Finance committee  Sure. I can respond to that. To clarify, you're talking about the rules that are in part 1 that relate to the avoidance of tax.

Finance committee  There's a rule right now in the Income Tax Act that applies to prevent someone who has a tax liability from transferring their assets to a related person for less than fair market value in order to prevent that person from being able to pay their tax liability. For example, a corporation—if it were to transfer, if this rule didn't exist—could potentially destroy the tax liability and make it unrecoverable by transferring assets to a related shareholder or a company, or someone else.

Finance committee  I don't have that in front of me, unless one of my colleagues who's on has that. We can go back and check if there's anything that we can provide to you.

Finance committee  Again, I can double-check for you, but I don't believe there's anything associated with this measure as a cost. As I said, it's a rule that already exists in the Income Tax Act. It's something the CRA is already auditing and enforcing. There was a case the CRA lost that caused these amendments to be made, in order to address the planning done in that particular case.

Finance committee  Mr. Chair, I can respond to that question. This amendment is actually a response to a court case from 2018. The court of appeal in that case determined that the general anti-avoidance rule was not available in situations where a transaction had been done to create tax attributes, but those attributes had not yet been used.

Finance committee  The intention of the amendments is to make it so that it is clear that the GAAR conditions of the test would be satisfied where there have been tax attributes that have been created and could be used in the future even though they haven't been used yet. The department's intention is to ensure that, in the future, it's not open to taxpayers to argue that they haven't satisfied the GAAR because they haven't used the tax attributes.

Finance committee  The case that caused these amendments included the creation of the paid-up capital, which is an account that can effectively be taken out of a company, tax-free, for the shareholder. There have been other cases where taxpayers try to create paid-up capital. Also there have been cases where taxpayers try to create a cost base in shares, which could allow shares to be sold without triggering capital gains, or where they try to create losses to shelter income.

Finance committee  Mr. Chair, I could answer that question and then one of my colleagues may have more to add. The legislation doesn't contemplate any specific guidelines, but it is the CRA's policy that they would typically make information available to taxpayers on their website with respect to how they would interpret and apply rules.

Finance committee  Thank you, Mr. Chair. I'm Lindsay Gwyer. I'm the director general for income tax legislation at the tax legislation division at Finance. I'll provide a brief overview of part 1, and I have colleagues here who can provide an overview of parts 2 and 3. Part 1 contains the income tax amendments in the bill, as well as some related amendments to other statutes.

Finance committee  The general rule is that, if it's a personal expense, it's not deductible, even if you're carrying on a business. That's interpreted to mean that, if you're commuting to and from work, then any of those expenses are not deductible. If you're working at different places every couple of months, I don't know exactly where the CRA draws that line, but the general rule is that travel between work and home is not deductible for business purposes as well as employment purposes.

Finance committee  I'll start with the point on double deductions. Both deductions would, as I mentioned earlier, apply in very similar circumstances. There are restrictions on both with respect to what can be deducted and with respect to what has been deducted under other provisions of the Income Tax Act, so the same expense would not be able to be deducted under both of the deductions.

Finance committee  You're right. There is nothing in the bill that requires the work location to be in Canada, so yes, it's possible that the deduction could be claimed in respect of someone who is commuting to the U.S. for work. In those circumstances, it would really depend on all the facts as to whether that person would be subject or not to Canadian tax on that income.

Finance committee  Sure. I can answer and Mark can chime in if there's anything else. Yes, I think the main requirement in the deduction is that the person is travelling 120 kilometres away from their home, unlike the deduction that's in law right now where there are safeguards to limit the circumstances in which the deduction can be claimed beyond that requirement to travel 120 kilometres for the work.

Finance committee  I can't, offhand, think of a specific example. It might be important to clarify that. Both of the deductions provide that expenses that are deducted under one cannot be deducted under the other, so the same expense couldn't be deducted twice under the two different deductions. The concern is more that there are two different deductions in the Income Tax Act that have very similar purposes and apply in many of the same situations and very similar situations.

Finance committee  The tax system is set up in such a way that people are limited in what deductions they can make with respect to employment income in general. Most expenses related to employment income are not deductible unless they're specifically enumerated exceptions in the Income Tax Act, whereas business is more of a bigger picture of what expenses are relevant to computing the profit of a business, and that builds off accounting principles.