Bill C-470 (Historical)

An Act to amend the Income Tax Act (revocation of registration)

This enactment amends the Income Tax Act to revoke the registration of a charitable organization, public foundation or private foundation if the annual compensation it pays to any single executive or employee exceeds $250,000.

Bill C-317—Income Tax Act—Speaker's Ruling

[The Speaker, Conservative, Andrew Scheer]

I am now prepared to rule on the point of order raised by the hon. member for Windsor—Tecumseh concerning ways and means proceedings on Bill C-317, An Act to amend the Income Tax Act (labour organizations) standing in the name of the hon. member for South Surrey—White Rock—Cloverdale.

I would like to thank the hon. member for Windsor—Tecumseh for having raised this matter, as well as the bill's sponsor, the hon. member for South Surrey—White Rock—Cloverdale, for their interventions and the hon. member for Kitchener—Conestoga for his comments.

The hon. member for Windsor—Tecumseh pointed out in his remarks that the purpose of Bill C-317 is to require that labour organizations provide specific financial information to the minister for public disclosure. The member also pointed out that failure of a labour organization to comply with this new requirement could result in a labour organization losing its tax exempt status, noting, as well, the subsequent impact this would have on dues-paying members of that organization.

He characterized the effect of Bill C-317 in the Debates, on October 18, 2011, page 2171, as follows:

—the income tax exemptions that apply to labour organizations and the reduction of taxable income as a result of writing off the dues paid by their members would easily qualify as alleviations of taxation. Further, the provisions of Bill C-317 would repeal those alleviations by terminating the labour organization's Income Tax Act exempt status.

The member for Windsor—Tecumseh explained that any labour organization not in compliance with the financial disclosure requirements outlined in the bill would no longer enjoy the tax exempt status as provided for in section 149(1)(k) of the Income tax Act. He argued that this would have the effect of taxing a person, or in this case an organization, that was not already a taxpayer. He concluded therefore that Bill C-317 should have been preceded by the adoption of a ways and means motion.

In his submission, the hon. member for South Surrey—White Rock—Cloverdale in the Debates, on October 25, 2011, page 2438, contended that the purpose of Bill C-317 was limited simply to providing a mechanism for the public disclosure of union finances and only augmented the existing types of information that the Canada Revenue Agency was already empowered by its mandate to compel organizations or taxpayers to provide.

He also referred to a ruling from the 40th Parliament on Bill C-470, An Act to amend the Income Tax Act (revocation of registration). He found a parallel between Bill C-317 and Bill C-470. Where it had been argued that charitable donations were discretionary so that Bill C-470 did not affect any existing alleviation of tax, the hon. member argued that in the case of Bill C-317 payers of union dues could exercise their discretion by opting to join a union or labour organization that adhered to the financial disclosure provisions of Bill C-317 and, thus, maintain the tax exempt status of their dues.

Before analyzing the arguments presented, it is important to take into consideration the context of this discussion as it is worth noting that the financial procedures of the House are based on long-established and strictly observed rules of procedure, procedures that are based on the concept of the financial initiative of the Crown. This concept is clearly presented in Erskine May’s Parliamentary Practice, 23rd edition, at page 848:

—it is for the Commons, acting on the sole initiative of Ministers, first to authorize the relevant expenditure (or 'Supply') and, second, to provide through taxes and other sources of public revenue the 'Ways and Means' deemed necessary to meet the Supply so granted.

The role of the Speaker in the present situation is to determine if Bill C-317 is a legislative initiative which imposes a tax or other charge on the taxpayer and therefore would have required the prior adoption of a ways and means motion by the House.

In order to respond to that question, it may be useful to examine more closely the different precedents cited by the members who intervened on the present case.

During his initial point of order, the member for Windsor—Tecumseh referred the Chair to the ruling of November 28, 2007, on Bill C-418, An Act to amend the Income Tax Act (deductibility of remuneration). In that ruling, at pages 1463 and 1464 of the Debates, the Chair made reference to Erskine May's Parliamentary Practice, 23rd edition at page 896, where it explains, “the repeal or reduction of existing alleviations of taxation” must be preceded by a ways and means motion.

The Chair concluded that Bill C-418 removed an existing tax exemption which then resulted in an increase in the tax payable by certain corporations. In the Chair's view, this constituted a reduction of an alleviation of taxation and therefore required that it be preceded by a ways and means motion. I would ask hon. members to retain the phrase, “alleviation of taxation”, as I will return to that concept shortly.

First, let me address the differing interpretations of how an individual union member’s rights are affected by Bill C-317. The member for Windsor—Tecumseh argued that union members do not have the automatic individual right to stop paying dues to an organization that no longer enjoys a tax exempt status. The member for South Surrey—White Rock—Cloverdale countered that, in his estimation, union members would have the ability to select a labour organization that complies with the provisions of C-317 to ensure that they maintain their tax exemption. While this is more a question of labour law than procedure, the Chair is aware that members of a labour organization cannot easily change which union they belong to nor can they simply withhold paying their union dues except in extremely limited situations provided for in the law. As pointed out by the member for Windsor—Tecumseh, this is in stark contrast to donors to a charity who may choose whether they wish to contribute, the organization they wish to contribute to and the timing of any such contribution.

The Chair must agree with the hon. member for Windsor—Tecumseh that the non-compliance of the labour organization would also remove a current income tax deduction for the dues-paying members of the union. For the Chair, there can be no doubt that this also can be characterized as the removal of an existing alleviation. For this reason alone, Bill C-317 would need to be preceded by a ways and means motion.

Let us return to the larger context. The Chair appreciates the point made by the member for South Surrey—White Rock—Cloverdale that the Canada Revenue Agency already enjoys the authority to compel the financial disclosure of certain financial information. However, it is not the power of the CRA to require the disclosure of certain information that is at issue.

It is true, as the member for South Surrey—White Rock—Cloverdale claims, that Bill C-317 changes the reporting requirements for labour organizations. However, contrary to what the member asserted, that is not all it does. In stating that non-compliance with these new requirements makes a labour organization ineligible for tax deductions available to labour organizations, Bill C-317 potentially removes an alleviation of taxation and in so doing, the bill potentially creates a new statutory authority that removes what is currently an unqualified exemption.

Perhaps the distinction can be better understood by looking again at the example offered by Bill C-470 in the third session of the 40th Parliament. That bill changed the definition of a class of taxpayers, specifically registered charities, but the alleviation of tax for registered charities as a class of taxpayer remained unchanged. By contrast, Bill C-317 does not change the definition of a labour organization. It demands disclosure of certain types of information, failing which disclosure, the bill provides that the tax alleviation in place for labour organizations will no longer apply to non-complying labour organizations.

This is a subtle difference, but it is a crucial distinction for the Chair.

The ruling on Bill C-470 determined that the bill altered the conditions and requirements for an organization to be classified by the minister as a registered charity but did not alter the class of taxpayer. In more basic terms, Bill C-470 proposed to alter the definition of what constituted a registered charity but did not change the tax exemptions for registered charities. In the ruling on C-470, delivered on March 15, 2010, and found on pages 419 and 420 of the Debates, I stated:

It seems to me that the bill instead seeks to provide a new criterion that would allow the minister to determine into which existing class of taxpayer an organization falls. The existing tax regimes and the existing tax rates are not affected.

However, unlike Bill C-470, Bill C-317 does not attempt to alter the conditions or requirements for an organization to be classified as a labour organization.

According to the provisions of Bill C-317, under the Income Tax Act, a labour organization would remain a labour organization, whether it complied with the proposed disclosure requirements or not. If enacted, Bill C-317 would thus create a situation whereby labour organizations can be differentiated into two distinct categories, those that comply with the financial reporting mechanism and those that do not.

In the Chair's opinion, this new category of labour organization would constitute a class of taxpayer that does not currently exist. Labour organizations in the newly created class, that is those that do not meet the financial reporting requirements outlined in the bill, would see the removal of their current tax-exempt status. Put simply, Bill C-470 did not alter the tax-exempt status of registered charities, whereas, in contrast, Bill C-317 proposes to alter the current tax-exempt status of labour organizations.

As a result of this determination, I find that Bill C-317, by distinguishing between certain labour organizations, creates a new class of taxpayer and that this new class of taxpayer would then be subject to a removal of an alleviation of taxation.

For the reasons stated, I must, therefore, rule that Bill C-317 should have been preceded by a ways and means motion. Consequently, I also rule that all proceedings on the bill to date, namely introduction and first reading, have not respected the provisions of our Standing Orders and are, therefore, null and void. Accordingly, the Chair directs that the order for second reading of the bill be discharged and the bill be withdrawn from the order paper.

However, I am reluctant to deny the member what is likely his only opportunity in this Parliament to have an item on the order of precedence.

As members are well aware, Standing Order 94(1) provides the Speaker with the authority to “make all arrangements necessary to ensure the orderly conduct of Private Members' Business”.

In light of the unique nature of this particular situation, the member for South Surrey—White Rock—Cloverdale will be permitted to substitute another item onto the order of precedence. The substitution shall be done pursuant to the spirit of Standing Order 92.1, which allows a member 20 sitting days to substitute another item of private members' business for the item that has been discharged and withdrawn. Should the member choose not to replace the item within the next 20 sitting days, his name will then be dropped from the order paper.

I thank the House for its attention.

Bill C-317--Income Tax Act

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Mr. Speaker, I appreciate the opportunity to respond to the point of order raised by the member for Windsor—Tecumseh regarding my private member's bill, Bill C-317. The thrust of the argument was that my bill would do something that only the government is allowed to do.

The history behind this is that, within our parliamentary system of democracy, only ministers of the day have the authority to propose new taxes. Before they are allowed to propose a tax, they must bring forward a ways and means motion to notify the House of Commons of their intention.

At page 900 of the House of Commons Procedure and Practice, second edition, it states:

The House must first adopt a ways and means motion before a bill which imposes a tax or other charge on the taxpayer can be introduced. Charges on the people, in this context, refer to new taxes, the continuation of an expiring tax, an increase in the rate of an existing tax, or an extension of a tax to a new class of taxpayers.

Thus, this has been a limitation on the use of private member's bills.

No one is suggesting that Bill C-317 proposes a new tax, or is the continuation of an expiring tax, or an increase in the rate of an existing tax. The member is only trying to object to my bill on the grounds that it is the repeal of an existing alleviation of taxation and an extension of a tax to persons who are not already taxpayers--in other words, a new class of taxpayer.

If that were the case, then he would be correct to suggest that the bill be discharged. However, my colleague has read more into my bill than actually exists. He is mistaken because he fails to recognize the limited purpose and effect of the bill, which is to simply require more complete and public disclosure of a union's finances on a regular basis.

First, his assertion that the bill “repeals the existing alleviation of tax” is incorrect. The bill does not remove any tax deduction. Bill C-317 maintains the status quo and does not grant the Canada Revenue Agency any powers, including any taxation powers, that it does not already have. The CRA is already empowered to compel financial disclosure. It can do so as a result of its mandate to ensure that organizations with tax exempt status do not engage in activities that would no longer justify that status. This power, the power it already has, is a simple function of its mandate to ensure compliance with the Income Tax Act. It is a mandate that the CRA exercises in respect of all classes of taxpayers who must comply with the act.

It is true that the bill would change things. The failure to comply with the additional disclosure proposed by the bill could also result in a union losing its tax exempt status. However, this loss of tax exempt status would result from the already existing enforcement provisions of the Income Tax Act and not from any provision contained in Bill C-317.

In other words, if a union violates the current requirement to disclose, the CRA can remove its tax exempt status. That is true whether my bill passes or not. All my bill would do is increase the quantity and public nature of that disclosure with the same enforcement authority that the CRA already has.

My colleague also raised the issue of my bill creating a “new class of taxpayer”. According to the Income Tax Act, the term “taxpayer” is defined to include “any person whether or not liable to pay tax”. Even if an individual earns no income, he or she is still a taxpayer. However, the class contemplated in the member's unlikely example of a labour organization that chose to violate the Income Tax Act already exists. This existing class is the class of taxpayers who pay union dues. He is trying to pretend that the class is those who are in one tax bracket or another and who may change their tax bracket and tax payable as a result of a union losing its tax exempt status.

In the context of the loss of dues deductability, differentiating on the basis of income tax brackets is irrelevant to identifying a class of taxpayer. In fact, those who are affected by the loss of the union's tax exempt status have only one thing in common: they are a single class of taxpayers under the Income Tax Act who pay union dues.

The legislation only has the potential to affect this already existing class of taxpayers. Their tax bracket does not matter. The point is their loss of dues deductibility. That is their class and it is an already existing class. Whether they pay more or less tax as a result of rulings by the CRA is a function of the CRA's normal day-to-day operations, not the result of this bill. In other words, this class of taxpayers is already subject to fluctuations in the level of taxation to which it may be subject under the current legislation and CRA 's interpretations and administration of the act.

I have one more point to make in response to my colleague's point of order. He claimed that the ruling in Bill C-470 from the 40th Parliament should be distinguished from this case because union members would be obligated to pay dues while charitable donations are discretionary. Even if it is accepted that the bill may have the effect claimed by my colleague, and I do not concede that it would, it must be pointed out that union members whose union has lost its tax exempt status for refusing to disclose have the right to exercise certain options. Those options include the option to be represented by another union, a union that has maintained its tax exempt status. This would serve to ensure that member dues continue to be eligible for a tax deduction. Therefore, the ruling in Bill C-470 is a relevant precedent to be relied upon on this particular point.

Those points conclude my response to the point of order raised by the member for Windsor—Tecumseh.

Bill C-371—Income Tax Act

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Mr. Speaker, I rise on a point of order regarding Bill C-317, An Act to amend the Income Tax Act (labour organizations), standing in the name of the member for South Surrey—White Rock—Cloverdale.

The bill proposes to amend the Income Tax Act in an effort to force labour organizations to submit for all to see, that is complete public disclosure, an incredibly onerous level of detailed financial information about their work on behalf of their members. While labour organizations already abide by financial disclosure rules, mostly imposed at the provincial level of government, they do that because it ensures they are accountable to their members and not just because they are driven by legislation.

The bill, which is mostly ideologically motivated, would seek to expose virtually every last detail of a labour organization's financial books. The risk of this is that it gives access to other business organizations in which members may be involved in labour negotiations or labour disputes, exposing their knowledge base to some risk in that regard.

Aside from the privacy concerns over making this level of financial detail available to the public, it shows the thrust of the government, as we have seen with the labour disputes, back-to-work legislation recently and more threats of it at this point, but that culminates now by a government member bringing forth as a private member's bill what should in fact be a government bill, and that is really where my point of order lies. By imposing these types of conditions Conservatives, they are precipitating action that should only be precipitated by a government bill.

The measures set out in the bill include a threat of delisting the labour organization for non-compliance. One of the points that has been missed in this regard about its consequences, because we are not just talking about national labour organizations or national unions, is it includes a local labour council, a union local, even a small one of say 20 or 30 members, a national labour organization, or even a federation of labour. It covers all of them. My concern with the admissibility of the bill is it would have the effect of raising taxes, which is the exclusive prerogative of ministers in the House of Commons and cannot be done by private members' business. At page 1114 of House of Commons Procedure and Practice, second edition, it states:

The power to initiate taxation rests solely with the government and any legislation which seeks an increase in taxation must be preceded by a ways and means motion.

As a result of this and the reasons I will set out in greater detail shortly, Mr. Speaker, I would ask you to rule that the proceedings on the bill to date, namely its introduction and first reading, which it already had, have not respected the provisions of our Standing Orders and are therefore null and void and further that you direct that the order for second reading of Bill C-317 be discharged and the bill be withdrawn from the order paper. Those are the two orders I would be seeking from you, Mr. Speaker.

