Finance Committee on May 1st, 2014

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Thank you very much, Mr. Chair, and thank you to our witnesses.

I had the opportunity to sit as the founding board member of the Dave Thomas Foundation for Adoption, and there are a number of things that the organization has done in Canada. Some of it has been surveys in terms of trying to find out attitudes on adoptions. I just note that they commissioned the Canadian foster care adoption attitudes survey to try to determine what some of the issues are and how we could get more kids adopted.

We found out that there are some 30,000 kids in foster care, which is always a challenge, in and out, and that if only 0.5% of people who are thinking about adopting actually adopted, we'd have all those kids out of foster care. However, one of the things that was discovered was the cost of actually being able to adopt kids. I know that we have the adoption expense tax credit. I know that's great, but could you guys explain exactly how that will work in terms of the cost and how it differs from where we are now?

[Ted Cook]

Sure. Maybe my colleague might make some further comments on the particular credit itself, but the change that's being proposed in this bill is actually fairly simple. The adoption expense tax credit is a non-refundable credit that's indexed to inflation each year and without this amendment the expense limit for the credit would be on the order of about $11,800. So what this measure would do is simply increase that $11,800 to $15,000 for this year and because it is an indexed credit, then it will increase with inflation year after year.

So that's fairly straightforward. In terms of dealing more generally with your question, I'd also note that in economic action plan 2013 the period for which expenses can be eligible for the credit was extended to start the adoption period earlier in certain cases.

So I think all those are just additional removals of disincentives to adoption, if you will, relating to the cost of adoption.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

I understand the tax credit works based on income. So what kind of tax savings then can this mean to an individual family if they were able to push up against the $15,000 limit?

[Ted Cook]

I'll just address that briefly. What it does, because non-refundable credits are creditable at 15%, is it offers approximately $500 in tax relief.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Thank you very much. I'm going to turn it over to Mr. Keddy.

[The Chair, Conservative, James Rajotte]

You have four minutes.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you, Mr. Chairman. Welcome to our witnesses.

I want to revisit the search and rescue volunteers tax credit and the volunteer firefighters tax credit for a second. It was my understanding that the changes to this tax credit will allow someone who does both, participates in search and rescue and is a volunteer firefighter, to actually combine hours. If they have 100 hours of search and rescue and 100 hours as a volunteer firefighter, they will qualify for the credit.

In most of rural Canada, many of these search and rescue volunteers and volunteer firefighters may not get their full 200 hours of volunteer time. So this opens this credit up to a tremendous number of volunteers. Do we have a real number or do we have an estimate of how many more people will qualify under these changes?

[Miodrag Jovanovic]

Our estimate is based on what we could observe of the number of members currently in the air, ground, or marine search and rescue associations, which is roughly about 19,000 individuals. We don't have much information to determine what's going to be the take-up from there, but that's the primary figure basically.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

So potentially we could have another 19,000 volunteers across Canada eligible for a tax credit who were never eligible prior to this.

[Miodrag Jovanovic]

Potentially.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Excellent.

I have a question on 4(b), on mobile offshore drilling units.

We've worked as a government to reduce the corporate tax rate and reduce the small business tax rate. In economic action plan 2014, we've built on those measures by eliminating the 20% most favoured nation rate on mobile offshore rigs.

The challenge, when looking at this—

[The Chair, Conservative, James Rajotte]

Mr. Keddy, that's not part 1.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

It's 4(b). You said one to four.

[The Chair, Conservative, James Rajotte]

We're doing part 1.

This is how the officials are being presented to the committee. This is part 1.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

I apologize, Mr. Chairman. We're stuck on one system here.

I'll back up to—

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

[Inaudible--Editor]

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Oh, oh!

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

We're trying to move ahead, and I'm losing time as I'm talking.

On the medical expense tax credit, can you explain what measures will be eligible under the proposed amendments in this year's budget? Who is eligible to claim the medical expense tax credit? How much has it expanded?

[Ted Cook]

The medical expense tax credit has changed in two ways under this bill. The first is to add service animals for people with severe diabetes. They are called diabetes alert dogs. The cost of acquiring these dogs, the associated training and travel, and the care and maintenance of these dogs will be eligible for the medical expense tax credit. These dogs can actually, through scent, determine changes in the blood sugar levels of individuals and alert them that is occurring.

The second part of the measure is to allow the medical expense tax credit to be available in respect of what we call individualized therapy plans. There are certain plans of therapy that are currently eligible for the medical expense tax credit, but sometimes to undertake these therapies a plan has to be developed in the first instance. This measure would ensure that the development of these plans, which relate to therapy that is itself eligible for the medical expense tax credit, will also be eligible.

In terms of the quantum, there are not very many of these dogs coming into Canada yet.

[The Chair, Conservative, James Rajotte]

Okay. Thank you.

Thank you, Mr. Keddy.

Just to explain—sorry, colleagues, I thought I was clear about this—the reason for doing it this way is that we have different officials who will come to address different parts and divisions of the bill. We can't keep swapping people in and out at the table. That's why we're proceeding in this fashion.

We'll stick with part 1.

We'll go to Mr. Cullen, please.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Thank you, Chair. I'll keep my questions brief.

I want to get back to the flow-through share tax credit for mining. I represent a resource-rich part of the country, in northern British Columbia, and this is an important issue.

I have two principle questions.

The last time you presented, Mr. Cook, and again today, you talked about the association of other factors. Regarding the effect of the tax credit, we see tax credits that help with efficiency and also produce results.

Has the department done a study as to what the impact has been over these—what is it?—seven years of renewal on this particular tax credit to understand what the impact has been for the mining exploration economy?

[Ted Cook]

There are two ways to answer your question, and I can only provide information relating to one.

In terms of the actual take-up and application of the credit itself, in 2012, the last year for which we have data, approximately 350 companies issued flow-through shares. They were applicable in respect of between 30,000 and 40,000 individual investors. They raised about $750 million through these shares to be applicable for investment.

I think maybe the other question is about what the margin is. I don't have a figure that I can provide to you as to the marginal impact.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

I don't know if we're using the same terminology here. It's less so on the margin and more on the broader economic impact.

We're trying to understand the effectiveness of tax credits. With any program that is run by the department, it's to understand what the resulting activity would be in the absence of that program. On mining exploration, the idea, I believe, of this particular program, is to incentivize exploration that otherwise would not have happened because of, say, depressed mineral prices or a cooling investor climate.

Am I right so far in my understanding of this program?

[Ted Cook]

It's generally correct.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Generally correct....

Again, has the department endeavoured—and I don't offer this as a critique, more just an understanding—to have any sort of a study as to what the result would be in the absence of such a program? Should the program be augmented? Should the program be made permanent?

As Mr. Brison pointed out, the renewal after renewal, for some of the companies I've spoken to, causes some concern. These companies don't just work on an annual basis, as you can understand. They do an exploration season, but that is usually connected to at least three or four seasons strung together. To be able to plan in light of not knowing what the revenue take-up will be from the market is difficult.

Does the department have a study of the effectiveness of the tax credit? Has it contemplated making it a permanent program?