public leaders at all levels.

[Melissa Lantsman, Conservative, Thornhill, ON]

Mr. Speaker, I am going to take a moment off the top to ensure the memory of my father is forever etched into the record of this place. Over the holidays, my brother and I, and our families, suddenly lost our father, Michael Lantsman, whose sacrifices were the sacrifices of heroes. We know that he could not wait to see the love of his life and the centre of our universe, whom we lost three years ago, my mother, Ora Lantsman, in the next world.

Together, I think they are reunited knowing that they built a life for us, which has given me the opportunity to ensure that Canadians will know their selflessness, their sacrifices and their hardship as I will continue to be guided by the values they imparted and to tell their story, as I have in the House. Their story is the story of so many Canadians who chose this country, made it their home and built a better life than the one they left behind. His memory will be a blessing, and I certainly will make sure of that.

I will go back to the regularly scheduled programming. For some, the holiday break was a chance to rest, to see family and to do important work in the community. However, for the Prime Minister, it was a chance, again, to flaunt the rules and to demonstrate just how out of touch he is.

Let me start by saying that the Prime Minister has bad judgment. We have seen it. This is a guy who thought it would be a good idea to dress in blackface, to dress up in costumes on a business trip, to flagrantly and blatantly break ethics laws multiple times and to confide trust in ministers who do exactly the same things.

We were still shocked to see him accept a free luxury stay last month valued at over $84,000. Mr. Speaker, $84,000 is more than the average family makes in a year. It is a sum that could buy 20,000 meals for a homeless shelter. It is a sum that translates to over $9,000 a night. I would be very interested to learn from the Prime Minister at a future question period what $9,000 a night might buy.

I would be even more interested to learn why he did not have the common sense to refuse that free stay, knowing just how ethically dubious and out of touch it was. It is evidenced, of course, by the PMO changing its story three times on who paid for the luxury vacation and when. Let me say, and I think Canadians would agree, that the Prime Minister has every right to take some time off, as do all Canadians.

However, that luxury vacation, its cost, its size and its magnitude, is just another example of conveniently deciding to set aside any personal or professional principles to profit from his status in office. It further proves that he is simply out of touch, and it underlines that he understands nothing about the Canadian middle class.

The fundamental truth is that the Prime Minister, who is so comfortable in the lap of luxury, cannot pretend to understand Canadians who are struggling. It is evidenced by this bill we have seen in the House that fails to meet the needs of the middle class, to meet the needs of struggling Canadians from coast to coast to coast who tell their MPs, and I am sure they hear it on the other side, of their struggles.

We now have rent prices that have doubled. We have seen the reports throughout Christmas. Housing prices have doubled under the government. The cost of home heating has doubled. The price of groceries has increased by 25% this year, all after eight years of a Liberal government led by the Prime Minister. The Prime Minister says that Canadians from all walks of life who are struggling, because of statistics like this, are just “grumpy”. That is what he said in a year-end interview.

I have to say to the Prime Minister that “grumpy” is something that happens when, perhaps, one's private jet breaks down, or when the custom sock store runs out of one's favourite pair. What is happening right now is not people being “grumpy”. These are people who are faced with the fear and the anxiety that come with thinking about the survival of their families. These are people confronting the reality that their generation, or their kids, might not be better off than they were. That is real fear and anxiety in the Canadian public right now.

People fear for their lives in the face of violent crime, which is up 39% since 2015, and gang-related crime, which has doubled. People are scared when they are faced with the highest murder rate in 30 years. People in the GTA cannot even park their car in the laneway because auto theft is up 50% in just two years; it is up 217% since the Prime Minister has come to office. That is if they are lucky enough to even have a laneway at all, because to buy a home in Toronto, one needs to commit nearly 85% of one's income just for housing costs.

Under the Prime Minister, Canada is still on track to have the worst economic growth out of 40 OECD countries, while inflation and high interest rates take more money out of Canadians’ pockets and off their paycheques. Housing remains unaffordable thanks to the refusal to force gatekeepers to get out of the way and actually build homes.

On top of this, it is the former immigration minister who broke our immigration system and overwhelmed our housing market with policies that, according to his own cabinet colleague, the current immigration minister, caused the system to get “out of control”. Despite this, and, as usual, people fail upwards in the current government, the minister’s failure was recognized when he became the new housing minister. He is expected to fix the problem that they in fact created over the last eight years. As well, two million people a month visit food banks just to put a decent meal on the table, or worse, they go without.

The response to all of this is the fall economic statement. It is an anemic response to a country that so many beyond these walls do not recognize anymore. We know the source of the misery, and we all want it to be over. It is out-of-control government spending that drives up the cost of the goods we buy and the interest we pay. It is the out-of-control taxes that make it more unaffordable to buy a home, to put gas in the car or to buy groceries. It is the out-of-control bureaucracy that makes it harder to build things and to create good-paying jobs. The solution, of course, is to cut spending, cut taxes and cut the bureaucracy, but instead, the bill would continue the deficit spending that is putting us way beyond our means.