To begin, I draw attention to Speaker Milliken's ruling on November 28, 2007, at pages 1463-64 of Debates. Therein he references page 896 of Erskine May's Parliamentary Practice 23rd edition, which states quite clearly, ”

—“the repeal or reduction of existing alleviations of taxation” must be preceded by a Ways and Means motion.

It is not a discretionary call. It is a must situation.

It is clear to me and I suspect that you will agree, Mr. Speaker, that the income tax exemptions that apply to labour organizations and the reduction of taxable income as a result of writing off the dues paid by their members would easily qualify as alleviations of taxation. Further, the provisions of Bill C-317 would repeal those alleviations by terminating the labour organization's Income Tax Act exempt status.

Furthermore, while the House of Commons Procedure and Practice, second edition, at page 900, lists four limited categories of charges on the people, which would require a ways and means motion before tabling in the House, if you trace this passage back to the primary source of the reference, Mr. Speaker, you will find what seems to be much more clearly worded guidelines. I would ask you to pay particular attention because there seems to be, and I will not say a contradiction, greater clarity if we go further back in our history in this regard.

Citation 980 of Beauchesne's Parliamentary Rules & Forms sixth edition, on page 265 states that a:

Ways and Means motion is a necessary preliminary to...an extension of the incidence of a tax so as to include persons not already payers.

“Persons not already payers” is a much more specific restriction than creating a new class of taxpayers, which is the guideline set out at page 900 of the House of Commons Procedure and Practice, which I cited a moment ago. It is the difference between finding that a bill creates a new type of taxpayer and finding that a bill creates taxpayers out of those who did not pay tax before.

In the case of the 41st Parliament Bill C-317, examples are readily available to illustrate how the incidence of the federal income tax on dues-paying members of a labour organization might be extended under the proposed changes to the Income Tax Act to make federal income taxpayers out of persons who previously were not. Therefore, we are creating new taxpayers.

Consider if you will, Mr. Speaker, the hypothetical case of a dues-paying member of a labour organization who pays no federal income tax because the member's taxable income falls just short of the amount covered by the personal income tax exemption. If this person's labour organization were to lose its ITA exempt status for failing to meet the conditions set out under the provisions of Bill C-317, his or her membership dues would no longer be excluded from personal taxable income. This increase in taxable income could easily push his or her taxable income to an amount over that which is exempt, effectively creating a federal income taxpayer where there was not one before, which is the very definition of Beauchesne's description of what is not permissible in this place without a preceding ways and means motion, which only can be brought by the government of the day.

I am anticipating an argument from the government side on the private member's bill, so I reviewed a precedent on this matter. I fear there may be a temptation to use Speaker Milliken's decision of March 15, 2010, on Bill C-470 from the 40th Parliament, as a relevant precedent to the question on hand today, so I will ask you, Mr. Speaker to take extra caution when reviewing the decision. While there are some similarities between the two bills, I would submit that the many differences will lead you to rule the opposite particularly when using the much more specific delineation of the rule in question as laid out in Beauchesne's.

I am not sure it will be necessary in your deliberations, Mr. Speaker, but I would draw to your attention just one of the many important differences between the two bills, the one in the 40th Parliament and this one today, which is the stark contrast between labour organizations and charitable ones. In particular, members of labour organizations would continue to have an obligation to pay their membership dues, as they do under provincial legislation, even in the event of the organization's delisting from ITA exempt status, whereas charity donors' contributions are completely discretionary. Finally, labour organizations are selected, supported and held accountable by the very dues-paying members who make the financial contributions in the first place. Charities are not.

In conclusion, Mr. Speaker, I would again ask that you rule that the proceedings to date under Bill C-317, An Act to amend the Income Tax Act (labour organizations) standing in the name of the member for South Surrey—White Rock—Cloverdale namely, the introduction and first reading, have not respected the provisions of our Standing Orders and are therefore null and void and that you direct that the order for second reading of Bill C-317 be discharged and the bill withdrawn from the order paper.

It is quite clear that the bill should be presented, if it is going to be presented at all, by the government of the day. It would bring forth a ways and means motion and then the proper bill would flow from that. This attempt to do it through the back door by way of a private member's bill is really a serious breach of the Standing Orders of the House.

The House proceeded to the consideration of Bill C-470, An Act to amend the Income Tax Act (disclosure of compensation — registered charities), as reported (with amendment) from the committee.

Finance

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Mr. Speaker, I have the honour to present, in both official languages, the ninth report of the Standing Committee on Finance regarding Bill C-470, An Act to amend the Income Tax Act (revocation of registration).

The committee has studied the bill and has decided to report the bill back to the House with amendments.

[The Chair, Conservative, James Rajotte]

The final amendment we have is amendment LIB-0.1. We have an interesting numbering system. This is the Dewey decimal system for amendments.

This is to change the title of Bill C-470 by replacing the long title on page 1 with the following: “An Act to amend the Income Tax Act (disclosure of compensation--registered charities)”.

I'm going to ask Mr. Pacetti to move this.

[Wayne Cole, Procedural Clerk]

It is that Bill C-470 in clause 1 be amended by replacing line 5 on page 2 with the following:

(b) the Minister shall, unless otherwise justified, make available to the

That Bill C-470, in Clause 1, be amended by replacing line 5 on page 2 with the following: (b) the minister shall, unless otherwise justified, make available to the

[The Chair, Conservative, James Rajotte]

I call the 53rd meeting of the Standing Committee on Finance to order.

Our orders today are to study Bill C-470, an act to amend the Income Tax Act , and we have clause-by-clause consideration today.

Colleagues, we have with us here today as witnesses officials from the Canada Revenue Agency and the Department of Finance, who have presented to us before on this bill. We want to thank them for being with us here today to answer any of our questions or inquiries.

Colleagues, you should have amendments. I believe that you have five Liberal amendments, and you have two government amendments.

Just before I get to Bill C-470, the clerk informs me that I need the committee's approval for the operational budget request for witnesses for this study of Bill C-470. The amount requested from the committee is $13,850. You should all have that.

So moved by Mr. Szabo.

(Motion agreed to) [See Minutes of Proceedings]

Thank you.

We will now move to Bill C-470 and clause-by-clause.

Colleagues, I'll take a few minutes and outline how I think we should approach this. This is just my suggestion.

I've been going through the amendments with the clerks and the legislative clerk to get some advice. My understanding, and if I err anywhere, I am going to ask the legislative clerk to speak on this, is that the government amendment covers amendment L-1.1 and amendment L-1.2. The government amendment covers the subject areas covered in amendments L-1.1 and L-1.2.

So if it's agreeable to the committee, my suggestion is that we start with the government amendment and see if we can approve that. There is a technical change there, which I will ask members to speak to.

Liberal amendment L-2 is distinct in the sense of proposed paragraph (b), which says “the Minister shall make available”. So I would expect that Mr. Pacetti would move that amendment.

With respect to the title, “An Act to amend the Income Tax Act (disclosure of compensation)”, we would move to that.

Then we'll move to amendment L-1, which deals with amendment G-2.

I'm suggesting that we do the two government amendments first. I'm hoping that will be the simplest way to deal with this.

D'accord?

[Joan Jardin, Treasurer, Kingston and District Labour Council]

Hello, and thank you to the Standing Committee on Finance for allowing me a few minutes to address your honourable members.

I'm here today on behalf of all the affiliates and community members of the Kingston and District Labour Council. I'm sensing it's quite a different position or background from that of a lot of my esteemed colleagues here.

We have been chartered with the Canadian Labour Congress since 1956. I'm Joan Jardin, and I'm the treasurer of the labour council. We represent over 40 member unions and 156 union locals in the Kingston region. Our membership totals almost 10,000 workers, in addition to many community coalitions and groups. We are active in labour concerns and in employment, municipal, provincial, federal, and social issues.

As you're aware, there's a strong partnership between organized labour in Kingston and the United Way serving Kingston, Frontenac, Lennox, and Addington. I have personally been in the campaign cabinet as labour liaison for over seven years, and I've also worked on the citizens review panel, where we do the real accountability, not the paper accountability that can be published in a quick snippet. We actually go to the agencies. We look at their income. We look at the programs. We take a look at their actual outcomes, and we also visit the organization. So we do the real accountability. We can actually take a look at the organizations. Just taking one piece out of the other really is information in a vacuum and really does pit people against each other.

It's due to this very important relationship that we feel it's necessary to inform you of our thoughts surrounding Bill C-470. I hope you've received a copy of the letter that we have sent. If passed, this legislation would have a far-reaching impact, not only on the charitable sector, but on many institutions, such as schools, hospitals, universities, and more. To the extent that this bill seeks to further strengthen transparency and disclosure, we are in principle supportive. There are, however, some serious issues that the Kingston and District Labour Council sees with the bill. The Kingston Labour Council has identified five areas of concern, which will have a direct and negative effect on our community. On behalf of those I represent, I sincerely ask that this bill not be passed as written and that this committee consider all ramifications of the language in this piece of legislation.

Also, I wear another hat--and I haven't actually seen all the amendments proposed, because I actually have a full-time job in addition to working for agencies--in that I'm a teacher, and when I look at this, it seems as though there's been a problem, and you're trying to hurt the class, and I don't think any of you would like that. If there are some particular issues, we address those issues, and we find ways to deal with those. Also, I believe in accountability, but I don't believe in pretend accountability, so I think we really have to make sure we're not just making extra work for people, but that we actually are looking deep into the very important issues of charities. I wish we didn't need charities, but unfortunately we do.

First, of course, is disclosure. The disclosure requirements could be quite problematic for the vast majority of charities that are very small and have very few employees. The small charities will be forced to publicly disclose names and salaries of their staff. Of course, given the amendment changing it to $100,000, that disclosure will be a bit limited, but especially if it's a small charity, it will certainly be possible to pinpoint who they are, and that's a bit of an issue.

[Katherine van Kooy, President and Chief Executive Officer, Calgary Chamber of Voluntary Organizations]

Thank you very much, Mr. Chairman.

I appreciate the opportunity to be able to comment in person today. My name is Katherine van Kooy and I'm the president and CEO of the Calgary Chamber of Voluntary Organizations. Our 440 members reflect the diversity of this sector in terms of the size of the organizations and the range of areas in which they operate. My comments today are really based on our concern about the implications of this legislation for the broad charitable sector.

We appreciate the response to the concerns that have been raised previously about the impact of this legislation, particularly the amendment that was introduced on November 29 to remove the salary cap. Had there been a legislated compensation cap, it would have put employees of charities into a separate class through government intervention in determining compensation that should be market-driven. In doing so, government would also be sending a very strong message that the work of the charitable sector is less valuable than that of the for-profit sector.

Our organization is committed to the promotion of high ethical standards and accountability for charities. We believe that donors, charities, and communities all benefit when donors feel comfortable that their money is being spent wisely.

Through CCVO's work, we know that one of the major issues raised by organizations in Alberta and across the country is the growing overburden of multiple reporting requirements. These requirements increase administrative costs without contributing in a meaningful way to improved accountability and services to the community. Therefore, we urge that the priority of this committee be given to streamlining reporting requirements and improving the existing mechanisms first.

As already outlined by others, there is an existing mandatory reporting system in place for all registered Canadian charities through the annual T3010 reports that are filed with the Canada Revenue Agency. The system already requires substantial reporting of information about revenues and expenditures, fundraising costs, compensation levels, details about directors, and more. When organizations are not fulfilling their reporting requirements, or when the information provided raises concerns, we fully encourage the CRA to take action. They already have the power to do so. In fact, as you know, the CRA has the power to investigate not only executive salaries that Bill C-470 is now focused on, but other areas as well.

Some concerns have been raised about the information available on the CRA website. I would point out that the timeliness of reporting requirements is far more stringent in Canada than it is in the United States. In terms of the issues raised about accessibility of the information, that's a matter that can be resolved without the need for legislation.

The focus of Bill C-470 is now entirely on disclosure of compensation levels, including compensation for fundraisers, as though this is the only basis on which donors should choose to invest in charities. This information conveys nothing about the impact of the organization in pursuing its mission, or the value of its work in the community it serves. As a donor, that's the information I need in order to be comfortable that my donation is a wise one. Meaningful information about the potential impact of my donation is hard to find. At least it's hard to find in one central location.

I suggest it would be more effective for us to extend and improve the type and quality of information that's collected and available on the CRA website. These changes could be made simply through administrative reforms. If the committee feels it is necessary, the annual T3010 return could be adjusted, as others have suggested, to provide more information about top salaries. It makes sense to use the framework that is already in place. CCVO, and I'm sure many other organizations, would be more than happy to work with the CRA to continue to improve the quality, usefulness, and accessibility of information about Canadian charities.

We do not support the need for this legislation. However, if the committee decides that legislation is required, we urge, as others have, that two amendments be included to further enhance the positive addition of a minimum threshold for reporting the top five salaries in an organization.

First, include an escalator clause that will adjust the threshold level automatically for inflation. This would preserve the intent of reporting on executive-level compensation and not drift down over time into reporting on non-executive staff.

Second, we also feel it's essential that the minister be able to exercise discretion to deal with situations where public disclosure of the names and salaries of employees could compromise their safety.

Finally, we recommend that there be opportunity for further consultation on any new changes that may be proposed to this legislation. This is to ensure that the changes do not in turn have unexpected consequences.

Bill C-470 is intended to increase transparency and improve information for donors. I encourage the committee to consider whether those goals are best achieved through new legislation and new provisions regarding the same type of monetary-only information, or if what is required is more meaningful information and increased follow-through on the provisions already in place for the CRA as the regulator of Canadian charities.

Thank you.

[Mark Blumberg, Partner, Blumberg Segal LLP, Association of Fundraising Professionals]

Thank you, Mr. Chairman.

My name is Mark Blumberg. I'm a charity lawyer in private practice and a volunteer with the Association of Fundraising Professionals' Canadian government relations committee. I've written quite extensively on Bill C-470, and I'm grateful for the opportunity to address you today.

The Association of Fundraising Professionals, also known as the AFP, is a global professional association for individuals responsible for generating philanthropic support for a variety of non-profit charitable organizations. The AFP advances philanthropy in society by enabling people in organizations to practise effective and ethical fundraising. The core activities through which AFT fulfills this mission include education, training, mentoring, research, and credentialling. AFP is the largest association of fundraisers in the world, representing more than 30,000 practitioners, including 3,100 members in 16 chapters across Canada.

AFP appreciates the spirit of Bill C-470, strongly supports transparency and good stewardship, and is pleased to learn of recent amendments proposed relative to the bill. However, we remain concerned about the bill for a number of reasons.

First, there are already rules on charity compensation. CRA notes that compensation should be fair and reasonable. Otherwise, if compensation were disproportionate to the services rendered, it would contravene the Income Tax Act. The CRA's fundraising guidance, which is available on the charities directorate website, also discusses good staffing processes and notes that the salary should “never exceed the fair market value for the services provided”.

Second, a regulatory framework for transparency already exists. On the revised T3010B , the Canada Revenue Agency already requires that charities must provide compensation information for their ten most highly paid employees in one of nine ranges to the CRA, which then publishes them. Creating another secondary disclosure is unnecessary.

Third, non-profit board members and administrators are already subject to CRA scrutiny and have a fiduciary duty to make sure that all decisions, including those concerning employee and executive compensation, are made in the best interests of the registered charity.

Fourth, CRA already has the power to ask charities, first, to provide additional compensation detail as it deems appropriate, and second, to publish that information. This appears to make the bill as revised unnecessary.

