Evidence of meeting #49 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was information.
A recording is available from Parliament.
4:40 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you for your opening remarks.
We will begin with Mr. Pacetti, who has seven minutes.
4:40 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Thank you, Mr. Chair.
Thank you to the witnesses for appearing.
There were two presentations, but they didn't really speak about the bill itself; they just spoke about your roles and the intent of the bill. I think from what we heard from the presenter of the bill, she wants to increase transparency. We heard from her that there's a problem with the CRA.
Maybe the Finance officials can help me out here, but I'll start with the easiest question. Do we have a problem with the $100,000 cap? Are you telling me, Ms. Hawara, that we should be increasing it to $250,000? Is that what your opinion would be?
4:40 p.m.
Acting Director General, Charities Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
The cap that has been presented in the amendment by Ms. Guarnieri...or not the cap, but the threshold, in terms of—
4:45 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
The threshold, yes. That's probably a good word.
4:45 p.m.
Acting Director General, Charities Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
I'm certainly not saying it should be increased to $250,000, no. Again, as Mr. Williams said, my remarks unfortunately didn't take into account the fact that amendments were being worked on and presented to the committee today. When I talked about the $250,000 in my opening remarks, I was referring to the initial proposal in the bill that would see the salaries capped at $250,000, or at least give the Minister of National Revenue the discretion to revoke a charity if they paid a salary above that range.
4:45 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
We're not saying they shouldn't pay the salary above that range.
I'm addressing the comment to you also, Mr. Williams, because you're saying the charitable sector has to compete with the private sector.
Nobody here today said that charities cannot pay these salaries. We just want them to be disclosed and we want them to be disclosed transparently.
The bill is saying we want the name, job title, and the annual compensation of the five executives or employees with the highest compensation. My understanding, from what Albina was saying, is that's not exactly what is being listed on the website.
4:45 p.m.
Acting Director General, Charities Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
I could speak to that, Mr. Chair.
The information currently available on the website is, first of all, if a charity is remunerating individuals. If they have full-time employees, they are to identify how many employees they are remunerating on a full-time basis.
4:45 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
So it's not by name and job title.
Would CRA be able to do that?
4:45 p.m.
Acting Director General, Charities Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
If I could just continue, in terms of what is required to be disclosed currently, for the top 10 salary earners, each charity must disclose the salary range in which those organizations fall. So, for example, a charity that remunerates two individuals between $200,000 and $250,000 would have to indicate that there are two people in that salary range.
4:45 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Could I just ask the question?
Right now, the name and the job title are not disclosed. Correct?
4:45 p.m.
Acting Director General, Charities Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
No, they are not.
4:45 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Okay. We're talking about the bill. So the information the charities provide you with—would you be able to post the name, job title, and annual compensation of the five executives?
4:45 p.m.
Acting Director General, Charities Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
If that was required by the legislation, that information could be collected by the CRA.
4:45 p.m.
Liberal
4:45 p.m.
Acting Director General, Charities Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
That information is not being collected right now.
4:45 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Thank you.
I'm going to ask the Finance officials.... If we just go with the bill—I know you didn't see the amendments, but it's already in the bill--Mr. Williams, would you be comfortable if the Minister of Finance could direct CRA to have charities provide them with names, job titles, and the annual compensation of five executives?
4:45 p.m.
Acting General Director (Analysis), Tax Policy Branch, Department of Finance
I could speak to you more about the implications and the technical aspects of the bill. I'd have to defer to my minister to pass judgment on his comfort level with the bill.
I will say we were concerned with the impact of the cap on the ability of charities to attract and retain highly qualified employees, particularly in the larger charities such as universities and hospitals. There was also a concern that imposing full disclosure would affect a number of charities, given that 60% of all charities don't have paid employees, and the charitable sector is generally characterized by those earning fairly modest incomes. So that would be seen as onerous on them and might bring up privacy concerns.
In terms of the way the bill stands now, I understand you have a list of charitable organizations that have agreed to appear in front of the committee and I think that would be a good question to pose to them, whether they have particular privacy concerns associated with the $100,000 disclosure.
4:45 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
If the bill were passed as is, would the department have any problem with it? We are going to ask the charitable organizations. I'm asking you now.
4:45 p.m.
Acting General Director (Analysis), Tax Policy Branch, Department of Finance
In terms of the cap, which is our principal concern, that's been addressed.
4:45 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
So you're okay with it. Thanks.
Just quickly, in terms of the penalties, Ms. Hawara, I think you address it, but how do you calculate penalties when somebody is offside? I thought it was revoking or not revoking. Penalties are not assessed on amounts told or things like that, as you would normally do for individuals or corporations. How would you get to amounts that are being assessed?
4:50 p.m.
Acting Director General, Charities Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
There are specific provisions in the legislation around sanctions for providing undue personal benefit to any individual, whether within or outside the charity. For a first infraction, the penalty would amount to 105% of the undue benefit. If there were a second infraction within a five-year period from the time the first infraction occurred, the penalty would then be 110% of the undue benefit and could be accompanied by a suspension.
4:50 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
How do you calculate the undue benefit? The only way you can do it is through an audit, correct? You can't do it through a desk audit.
4:50 p.m.
Acting Director General, Charities Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
It depends on the nature of the undue benefit. Our best way of going in and finding out what is happening in a charity is to conduct an audit.