Finance Committee on May 28th, 2013

[Shelly Glover, Conservative, Saint Boniface, MB]

It is.

[The Chair, Conservative, James Rajotte]

Is there something you want beyond that?

That's why I'm asking, Mr. Brison. If there's a question you can direct to an official, they can answer, but this information is online.

[Scott Brison, Liberal, Kings—Hants, NS]

When we had the technical briefing we were provided with more information than has been provided online, and I feel it would benefit us. I would be willing to use my time, a couple of minutes for each clause, to ask the officials to provide their own explanations.

[The Chair, Conservative, James Rajotte]

Mr. Jean, you wanted to get in on this point.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Mr. Chair, frankly, that could take us a couple of months, and the scenario is totally out of the ordinary. If Mr. Brison wants to spend his time asking specific questions about the ramifications of specific clauses, I think that's reasonable, but to ask an open-ended question to the officials who are here to make a comment on each and every clause seems a little bit outrageous, to be honest.

[The Chair, Conservative, James Rajotte]

Mr. Brison, do you have any specific questions that you wish to ask? You say the information that's provided online is not sufficient, so is there something in addition to this that you want the officials to address?

[Scott Brison, Liberal, Kings—Hants, NS]

I can certainly ask specific questions, if that's the will of the government members. I can do that for some time.

[The Chair, Conservative, James Rajotte]

Can the officials do an overview of part 2 in five minutes—the entire overview? Is that okay?

[Scott Brison, Liberal, Kings—Hants, NS]

I think that would be helpful.

[The Chair, Conservative, James Rajotte]

Okay, give us a summary in five minutes.

[Carlos Achadinha, Legislative Chief, Sales Tax Division, Public Sector Bodies, Department of Finance]

We'll start with clause 42.

This amendment is similar to an amendment in the Income Tax Act in clause 21 of part 1. It's made to ensure consistency in respect of the administrative provisions across various tax statutes. The amendments deal with the issuance by the CRA of a requirement to a third party to provide information for the purpose of verifying compliance by unnamed persons. Similar to the Income Tax Act amendment, this amendment eliminates the ex parte aspect; instead, the CRA will give notice to the third party when it initially seeks a court order from a judge of the Federal Court. This amendment is in the non-GST/HST portion of the Excise Tax Act dealing with the taxation of certain fuels and other excisable products.

Clause 43 has to do with pension plan rules. My colleague, Greg Smart, will give some explanation.

[Gregory Smart, Expert Advisor, GST Legislation, Department of Finance]

Clause 43 adds new section 157 to the Excise Tax Act to simplify compliance in respect of transactions between an employer and a pension plan trust in the case where an employer performs activities in relation to a registered pension plan of employees of the employer. New section 157 allows a participating employer of a registered pension plan to jointly elect with a pension plan trust to treat any actual taxable supplies by the employer to the pension plan trust as being made for no consideration, meaning that no tax applies to these actual supplies. Instead, there's a deemed supply between the employer and the pension plan trust and taxes collected and remitted just on this deemed supply.

Clause 44 also deals with the GST/HST pension plan rules, and it's also a simplifying measure. This is an amendment to address concerns with the complexity and cost of complying with the pension plan deemed taxable supply rules. In particular, employers have expressed concerns that where only a small amount of tax is at stake, these rules are difficult to comply with. Clause 44 proposes a measure that allows an employer participating in a registered pension plan to be fully or partially relieved from accounting for tax under the pension plan deemed taxable supply rules if the employer's pension plan-related activities fall below certain thresholds. An employer would be relieved from applying the deemed taxable supply rules for a fiscal year of the employer where the amount of GST that the employer is required to account for and remit under the deemed taxable supply rules in the preceding fiscal year of the employer is less than both $5,000 and 10% of the total GST paid by the pension plan trust in the preceding fiscal year.

Clause 45 deals with GST/HST business information requirements.

Carlos.

[Carlos Achadinha]

I can take it from here.

This basically provides the Minister of National Revenue with the authority to withhold GST/HST refunds claimed by a business until such time as the business provides all prescribed business identification information. For example, when a business registers for GST purposes, it is generally required to provide CRA with basic business identification information, such as its name, ownership details, business activity, and contact information. CRA uses this registration information to manage business accounts and to improve tax compliance, including fraud detection. This measure will assist the Canada Revenue Agency in authenticating GST/HST registration and will ensure CRA compliance activities by improving the quality of data CRA uses to assess compliance risk.