Fifth, providing simply the name, job title, and annual compensation without context could be misleading. One researcher might be paid $150,000 and another $250,000. Which charity is providing appropriate compensation? Or might both be appropriate subject to differing circumstances? To know the answer, an individual would require information including, but not limited to, information on experience, professional qualifications, amount of responsibility, and comparable market compensation.

AFP has strongly supported past tough measures to enhance transparency and accountability, including the June 2009 guidance on fundraising, which owing in large part to open, comprehensive, and cross-sector consultation was well designed and welcomed by the sector. Indeed, the recent Attorney General’s report, while noting capacity challenges, specifically highlighted CRA's improved performance in charity regulation and enforcement.

AFP proposes that this bill not go forward at this time. Instead, we propose that the charities directorate of the Canadian Revenue Agency be instructed to immediately and urgently undertake consultation with the sector and other interested parties about increasing transparency and accountability. CRA Canada, without changes to the Income Tax Act, has already significantly increased disclosures in the T3010B on a number of different issues, including expanding salary ranges from $120,000 to $350,000 and up. That did not require any legislative changes, and I don't believe Mrs. Guarnieri was even aware of that change.

AFP strongly believes that it would be beneficial to this sector, its stakeholders, and the CRA to have greater transparency and more relevant information available. CRA has a proven record of delivering on such matters.

In conclusion, AFP would like to thank the Standing Committee on Finance for this opportunity to appear, and we are available to provide any additional information you require in your deliberations on this important issue.

Thank you.

[Terrance Carter]

This raises the last point of concern, and that is the potential prejudicial impact that Bill C-470 could have on the workforce within the charitable sector.

Employees of registered charities are a diverse group, often changing positions within the sector as well as coming into and out of the charitable sector. This is due in part because their compensation tends to be lower than in the business or public sector. As well, there's often less security in their positions and availability of pensions compared to public sector positions.

The charity sector workforce is driven by a passion for what they do. They are generally prepared to receive less compensation than their counterparts in the private sector or in government. To now require those same individuals who receive compensation in excess of $100,000 to have their name, job title, and compensation made public may have the effect of driving good people from the sector.

In addition, for those employees working and travelling in areas of conflict—

[Terrance Carter, Chair, National Charities and Not-for-Profit Law Section, Canadian Bar Association]

Mr. Chair, members of the committee, thank you for the invitation to appear before the committee to provide comments on Bill C-470.

My name is Terrance Carter, and I am chair of the charity and not-for-profit law section of the Canadian Bar Association.

CBA is a national association of 37,000 jurists from across Canada, including lawyers, notaries, law teachers, and students. This submission was prepared by the national charity and not-for-profit law section of the CBA. Members of the section include lawyers from across Canada who advise or serve on the boards of charitable and not-for-profit organizations.

At the outset, the CBA section is very pleased that amendments to Bill C-470 have been proposed to remove the compensation cap of $250,000. What remains of Bill C-470 is a requirement to make available to the public “the name, job title and annual compensation of the five executives or employees with the highest compensation” in excess of $100,000. In this regard, the CBA section questions the need for a name and salary disclosure requirement proposed in the bill.

As will be explained, the stated objective of the bill, namely the need for transparency, in our opinion can be met by permitting the charities directorate to monitor the activities of registered charities, including compensation through executives and other employees in accordance with subsection 149.1(14) of the Income Tax Act requiring all registered charities to file an annual T3010B, registered charity information return.

The concerns of the CBA section will be addressed by explaining three problematic aspects of the bill as amended. Specifically, they are redundancy in transparency objectives, privacy concerns, and the potential prejudicial impact upon the charitable sector workforce.

First, transparency and accountability in the charitable sector is no doubt a desirable objective. However, transparency is not an absolute value, and it must be balanced with privacy, efficiency, and practical impact of the disclosure to be made.

The requirement by CRA that every registered charity must include in its annual T3010B disclosure the compensation ranges, from under $40,000 to over $350,000—but not the names or job titles of persons receiving them—for the ten highest-paid employees provides a suitable level of transparency for both CRA, as the regulator, and the public, without violating the privacy of the employees of the charity.

If the CRA becomes concerned about the question of compensation, they have the authority under the Income Tax Act to conduct an audit and require the disclosure of all details of compensation, including the name, job title, and actual amount paid as compensation. A registered charity that fails to disclose such information is subject to sanctions, including the ultimate sanction of revocation of charitable status.

With regard to the matter of privacy, the CBA section believes there is an unnecessary and unwarranted intrusion of an individual's privacy in requiring disclosure of the name, job title, and compensation received by an employee or executive of a charity simply because the person works for a registered charity. The charity may receive no direct government funding and it may not even issue tax receipts for tax credits.

There is no compelling policy reason from an income tax perspective, either based on transparency or accountability, to require the identification of individual employees in the manner called for in the bill.

In order to justify an intrusion of a person's privacy, there needs to be a cogent policy reason for doing so. Since CRA is already collecting and making public the compensation range of the top ten employees of a charity and it has the ability to audit and review the details of compensation paid to such employees, there's no policy reason to justify the intrusion upon an employee's privacy.

[Alan Dean, Vice-President, Board of Governors (volunteer), National Office, Canadian Red Cross]

Thank you, Mr. Chairman and members of the committee.

My name is Alan Dean. I'm very pleased to be here today in my capacity as vice-president of the board of governors of the Canadian Red Cross. I also chair the pension committee and the governors committee of the Red Cross in Canada. I fulfill these roles as a volunteer and have been involved with the Red Cross for eight years, both at the provincial and the national level. In my professional life I'm a partner with the law firm of Gowling Lafleur Henderson.

The Canadian Red Cross is Canada's leading humanitarian organization, providing services in Canada and abroad ranging from health intervention to disaster response. The Canadian Red Cross is an independent organization governed by a volunteer board of governors. Internationally, we are members of the Federation of Red Cross and Red Crescent Societies. In Canada, we are a large and a complex organization. We have over 6,400 staff, supplemented by a trained volunteer force of approximately 20,000 people.

The volunteers and the staff are responsible for carrying out the Canadian Red Cross's mandate. They also ensure, in doing that, that our programs are properly funded and that our funds are managed efficiently. Our revenues in 2009 were $372 million, and we are fully compliant with the CRA filing regulations.

Our governance model is woven throughout the organization from a regional to a fully national level. We strongly support the objectives of accountability and transparency. We strive to maintain the highest level of public trust through our efforts. We believe firmly that our donors deserve no less, both in terms of accountability for the use of the funds donated by Canadians who work hard for their money and of the best possible information upon which to base their charitable donation decisions.

So we commend the work of this committee in ensuring that Canada's laws and regulations are up to date and sufficient in terms of ensuring an appropriately high level of transparency.

We are pleased to note that the sponsor of Bill C-470 has chosen to amend the bill in order to remove the previously included compensation cap. Directors of charities must serve without remuneration. They bear a heavy duty and are viewed as higher-order fiduciaries with trustee-like responsibilities, unlike their counterparts in the for-profit sector. A salary cap would have severely limited a board's ability to select qualified management staff and hire the best and the brightest, so we applaud the amendment to remove the compensation cap.

We currently comply with the robust reporting and transparency requirements mandated by the Canada Revenue Agency. As you know, charities like ours are now required to identify the salary range for their ten highest-paid positions, and these salary categories have been expanded. If parliamentarians decide that the existing disclosure regulations, including the new Canada Revenue Agency requirements of 2009, are lacking, we would welcome the opportunity to work with you in examining other models for disclosure and transparency.

In particular, we take positive note of the proposed amendment to Bill C-470 that establishes a floor for salary disclosure of $100,000. We have no objection to this proposed floor, nor to the concept of releasing specific information regarding job titles or descriptions and specific salary amounts for employees who would fall into the categories for disclosure that Parliament might establish. That said, there may be specific circumstances in which the information related to a particular individual should not be disclosed, to protect that individual's safety and security. To address those, we agree with the notion of giving the minister responsible some discretion to withhold information, to protect individuals from harm.

Thank you very much, Mr. Chair and members of the committee. I would be pleased to respond to any questions you may have.

[Tom Closson, President and Chief Executive Officer, Ontario Hospital Association]

Good afternoon. My name is Tom Closson and I'm president and CEO of the Ontario Hospital Association. The OHA represents Ontario’s 154 public hospitals, virtually all of which are CRA-registered charities.

We originally requested the opportunity to appear before this committee because we had grave concerns about the effect the proposed salary cap included in Bill C-470 would have on hospitals across Ontario and the largest and most successful hospital foundations. The majority of Ontario's hospitals employ at least one individual who earns more than $250,000 per year. In many hospitals these individuals include physician leaders or physician specialists. In Ontario, approximately 15 hospital foundations pay at least one employee, usually only one employee, more than $250,000.

Hospitals are in the business of providing patient care. Hospital foundations are responsible for raising the funds necessary to support the associated hospitals.

In Ontario, hospital foundations fund two-thirds of the salaries of many hospital medical researchers who are principal investigators. They're also responsible for raising 10% of the funds necessary for major capital construction projects and 100% of the funds necessary to purchase medical equipment like MRIs and CT scanners. If a hospital lost its charitable designation, its foundation could not give the hospital the funds it has raised. If a hospital's foundation lost its charitable designation, the hospital could not receive the funds raised by the foundation. In either case, the result would be devastating for the hospital's patients.

Leading a hospital or a hospital foundation is not easy. Leadership has a big impact on the success. In Ontario, hospitals and hospital foundations have volunteer boards of directors who are responsible for recruiting in-demand medical research and management talent. They also determine appropriate compensation structures and they manage performance. Their leadership has helped to make Ontario's hospitals some of the highest performing in the world. If passed unamended, Bill C-470 would undermine the responsibilities of those boards of directors, which in the case of hospitals have a direct legal relationship to the Government of Ontario. For these reasons, the OHA does not support Bill C-470 as it currently is drafted, but we acknowledge and appreciate the sponsoring member of Parliament's commitment last week to stripping out the salary cap from the bill.

With respect to the proposal to create a salary threshold of $100,000, above which registered charities would be required to publicly disclose the salaries of the top five executives, Ontario's hospitals have no objection to that. As you may know, Ontario's hospitals are already subject to our province's public sector salary disclosure, which requires us to disclose the top compensation for every hospital employee who earns more than $100,000 per year every March 31.

I also understand there has been some discussion here regarding the disclosure of the relationship that some charities have with third-party fundraising companies and that action could be taken through an amendment to Bill C-470. I would encourage the committee to refrain from doing so without additional formal examination of the issue. The operations of charities are complex and sensitive, as are their vendor relationships. I believe a full examination of all of the issues would be beneficial before action is taken by legislators.

Let me sum up by saying that the Ontario Hospital Association would have no objection to Bill C-470 if it were amended to strip out the salary cap or include a public sector requirement for the top five executives earning more than $100,000. That said, we believe that the Canada Revenue Agency already has sufficient authority to properly police the charitable sector, and we remain unclear about what substantial new benefit even an amended Bill C-470 would provide to the public.

Thank you for your time today, and I look forward to questions.

[Gary Bizzo, As an Individual]

Thank you, Mr. Chairman.

First, there are a great many charities in Canada that provide exceptional service, above and beyond, to the Canadian public. I represent donors.

I work for a society with charitable status in Vancouver called SUCCESS. Our 400 dedicated employees will tell you that they are committed to the good of our community. We operate dozens of programs that are not-for-profit. As a senior manager with eight years of experience, I earn $60,000 a year—comfortable by many standards. For the most part, my colleagues and I work for SUCCESS because we like the work and the 180,327 clients we served in 14 languages in 2009.

At the airport on the way here, I ran into my ex-CEO, who had just retired two weeks ago, Tung Chan. He candidly told me he made $110,000 to manage our $40 million society. He said there is a trend to find experienced CEOs who have retired and who are willing to give something back to the community. He felt transparency was paramount and expected.

Transparency is needed with charities. The vast majority of charities fear nothing from openness around the percentage of contributions that go to administration. I prefer to give to charities that understand that as a middle-class person, my contributions represent a big deal to me. I want a charity that has a low administration percentage.

Corporations are obliged to give shareholders information. Why should executives of large charities have any special status? When we the people give them tax benefits, should we not get the same obligation on transparency?

A CEO friend of mine, Gordon Ross, a former adviser in President Clinton's White House committee on Internet security, told me that the general population has no idea what is going on around them because everything is filtered. In a digital age, we are told what people want us to know. I want to go back to the days when it was not filtered. I want disclosure.

As a social media networker with almost 100,000 followers, I put it out to my followers for their opinions on transparency. I have a word-of-mouth influential reach of just over 6.7 million, according to a website called “gripe”. In the space of an hour, I received just under 1,000 messages. The first messages were adamantly against my criticism of CEOs, mainly commenting that good mainstream people needed high compensation. Over 900 messages were against these salaries and wanted transparency.

I run a business blog, so when I switched to promoting this bill on my blog, I did not anticipate the results and fervour of my roughly 5,000 readers per month. While many bloggers with my numbers may expect three to four people to respond to their writings, on my first blog on “excessive charity salaries and transparency”, April 14, 2010, I received 129 comments. The numbers are roughly 50 to 60 times the usual average of responses. Nearly all support Bill C-470, transparency, and salary cap.

I insist that, as important as it is that there is a cap on the size of salaries, transparency is fundamental for me to make an informed determination whether I will contribute to make the world a better place through donations. However, it must be my choice.

Thank you.

[Terry Anne Boyles, Vice-President, Public Affairs, Association of Canadian Community Colleges]

Thank you.

I'm Terry Anne Boyles. I'm vice-president of public affairs with the Association of Canadian Community Colleges. We represent Canada's 150 colleges, institutes, CÉGEPs, polytechnics, and universities with a college mandate. We have campuses in over 1,000 communities in the country and work very closely with the charitable sector in each of those communities and in the wider communities, the regions the colleges serve.

Colleges and their foundations, both formats, are registered charities under the Income Tax Act. We also appreciate the changes within the legislation, as Alain Pineau has just mentioned. I won't address that much further, except to say that while we support the goal of increased transparency and accountability that motivated the bill, there are elements that do have a direct negative impact on member institutions. They're particularly concerned about some of the cost factors that will impact the administration of the bill.

We believe the existing authority of the CRA's charities directorate does provide an adequate mechanism for ensuring transparency and accountability, and we would urge you to defeat Bill C-470. Our members are multi-million-dollar organizations that deal with complex management issues. If the cap hadn't been removed, we would have been telling you about how to attract the high-calibre people they need to run these institutions, being able to have that flexibility. It's important in terms of the salaries. We believe reporting those salaries on the form T3010 through CRA is an adequate, accountable, and transparent way to do the reportings, and we support that. As public institutions, our member institutions report their top salaries, both within the annual reports of their institutions and under whatever the provincial or territorial government accountability measures are.

Fundraising is absolutely vital. One of the points is that within the economic context of the country, our member institutions are struggling with the raising of funds to meet the capacity needs of those institutions and provide access for those who are disadvantaged, and maintaining their charitable status is absolutely critical to moving forward.

The other point we want to address is to support the points of all the other charities. We and our member institutions are concerned about the small charities and their communities and the disclosure requirements for the top five salaries. We believe this disclosure is unnecessary and an unwarranted invasion of privacy. We're also concerned that this puts the employees of some charities at substantive risk.

