Bill C-52 (Historical)

Budget Implementation Act, 2007

An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007

Part 1 implements income tax measures proposed or referenced in Budget 2007 to
(a) introduce a tax on distributions from certain publicly traded income trusts and limited partnerships, effective beginning with the 2007 taxation year;
(b) reduce the general corporate income tax rate by one half of a percentage point, effective January 1, 2011;
(c) increase the age credit amount by $1,000 from $4,066 to $5,066, effective January 1, 2006;
(d) permit income splitting for pensioners, effective beginning in 2007;
(e) introduce a new child tax credit of $2,000 multiplied by the appropriate percentage for a taxation year, effective beginning in 2007;
(f) increase the spousal and other amounts to equal the basic personal amount, effective beginning in 2007;
(g) increase the age limit for maturing registered retirement savings plans, registered pension plans and deferred profit sharing plans to 71 years of age, effective beginning in 2007;
(h) expand the types of investments eligible for registered retirement savings plans and other deferred income plans, effective March 19, 2007; and
(i) increase the contribution limits for registered education savings plans and expand eligible payments for part-time studies, effective beginning in 2007.
Part 1 also amends the Canada Education Savings Act to increase the maximum annual grant payable on contributions made to a registered education savings plan after 2006.
Part 2 amends the Excise Tax Act to clarify the legislative authority that allows the Canada Revenue Agency to pay refunds of excise tax directly to end-users, where fuel subject to excise has been used in tax-exempt circumstances. It also amends that Act to repeal the excise tax on heavy vehicles and to implement the Green Levy on vehicles with fuel consumption of 13 litres or more per 100 kilometres. It also provides an authority for the Canada Revenue Agency to pay a refund of the Green Levy for vans equipped for wheelchair access.
Part 3 implements goods and services tax/harmonized sales tax (GST/HST) measures proposed or referenced in Budget 2007. It amends the Excise Tax Act to exempt midwifery services from the GST/HST and to zero-rate certain supplies of intangible personal property made to non-GST/HST registered non-residents. It also amends that Act to repeal the GST/HST Visitor Rebate Program and to implement a new Foreign Convention and Tour Incentive Program, which provides rebates of tax in respect of certain property and services used in the course of conventions held in Canada and the accommodation portion of tour packages for non-residents, and establishes new information requirements in the case where rebates are credited by the vendor.
Part 4 implements other measures relating to taxation. It amends the Customs Tariff to increase the duty-free exemption for returning Canadian residents, from $200 to $400, for absences from Canada of not less than 48 hours. It amends the Federal-Provincial Fiscal Arrangements Act to clarify that when a federal corporation listed in Schedule I to that Act pays provincial taxes or fees, wholly-owned subsidiaries of that corporation also pay provincial taxes or fees. It also authorizes the Minister of Finance to make payments totaling $400 million out of the Consolidated Revenue Fund to the Province of Ontario to assist the province in the transition to a single corporate tax administration. This last measure is consequential to the October 6, 2006 Canada-Ontario Memorandum of Agreement Concerning a Single Administration of Ontario Corporate Tax.
Part 5 enacts the Tax-back Guarantee Act, which legislates the Government’s commitment to dedicate all effective interest savings from federal debt reduction each year to ongoing personal income tax reductions. That Part also commits the Minister of Finance to report publicly at least once a year on personal income tax relief provided under the Guarantee to Canadians.
Part 6 amends the Federal-Provincial Fiscal Arrangements Act to set out the amounts of the fiscal equalization payments to the provinces and the territorial formula financing payments to the territories for the fiscal year beginning on April 1, 2007 and to provide for the method by which those amounts will be calculated for subsequent fiscal years. It also authorizes certain deductions from those amounts that would otherwise be payable under that Act. In addition, it makes consequential amendments to other Acts.
Part 6 also amends that Act to provide increased funding for the Canada Social Transfer beginning on April 1, 2007, and to provide for the method by which the Canada Social Transfer and the Canada Health Transfer amounts will be calculated for subsequent fiscal years, including per capita cash allocations. It also provides for transition protection.
Part 7 amends the Financial Administration Act to modernize Crown borrowing authorities.
Part 8 amends the Canada Mortgage and Housing Corporation Act to permit the Minister of Finance to lend money to the Canada Mortgage and Housing Corporation.
Part 9 amends the Bankruptcy and Insolvency Act, the Canada Deposit Insurance Corporation Act, the Companies’ Creditors Arrangement Act, the Payment Clearing and Settlement Act and the Winding-up and Restructuring Act to allow the Governor in Council to prescribe the meaning of “eligible financial contract”. Those Acts are also amended to provide that, after an insolvency event occurs, a party to an eligible financial contract can deal with supporting collateral in accordance with the terms of the contract despite any stay of proceedings or court order to the contrary. This Part also includes amendments to the Bankruptcy and Insolvency Act and the Winding-up and Restructuring Act to provide that collateral transactions executed in accordance with the terms of an eligible financial contract are not void only because they occurred in the prescribed pre-insolvency or winding-up period.
Part 10 authorizes payments to provinces and territories.
Part 11 authorizes payments to certain entities.
Part 12 extends the sunset provisions of financial institutions statutes by six months from April 24, 2007 to October 24, 2007.
Part 13 amends the Department of Public Works and Government Services Act to provide the Minister of Public Works and Government Services with the power to authorize another minister, to whom he or she has delegated powers under that Act, to subdelegate those powers to the chief executive of the relevant department. That Act is also amended with respect to the application of section 9 to certain departments.
Part 14 amends the Financial Consumer Agency of Canada Act to allow the Minister of Finance to provide funding to the Agency for activities related to financial education.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, today we will continue debate on an opposition motion.

