Bill C-33 (Historical)

Income Tax Amendments Act, 2006

An Act to amend the Income Tax Act, including amendments in relation to foreign investment entities and non-resident trusts, and to provide for the bijural expression of the provisions of that Act

Part 1 of the enactment enacts, in accordance with proposals announced in the 1999 budget, amendments to the provisions of the Income Tax Act governing the taxation of non-resident trusts and their beneficiaries and of Canadian taxpayers who hold interests in foreign investment entities.
Part 2 enacts various technical amendments that were included in Part 1 of a discussion draft entitled Legislative Proposals and Draft Regulations Relating to Income Tax released for consultation by the Minister of Finance on February 27, 2004. Most of these amendments are relieving in nature, and others correct technical deficiencies in the Act. For example, Part 2 enacts amendments
–       to implement various technical amendments to qualified investments for deferred income plans,
–       to clarify that certain government payments received in lieu of employment insurance are treated the same as employment insurance for income tax purposes,
–       to extend the existing non-resident withholding tax exemption for aircraft to certain air navigation equipment and related computer software,
–       to allow public corporations to return paid-up-capital arising from transactions outside the ordinary course of business, without generating a deemed dividend,
–       to confirm an income tax exemption for corporations owned by a municipal or public body performing a function of government in Canada, and
–       to provide that input tax credits received under the Quebec Sales Tax system are treated for income tax purposes in the same way as input tax credits received under the GST.
Further, Part 2 enacts provisions to implement announcements made by the Minister of Finance
–       on September 18, 2001, limiting the tax shelter benefits to a taxpayer who acquires the future business income of another person,
–       on October 7, 2003, to ensure that payments received for agreeing not to compete are taxable,
–       on November 14, 2003, to simplify and better target the tax incentives for certified Canadian films,
–       on December 5, 2003, to limit the tax benefits of charitable donations made under certain tax shelter and other gifting arrangements, and
–       on November 17, 2005, relating to the cost of property acquired in certain option and similar transactions.
Part 3 deals with provisions of the Act that are not opened up in Parts 1 and 2 in which the following private law concepts are used: right and interest, real and personal property, life estate and remainder interest, tangible and intangible property and joint and several liability. It enacts amendments to ensure that those provisions are bijural, that is that they reflect both the common law and the civil law in both linguistic versions. Similar amendments are made in Parts 1 and 2 to ensure that any provision of the Act enacted by those Parts are also bijural.

Income Tax Amendments Act, 2006

[Dean Del Mastro, Conservative, Peterborough, ON]

It is about time.

One of the things that really floors me about the former government is that this bill, the one that we are speaking about today, has been around since 1999. The questions are: What stopped us? Why did we not do better? We just did not get it done comes to mind. However, I do not think that is why it did not move on this. The fact is that closing tax havens and closing down tax loopholes did not matter to the Liberal government. It did not care.

Indeed, the member for Markham—Unionville and the Leader of the Opposition went to Bay Street when we announced that we would be moving to close some of these tax loopholes. The member for Markham—Unionville started off by saying, “We subsidized farmers. Why shouldn't we subsidize corporations?”

Does he not get it? Does he not get it that there is a big difference between, quite frankly, the problems that the Liberals caused in agriculture because they did not understand how to manage the Department of Agriculture? There is a big difference between that and subsidizing wealthy multinational corporations through tax loopholes and encouraging the use of these loopholes.

The member has been here for a long time. The Auditor General has spoken on this issue a number of times. Did the member ever see anything done? Did she believe the Liberals were ever going to move on it? Why should anybody ever believe that the Liberals would ever support anything to do with tax fairness?

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, my colleague makes a very important point concerning the length of time it takes for anything to happen in this place under either a Liberal government or a Conservative government to deal with tax havens and tax loopholes.

The record, obviously, of the Liberals, who had 13 years to fix these problems, is the most egregious one. The Conservatives are just beginning and their first big mistake was to backtrack on the interest deductibility issue. Since the Conservatives have talked about cracking down on tax havens, and since the Liberals refused to do anything, we now have a chance in this House to do something.

I want to mention that I think the inaction by the Liberals over the years was directly related to their ties with big banks and big corporations. I think the fact that their own members had investments in big corporations that wanted to take advantage of tax havens had something to do with it. However, I do not know for sure.