We are pleased to be working with the other charities appearing before the committee. We each represent quite different areas of the charitable sector in the country, but we are united in our view that the legislation is flawed, unnecessary, and will increase costs, both to the charities and to the Government of Canada. As we've said before, the CRA's charities directorate already has the tools at its disposal to guarantee transparency and accountability. The Income Tax Act provides the minister with the authority to investigate and take action where necessary on those who have undue benefit from their positions at charities, and certainly in our sector the provincial-territorial legislative frameworks do the same.

We urge the committee to defeat Bill C-470.

Thank you.

[Alain Pineau, National Director, Canadian Conference of the Arts]

Thank you, Mr. Chair.

Good afternoon, members of the committee. My name is Alain Pineau and I'm the national director of the Canadian Conference of the Arts. Thank you for giving me the opportunity to present our views on Bill C-470.

The CCA is the oldest and most broadly based cultural umbrella organization in Canada. The CCA provides a national forum for the entire arts, culture, and heritage community, from all disciplines and regions. Our membership reaches over 300,000 artists, creators, and cultural workers.

The CCA fully supports the objectives of transparency within the structures of charitable organizations in Canada, but it is our opinion that Bill C-470 is fundamentally unnecessary, intrusive, and ill-conceived. Like other members of Imagine Canada, we rejoice in the fact that the sponsor of the bill has proposed to drop the controversial cap on salaries. This suggestion was certainly the most intrusive aspect of the bill. While it may not affect many organizations in the cultural sector, salaries of over $250,000 are rarely found in our arts sector. We all object to this unjustified intervention of the government in the governance of civil society organizations.

In our view, the second aspect of the bill remains objectionable, even after the proposed amendment to establish a $100,000 floor on salaries to be made public. Again, this would not apply to many people or organizations in the arts sector, but it is our opinion that it remains intrusive and unjustified. A large number of organizations in the arts, culture, and heritage sector have the status of charitable organizations. However, the vast majority receive only a small percentage of their revenue from donations. Very few arts, culture, or heritage organizations receive even 10% of their revenue from charitable donations.

Take the CCA's own case. Over the past three years charitable donations have contributed a small but much needed 1% of the total revenue of our organization. People who give to an organization like ours do so because they support the work we do and want to help us pay the expenses related to our main activities. Our case is not unique in the arts, culture, and heritage sector. It is our position that even with a floor of $100,000, this clause in Bill C-470 would still constitute an unwarranted and unnecessary intrusion on Canadians' right to privacy.

Why do we think it unnecessary? Because the CCA believes that Revenue Canada already has measures in place to regulate non-profit spending. Canadian charities are already required to publicly account for their organizational activities and finances, including information on staff compensation. Form T3010 requires the provision of a substantial amount of information, including contact information, details about directors, detailed revenue and expenditure information, description of charitable programs, political activities, transfers to qualified organizations, and fundraising revenues and expenditure. Charities must also report compensation information on schedule 3 to form T3010, to include total number of full-time staff, total amount of staff compensation, and the total amount paid to part-time staff.

The information is available, but I guess we can agree with the Honourable Albina Guarnieri that this information may be difficult for Canadians to understand and access. We agree that all Canadians should have easy access to the information in order to be better informed on the operations of charities. But instead of approaching the problem of transparency by applying intrusive legislation onto charities, we suggest that this is an opportunity for this committee and interested members of Parliament to work with Revenue Canada to make the information on charities more easily accessible to a Canadian audience.

Sustaining Canada's Economic Recovery Act

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I am pleased to participate in the debate on Bill C-47, which is not a short bill. The printed version is 143 pages long. The bill includes about nine different sections and 199 clauses. I hope all hon. members will appreciate that when we get a bill this size, it is difficult for any speech to touch on the substantive matters.

The House will often deal with the issue of relevance in debate. I have heard people say that we are debating the budget from last March and they start talking about virtually every item in the budget. However, subsequent to that we have had one implementation bill and this is the second. These implementation bills are intended to put the technical mechanics in place so the representations in the budget are operable. I want to get into a few of those.

I want to advise those who are interested that this bill deals substantively with amendments to the Income Tax Act and related acts in part 1. Part 2 deals with amendments to the Air Travellers Security Charge Act. Part 3 deals with amendments to the Federal-Provincial Fiscal Arrangements Act, which is extremely important in terms of funding of provincially delivered programs and services. Part 4 deals with amendments to the Bank Act and the Financial Consumer Agency of Canada Act. Part 5 deals with amendments to the Canada Disability Savings Act, which we discussed substantively at committee. Part 6 deals with amendments to the Customs Act. Part 7 deals with amendments to the Federal-Provincial Fiscal Arrangements Act. Part 8 deals with amendments to the Office of the Superintendent of Financial Institutions Act. Bill C-47 is a very broad-based bill.

When we are dealing with a budget implementation bill, we are often not talking about anything in the bill in terms of specific amendments to legislation. We tend to drift back to the budget itself and some of its consequences.

The parliamentary secretary, on behalf of the government, led off the debate on the bill. He did not talk much about the budget implementation bill but rather he talked about the budget. This opened up the debate to virtually everything to do with the budget. That is why some people who are interested in the proposed changes to some of these acts have been somewhat ignored in the debate. To rectify that, I want to deal with the proposed amendments to the Income Tax Act and related acts. It is an area in which I have some experience.

The first important area has to do with benefits entitlement and shared custody. Under the Universal Child Care Benefit Act, an eligible individual is defined in subdivision a.1 of division E of part I of the Income Tax Act. If I repeat a lot of these references, people will not understand, so let me just say it is defined in the act. The act currently provides for only one eligible person for a given period.

Under the current provisions, the Canada Revenue Agency has rotated benefits for the universal child care benefit, the Canada child tax benefit and the GST-HST credit for families with shared parenting arrangements on a six month payment basis. The budget proposed to allow two eligible parents in a shared custody arrangement to receive child benefits, including the UCCB. I support that change. It makes sense. A lot of people are at a disadvantage by having just one eligible recipient where shared custody would be a more equitable situation.

The second item under the income tax amendments has to do with the rollover of RRSP proceeds to an RDSP, or registered disability savings plan.

The existing registered retirement savings plan rollover rules are extended under the bill to allow a rollover of a deceased individual's RRSP proceeds to a registered disability savings plan of a financially dependent, infirm child or grandchild. The reason that is important, and why I support it, is that on death of the holder of a registered retirement savings plan, if there is not a spouse for which the act already provides a tax-free rollover, it would then collapse and be taxable fully in the year of death.

If an RRSP collapses all in one year and has a tax liability, in many cases most of that would be taxed at the highest possible rate. It means the estate of the person involved would pay much more tax now than it would have paid had he or she not bought the RRSP in the first place. This would allow that investment in the RRSPs to rollover to a disabled person, financially dependent infirm child or grandchild. It would in fact help families. Members will know that anything that helps families will have my support.

The third area under the Income Tax Act has to do with charities and the disbursement quota form. The finance committee presently is looking at Bill C-470, which tries to put transparency through the expenditures, particularly the human resources costs and salaries of executives of charities. Concerns have been raised that some charities pay exorbitant amounts of compensation to people with the amount of the moneys actually go for charitable purposes being substantially reduced, and that is a problem.

Interestingly enough the changes made in Bill C-47, and I do not know enough about individual cases, I suspect will help some and hurt others because it deals with a disbursement quota.

First, the disbursement quota reform for registered charities, specifically the charitable expenditure rule, would be repealed. Second, the capital accumulation rule would also be modified to increase the threshold from $25,000 to $100,000 for charitable organizations. Third, the anti-avoidance rules would be extended to situations where it could be reasonably considered that the purpose of the transaction was to delay unduly or avoid the application of the disbursement quota. Finally, measures would be implemented to ensure that transferred amounts between non-arm's-length charities would be used to satisfy the disbursement quota for only one charity.

The problem I have with that section is it goes in a different direction than Bill C-470 in terms of the transparency and the concern that there be moneys. In fact, it would allow the charity to have a higher threshold of making disbursements. It would also allow certain charities to accumulate money for capital investments, for instance, if they wanted permanent facilities or core funding for certain programs.

I can understand that in terms of, for instance, hospitals, hospital foundations. I am not sure if the same rules would not have maybe unintended consequences with regard to other charities that are not in some of those key areas of universities or hospitals or organizations like the Cancer Society or the Heart & Stroke, et cetera. There are 85,000 registered charities in Canada. When we start to play around with the disbursement quota rule, somebody will fall through the cracks and there may be some unintended consequences. It will be up to us to monitor the situation.

The next area under part 1 has to do with the employee stock options. There are various methods in the Income Tax Act to deal with the treatment of employee stock options.

First, there is an amendment that would preclude double deductions of both the employee and the employer in respect of the same stock option benefit, which would make sense. The stock option agreement to a non-arm's-length person results in an employment benefit at the time of disposition, and, again, that makes some sense.

A further measure would repeal the tax deferral election. As well, the existing tax withholding requirements would be clarified to ensure that the amount in respect of tax on the value of the employment benefit associated with the issuance of the security would be required to be remitted to the Canada Revenue Agency by the employer. Again, administrative and substantively I agree with that.

Finally, the last measure introduced is a special elective and relieving tax treatment for taxpayers who elected under the tax deferral election introduced in budget 2000 to defer taxation of their stock option benefits until the disposition of the options securities. That appears to be a sound approach.

Section (e) under part 1 deals with accelerated capital cost allowance for clean energy generation. At the finance committee's prebudget hearings, which we have recently concluded, the issue of accelerated capital cost allowance came up frequently. It is an opportunity for businesses to write off, for tax purposes, desirable investments on an accelerated or quicker basis so they pay less tax, which allows them more cash flow to meet their obligations or, more important, to reinvest and continue to roll over their assets to ensure they have the assets, the machinery, the equipment and the like to be more efficient in their work.

Accelerated capital cost allowances is with us to stay. It has been used as a tool rather than a tax cut or something like that. This is effectively a tax deferral scheme. If the businesses keep doing it, it effectively represents a permanent reduction in taxes that could carry forward as long as they continue to invest in the capital, equipment and machinery. I agree with it as a tool and it is very much supported by those who are involved in equipment.

In this one, the section deals specifically with clean energy generation. With regard to our environment and addressing greenhouse gas emissions, et cetera, this is a positive development, which I support.

Section (f) is capital cost allowance for television set-top boxes. I do not know if anybody will understand that, but the capital cost rate for satellite and cable set-top boxes that are acquired after March 4 and that have neither been used nor acquired or used before March 5 will be increased to 40% to better reflect the useful life of the assets. This is effectively a correction of a rate, which is already available in the tax act. As it indicates, it is simply to reflect the fact that these assets have a very short lifespan or utility before substitutes become available and desirable by consumers. It allows them to write them off over a short period of time.

Section (g) under part 1 deals with the Canadian renewable and conservation expenses to do with principle business corporations. The definition of that will be amended to clarify that flow-through share eligibility extends to corporations the principle business of which is one or any combination of producing fuel, generating energy or distributing energy. I agree with that. It is a constructive move to make that change.

Section (h) deals with international financial reporting standards. It gets a little too technical, so I will not go to go there. Having looked at it, there is a five-year transition rule, and I think it works.

There is a sub-item on that. Amendments to the Canada pension plan and the Employment Insurance Act and the Income Tax Act will be made to provide legislative authority for Revenue Canada to issue online notices where authorized by a taxpayer. Again, this is an efficiency in terms of the process.

In addition, part 1 of the bill implements a number of other income tax measures. Employee life and health trust is new. The working income tax benefit will be amended for 2009 to $925 for single individuals with no eligible dependents and to $1,680 for individuals with at least one eligible dependent.

The amendments in this bill will ensure that the working income tax benefit amounts will continue to be indexed to inflation on an annual basis. Thank you, Mr. Minister. I think it is an important change.

There are some technical amendments to the tax-free savings account. I want to comment more fully on that, but I will move on.

Finally, there are the labour-sponsored venture capital corporation rules. Very few people will understand very much about that, but there are consequential amendments related to the tax-free savings account, which I want to address now.

First of all, I certainly support the tax-free savings account instrument, which allows Canadian residents who are 18 years of age or older to be eligible to contribute up to $5,000 annually in a tax-free savings account. The contributions are not tax deductible, but the investment income earned in a tax-free savings account will not be taxed. Since the contributions were not deductible when deposited, there will be no tax when withdrawn.

It is a good instrument to save money if one has money. This is of benefit certainly to middle and higher income Canadians who have cash that they are presently investing and paying income tax on the investment income. Now there is an instrument where they, their spouses and kids can have tax-free savings accounts. All of a sudden, formerly taxable investment income is going to be growing up in non-taxable instruments.

Eventually, I suppose, the taxes will ultimately come when that money is taken out and disbursed for consumption purposes and it works its way through the system. However, it is a leakage of tax revenue to the government, no question about it.

I raised my concern on this with the finance minister and officials last Tuesday. It has to do with the number of amendments they have to make. This is a simple program. One can put up to $5,000 a year in there, and on any income earned on eligible investments, one will not have to pay any tax ever.

We have amendments to make the income attributed to deliberate overcontributions and prohibited investments subject to existing anti-avoidance rules. We also want to make any income attributable to non-qualified investments taxable at regular tax rates. As well, we want to ensure that withdrawals of deliberate overcontributions, prohibited investments, non-qualified investments or amounts attributable to swap transactions or related investment income from a tax-free savings account would not create additional tax-free savings account contribution room. Finally, we want to effectively prohibit asset transfer transactions between tax-free savings accounts and other accounts.

It is a simple program, but the amendments that are being made say to me that the crafters of this and all the levels of care and due diligence that took place in the process somehow did not consider what would happen if people made overcontributions. The government did not consider that if people made an overcontribution, a penalty of 1% was actually a lower amount than what they could earn on those investments, so 1% was not a deterrent. People realized that they could invest at 3%, and if it cost 1% in penalties, they would still make 2% on something that is not going to be taxable anyway. It is getting around the rules.

How is it that the government could not deal with the issues of non-qualified investments? Obviously there are some. It could not deal with deliberate overcontributions, prohibited investments, non-qualified investments, or amounts attributable to swap transactions and what happens if this is done and what are the consequences.

The point I made there and I will make again today in the House is that I did not get a strong comfort level that there was rigorous due diligence and careful thought given to this particular program. With all the things that the government missed in a very simple program, in my view, if the little things are not done well, there is not a great confidence level with regard to the larger items.

[Cathy Hawara, Acting Director General, Charities Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency]

Thank you, Mr. Chairperson.

Good afternoon. Thank you for the invitation to appear this afternoon on Bill C-470.

I am Cathy Hawara, the director general of the charities directorate within CRA. With me is Bryan McLean, the director of policy, planning and legislation division.

I would like to explain the existing legal and regulatory framework administered by the CRA in our role as the federal regulator of registered charities in Canada.

The CRA administers the Income Tax Act, which confers significant tax advantages on registered charities, and prescribes the requirements for obtaining and maintaining charitable registration.

CRA has the authority to revoke a charity's registration if it fails to comply with the registration requirements of the Income Tax Act. An example would be if the charity uses its resources for non-charitable purposes, including providing undue personal benefits to any member. An undue benefit would include a situation where a charity pays or otherwise compensates a person beyond reasonable remuneration for services rendered, irrespective of the level of compensation.

For example, paying an individual $50,000 for services rendered would constitute an undue benefit if, in reality, there were no services provided or if compensation did not correspond with fair market value.

Every year charities must provide information to the CRA by filing what is called an information return. The return includes information about compensation. It is made public on the CRA website and is taken into account as part of our audit program. The CRA's current audit practices include reviewing situations where staff compensation exceeds fair market value for the services rendered. In that regard, we would consider the degree of benefit conferred and whether an advantage was conveyed inadvertently or whether the situation was structured specifically to yield excessive benefits.