On Friday, we will resume debate at second reading of Bill C-43, the senate consultations bill. That is the bill to strengthen accountability and democracy by giving Canadians a say on who they want representing them in the Senate.

Next week we will focus on making our streets and communities safer by cracking down on crime. It will actually kick off tonight with the Prime Minister's address to the annual police appreciation night in York region where I live. Getting tough on criminals is the best way parliamentarians can show our appreciation for those brave men and women who put their lives in danger every day while protecting and serving their communities.

Our plan for next week's focus in cracking down on crime will begin with Bill C-48, the bill dealing with the United Nations Convention Against Corruption. There will hopefully be an agreement to pass that bill at all stages.

Following Bill C-48, we will consider Bill C-10. That is the bill to introduce mandatory minimum penalties for gun and violent crimes. Our government will be proposing amendments at report stage to restore the meaningful aspects of the bill to ensure that violent criminals actually serve time in jail, all of which was gutted by the Liberals in committee.

Bill C-22, the age of protection bill, was reported back from committee and will be considered at report stage and third reading.

Following Bill C-22, we will move on to Bill C-27, the dangerous offenders legislation, which would require criminals who are convicted, for example on three separate occasions of a violent sexual assault, to prove to the court why they would not a danger to the community.

Tuesday, May 1 shall be an allotted day.

If time permits, we will seek to call Bill C-52, the budget implementation bill.

With regard to the question on the environment, our government is taking action on the environment. Later today he can look forward to seeing a cornerstone step in taking action to reduce greenhouse gases with the environment minister's announcement, action that has never been taken by another government and more action than any government in the world is taking.

Bill C-52—Budget Implementation Act, 2007

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, I would like to respond today to the point of order that was raised by the hon. member for Scarborough—Rouge River concerning Bill C-52, the budget implementation act.

The member argued that clause 13(1) of the bill respecting the application of the definition of “SIFT trust”, which is a specified investment flow-through trust, is not in keeping with the practices and customs of this House. In his view, the provision represents an inappropriate delegation of subordinate law and the member has asked that the Speaker rule that the clause be struck from the bill and the bill ordered reprinted.

As the Speaker has noted, this is a complex issue.

I appreciate the expertise of the member for Scarborough—Rouge River on matters of subordinate law. However, I submit that this is not a valid point of order, as there are no procedural authorities that preclude the House from legislating in this manner. In short, this is a matter for debate, which would be better dealt with by members in the House and at committee, rather than a procedural question for the Speaker to resolve.

Let me first briefly provide some background to this issue in order to assist the Chair.