I tried earlier to read a quotation but I was talking too fast to get it out. It was in response to a question from my leader, the member for Toronto—Danforth, back in 2003 when we were concerned about the member for LaSalle—Émard still running the Canadian Steamship Lines even with the apparent conflict of interest. In response to that question, the member for LaSalle—Émard said that he would not be able to live with himself if his dream were turned over to another country. He said that he would not be able to bear Canada Steamship Lines suddenly finding itself nothing but a collection of ships being run from the States.

It was not too long after that when the member decided that it would be important to have his sons run the company but they made no changes with respect to the flags of convenience and with respect to the tax evasion policies. They continued to accumulate revenue because they were not paying their fair share of taxes.

On the issue of the Auditor General, let us note that we are talking about several reports that go back to 1999, 2002, and now another one in 2007, and still the concerns raised by the Auditor General have not been fully addressed by any government. We are still waiting for some plan of action. We are waiting for more than studies. We are waiting for the Conservative Government of Canada, Canada's supposedly new government, to do something new and different. We are waiting and waiting and waiting.

When will the government decide to finally shut down Barbados as a tax haven? When will it decide to take on all of these loopholes and ensure that Canadians have the resources they need to build the programs they need to have a strong united country?

[Dean Del Mastro, Conservative, Peterborough, ON]

Mr. Speaker, I would suggest to the member that this government is a government of great courage when it comes to tax fairness. As the member well knows, on October 31 this government, in a minority situation, moved to close what we considered to be a great risk to overall corporate tax revenue. I appreciate that the NDP has stood behind that decision pertaining to the income trusts.

We further moved to take all of those taxes that would be placed on income trusts and give it to Canadian seniors. It was completely revenue neutral. We made sure that wealthy corporations would not avoid taxes on the backs of not only retired Canadian seniors, but hard-working Canadians right across the board. This government has been very brave and courageous in bringing tax fairness to Canadians. I know the hon. member stood behind that.

When these reports were being brought forward by the Auditor General, they were being covered in the media and being talked about a lot by Canadians. I heard a lot about them. I was in business in Peterborough and I was really concerned that I was paying a lot of taxes and it did not seem fair to me that I had this enormous tax burden but large corporations were paying nothing.

Did the member ever hear the Liberal Party talk about coming down on these egregious actions by corporations that were avoiding taxes? Did she ever see them do anything about it? Did she ever see any action?

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

No, I am afraid not, Mr. Speaker. On this front, dealing with fairness in our taxation system and loopholes available to the wealthy and corporations in our country, it is very hard to find any kind of action. There is a trail of negligence and broken promises. The Auditor General has made report after report with very little action flowing from them.

What I worry about is that the Conservatives are beginning to go down the similar path that the Liberals followed, which is to make a lot of promises, do a few things like the income trust issue and the double-dipping, and then not really get at the big issues around tax havens.

What we really need is for the Canadian Conservative government to take immediate steps to shut down all remaining offshore tax havens, especially when we consider the fact that the Canada Revenue Agency is now investigating Merck Frosst for putting $2 billion away in Barbados.

We spent years trying to get the Liberals to lower the flags of convenience flown overseas by Canadian corporations to avoid taxes. I do not want to spend another decade fighting Conservatives to get the same thing done. Conservatives have the time and the mandate to actually act against tax havens, and I am waiting to see the signs of that. I am waiting to see if they are serious about this.

In opposition, the Conservatives railed against the Barbadian tax haven, just as we did, because it benefited certain members of the government and the corporate elite. Many Conservatives, including the current Prime Minister, voted for a motion to close this tax loophole that results in individual Canadian taxpayers having to make up the difference. If the Conservatives leave this loophole open, they are demonstrating that it is not ordinary Canadians who benefit from their policies. If the Conservatives do not act to close the Barbados tax haven, all their protests in the case of Canada Steamship Lines and other obvious examples will mean nothing but cheap politics.

I urge the Conservatives to put their money where their mouth is and actually do something to prevent so much investment from going to offshore financial centres. They should keep in mind that between 2003 to the present that number has increased eight-fold.

[The Acting Speaker, Royal Galipeau]

Resuming debate. Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker, Royal Galipeau]

The question is on the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[The Acting Speaker, Royal Galipeau]

I declare the motion carried unanimously.

(Motion agreed to, bill read the third time and passed)

[The Acting Speaker, Royal Galipeau]

It being 12:52 p.m., pursuant to order made earlier today, the House will now proceed to the consideration of private members' business as listed on today's order paper.