The current legislative framework allows the CRA to take a measured approach to resolving non-compliance based on the severity of the offence. For example, if the infraction is not found to be intentional, serious, or egregious, the CRA may choose corrective measures that provide the charity an opportunity to remedy its non-compliance. If, however, our review reveals serious or repeated offences, we may impose intermediate sanctions in the form of monetary penalties and/or a suspension of receipting privileges, or proceed directly to revocation.

With respect to disclosure requirements, the Income Tax Act provides a framework for public accountability in the charitable sector. To this end, the CRA posts on its website the registered charity information returns completed annually by each registered charity. This provides Canadians with access to detailed information about charities' annual operations, including expenditures and programming.

To enhance the clarity and relevance of public information on charities, in 2009 we updated the salary range categories in the annual information return. The upper end of the range was increased to accommodate larger charities, such as hospitals and universities, and provide the public with more meaningful information. Charities are now required to identify the salary range for their 10 highest-paid positions, and the salary categories have been expanded, with the last threshold being $350,000 and above.

In 2008, which is the last complete year that we have data on, 86% of charities reported compensating all of their employees combined less than $250,000. While our 2009 data is not yet complete, early indicators suggest that individual compensation above $250,000 principally occurs in health care charities and, to a lesser extent, in universities and educational charities. To date, fewer than 1% of the charities have reported compensating individuals in excess of $250,000.

In closing, the current legislative and regulatory frameworks allow the CRA to monitor salaries based on the information that is currently reported and made public, so that we may investigate further where warranted. The legislative framework also provides a range of compliance options to allow us to take a measured approach to remedying situations involving undue benefit, based on the specific facts in each situation, up to and including revocation of registration.

Mr. Chair, we would be pleased to answer any questions the members of the committee may have.

[Baxter Williams, Acting General Director (Analysis), Tax Policy Branch, Department of Finance]

Hello.

I understand that amendments to the bill have been tabled. I haven't had a chance to incorporate those into my speaking notes, so I hope you take that into account.

Thank you for the introduction, and thank you for this opportunity to provide you with comments on private member's Bill C-470, which deals with compensation in registered charities.

My objective today is to provide some context about the current legislative and regulatory framework for compliance in the charitable sector, as provided in the Income Tax Act.

There are currently 85,000 registered charities in Canada, ranging from small entities run by volunteers to large charities such as hospitals and universities. To give you an idea of the diversity of charities, in terms of the size of these 85,000, about half report total annual receipts or revenues of under $100,000. Over half the registered charities in Canada report having no paid employees.

The Income Tax Act contains substantial incentives encouraging people to donate to registered charities.

Individual donors receive a 15% tax credit for annual donations of up to $200, and a 29% credit for donations over and above $200.

If you also take into account provincial and federal support measures, Canadians receive approximately 46% in tax credits, on average, for donations in excess of $200.

Organizations benefit from a tax deduction on donations received.

Over the past decade, the Government of Canada has significantly increased incentives for donating to charities. The capital gains tax associated with donations of publicly listed securities to public charities was first reduced in 1997 and was eliminated altogether in 2006. This exemption was extended to donations of listed securities to private foundations in 2007. The incentives for making donations of ecologically sensitive land to conservation charities were also significantly improved. Finally, larger gifts to charities were also made more effective by increasing the annual donation limits, as a percentage of income, from 20% of net income to 75% of net income.

In addition to their ability to issue tax receipts for donations, registered charities are also exempt from tax on their income.

In light of the generous tax support provided to encourage Canadians to donate to charities, the Income Tax Act contains a number of restrictions on how charities can operate. These provisions build on the common law and provincial statutes in place to regulate charities.

The Income Tax Act requires that registered charities be established for charitable purposes and that they devote their resources to charitable activities. While the meaning of charitable activities and charitable purposes is largely determined by jurisprudence, the Income Tax Act includes specific requirements for registration as a charity and grounds for revocation.

On compensation, the current framework for charities includes compliance tools that can be used in cases of excess compensation.

From a policy perspective, it is important to recognize that the charitable sector is in competition with the private sector for highly skilled executives. In this regard, it's appropriate for charities to pay their executives salaries that are comparable to their private sector counterparts--that is, fair market value.

The CRA's assessment of what constitutes reasonable compensation must be based on a comprehensive review of the specific circumstances under which compensation is paid.

For example, it might be reasonable to provide an executive with enhanced compensation in order to manage millions of dollars in resource expenditures as well as hundreds of employees. However, it might be ill-advised to pay the same salary to the president and sole employee of a small charity.

In cases of excessive compensation, the Income Tax Act provides the Canada Revenue Agency with the authority to impose an intermediate sanction; that is, a penalty for undue benefits, if a charity pays an unreasonable amount to any person.

If the CRA determines there is an undue benefit provided to a person, a penalty equal to 105% of the amount of undue benefit can be imposed on a charity. A 110% penalty and the suspension of tax receipting privileges can be applied in the case of repeat infractions. Penalties are normally transferred to an eligible charity, thereby keeping the funds within the charitable sector.

Excessive compensation could be grounds for revocation in some cases because the funds spent on excessive compensation are funds that are not devoted to a charitable purpose, as required by law.

I would also like to mention that the rules in the Income Tax Act for undue benefit apply to many sorts of transactions, not just to excessive salaries. This helps ensure that charities do not pay more than what would be considered reasonable remuneration for goods and services.

The Income Tax Act requires that registered charities file annual information returns that are made publicly available. That requirement allows Canadians to access a broad range of financial information on charitable organizations, including information on compensation. The requirement to produce such returns contributes to greater transparency in the sector.

Charities are required to report the total compensation for their 10 highest paid positions by salary range. That information is available to the public on the CRA's website and helps foster transparency with regard to how resources are used by charitable organizations. Those reports help the CRA to detect potential abuse and set audit priorities.

The Department of Finance will continue its ongoing efforts to ensure that appropriate legislative and regulatory frameworks are in place to promote accountability in the charitable sector.

I would be happy to respond to any of your questions.

Thank you.

[The Chair, Conservative, James Rajotte]

Colleagues, if I can ask you to find your seats, please, we will begin our second hour of discussion here today on Bill C-470, An Act to amend the Income Tax Act, which deals with charities.

We have two departments before us today. We have the Department of Finance and we have the Canada Revenue Agency.

Thank you very much for coming this afternoon.

We have Mr. Baxter Williams, acting general director of analysis, tax policy branch. We have Ms. Sharmila Khare, chief, personal income tax division.

From the Canada Revenue Agency we have Ms. Cathy Hawara, acting director general, charities directorate, legislative policy and regulatory affairs branch; and Mr. Bryan McLean, director of policy, planning and legislation division, charities directorate, legislative policy and regulatory affairs branch.

We'll hear from the Department of Finance first and then from CRA.

We'll start with Mr. Williams, please.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you, Mr. Chair. Thank you, Madam Guarnieri.

I just have a comment and then a proposal that I would put to the committee when it goes to clause-by-clause.

First of all, I support the intent of this bill. I support your proposed amendments. I think it would shed much-needed transparency and light on the compensation issue regarding many charities in Canada.

My concern is with related corporations. In recent years, these for-profit share capital corporations have emerged that are very tightly and closely related to federally registered charities. These are for-profit enterprises that are not subject to any public reporting requirements, as they're often CCPCs, Canadian-controlled private corporations.

What they are doing is using the goodwill, the good name, of federally registered charities in order to promote their for-profit enterprises. Their give-back to the charity is that they somehow apportion a portion of their profits—give a portion, a percentage of their profits—back to this charity. It's not clear how much of those profits they're giving back in terms of their overall revenue base and what the compensation is of the senior executives who work for these for-profit corporations.

So I would propose to you that Bill C-470, in clause 1, be amended, by adding after line 18, the following: the name, job title, and annual compensation of the five executives or employees with the highest compensation, provided it exceeds $100,000 annually, of any corporations related to the registered or previously registered charity. What that would do is shed transparency on very closely related share capital corporations whose executives might be profiting from the goodwill of a close association with a federally registered charity.

[Albina Guarnieri, Liberal, Mississauga East—Cooksville, ON]

Thank you, Mr. Chair.

I would like to begin by thanking committee members for participating in the study of Bill C-470, which would bring about more transparency with regard to the salaries paid by charities.

Mr. Chairman, when I introduced Bill C-470 last fall, I genuinely believed it was a mere accessory to motherhood and apple pie. I doubted anyone would actually argue with the idea that Canadian charities should have the same type of salary disclosure that American charities already have, that all Canadian public corporations like Rogers and Bell have, and that most provincial governments already have. The fierce resistance made me wonder if I had innocently stumbled onto something.

I met with countless charities and with even more donors and started asking why transparency could be so frightening to so many. The small measure of transparency my bill seeks is the disclosure of the names, titles, and salaries of just the five highest-paid employees. Charities would still report ranges of the top ten, as they do now, but the top five would be fully disclosed.

A second prong of my bill adds to the minister's long list of rarely or never-used powers to actually regulate charities. It would allow the minister the discretionary ability to deregister a charity if it pays an executive more than a quarter-million dollars in a year. While lately the media are full of reports of abuses by charities, I should say at the outset that there are many excellent charities in this country.

One is the St. Peter's Parish Dominican Relief Fund. It delivers hundreds of thousands of dollars in aid every year to Haitians living in the bateyes, in the Dominican Republic. Father Michael Corcione, Dr. Dario Del Rizzo, and a team of volunteers set up medical clinics, provide medical care, medicine, and clothing, and handle fundraising, logistics, and program delivery without spending a single dime in administration or fundraising costs.

At the other end of the scale is World Vision. It collects over $350 million in donations annually, spends less than 20% on fundraising and administration, and pays its CEO $188,000. The largest issuer of tax receipts in Canada appears to pay far less than the discretionary cap suggested by this bill. Tiny charities and massive charities can both put the cause first and keep salaries in check.

In the middle are charities as small as 2% of the size of World Vision that pay much more to executives and spend twice or three times as much on administration and fundraising. Transparency itself will not cure self-interest and the temptation to take home more charity in pay and perks; however, it will provide some measure of restraint and donor awareness. Better-run charities may benefit from donations redirected from those that burn more than half of every dollar on fundraising companies and administrative salaries, where the president hires himself as a consultant, where nepotism pays six-figure salaries to spouses and children, where the executives pocket donated prizes, or where the charity helps facilitate a $2.5 billion tax fraud by issuing inflated tax receipts through gifting tax shelters.

To see why salary disclosure is so important to donors and so threatening to executives, let's look at the current state of disclosure. You will have read in The Toronto Star that the Oshawa Hospital Foundation paid its CEO $200,000, five-figure benefits, $10,000 a month in consulting fees, and more. All of this would have been a surprise to anyone looking at the return posted on the CRA website, which says the charity did not indicate that it incurred expenses for compensation of employees during the fiscal year. The Toronto Star total adds up to about $350,000. The CRA publishes “zero” for 2009 and previous years.

You can get classified Pentagon documents on WikiLeaks easier than you can find compensation information about charities.

I would argue that early compensation disclosure would have prevented the Oshawa situation from turning into a crisis, as there never would have been a need for an investigative reporter to dig out the truth.

Mr. Chair, with the current state of disclosure, 88% of donors don't bother to look at the CRA site and the confusing and misleading information posted there. They don't have the time to figure out the shell games. They rely on the only real regulators of charities, the media: the Toronto Star, The Globe and Mail, and CBC, to name a few.

The CRA was kind enough to provide data on donors, donations, fundraisers, and management/administration costs. I've circulated some tables for your perusal. You will see that since 2000, donors have remained flat, so high-priced fundraising talent is not attracting more donors. Charitable receipts are growing barely faster than the rate of inflation, barely more than 1% a year on average, but fundraising costs defy gravity. For every percentage point increase in donations, fundraising costs rose three and a half percentage points. Even after accounting for inflation, fundraising costs rose more than 50%, three and a half times as fast as donations.

Management and administration costs marched skyward as well, rising even faster than fundraising costs, so secrecy has certainly been a booming success for fundraisers and executives in terms of pay. It is not much of a success for frugal charities that have to spend more and more to maintain their revenue against competition that can spend 50¢ of every dollar on fundraising and administration, without sanction or salary disclosure.

Let's look at the situation from the perspective of people who need the money to reach the cause, people hoping for a cure or a helping hand. Putting a personal face on it, if you will permit me, let's take a look at the MS Society. I know that donors and sufferers are disappointed to find out that the MS Society is spending more on fundraising than research. Fundraising, management, and administration together exceed research by 75%, and exceed the total spent on all charitable programs by 20%, according to the CRA listing. Despite this, the MS Society is one of the better performers among medical charities and may just be a victim of the inflationary reality created by the fundraising industry, which you will hear from later.

Charities have become a filter that too often shrinks donations by half and leaves federal and provincial taxpayers paying for the bulk of actual programs through credits and deductions. The question my bill asks is whether secrecy is working. Are unlimited and undisclosed salaries for executives bringing down the costs or driving them up? Should Canadians continue to have to look to U.S. registrations to find out how much Canadian charities are paying themselves?

You will hear from charity executives themselves. You will hear from their lawyers and private fundraisers who rely on them. What do Canadians think? What do donors think?

I asked Pollara to ask 2,000 Canadians, and here is what they found. Only 12% said they had looked at the CRA website, so there needs to be another way to bring light to blind generosity.

When asked, do you agree or disagree that the five highest-paid executives from all Canadian charitable organizations should be required to disclose their salaries, 83% agreed and 11% disagreed.

When asked, are you aware that some charity executives earn more than $250,000 a year, 68% said no. Do they think there should be a limit? Sixty-eight per cent said yes; 22% said no.

What limit do they think is appropriate? Of those who supported a cap, 82% said it should be $100,000 or less. The median answer was $75,000. Only 3% of donors thought the cap should be higher than $250,000. So that is the best sense as to what donors are saying at large and might be saying to you. But alas, you will hear that the minister might deregister a hospital or someone might pay more than the limit for a brain surgeon. You might hear any number of other red herrings from people who know well that the minister already has the grounds to deregister countless charities on the basis of disproportionate private gain, and hasn't done so. He's hardly going to deregister a hospital, university, or orchestra for paying doctors, professors, or conductors.

Nonetheless, I have agreed to delete the part surrounding the cap, because I don't want that tangential debate to be the shield that keeps exorbitant salaries secret.

I have received assurance from the parliamentary secretary that the government will explore the murky issue of contract fundraisers and fundraising companies. Perhaps we will finally see full disclosure of all fundraising salaries earned from donations that never make it to the cause.

Moreover, I don't want anyone to be able to hide a $1 million salary behind a secretary's privacy concerns, as if they're worried about the privacy of low-paid workers. So I have offered another amendment to create a disclosure floor of $100,000.

In conclusion, we now have a bill with a single, unambiguous purpose of delivering transparency for high-paid executives. I believe that Bill C-470 can be a small first step to reforming the charities sector into a transparent and efficient funding vehicle for good causes. I know you will need to do more.

The salaries of fundraisers and the profits of fundraising companies need to be disclosed. Fundraising costs and CEO salaries need to be disclosed right on the tax receipt or other means, as Blaine Calkins suggested in the House of Commons. Tax receipts ought to be reduced by the amount that fundraising and admin costs exceed 25%. Donor reaction would bring fundraising costs down in a frantic hurry—to the benefit of every cause, cure, or vital need.

Finally, the minister should have the same powers as the securities regulator to ban executives who hide costs, funnel funds to related companies, or participate in scams like gifting tax shelters that robbed Canadian taxpayers of over $2 billion by inflating receipts. With these measures in place, the donor dollar would no longer go through more pockets than a dry cleaner, and perhaps charities would deliver a lot more charity.