The provision in question provides a rule for the application of the definition of “SIFT trust”. In particular, the provision sets out when a trust will be subject to the new rules pertaining to the taxation of income trusts.

Under the bill, a new trust will become a SIFT trust and therefore subject to the new rules for the taxation year in which it first meets the definition. However, for an existing trust, the SIFT trust definition will not apply, and therefore the new rules will not apply until the earlier of the 2011 taxation year, and the taxation year in which the trust exceeds the normal growth guidelines issues by the Department of Finance on December 15, 2006, unless that excess arose as a result of a prescribed transaction. As you can see, Mr. Speaker, this is quite technical.

To achieve this, the provision in question contains an incorporation by reference of the normal growth guidelines issued by the Department of Finance, to which I just referred. Incorporation by reference is a proper and legal approach to enacting legislation. It is neither rare nor unusual in legislation. An examination of Canadian statutory law would reveal many instances where incorporation by reference has been used in just this fashion.

For example, sections 181.3 and 190.13 of the Income Tax Act refer to the use of risk-weighting guidelines issued by the Superintendent of Financial Institutions in order to determine the amount of capital of an authorized foreign bank. These guidelines are defined in section 248 of the Income Tax Act and are issued pursuant to section 600 of the Bank Act. I could go on with other examples, but I am sure the Speaker would find that a tad tedious.

Furthermore, it is not uncommon for legislation to allow documents incorporated by reference in legislation to be changed from time to time. For example, section 11 of the Customs Tariff incorporate by reference the Compendium of Classification Opinions to the Harmonized Commodity Description and Coding System published by the Customs Co-Operation Council, as amended from time to time.

Therefore, it is not just in the Income Tax Act, but in other legislation as well that we see this same approach. As I said, we could go on at length, but I shall save us and save the House that lengthy example. I think the Speaker has ample precedent there.

In terms of procedural arguments, the member for Scarborough—Rouge River essentially made three points. He has argued: first, that the provision is not in keeping with the practices and customs of this House; second, that the clause attempts to exempt itself from rules regarding parliamentary scrutiny of subordinate law; and third, that the clause does not comply with the government's own internal rules on legislative drafting.

Let me address each point in turn.

On the first point, the practices and customs of the House, the essence of the member's argument appears to be that the clause does not conform to the rules of the House. The government submits that Bill C-52 and all of its provisions are properly before the House. The provision in question was included in a detailed notice of ways and means motion tabled on March 27, which was adopted by the House on March 28.

The ways and means motion adopted by the House on March 28 included the identical provision that the member for Scarborough—Rouge River questioned. Therefore, the provision in question is consistent with the rules governing financial procedures.

I submit there are no procedural grounds for the clause to be ruled out of order. Rather, this is an issue that would be more appropriately considered by the Standing Committee on Finance in its review of the bill. Should the member wish to improve the text of the bill, he and his colleagues are free to propose amendments to the bill in committee.

Citation 322 of the sixth edition of Beauchesne's states that:

When a bill is under consideration, points of order should not be raised on matters which could be disposed of by moving amendments.

This clearly falls into that category.

With the exception of very limited circumstances, it is clear that only the House itself can decide to alter the content of bills

The 22nd edition of Erskine May states, at pages 544 and 545, the following:

Throughout all these stages and proceedings the bill itself continues in the custody of the Public Bill Office, and, with the exceptions mentioned below, no alteration whatever is permitted to be made in it, without the express authority of the House or a committee, in the form of an amendment regularly put from the Chair, and recorded by the Clerks at the Table or by the clerks from the Public Bill Office in standing committee.

As Marleau and Montpetit note, at page 620:

The Chair has clearly ruled in the past that when a bill is in possession of the House, it becomes its property, and cannot be materially altered, except by the House itself. Only “mere clerical alterations” are allowed. By issuing a corrigendum to the bill, the Speaker may correct any obvious printing or clerical error, at any stage of the bill. On the other hand, no substantive change may be made to the manner in which a bill was worded when it was introduced, or when a committee reported on it, otherwise than by an amendment passed by the House.