Now Canadians are realizing that the Prime Minister is just not worth the cost. However, this is what we expect and this is what we get after eight years of the Liberal government. We should now expect that the government will do the opposite of the rational thing. We should expect that the Prime Minister is going to remain detached from the everyday realities and ignore every single point of view that differs from his own.

The country needs a lot of change after eight years. We cannot trust the people who have gotten us into this mess to get us out of it. After a cabinet retreat in a downtown luxury hotel about the middle class, of course, far away from anyone in the middle class, and after a Christmas when Canadians actually cut back without anyone over there taking notice, my Conservative colleagues and I are looking forward to a day when we can see a fall economic statement that actually addresses the misery that Canadians have been telling us about every single time we are at home in our communities.

There is going to be a clear choice. People can have the Liberals, who will raise taxes and inflate regulation and red tape, pump up inflation and interest rates and let crime, chaos, drugs and disorder run rampant, or they can have Conservatives, with a simple plan of axing the tax. We are going to build homes, fix the budget and stop crime. That will be the future choice for Canadians. It is a future where housing is affordable and food is affordable, where communities are safe, and where our nation is strong at home and back to being respected abroad. We know that future is possible, because we knew it before. Life was not like this before the current government, and life will not be like this when it is gone.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Mr. Speaker, it is great to see my friend from a neighbouring riding stand in the House and speak to the fall economic statement. Again, to the member for Thornhill, I give my condolences on her father's passing.

In the city of Vaughan a few months ago, we announced an investment of $59 million from the housing accelerator fund to assist the City of Vaughan in accelerating the approval and development of housing projects for homes for individuals who live in our city and families who are moving to our city. There are about 7,000 to 10,000 people a year who move to the city of Vaughan, which the hon. member is well aware of. Much like the hon. member at one time worked in a private administration that collaborated with the provincial government to announce the building of the subway that is now in the city of Vaughan, the government is collaborating with the City of Vaughan with a $59-million investment.

Does the hon. member not agree with this investment, which will benefit the city of Vaughan and the residents, current and future, who will live in the member's riding, in my riding and in the other member's riding?

[Melissa Lantsman, Conservative, Thornhill, ON]

Mr. Speaker, while I appreciate the member opposite and my neighbour standing in fancy photo ops with the mayors and the housing minister making announcements, the homes have not been built in Vaughan.

In fact, after eight years of the Prime Minister, rent has doubled in Vaughan, the price of a house has almost doubled in Vaughan, the price of a mortgage interest rate payment has doubled in Vaughan, and it used to take 25 years to pay off a mortgage in Vaughan and now it takes most people in the GTA 25 years to save for a down payment. I am not sure why the member opposite is patting himself on the back, but I will not support his fancy photo ops.

Conservatives will get houses built. We will get the private sector to put shovels in the ground.

[Leah Gazan, NDP, Winnipeg Centre, MB]

Mr. Speaker, first, I want to give my condolences on the loss of the member's loved one.

I already kind of know what the Conservative government would look like. Under the leadership of the member for Carleton, in his nine years in government, we saw 800 affordable homes lost under his watch. He supported the Liberals in a $55-billion tax cut to CEOs. We know the number of Canadians living in poverty increased, health care funding was cut by $43.5 billion, nine veteran support offices were closed and, worst of all, under his watch, the retirement age for seniors moved to age 67. I already know the story, because I have seen the same old Liberal-Tory story since the beginning.

I know that the Conservatives talk a good game about affordable housing when their real plan is to line the pockets of investors. I want to ask the member a very specific question. Is her government committed to building rent-geared-to-income co-op and public housing?

[Melissa Lantsman, Conservative, Thornhill, ON]

Mr. Speaker, I thank the member opposite for her condolences.

At every opportunity, and I think the member's constituents ought to know this, she supports the Liberal government, and it is at every single stage of the game and in every single confidence vote, to raise taxes, to put forward a photo op plan for building more houses. There is innumerable waste on that side.

This is what a Conservative government would look like. It would be a government that takes care of people and does not line the pockets of its own friends.

I like that the member opposite asks what the future government will look like. I think she should get used to saying that. We will certainly put forward a plan when that time comes.

[The Deputy Speaker, Conservative, Chris d'Entremont]

We are out of time but before moving on to the next member, I believe the hon. member for Battle River—Crowfoot has a point of order to speak to.

[Damien Kurek, Conservative, Battle River—Crowfoot, AB]

Mr. Speaker, I apologize to the Chair.

[The Deputy Speaker, Conservative, Chris d'Entremont]

I thank the hon. member for that apology.

Continuing debate, the hon. member for Scarborough—Guildwood.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, this is my first opportunity to speak in the year of Our Lord 2024.

[Some hon. members]

Oh, oh!