Thank you.

[The Chair, Conservative, James Rajotte]

I call the 49th meeting of the Standing Committee on Finance to order.

Our order today, pursuant to the order of reference of Wednesday, April 21, 2010, is Bill C-470, An Act to amend the Income Tax Act (revocation of registration).

We have two panels with us at this meeting, or two one-hour sessions. In the first panel, from 3:30 to 4:30 p.m., we have our colleague, the Honourable Albina Guarnieri, member of Parliament for Mississauga East—Cooksville, and the sponsor of this private member's bill.

Welcome to our committee. It's a pleasure to have you here today. We have the first hour dedicated to your opening statement and questions from members. I believe you have an opening statement of around 10 minutes. We want to welcome you to the committee and have you begin at any time.

[Paul Szabo, Liberal, Mississauga South, ON]

I have more questions, but I do want to raise that the member for Mississauga East—Cooksville has a bill with regard to charities, Bill C-470. I suspect somebody on the panel is aware of it. No? Wow.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

What date do you need our witness list by, on Bill C-470?

[The Chair, Conservative, James Rajotte]

Thank you.

We're well over time, Mr. Brison, unfortunately.

Thank you for your presentations and your answers to our questions.

If you have anything further you wish the committee to consider, we will be considering recommendations after the break week. Please submit your comments to the clerk. I will ensure all members get them. I want to thank you all for being here this morning.

Colleagues, just very briefly, please take a look at the projected calendar and the witness list for Bill C-470. If you have any additional witnesses you wish the committee to consider, we can certainly do so, but perhaps tomorrow we'll just briefly discuss the witness list. I would like you to have a look at the list and perhaps prioritize from each of your points of view.

I see the roll of the eyes of Mr. Mulcair. That means he agrees with me.

Thank you.

Monsieur Carrier.

[The Chair, Conservative, James Rajotte]

If there's anything further you have on it, I'd certainly appreciate it.

My final point is for Ms. Pearson. As two of our colleagues mentioned, private member's Bill C-470 deals with the charitable sector. We hope to deal with that at the end of November, beginning of December. I know we have a lot of witnesses who want to appear on that bill, but I just want to highlight that for you. We have to report it back to the House on December 17.

[Vaughan Dowie]

I think you are talking about Bill C-470. Canadian universities say unanimously that this bill should not apply to universities. Universities have staff and top researchers who sometimes make more than $250,000. We are making representations to the four political parties so that everyone is aware of our situation.

Finance

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Mr. Speaker, I have the honour to present, in both official languages, the fifth report of the Standing Committee on Finance, respecting the request for an extension of 30 days to consider Bill C-470, An Act to amend the Income Tax Act (revocation of registration).

The House resumed from April 19 consideration of the motion that Bill C-470, An Act to amend the Income Tax Act (revocation of registration), be read the second time and referred to a committee.

Income Tax Act

[Albina Guarnieri, Liberal, Mississauga East—Cooksville, ON]

Mr. Speaker, first let me thank members from all sides of the House who have added productively to the debate on this issue.

Bill C-470 seeks to add two ingredients to charity executive pay: reason and accountability. Salaries would have to be within reason, or the minister could take action in the interests of donors and taxpayers who often have no direct say on how their money is spent. Greater accountability will come with the disclosure of every charity's top five income earners and their salaries.

The government did make progress last year by requiring more detailed ranges of salaries, but no corporate CEO could get away with saying he just made over $350,000. Donors are paying the bill and deserve the names, positions and amounts, like any shareholder. Arguments for continued secrecy have largely withered over the past several weeks. It is simply not tenable for charities who rely on the faith and trust of donors to say they deserve salary secrecy that is unthinkable in either the government or corporate sector.

The promise of Bill C-470 is that donor awareness may be a cure for the high salaries and costs that are shrinking every donor dollar today. Bill C-470 also aims to add a measure of reason and restraint to charitable salaries. It does not seek to impose a hard cap, but simply to provide a long-overdue mechanism for the minister to restrain excessive compensation. The minister would retain the absolute discretion to act in the interests of both the cause and the donor community.

Diversionary concerns about the potential impact on the top salaries of professors and surgeons at universities and hospitals are not well founded, as most of these institutions have separate charitable foundations. For those that do intermingle operating and fundraising activities, the minister can make the obvious distinction.

Fewer than 1% of Canadians earn $250,000 a year. Charities rely on the generosity of the other 99% and need to justify the exorbitant pay of their fundraisers. When one executive was reported to have received millions of dollars in salary incentives and severance, the excuses poured in from charities: “We have to attract fundraising talent from the U.S.”; “We cannot find competent people who would work for under a quarter million a year”. Other organizations have even argued that young people will not go into charity work if they cannot make a lot of money. I wonder if I am alone in finding this somewhat ironic.

From 2000 to 2008, the number of donors in Canada was basically stagnant, growing by less than 1% annually. So the charitable sector is not attracting more donors. Total tax receipted donations grew by an average of only 5%, little better than the rate of inflation. So Canadians are donating more, but hardly enough to justify ballooning fundraising pay.

Published information with the CRA reveals even less connection between pay and performance. Without a single person reporting making over $250,000, one charity raises twice as much money at half the cost per dollar of the highest paying Toronto medical charity. So it is possible to run a charity without investment banker salaries. But exorbitant salaries are infectious and are spreading to charities great and small and even very small.

One small foundation that pays more than $350,000 actually hiked salaries by 69% over the last five years while revenue dropped 33%. Thirty-six cents of every dollar raised is now lost to fundraising and administration, double the rate of only five years ago. Paying astronomical salaries does not always deliver astronomical results. Many sports leagues have adopted salary caps to respond to similar situations where competition was raising costs far faster than revenue.

In conclusion, Bill C-470 asks the House to take a small step in curbing a free-for-all with donor and taxpayer money. Parliament alone can take a stand to safeguard the sacrifice of donors by insisting that charities deliver more transparency and ultimately more charity.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I am pleased to speak to Bill C-470, brought forward by the member for Mississauga East—Cooksville, which has to do with charities.

I support this bill very much. I am little concerned because there has been some misinformation of which I think members should be aware. Probably the best reason this bill should go to committee is to enable the charitable institutions and foundations to provide some input. I understand there was concern in the charitable sector initially, but that actually has turned around. I believe there are some 85,000 charities.

I approach this not from the standpoint that I am looking for some charity that is doing something that it should not be doing. What is needed is greater transparency, openness and accountability. We are talking about taxpayers' dollars. When people make a charitable donation, they claim that donation and get the appropriate tax credit on their income tax return. All Canadians, all taxpayers, are subsidizing the contribution to various charitable organizations and foundations. From that standpoint, it is very consistent that disclosure of relevant information should be made available to all Canadians about how their tax dollars are being spent.

I do not think there are many people who have not heard some conversation about exactly who is getting how much and how much of their dollars is actually hitting the ground and helping the people they want to help. The United Way is asked this question all the time, and it reports on it and it boasts about it. Campaign 2000, which helps deal with the issue of child poverty, is constantly looking at how much money is actually going toward helping people and promoting the alleviation of child poverty in Canada.

It is extremely important that we look at this from the accountability aspect.

Today I received a letter from the Prime Minister's chief of staff, who subsequent to his appearance before the ethics committee on the subject matter, provided copies of the letters that he sent out to the ministers indicating that it is a responsibility of the government to promote accountability, transparency and openness. I think the House concurs. It is the law. It is a charter right.

I know where some of the confusion has arisen for some members who may have looked at this. It is one of those cases that if we just hear the short version, or the summary, we may get an impression which is not reflective of the full detail of the bill. The summary of this bill states, “This enactment amends the Income Tax Act to revoke the registration of a charitable organization, public foundation or private foundation if the annual compensation it pays to any single executive or employee exceeds $250,000”, period.

That is how the summary was drafted, but that is not exactly what the bill would do. The bill would not revoke the registration of a charity, or a private or a public foundation, if it pays any one person more than $250,000. The bill requires the disclosure and the minister may look at it. It is not absolute; it is optional. It is a matter that the minister may invoke if there is clear abuse. There is some ministerial discretion. This is not a black and white situation, that if a charity pays somebody over $250,000 that, all of a sudden, the registration of the charity is revoked.

I hope that members will look carefully at this. This is one question that has to be totally clarified in committee to absolutely ensure, to the assurance of all hon. members, that this bill is not an attack on charities.

The government deputy House leader had made an indication that in his view there was a royal recommendation required for the bill, and I think he made an interesting argument. However, the bill effectively only amplifies or adds further criteria under which the minister responsible for the act in question, the Income Tax Act, can have the latitude to take decisions if it is appropriate.

The Speaker ruled that in fact there was not a need for a ways and means motion for this amendment to the Income Tax Act. I think members should take some solace from that. The bill is a sound bill, it is a clean bill and it should go to committee to hear from the stakeholders who may be affected and may be concerned.

It is always good when we can have people on side. They will come before committee, they will ask their questions or make their representations and things will be clarified. Then it is not just what a half dozen people happen to say during the debate at second reading in the House based on their own information or knowledge, but it is the experts. It is those who are in the business and who can provide the details and the commentary on the legislation and its implications and make recommendations for changes to the bill if necessary. That is what the committee is for.

We cannot make amendments here on second reading. We can say that we have some concern about this aspect and we hope that the committee will do that. Those are the kinds of things that happen from time to time. The committee stage is extremely important.

I believe this is an important bill, primarily from the standpoint of the openness and transparency requirements and the accountability requirements that we expect from all matters as they relate to governing the taxpayers' dollars.

The member in question has been here for more than 20 years. I know she does her homework. Anyone who knows the member knows that she is a member of great integrity. She has not brought many bills before this place, but when she does, look out, because she is responding to critical issues in which the public interest is to be served.

I am not going to get into this, but people may want to look at her background. The member has a reputation for bringing matters that I think are extremely important for us to consider.

This is not an inconsequential bill. It is a significant bill. It is a bill that I believe will get a thorough hearing at committee, and I believe it will pass at all stages and become law.

There was a question that came up in one meeting I was at that I want to raise as well, about whether or not this would affect universities, and people were talking about foundations.

As we know, many hospitals have a fundraising wing that is separate from the hospital operations themselves, separate and incorporated entities to raise money for hospitals. These would be maintained separately. The bill would not affect hospitals or other foundations that are set up for that purpose. It is a small detail, one question only, but it is the kind of question that has come up.

Therefore I wanted to rise in the House today to say that I have taken the time to look at it. I heard the member present her bill in debate. I heard her represent her position last week in the media. After people asked their questions and got the answers, to fully understand, it is amazing how the outlook on the bill has turned so dramatically.

I want to leave it at that, and I want to encourage all members of Parliament to please vote for the bill on second reading and to encourage the committee to do appropriate hearings to ensure that we make good laws and wise decisions.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Mr. Speaker, I am thankful for the opportunity to speak to Bill C-470, a proposal before the House sponsored by the member for Mississauga East—Cooksville.

From the onset, I will state that our government agrees with the member on the importance of ensuring proper and appropriate regulation of the charitable sector in Canada. This includes the need to remain vigilant against undue personal benefit for individuals employed in the sector.

Our government is always open to exploring ways to strengthen current legislation. In that regard, we welcome and will support Bill C-470 for discussion in the finance committee in the coming weeks and months. Moreover, we understand that many charitable organizations, both large and small, would like to participate in the debate on Bill C-470 and potentially make some suggestions related to the proposal.

We are especially encouraged that the member noted earlier in the debate that she was ready to more fully explore this proposal at committee stage. The member for Mississauga East—Cooksville would likely agree that we need an opportunity to hear the voices of those involved in charities across Canada to make certain that occurs.

I also believe that all members of Parliament share in the member's belief that charities are a vital part of communities right across Canada. That is why since 2006 our government has taken some notable actions to help bolster charities and allow them to keep doing the great work they do in our communities.

In budget 2010, our Conservative government announced it would move forward with a plan to reform what is referred to as a disbursement quota. This reform is intended to reduce unnecessary red tape to better allow charities to focus their time and resources on their charitable activities and helping their communities.

For the benefit of the House, I will relay a small sampling of the feedback we have received on this particular budget 2010 announcement.

Imagine Canada applauded it for providing the following:

...greater flexibility for charities as they seek to meet the increasing and changing needs of Canadians....

The [disbursement quota] added layers of red tape and reduced flexibility in responding to the needs of Canadians and communities. ...[it] will help charitable organizations, especially smaller and rural ones, to better plan their activities to meet the real needs of their communities.

The Salvation Army cheered it by saying:

The removal of the quota will provide The Salvation Army; one of Canada’s largest charities, with increased flexibility....

We are very pleased with this announcement. The proposed changes will allow us to better respond to the needs of the people we serve in 400 communities across Canada.

Finally, someone the member for Mississauga East—Cooksville may be somewhat familiar with, the Community Foundation of Mississauga's executive director, Eileen MacKenzie, explained:

We applaud the government’s decision to reform the disbursement quota policy. ...[it] will lessen the administrative burden on our charities, direct more resources to addressing community needs and enable them to plan more effectively for the future.

This is a specific example of a helpful initiative our Conservative government has undertaken to support Canada's charitable sector. Today's proposal deals with the accountability of these registered charities, specifically regarding the compensation given to those employed by such organizations.

To put this debate into context, I believe it would be informative to look at how charities are regulated in Canada. First, responsibility for the regulation of registered charities is divided between the federal government and provincial and territorial governments.

Within the federal government, the Canada Revenue Agency, or CRA, regulates registered charities. The CRA is responsible for applying the provisions of the Income Tax Act relating to registered charities. Beyond income tax considerations, the regulation of charities is constitutionally under the jurisdiction of the respective provinces and territories in which they operate.

As mentioned earlier, recent reforms have given CRA more powerful compliance tools when regulating the charitable sector. The ultimate compliance tool is the ability to de-register a charity. If a charity is deregistered, it immediately loses its ability to issue tax receipts to donors. It also may become taxable on its existing assets. In addition, it must transfer its charitable resources to another charity within a specified period of time or pay a revocation tax to the government. Clearly, considering the special tax treatment that registered charities receive, excessive compensation for those employed by them is not something that donors or everyday taxpayers would approve.

That is why, currently, if the CRA comes across a situation where a registered charity is not fulfilling its charitable purposes and/or there is undue personal benefit, such as compensation clearly in excess of fair market value, CRA can take strong corrective action.

Under the present system, for the first infraction by a registered charity, CRA can impose a tax of 105% of the amount of the undue benefit. If a charity repeats such an infraction within five years, the penalty increases to 110%. In addition, CRA can immediately suspend the tax receipting privileges of the charity. Finally, if the problem is ongoing and repeated, CRA can move to deregister the charity completely.

Before concluding, I want to state that our Conservative government firmly believes that Canadians who donate their hard-earned money to charities should have the proper tools available to ensure that those organizations are accountable, and that is why we took action to improve accountability.

Up until last year, CRA had only required charities to report on the compensation for the five highest paid employees and indicate limited salary ranges, with the last threshold being $119,000 and over. Our Conservative government did not believe that to be sufficient and brought in changes. Now we require charities to report the 10 highest paid positions, double than before. What is more, we expanded the salary ranges, with the last threshold being $350,000 and over. I note that all of this information is available publicly and online for all to view at www.cra-arc.gc.ca.

Our new accountability rules will improve transparency, allowing those generous men and women in Canada, who donate their own hard-earned dollars, the information they need to make their charitable giving decisions with peace of mind.