There would appear, Mr. Speaker, to be only two circumstances where the Speaker can make alterations to a bill: first, where the Chair has ruled that amendments adopted by a committee are beyond the scope of the bill, as you had recently ruled with respect to committee amendments to Bill C-257, the replacement workers bill; or second, when there is a clear printing error. As you noted in a ruling on February 23, 2004, this is only done in rare cases where there is a manifest error in the printing of the bill.

Apart from these limited instances, I submit that it is up to the House to decide whether or not to adopt a bill with our without amendment.

Even if you were, Mr. Speaker, to conclude that the provision of the bill as currently drafted is unacceptable, I would submit that the House and the committee should, first, have an opportunity to review the matter and consider possible amendments to improve the text of the bill.

In the event the provision in question remains in the bill at third reading, I submit that it is at that point when the Speaker should intervene on this matter in the unlikely case you think it is necessary.

It is analogous to the procedure that we use with private members' bills when we have those flaws. Committee exists and represents an opportunity for the flaws to be cured. If this is a flaw, indeed, that would be the place at which it could happen. The Speaker, if faced by a change that is unacceptable, does not need to put the question on that clause at third reading.

On the question of the review of statutory instruments, the hon. member has also suggested that the provision of the bill exempts itself from the rules of the House regarding parliamentary scrutiny of delegated legislation. It is not uncommon for bills to establish forms of delegated legislation that are not subject to the Statutory Instruments Act. It is perfectly within the prerogatives of the House to pass legislation to that effect. As I have indicated earlier, it is not the role of the Speaker to decide whether such legislation is appropriation.

The third point is the government guide for drafting.

The hon. member also suggested that the provision in question is not consistent with the government's “Guide to Making Federal Acts and Regulations”.

The guide sets out principles for making legislation and regulations, as well as government processes for ensuring that statutory and legislative changes are made in an effective way.

Apart from the fact that this guide is by no means a procedural authority, I would also point out that the guide does not prevent the government from introducing legislation such as the provision in question, provided that the cabinet has authorized such legislation.

In conclusion, I would submit that clause 13(1) of Bill C-52 is properly before the House. This is a matter for debate. The issue is properly in the hands of the House and the finance committee will be better placed to examine whether this section of the bill is appropriate or whether it can be improved.

As always, I understand that the Minister of Finance is prepared to discuss this matter, and all matters related to the bill, further in committee. Indeed, if there is any flaw, committee can certainly be curative in so doing.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, today we will continue with the debate on the opposition motion.

Tomorrow we will begin debate, as I said earlier, on one of the government's bills to modernize the Senate of Canada, Bill C-43. This is an act to provide for consultations with the electors on their preferences for appointments to the Senate.

In fact, yesterday the Prime Minister announced that Bert Brown would finally take his seat in the Senate after being elected twice by the people of Alberta. For those who say it cannot be done, we are getting it done. We will continue to get the job done for the other provinces, with the bill, so they too can elect senators. The Senate elections bill, along with the bill to limit terms of senators to eight years will achieve meaningful Senate reform. Meanwhile, we have talked about constitutional reform. We do not think it is necessary. It can be done without it.

However, in response to the other question raised by the opposition House leader on Bill C-16, we will be bringing it forward. We have indicated that we will bring forward a motion to ask that the amendments by the Senate be removed and to communicate that to the Senate. We will bring that motion forward on Monday. We believe we have the support in the House to have that secured so we can have fixed date elections that cannot be tampered with. That will be on the agenda for Monday, followed by Bill C-52, the budget implementation bill. BillC-43 will be the backup bill on that day. That is the Senate consultations.

Tuesday, April 24 and Thursday, April 26 shall be allotted days.

On Wednesday, we will resume debate on BillC-52, the budget implementation bill, if it has not been completed Monday. It will be followed by Bill C-40 on sales tax and Bill C-33 on income tax.

Friday, April 27, we will continue with those same finance bills.

Taxation

[Jim Flaherty, Conservative, Minister of Finance]

Mr. Speaker, there are more than $1 billion in tax savings in Bill C-52, which is before the House, including pension splitting for seniors, which the Liberals oppose. This is just one large tax reduction that they oppose.

With respect to the issue of tax havens, I understand that we are for tax fairness and the Liberals are for tax havens. In fact, they have been known to use tax havens in the past. They have lots of experience with tax havens. We do not support tax havens.