Clause 46 is another amendment that deals with CRA's information requirements regarding unnamed persons and is also intended to ensure consistency across various tax statues with respect to the GST. It is very similar to the amendment I described earlier. This has to do with eliminating the ex parte aspect. Instead, CRA will have to give notice to the third party when it initially seeks a court order from a judge of the Federal Court.

Clauses 47 to 50 deal with amendments to the GST/HST health care services provisions.

The first amendment deals with the GST treatment of home and personal care services. Currently an exemption from the GST/HST is provided for publicly subsidized or funded homemaker services, such as cleaning, laundering, meal preparation, and child care when these services are rendered to an individual who requires assistance in his or her home due to age, infirmity, or disability. The first amendment proposes to expand this GST/HST exemption to specifically include publicly subsidized funded personal care services, such as bathing, feeding, and assistance provided to people who need assistance in their homes.

The second amendment deals with services that are provided solely for non-health care purposes. Under the GST/HST rules, services that are provided solely for non-health care purposes, even if supplied by health care professionals, are not considered to be basic health care services and are not eligible for the GST exemption. This proposed amendment clarifies that GST/HST applies to reports, examinations, and other services that are not performed for the purpose of protection, maintenance, or restoration of the health of a person or for palliative care.

[The Chair, Conservative, James Rajotte]

You're up now on this, Mr. Brison.

[Scott Brison, Liberal, Kings—Hants, NS]

Could I wait until we get to the specific clause later?

I have a question on clauses 47 to 52 and the GST/HST on home care or report services for non-health.

[The Chair, Conservative, James Rajotte]

Sure. Why don't you put your question?

[Scott Brison, Liberal, Kings—Hants, NS]

Can you provide clarity about whether or not the examples provided by Dr. Cohen of the Canadian Psychological Association in her testimony to the committee would be subject to HST?

The first example she provided involved a victim of a car accident having to sue their insurance provider to get the insurance company to pay for mental health services. If that accident victim had to get an assessment for their court case, would that assessment now be subject to GST?

[Carlos Achadinha]

The Canada Revenue Agency officials have had a number of meetings and some discussions with the Canadian Psychological Association, and they've tried to explain to them specific applications of the GST. With respect to the services you've just mentioned, where a report, examination, or other service is performed solely for the purpose of determining liability in a court proceeding or under an insurance policy, it will be considered taxable. However, where an assessment is done along with outlining a treatment plan or some other sort of health care-related services that are being provided, that will be considered to be an exempt service, because it's done in the context of designing a health care treatment plan for an individual.

[Scott Brison, Liberal, Kings—Hants, NS]

In the second example Dr. Cohen provided, she referred to the fact that a significant portion of mental health services are not considered to be basic health care but are instead paid through private insurance. If someone has to get an assessment for the purpose of proving to their insurance provider that the insurance should pay for at least part of the mental health service cost, is that assessment now subject to GST?

[Carlos Achadinha]

Again, it will depend on whether the assessment lays out a treatment plan. If the assessment lays out something going forward with respect to a specific treatment plan in which there are going to be some true health care services provided, it will be an exempt service.

[Scott Brison, Liberal, Kings—Hants, NS]

The Canadian Psychological Association is still saying there's a lack of clarity. Are you concerned when an organization that represents a significant group of mental health care providers or professionals is saying that it's not certain how this will apply?

[Carlos Achadinha]

My understanding is that there have been some discussions with various stakeholders, including the Psychological Association, and colleagues at the Canada Revenue Agency. They intend to issue further guidelines based on some of those discussions, outlining specific circumstances and further details in terms of the application of this tax. They've had some general discussions outlining some of the general provisions and how things will apply, providing details and information to the stakeholders.

[The Chair, Conservative, James Rajotte]

Members know this already, but for the information of anybody observing these hearings, the document is on the Department of Finance website, www.fin.gc.ca/pub/C60, if anybody wants to see an overview of the legislation.

Now, I don't have an amendment before clause 47. Can I deal with clauses 42 to 46 inclusively?

(Clauses 42 to 46 inclusive agreed to)

(On clause 47)

I have amendment NDP-1. I'll go to Ms. Nash, please.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you, Mr. Chair.

This amendment would delay the coming into force of the changes to the HST exemption rules in order to clarify what services will be subject to the HST or GST, and we believe we need time for that clarification. We agree that there are certain services, such as cosmetic surgery, that should not receive the exemption. Given that the government has not clearly specified what services will be covered and what services won't be covered, we believe that will lead to confusion in both service providers and the Canadian public, hence the reason for our amendment proposing to delay the implementation.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Nash.

Is there any further discussion on this point?

Ms. McLeod.