Without a doubt, our Conservative government has taken action to both encourage charities to serve our communities across Canada better, while at the same time improving transparency surrounding their actions.

We are clearly committed to accountability and transparency in the charitable sector. While the tax system already has tools in place for both the regulation of compensation in the sector and to guard against undue personal benefit, we are always open to exploring other ways to strengthen it.

As Bill C-470 successfully passes second reading and advances to the finance committee, however, we again both welcome and urge a very comprehensive discussion at that stage. That discussion will provide an essential opportunity to hear directly from those in the charitable sector and explore their questions and concerns.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Mr. Speaker, I rise today to second private member's Bill C-470 put forward by the visionary member for Mississauga East—Cooksville. I call her visionary because she brought in a bill on proportional sentences for murderers that was so good for Canadians that the government adopted it. I hope the government takes the same lead on this private member's bill as well.

Charitable giving is part of our nature as Canadians. Charities across the country receive billions in contributions from Canadians of all income levels, of all backgrounds, and from every province and territory.

That being said, I am well aware of the challenges that charities have faced in recent years. In 2008 Canadians donated $8.19 billion, a 5.3% drop from the previous year. Although the figures for 2009 have not been released yet, the charities I have spoken to have told me how difficult 2009 was as well. The global economic downturn has had a huge impact in this regard, and like businesses, charities have felt the pinch.

There was good news however. The number of donors did rise to 5.8 million, which represented a 1.7% increase from the year before. This bill is about those 5.8 million Canadians.

The first component of this bill has to do with transparency, which is a standard that each and every charitable organization should be trying to achieve.

Those that give to a cause want to know that their gift is going to the right place. So we ask about a charitable organization's administrative costs, and how much of a donation is actually making a direct impact.

But surprisingly, up until last year, the Canada Revenue Agency never required charities to report the salaries of their top executives.

The charitable filings for 2009 mark the first time Canadian charities have disclosed compensation information for their ten highest paid officials. Previously, charities only had to provide limited information about their five best paid staff positions.

Yet, there is still great ambiguity with this disclosure. There are no exact salary figures for these individuals. Instead, there are only categories, like the top bracket of $350,000 and over, which leaves a lot to be desired when it comes to information.

The bottom line is that if someone chooses to make a contribution, they have a right to understand exactly what the leadership within their chosen charity is being paid.

Donors are like shareholders of any public company, so disclosure needs to be a lot more specific to give donors the information they need to make informed decisions about where they choose to donate their hard-earned money.

The second aspect of this bill is about introducing a salary cap of $250,000 within the charitable sector.

As the hon. member for Alfred-Pellan mentioned, there was great confusion and even anger when last year it was revealed that one of Canada's largest charities, the SickKids Foundation, paid its former president $2.7 million in 2008. To many this is a figure that is very hard to comprehend, particularly when considering how hard it is for a charitable organization to raise that kind of money. It is especially hard to see how someone can faithfully accept that kind of salary for doing good deeds.

The salary cap in Bill C-470 would allow charities to pay their top executives salaries comparable to federal deputy ministers who run even larger and more complicated organizations. If a charity wants to exceed the cap, it would fall to the federal minister. If he or she does not accept the justification, he of she can decide to de-list the charity.

I have an issue with those who say that the House of Commons should not be involved in the salary decision-making process.

As I mentioned previously, tax receipts were given to over 5.8 million Canadians in the year 2008. The Government of Canada encourages charitable giving through these subsidies. This is a long-standing tradition and I will go as far as to state that it is one of the essential components behind charitable giving in our country. Thus, we as members of Parliament have every right to scrutinize the salaries of executives that are, to an extent, being partially paid by way of Canadian taxpayers.

This past December, the Fraser Institute released its 2009 Generosity Index. The Generosity Index measured charitable giving for both Canada and the U.S. in the year 2007 and detailed the percentage of tax-filers who donated and the percentage of income that they gave to good causes.

For Canadian charities, the numbers were troubling. Americans donated 1.6% of their aggregate income to charities while Canadians donated less than half of that, at 0.73%. In dollar figures, Canadians donated approximately $8.5 billion to charitable causes, but if we had given at the same rate as our southern neighbours, the total would have been in excess of $17 billion.

Bill C-470 is an attempt to assist charities with this gap by instilling greater confidence in their practices among the Canadian public. The successful passage of this legislation will ensure that not only will Canadians be able to access more information, but they will also be able to have confidence in compensation packages that are equitable and fair in consideration of their charitable gifts.

As the economy recovers, the rate of charitable donations will recover. This bill would open the books of charities so that Canadians can open their wallets to charities with confidence.

Once again I thank the hon. member for Mississauga East—Cooksville for bringing in this important measure as a private member's bill.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Mr. Speaker, it is a pleasure today to speak to Bill C-470, which was introduced at first reading on October 29, 2009, by the member for Mississauga East—Cooksville. The bill itself is very short. It would amend several subsections of section 149.1 of the Income Tax Act.

These amendments would enable the minister to revoke the registration of a charitable organization, public foundation or private foundation if any of its employees receive compensation in excess of $250,000. Bill C-470 clarifies that compensation includes not only salaries, but also “wages, commissions, bonuses, fees and honoraria, plus the value of taxable and non-taxable benefits”.

Lastly, Bill C-470 enables the minister to make public the names and salaries of the five highest-paid employees in each organization registered as a charity, as part of the annual listing of charities in accordance with section 149.1 of the Income Tax Act.

I would now like to describe the circumstances that led to this bill. On October 1, 2009, the SickKids Foundation made headlines when it was reported that its president collected a severance package valued at $2.7 million. A debate ensued on the huge salaries paid to charity executives, what constitutes fair compensation, and whether these salaries are in line with such organizations' missions.

In Quebec, a series of articles was published in les affaires in 2008 calling into question the salaries of top executives at a number of charities. The title of the series was “Philanthropy: worthy causes, whopping salaries”. Naturally, the articles made a lot of people skeptical about how donations to these organizations are being used and may have a negative effect on future fundraising efforts for charities as a whole.

The author of these articles explained how surprised the average Quebecker was to learn that such a significant portion of donations and other amounts received by charitable organizations is spent on salaries, including those of the directors of these organizations. According to the figures declared to Revenue Canada in 2007, 55% of the revenues at Moisson Montréal was spent on salaries, 44% at Mira Foundation, 38% at Fondation québécoise du cancer, 35% at Sun Youth Organization, 31% at Leucan and 60% at Le Bon Dieu dans la rue.

This was also surprising to experts in the field. For example, the CEO of Bolduc, Nolet, Primeau & Associates, a philanthropic management company, stated that when salaries are as high as 30% or 40% of all revenues, there is a problem.

According to these articles, the average salary of directors of charitable organizations in Quebec was $125,000. These high salaries surprised not only the public, but also the experts, who thought they were much too high. Even more disturbing than the high salaries was the silence or reluctance of some major organizations to reveal the salaries of their directors.

This made the public even more doubtful about the legitimacy of these salaries. There is a lack of real safeguards, and there have been concerns that these salaries could get out of control and end up comparable to the salaries of American charitable organizations, which had an average salary of $410,000 in 2007. These salaries have been skyrocketing in recent years. In Canada, they increased by 17% last year alone, and there was a 44% increase between 1999 and 2008, according to the annual survey of benefits and compensation published by the Canadian Society of Association Executives.

However, the Bloc Québécois knows how essential it is for charities to be able to continue hiring qualified managers.

Bill C-470 would require that the names of the five highest-paid employees in each charity be published. The Bloc Québécois understands the underlying principle of transparency in this initiative, but it is worried about the privacy of these organizations' administrators. Perhaps the requirement of publishing these names should be removed from the bill.

Quebec charities with executives who earn an average of $125,000 a year will have some room to manoeuvre when it comes to salary increases. By respecting a $250,000 ceiling, these organizations will be able to recruit and retain qualified applicants.

But what about the salaries of executives in larger Canadian charities? Numerous factors need to be taken into consideration: the size of the organization in terms of its revenue, expenses and staff; the complexity of the regulatory environment in which the organization works; and the number of departments and government organizations it deals with.

Of course, these factors affect each organization differently. We cannot determine a realistic salary ceiling without considering these factors and taking into account the changing needs of the organizations as well as the domestic and international market.

The heads of several Canadian charities are already being paid over $300,000, which seems reasonable, considering the size of the organizations they manage.

Also, the number of Canadian charities is quite remarkable: 161,000 in all. In Laval alone, where I am from, there are 383 registered charities, including childcare centres, community centres, volunteer associations, regional recycling depots, private schools, the Laval symphony orchestra and the Laval health and social services centre, a Government of Quebec organization. All of those organizations are registered under the Income Tax Act.

So it would be very difficult to establish a salary cap for such a diverse group of charities and organizations whose volunteer elements are not necessarily obvious.

Given that the Quebec and provincial governments have full jurisdiction over the charitable sector, we must ensure that Bill C-470, in its current form, does not infringe on Quebec's areas of jurisdiction.

Furthermore, given that any charitable organization that wishes to register in Quebec must first be registered with the CRA, we must ensure that Bill C-470 fits in with Revenu Québec's provisions in that regard.

In any case, the Bloc Québécois is in favour of the principle of Bill C-470, which is why we will support it at second reading, so we may examine it in committee.

The Bloc Québécois recognizes the importance of charitable organizations in Quebec society. In order for these organizations to be able to pursue their charitable missions, it is important to maintain their credibility and the public's trust in them.

Nevertheless, the bill's impact on all charities must be thoroughly reviewed in order to ensure that these organizations can continue recruiting qualified staff despite the limitations this bill would impose.

The House resumed from March 15 consideration of the motion that Bill C-470, An Act to amend the Income Tax Act (revocation of registration), be read the second time and referred to a committee.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I am pleased to rise in support of the bill proposed by my colleague, the member for Mississauga East—Cooksville. We on this side of the House believe the charitable sector is extremely important and it is important for government to act to strengthen it and to increase the credibility of the charitable sector in the minds of Canadian donors.

My colleague's bill would do just that. It is particularly timely because the government recently has acted to undermine the credibility of the charitable sector in the eyes of Canadians. Therefore, my colleague's bill is particularly important in order to redress the imbalance caused by the government's behaviour.

The first example I will mention is this. On January 14, the government promised to match the donations of Canadians for earthquake ravaged Haiti through the Haiti earthquake relief fund. However, two months and one day later, news has broken that the government has not sent a single matched dollar down to Haiti. This is causing a certain amount of anger in the Haitian community and among those who have contributed to Haiti on the understanding that the government would expeditiously match their contributions dollar for dollar. That hurts the government's credibility. The next time there is a disaster and the government promises to provide matching funds Canadians, who will no doubt respond with generosity, may not be as likely to believe the government will act swiftly and with purpose.

The second example where the government has undermined the charitable sector concerns the finance committee and prebudget proposals, which would have had the effect of enhancing the ability of Canadians to make charitable contributions. I believe the finance committee unanimously endorsed the following:

The federal government examine incentives that would have the effect of increasing the level of charitable giving by businesses and individuals. In particular, the government should consider:

an increase in the charitable tax credit rate to 39% for incremental annual increases in giving, provided that annual giving is more than $200 and less than $10,000;

the creation of a corporate structure for not-for-profit organizations that would allow the issuance of share capital and other securities;

and the elimination of the capital gains tax on donations of real estate and land to public charities.

Unfortunately, the finance minister did not share the finance committee's enthusiasm for strengthening Canada's charitable sector in one or more of the three ways that I have just described. However, as we know, there was no mention of any of these recommendations in budget 2010.

My first point is that while we on this side believe it is important to strengthen the charitable sector and to strengthen the credibility of that sector in the minds of donors, the government first, by not following through expeditiously on its matching donations to Haiti, and second, by totally ignoring the proposals to improve the ability of Canadians to give to the charitable sector, particularly at a time of recession when those donations are needed more than ever and when Canadians are less able than normally to afford to give them, the government declined to do. Therefore, it is more important than usual that a bill like that of my colleague arrives in order to strengthen the credibility of the charitable sector.

In the United States, charities file the salaries of their CEO and other top executives with the IRS and they are publicly accessible for anyone who is thinking of donating to that charity. Canadians are not so lucky.

Last fall, one CEO departed a very well known charity, with a $2.7 million incentive payment in cash for leaving that charitable organization before his contract was finished. This was on top of his annual $600,000 salary.

The old saying is “It takes money to make money”, and there is no doubt some truth to that. Some of Canada's largest charities obviously require some very good talent at the top if they are to raise the funds they need to provide services.

Even more important than this, however, is that Canadian donors can feel confident that the money they have worked hard for and donated to charity goes almost entirely toward the charitable purposes it was intended for and not toward very large executive compensation packages. Think about the example I just gave.

It takes a lot of donations from a lot of Canadians to pay someone $2.7 million. To make this tangible, let us assume that someone signed up to give $10 a month through automatic withdrawals to a charity. That is $120 a year. It would take more than 22,000 Canadians, at this level of donations, just to donate enough money to pay the departing CEO of that charity. I would argue this could be enough to damage the confidence some Canadians have in our charitable sector.

Worse, news only emerged about this case because the amounts were discovered in publicly available IRS documents, as this charity operates on both sides of the border. Media reports indicated that Canadians were so outraged by the revelation that the charity had to set up a special phone line to deal with all the incoming calls.

Canadians had a right to be outraged. Canadians listening at home should know that my good colleague, the member for Mississauga East—Cooksville, has heard them, which is why we are debating Bill C-470 today.

What exactly would Bill C-470 do to help deter this kind of behaviour and restore the confidence of donors in the charitable sector?

First, it would limit the pay of a charity's CEO to $250,000 per year. It would similarly limit the pay of other executives who work at a charity. The penalty for non-compliance would be that the charity would face revocation of its charitable status, quite a stiff penalty that I am sure every charity would want to avoid.

On the face of it, $250,000 seems to be a reasonable pay threshold for 2010. Should the bill go to committee and it is discovered that a very large charity cannot hope to find a CEO for that amount, I would be amendable to amending the bill slightly.

However, as my colleague has pointed out, there is also a further safeguard in that the minister is not obliged to force the cap of a $250,000 salary, so one cannot exclude the possibility that in some few cases there may be very large charities that, in order to be effective, may have to exceed that limit. The discretion would be in the hands of the minister to allow that and/or there could be amendments to permit it under certain circumstances.

Recent media reports have revealed that some of our larger charities, such as Big Brothers Big Sisters of Canada and the United Way of Canada, would not run afoul of the law without current executive pay incentives. Therefore, on the surface, $250,000 seems to be a good starting point for Bill C-470.

Once again, I would like to congratulate my colleague, the hon. member for Mississauga East—Cooksville, on her excellent work on behalf of Canadians. I have certainly heard from my constituents about the $2.7 million example I mentioned earlier. I am sure that many of the members of the House have as well.

I hope all members will listen to those Canadians and vote to send Bill C-470 to committee.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Mr. Speaker, I am glad to be able to join the debate and express my support for Bill C-470, a bill that I feel is of utmost importance in ensuring that Canadians retain faith in giving money to charitable organizations across the country.

The bill will provide Canadians with the knowledge that the presidents, CEOs and other executives of the thousands of registered charities throughout Canada are limited in the amount of compensation they are receiving. Therefore Canadians will feel more confident donating to charities without having to worry that the money they are providing is going to line someone's already-deep pockets.

With the current state of the economy, perhaps more than ever we need charities that act in the best interests of Canadians. We need food banks to ensure that people who find themselves fallen on hard times can eat property. We need health and wellness charities to guarantee that we can adequately support the individuals and families of those who find themselves sick or injured.