We think all Canadians should pay their fair share, including multinational corporations doing business in Canada.

[Jim Flaherty, Conservative, Minister of Finance]

Mr. Speaker, the commitment in the budget is firm and it is incorporated in Bill C-52, which is the first budget implementation bill that is now before the House. I believe it is up for debate today as a matter of fact. The commitment is quite clear.

I congratulate the hon. member on his new appointment as the finance critic for the Bloc.

Bill C-52--Budget Implementation Act, 2007

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

Mr. Speaker, I rise today on a point of order in relation to Bill C-52, the budget implementation bill.

It is my view that a portion of that bill is drafted in a way that is not in keeping with the practices and customs of this House, that the bill attempts to exempt itself from our rules regarding parliamentary scrutiny of subordinate law, and does not even comply with the government's own internal rules on proper drafting of legislation.

The part of the bill I am referring to is clause 13(1) at page 20, line 16. It amends section 122 of the Income Tax Act and bears the bill subclause number (2)(b) and deals with the issue of income trusts and how they are to conduct themselves for tax purposes over the next four years, until the year 2011. For ease of reference, the margin heading reads “Application of Definition SIFT trust”, which is the short acronym for income trusts.

A notice of ways and means motion on the subject of income trusts was tabled in the House during the afternoon of October 31, 2006 and was concurred in a few days later. The intent of that ways and means motion was in part to impose a 31.5% tax on income trusts starting in 2007, but that for existing income trusts the start date would be 2011.

On December 21 the government released a draft bill for consultation on this issue. However, the clause in question today never appeared in that draft bill. The implementation of the ways and means motion is now found in Bill C-52. Subclause (2)(b) of the bill found on page 20 referred to earlier reads as follows:

the first day after December 15, 2006 on which the trust exceeds normal growth as determined by reference to the normal growth guidelines issued by the Department of Finance on December 15, 2006, as amended from time to time, unless that excess arose as a result of a prescribed transaction.

This clause which I have just read deals with transitional tax measures involving how a large segment of the Canadian economy and billions of dollars of taxpayer assets are to be governed under our tax laws for the next four years, and yet this is proposed to be administered by way of a reference in legislation to guidelines only, which themselves are no more than a press release. I have a copy of that press release that sets the guidelines which I am prepared to table today. Worse yet, this press release, according to the clause in question, can be amended from time to time, as I have just read.

The bill is silent on any mechanism for amending these guidelines or press releases and there is no official or specified repository of this information. What we have in this clause, in effect, is a delegation of subordinate law, not by regulation nor by ministerial directive, but by press release.

This action of the government, that is to say to apply a tax burden or levy against a group of taxpayers using a so-called guideline or press release, is unprecedented. As a matter of fact, the only reference I could find to a budget implementation bill using guidelines dates back some 11 years to 1996 and dealt with the reimbursement of a conservation expense. In other words, the 1996 initiative gave money back to the taxpayer. For the benefit of the Chair, this was clause 66.1(6) of that bill. The situation now before the House is the reverse.

Let me remind the House that the contents and consequences of using that news release are not minor in nature. They are very broad in scope and have a large impact on this broad group of taxpayers involving billions of dollars. The news release itself says, “The deferred application of these measures is conditional on existing,” and income trusts are referred to by using the acronym SIFT, “respecting the policy objectives of the proposals”.

Materials released with the minister's announcement indicated that, for example, the undue expansion of an existing income trust might cause the deferral to be rescinded. This introduces a whole layer of conditions, at least some of which appear totally arbitrary in nature and which the taxpayer must fulfill in order to benefit from the 2011 delay date of tax liability set out in the bill, and yet the bill is silent on these conditions. They appear nowhere in the bill, only in the news release.

The news release includes the concept that if the conditions are not met, the minister, by some unknown authority, can cause the taxpayer's deferral to be rescinded. That would actually result in a tax increase to the taxpayer. That is a new power found only in the news release, that the minister could by some unknown authority rescind a taxpayer's deferred status and somehow force the person to pay the tax sooner than the bill would otherwise have him or her do. That increases the tax burden.

