Evidence of meeting #47 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was finance.
A recording is available from Parliament.
1:40 p.m.
Liberal
Paul Szabo Liberal Mississauga South, ON
Were the drafters of the plan involved in a process of due diligence, and did they sign off that they had done a rigorous review?
1:40 p.m.
Director, Tax Legislation Division, Tax Policy Branch, Department of Finance
The process for drafting legislation within the Department of Finance is one that involves several levels of review and checks and balances, up to and including my level. And of course that needs to be signed off by the minister before it's recommended to Parliament and included in a bill. Once it's in a bill, of course, there is review not only by Parliament writ large but by this committee and also by the committee in the Senate.
1:40 p.m.
Director of Legislative Development, Tax Policy Branch, Department of Finance
Mr. Szabo, I might add that the legislation went through the usual review--
1:40 p.m.
Liberal
1:40 p.m.
Director of Legislative Development, Tax Policy Branch, Department of Finance
--tax legislation goes through in the committee I chair, which includes representatives from the Department of Justice and the Canada Revenue Agency. They would also have been involved in the drafting and review of all of the TFSA legislation.
1:40 p.m.
Liberal
Paul Szabo Liberal Mississauga South, ON
In my corporate life, being a chartered accountant, we always used to have anticipated questions and what ifs. Right now, what you're telling me is that we've had several levels of the finance department go through this thing and sign up all along the way. They didn't consider over-contributions. They didn't consider prohibited investments. They didn't consider non-qualifying investments. They didn't consider swap transactions.
The list is pretty long relative to the program itself. I don't think I need any more answers. My view is that this was poorly executed and poorly drafted, and it's one of the problems we have. Why our Income Tax Act is so complex is because rather than doing it right at the start, we have to keep fixing things.
Let me move on to the Bank Act, Mr. Chair, if I can, because I'd like another round.
1:45 p.m.
Director, Tax Legislation Division, Tax Policy Branch, Department of Finance
It's not quite accurate to say that prohibited investments, over-contributions, and non-qualified investments were not contemplated. If you look at the act as it sits right now, before the amendments proposed here, you will find that all of those concepts are represented in the act, and all of those concepts have penalties associated with them.
What we found, surprisingly enough, was that those penalties were not sufficient to overcome the over-exuberance in tax planning we discovered, tax planning that may or may not have been effective. It would be better, in the context of a new program, to nip it in the bud, to use the vernacular, rather than to deal with these issues through the courts and the application of the general anti-avoidance rule. That's why the minister and the government introduced these amendments to tighten up the penalties for those concepts that were already there.
1:45 p.m.
Liberal
Paul Szabo Liberal Mississauga South, ON
Okay, let's leave it at us tightening up something.
On the Bank Act and the Financial Consumer Agency of Canada Act, we're going to create a new external complaints body for financial institutions. We already have others, and it could be argued that maybe we have too many people involved in this. But that's not my concern.
My concern is that we have matters such as Internet spam. It costs $130 billion a year around the world. Canada is ranked number five in total spam occurrences. There are about nine billion spams a day. We're ranked number five, so we have a big number there. The government is probably looking for ways in which we might be able to tighten up there as well.
Since we have this act, we can deal with domestic things. A big part of the problem is due to international sources that are beyond the reach of our legislation. Having said that, we also have tax treaties and information-sharing agreements with over 90 countries around the world. Was it ever considered that if we're going to have a new complaints commission for banks--because a lot of this stuff has to do with people representing themselves as banks and trying to fish and harvest--that it would have a mandate to go beyond simply consumer complaints against financial institutions, which have basically told consumers that there is nothing they can do, and that we really have to leave it at that?
1:45 p.m.
General Director, Financial Sector Policy Branch, Department of Finance
I'll just try to clarify the nature of these amendments, and my colleague can jump in if she wants to.
We're not proposing to set up a new agency through these amendments. Banks are currently required to be members of a third-party dispute-resolution mechanism. Over time it has happened that different banks are members of different third-party outside dispute-resolution mechanisms that have different features and that offer different levels of service, if you will.
What we are proposing to do here is to have essentially a process whereby the existing Financial Consumer Agency of Canada would assess these third-party dispute-resolution mechanisms and make recommendations to the minister as to whether or not they should qualify as acceptable under the Bank Act. So it's not that there is a new agency being created. What we're trying to do is ensure that consumers, regardless of which bank they are banking with, will have access to the same quality of third-party recourse if they have a dispute with their institution.
1:50 p.m.
Liberal
Paul Szabo Liberal Mississauga South, ON
I have to apologize, then, because I'm a victim of detrimental reliance. The committee members were circulated a document prepared by the Library of Parliament that says:
Part 4 would create a new external complaints body for financial institutions. Banks would be required to belong to an approved third-party dispute-handling body. The Governor in Council would make regulations outlining the process under which an incorporated external complaints body could receive approval.
I guess that's not the case.
1:50 p.m.
General Director, Financial Sector Policy Branch, Department of Finance
The key inaccuracy there is that the act does not create a new third-party dispute-resolution system. There are already some bodies that do that in the private sector. And the issue, as I said, is having some uniformity of service for the institutions, regardless of which body they decide to affiliate themselves with.
1:50 p.m.
Liberal
Paul Szabo Liberal Mississauga South, ON
I have more questions, but I do want to raise that the member for Mississauga East—Cooksville has a bill with regard to charities, Bill C-470. I suspect somebody on the panel is aware of it. No? Wow.
1:50 p.m.
Conservative
1:50 p.m.
Liberal
Paul Szabo Liberal Mississauga South, ON
Okay. Under Bill C-47, with regard to the disbursement quotas for registered charities, this all has to do with a private member's bill that is currently before the finance committee, in which the member has expressed some concerns about the amount of money related to the charity that's not getting down and hitting the ground to help people but is being absorbed by expenses and in other ways. In fact, it touches on disbursement quotas.
This seems to be going in the opposite direction, so that it's opening up the ability of charities, in fact, to spend more money on operating expenses and capital expenditures with less money hitting the ground to assist the targets of the charity. Is that the fact?
1:50 p.m.
Director of Legislative Development, Tax Policy Branch, Department of Finance
It is the fact that disbursement quota rules will be amended and will in certain aspects be eliminated. In terms of oversight of charitable activities and amounts that they spend, that's not something the disbursement quota would directly impact in any case.
1:50 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you, Mr. Szabo.
We will move to clause-by-clause consideration, pursuant to Standing Order 75(1).
Consideration of clause 1 was postponed; therefore I will call clause 2.
I've been asked for a recorded vote on clause 2.
(Clause 2 agreed to: yeas 10; nays 2)
Monsieur Mulcair.
1:50 p.m.
NDP
Thomas Mulcair NDP Outremont, QC
If you agree, and so do the other members of our parliamentary committee, I would suggest this. Along the same lines as what happens in the House, when a vote has just been taken and is then repeated, if the others agree and if we firmly commit to ensuring that the record clearly reflects the same votes by clause and by individual, I am willing to resume the study without repeating my request for all the other clauses.
1:50 p.m.
Conservative
The Chair Conservative James Rajotte
Yes. If the committee agrees by unanimous consent, we can apply this recorded vote to all of the clauses up to clause 199, and it will be shown in the record.
Agreed? D'accord?
1:50 p.m.
Some hon. members
Agreed.
1:50 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you.
(Clauses 3 to 199 inclusive agreed to [See Minutes of Proceedings])
Shall the short title carry?
1:50 p.m.
Some hon. members
Agreed.
On division.
1:50 p.m.
Some hon. members
Agreed.
On division.
1:50 p.m.
Conservative