What we are trying to prevent is a situation where the minister or his officials conclude, based on a news release or guidelines, not as a matter of law, that this or that condition in the news release is not being met or has been amended and then is not being met and so, almost by a fiat, a taxpayer's deferral is rescinded. The taxes would be imposed on the person sooner than the 2011 date that Parliament has set out and the taxpayer would be left wondering why and how all this could happen.

Marleau and Montpetit's House of Commons Procedure and Practice reminds us at pages 686 and 687:

In 1950, Parliament adopted the Regulations Act, which decreed that all “orders, regulations and proclamations...” would be systematically and uniformly published and tabled in the House.

This language is from the Regulations Act, 1950. I ask rhetorically, how does the scheme described in the bill herein comply with these practices. Clearly, they do not. It attempts to exempt itself from those rules.

Erskine May's Parliamentary Practice also has references defining statutory instruments.

Our current Statutory Instruments Act provides clear direction regarding subordinate law, offering instructions in areas such as the coming into force date, the means or instruments by which the coming into force will be achieved, the method to be used to publish the subordinate law, and even Parliament's role in the revocation of the instrument should it be found not to be in compliance.

Again, the so-called guideline tax measure referred to in the budget implementation bill also appears to exempt itself from parliamentary scrutiny.

I want to briefly turn to the oversight issue. Marleau and Montpetit at page 688 describes the authority of the Standing Joint Committee for the Scrutiny of Regulations to “scrutinize any statutory instrument made on or after January 1, 1972”. Statutory instruments are referred to therein as:

--any rule, order, regulation, ordinance, direction, form, tariff of costs or fees, letters patent, commission, warrant, proclamation, by-law, resolution or other instrument issued, made or established...in the execution of a power conferred by or under an Act of Parliament.

Clearly, Parliament intended that important issues such as the one found in the budget implementation bill, should be manifested in a statutory instrument subjected to parliamentary oversight and not left to the status of a guideline or press release which can be amended from time to time by an unidentified government official with a computer and a printer.

Again, referring to the Statutory Instruments Act, the Standing Joint Committee for the Scrutiny of Regulations is mandated to report to this House to ensure that instruments conform to 13 criteria of good governance. I draw the attention of the Speaker to criterion number 7, which requires compliance with the act with respect to transmission, registration or publication.

How are members of this House to know whether or not one of the minister's guidelines, which can be amended from time to time, was even published, let alone whether or not it conforms to the rules?

Criterion number 11 guards against an unusual or unexpected use of the powers conferred in enabling legislation. Again, in this case, members will not have the tools to make such a determination because a press release was used.

Clearly in this clause and perhaps others, the government has attempted to create subordinate law by press release in a way that is not accountable to anyone and certainly not accountable to this Parliament. This is not a proper and accountable way to legislate, particularly for a government that proclaims or touts accountability as an attribute of its administration.

Finally, this part of the budget implementation bill does not even conform to the government's own rules on proper legislative drafting. I have in hand a copy of the Privy Council Office document entitled “Guide to Making Federal Acts and Regulations”, which I am prepared to table as well. Page 3 of the document describes what it considers to be proper subordinate law-making. Suffice to say this bill, or at least the clause I have referred to, does not even come close to adherence to those rules governing the making of subordinate law. Given the historic strictness with which the House imposes on tax measures, these vague and arbitrary provisions should be treated as out of order and a nullity. This is taxing by press release.

I conclude by inviting the Chair to review this submission and to rule that the clause in the budget implementation bill is out of order and cannot be proceeded with in its current form. A bill with references such as this should not be accepted in principle and read a second time. This clause, and any other clause or subclauses ancillary to it, should be struck from the bill and ordered reprinted.

If the government insists on proceeding with the objectives of this clause, as wrong-headed as some members may think they may be, it could do so by way of a separate, properly drafted bill dealing with its scheme for taxing income trusts to which the transition rules are central, which the government seemed to be prepared to do last December in any case and which a committee of the House endorsed earlier this year. Obviously, we would expect that the new bill would be properly drafted and conform to the rules of the House.

Given that Bill C-52 could be voted on at second reading fairly soon, I would ask the Chair respectfully to rule on this at the earliest possible opportunity.