To ensure Canadians feel confident in giving what they can to charities, we need to give them the benefit of the doubt that the money they provide is actually going to support their chosen cause.

The bill will put a much-needed cap on the amount of compensation executives of charities can receive. The bill will limit executives working for charitable organizations to a yearly compensation of a more-than-reasonable $250,000, with compensation in this instance to include all salaries, bonuses, wages, commissions, fees and honoraria.

It seems only logical to place a limit on the amount of money executives of charitable organizations receive, both as a benefit of providing greater oversight into the inner workings of charitable organizations, and as a method of restoring and maintaining donor confidence in an industry that has been tested by scandal over the past few years.

Here is an example of why this bill is needed. Some members may be familiar with one of the more high profile scandals over the past year with regard to executive bonuses. It involved former SickKids Foundation president, Michael O'Mahoney. O'Mahoney reportedly received a salary of $600,000 for the fiscal year of 2008-09. In addition to this, O'Mahoney also received a bonus of $2.1 million upon leaving his post, a bonus that the SickKids Foundation referred to as an incentive payment for the work he did for the charity.

Most of us called it a golden parachute, the kind of excess we are all too used to in the corporate world but would not expect in a charity. Is it not a little ironic that the president of one of Canada's most highly regarded philanthropic organizations pulled in a yearly income that would rival that of all but the most lucrative corporate salaries? Is it not also ironic that O'Mahoney pulled in a far greater salary than Mary Jo Haddad, president and CEO of the Hospital for Sick Children, for whom the SickKids Foundation does its primary fundraising?

To reiterate, this is not a slight against the SickKids Foundation or the Hospital for Sick Children. SickKids is one of this country's most beloved and well respected charitable organizations. They have done exceptional work to ensure that the Hospital for Sick Children is adequately funded and is provided with the latest in cutting-edge treatments and preventive care. The problem I have with a situation such as this is that the money provided to Mr. O'Mahoney would have been taken out of the coffers of the SickKids Foundation, thus undercutting the amount of money the charity could provide to the Hospital for Sick Children and damaging the reputation of the charity, which in turn hurt their donations. And that is exactly what happened.

When this story broke in the news media, the SickKids Foundation received a backlash from donors in the form of a reduction in donations. People were not willing to pad someone's golden parachute. They wanted to help their community. The end result was a 10% decrease in donations and a 38-staff layoff.

Why would we allow an individual to walk away from a post with $2.7 million while the charity he was supposed to support lost vital donations, income and staff? Many will argue that paying these kinds of salaries and bonuses is the best way to attract the brightest talent, but these are charitable organizations and should not be the types of places for upper-tier executives to act in a manner that is comparable to Bay Street executives.

If the main focus for these executives is to line their pockets, I am certain there are many corporations that would love to hire them, but I cannot in good conscience sit and watch them play with funds that are designed to help people. At least with this bill, the minister will be able to exercise discretion to de-list charities whose executives see fit to claim massive salaries under the guise of charitable work.

The Canada Revenue Agency's charities directorate has the ability to audit roughly 1,000 charities per year. With approximately 100,000 registered charitable organizations in this country, that amounts to currently being able to perform an audit of a charity once every 100 years. Not only that, if the charities directorate actually digs up some form of unscrupulous dealings within a charity, it has very limited means to warn the public about such matters, as current tax laws keep the CRA from warning the public.

We need more stringent oversight into how charitable organizations do business. Many charities have been using commission-based incentives for employees, which can lead to aggressive, often-misleading tactics designed to lure people into donating to charities they might not wish to support otherwise. The use of such tactics is certainly frowned upon in the charity community. But with such lax oversight in this industry, it is almost impossible to discover who is using these methods.

It is not enough to simply expect charitable organizations to perform their duties in an honourable manner. I would assume most charities do operate nobly, but to simply assume they are is not enough. Take the example of the Wish Kids Foundation controversy of 2005. The fraudulent charity, which in name closely resembles the renowned Make-A-Wish Foundation of Canada, took $900,000 from donors who thought they were helping to give terminally ill children their dying wish.

As it turns out, not a single dime of the money raised by the Wish Kids Foundation went to sick kids. Instead, the executive director of the foundation, and I use the term loosely, took the money, purchased a new car, funded flying lessons for his son and put a down payment on a private jet. Think of the good $900,000 could have done for terminally ill children to enhance their quality of life, if only for one great day.

We need to work to ensure Canadian charities are acting in the best interests of the Canadian people. I am positive most are, but the few who are acting unethically tarnish the reputation of those looking to do some good for our country and the world at large.

If nothing else, limiting the amount of money executives earn within charitable organizations will provide much-needed oversight into how these organizations are run. It will allow us to more accurately see whose hands are in the till. People are cynical enough these days. We need to feel that institutions that stand for the name of good and charitable work are in fact delivering on their promise.

To summarize, given that there are so many charities out there, it is important that regulations are in place. We need to ensure that those dollars actually go to the right locations. I think the problem here is that we are seeing CEOs who are earning more than the Prime Minister, and he is running the country. If this were in place, I think we might end up seeing an increase in donations.

I would like to leave it at that. I certainly hope every member in this Parliament will support this bill.

[Christiane Gagnon, Bloc, Québec, QC]

Mr. Speaker, today we are talking about Bill C-470, which would amend the Income Tax Act in order to create certain conditions under which a charitable organization's registration could be revoked.

I will start by saying that the Bloc Québécois is in favour of this bill and will support it at second reading. We will then be able to study it further in committee and amend it as needed.

I would like to discuss the various amendments that Bill C-470 would make to the Income Tax Act. I will then outline the reasons behind the Bloc Québécois' support as well as some of the reservations we have about this bill.

Bill C-470 would cap salaries and other compensation given to directors of charitable organizations and would, by preventing excess, ensure the overall credibility of these types of organizations. The bill would cap charitable organization directors' salaries at $250,000.

Bill C-470 would also allow the minister to provide the public with a list of the five highest-paid employees in each registered charitable organization. This would make charitable organizations more transparent and would allow the public to trust them more.

The bill does not cover everything; it is a little bill. I would like to speak about the Bloc's stance regarding the two amendments to the Income Tax Act proposed in this bill.

We feel that this bill's goal is to create balance. On one hand, the ceiling for salaries cannot be too low because that would turn off the most qualified candidates. On the other hand, organizations have to maintain a certain level of credibility so that the public will trust them. We must strike a balance.

It is also important that this credibility and trust be maintained. More and more people in Quebec are making donations to charitable organizations.

According to Imagine Canada, from 2004 to 2007, Quebeckers increased the value of their donations by 24%, giving $1.17 billion of the $12 billion donated annually in Canada. That is the biggest increase in the country. There has also been an increase in major donations, that is, donations over $500,000.

If we want this trend to continue, the public must have confidence that these donations are being put to good use, especially in the current context, and that they are not being used to pay excessive salaries. Also, scrupulousness and performance must be a key part of the commitment made by the directors of such organizations.

However, the Bloc Québécois believes that a thorough review of the compensation paid to directors is necessary, so that charitable organizations can continue recruiting qualified staff despite the $250,000 salary cap.

As Peter Broder, a lawyer with an Edmonton foundation, stated:

—those salaries need to be seen in a broader context. That means a hard look at both the nature of the responsibilities of these individuals, given the mandate and scope of their charity's work, and better consideration of the salary structure within the sector as a whole...if we are to have a sector where people want to make a career, and a sector that attracts innovative and dynamic individuals, the other inadequacies of the current model need to be addressed.

A salary cap must be established in order to avoid excessive salary inflation. In recent years, the salaries of directors of charities have increased significantly. Last year in Canada alone, they went up 17%, and between 1999 and 2008, they went up 44%. That is a significant increase.

Since there are no guidelines or safeguards, many concerns have been raised regarding excessive salary inflation in the very near future, which has happened in the United States, where the median salary was $410,000 U.S. in 2007. That is a lot of money.

When this bill is being studied in committee, we must consider adding a provision that will allow us to ensure that salary increases remain reasonable. This will act as a control mechanism.

In Quebec, with the average salary of organization directors being $125,000, a $250,000 ceiling leaves a lot of room to manoeuvre when it comes to salary increases. We know that it is more outside Quebec where somewhat higher salaries are paid to directors of charitable organizations. That is not the case in Quebec.

For greater transparency, people would also like to know how the money they donate to charitable organizations is spent. Some organizations have shown some reluctance to disclose the salaries of their directors, thereby fuelling a culture of secrecy that could hurt the image of other organizations.

The salaries of the directors could be disclosed without naming the people who earn these exorbitant salaries. We also feel that such a measure would contribute to making charitable organizations more transparent.

I believe it is necessary to look at a person's salary without that person being named in order to comply with the Privacy Act. The purpose of this initiative is to increase public trust in charitable organizations and make people more inclined to make donations. If there were more transparency, the public would be more inclined to make donations since people would see that their money is well spent and that directors are not too greedy when it comes to their salaries.

Nonetheless, we have to make sure this bill does not encroach on the private lives of the directors, as I was saying earlier, so that their lives are not paraded through the media. When this private member's bill is studied, we have to be careful of any possible invasion of privacy. That is why we are proposing that the requirement to publish the names, job titles and salaries of the five highest-paid employees of each organization be studied in committee and possibly amended to remove the name of the person whose salary will be published.

The publication of the salaries, as set out in Bill C-470, will allow comparisons to be made between the salaries of the directors of agencies of similar size and will help determine whether any stand out as being unjustifiably high.

In my opinion, that should be the objective. We cannot compare apples and oranges, that is, salaries paid by a large corporation and those paid by a small one. We must be fairly vigilant when it comes to employees of charitable organizations that we deal with. A public list would make it easier to establish an acceptable average based on data for the sector as a whole.

The Bloc Québécois is in favour of this bill, which should be studied in committee. We have a few minor reservations. However, the member who introduced the bill is willing to examine the reservations about this bill expressed by other parties.

If this bill is adopted at second reading, committee members will have the opportunity to sit down, discuss it and get the facts about a number of charitable organizations. I believe that the member who introduced this bill got it right and has identified a specific problem. For example, when a charitable organization pays $500,000 to an executive, and that amount represents a significant percentage of the funds collected by the organization, the salary has to be justified.

As I was saying, that may not be the case for our charitable organizations in Quebec. I know that, in Canada, there are other ways of doing things and charitable organizations are on a different scale, as they have patrons and receive significant donations.

We must also examine the qualifications of the incumbents of these positions. We believe that it is very important to maintain this balance and to reassure the public about how charitable organizations spend their donations.

We will be following this matter with a great deal of interest. We hope that the committee will make amendments to ensure that transparency is the objective of this bill.

[Ted Menzies, Conservative, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, thank you for the opportunity to address today's proposal by the member for Mississauga East—Cooksville, in the form of Bill C-470. I am sure it will stimulate some very interesting debate. It is very timely and I congratulate the member for getting her private member's bill on the floor of the House. That is an accomplishment for any member of this House. As I say, it will provide an interesting discussion of charitable organizations and the compensation given to those employed by such organizations, a discussion that is certainly worth having.

Before addressing the specifics of today's proposal, let us look at the overall role and contribution of charities and the charitable sector in Canada.

As all members of this chamber would agree, charities are a very important part of the fabric of any country. Of course, that holds true for Canada as well. The Canadian Centre for Philanthropy has labelled charities and the larger voluntary sector as the vital third pillar of Canada's civil society. Indeed, there are approximately 85,000 highly diverse registered charities in Canada. These charities operate in a wide variety of areas, such as local services, health, the churches, arts and culture, education and research. I am a member of the world's largest service organization, the Lions Clubs International, and have been involved in many fundraising events all across this country.

What is more, according to Imagine Canada:

The nonprofit and voluntary sector is a significant economic force in Canada. When the value of volunteer effort is included, this sector contributes 8.5% to Canada’s GDP and is almost as large an employer as the country’s entire manufacturing industry.

Some of the smallest entities are run entirely by volunteers, with very limited budgets. At the other end of the spectrum are hospitals and universities and colleges, which are large organizations, both in terms of their budgets and in the number of people they employ.

Accordingly, the revenue base of these charities is equally diverse. Some depend primarily on donations they receive from the public, some raise considerable income from fees, while others operate related businesses. Still others depend highly on revenues from the federal and provincial governments.

There are three types of registered charities in Canada: charitable organizations, public foundations, and private foundations. The designation a charity receives depends on its structure, its sources of funding and its mode of operation.

The first category, charitable organizations, includes the majority of registered charities here in Canada. A charitable organization primarily carries on its own activities. It has a board of directors that is made up mostly or entirely of individuals who operate at arm's length from one another. Finally, it generally receives its funding from a variety of donors.

The second type of registered charity is a public foundation. Local community foundations or hospital foundations are typically structured this way. A public foundation is similar to a charitable organization in that it also receives its funding from a variety of arm's-length donors, and also has a board of directors that is made up primarily of persons who are at arm's length from one another. However, a public foundation primarily exists to help finance one or more charitable organizations. It may deliver some of its own programs, but most of its activities generally involve helping charitable organizations to run their programs.

Finally, the third type of registered charity is a private foundation. A private foundation differs from a charitable organization and a public foundation in that its funding often comes from one person or a group of related persons. This is often the case with a family foundation. A private foundation may fund other charities or it may operate its own programs.

The diversity of the charitable sector in Canada is especially noticeable in the size of its operations. Over half of the registered charities in Canada have total annual revenues of less than $100,000. At the other end of the spectrum, about 10% of charities have annual revenues that exceed $1 million. Again, as mentioned earlier, while charities have numerous sources of revenues and volunteer support, the generous donations of individual Canadians continue to be one of the principal sources. According to the recent “Canada Survey of Giving, Volunteering and Participating”:

In 2007, Canadians donated a total of $10 billion, an increase of 12% or $1.1 billion since 2004, and volunteered 2.1 billion hours, a 4.2% increase. The average donation increased to $437 from $400 in 2004.

In some of the larger charities, such as hospitals, health care institutions, universities and colleges, executives are responsible for overseeing the spending of millions of dollars in resources. They manage hundreds of employees. These charities are often involved in carrying out highly complex work. Because of the responsibilities placed on the shoulders of the leaders of large charities, such charities offer compensation for their executives. Today's proposal surrounds that issue of compensation.

Let us briefly turn to the regulation of charities in Canada and provide the chamber an overview of the measures currently in place to deal with just that issue and other issues related to today's proposal.

The Canada Revenue Agency, or CRA, has various tools to monitor and report on compensation at charities. At the federal level, the CRA administers a system to register charities under the Income Tax Act. As the regulator of charities, the CRA's responsibilities include processing applications for registration, offering technical advice on operating a charity, handling audit and compliance activities and providing general information to the public. Regulation of the charitable sector by CRA is based on both common law and the provisions of the Income Tax Act.

The common law requirement that charities devote their resources to charitable activities is central to how CRA provides guidance to the sector and enforces the rules. For instance, recent legislative and administrative reforms have given CRA additional compliance tools to use in the regulation of the charitable sector. An example of these include intermediate sanctions in the form of taxes or penalties for charities that do not comply with the requirements of the Income Tax Act. Prior to this, the only sanction available to the CRA was revocation of registered charity status.

At the same time, the concept of undue personal benefit has been clarified in the Income Tax Act. As a result, in the case of excessive executive compensation, the CRA has the authority under the Income Tax Act to conduct an investigation to determine whether the charity is indeed fulfilling its charitable purposes. It also has the authority to determine whether there is undue personal benefit and to impose a range of penalties up to and including the suspension of receipting privileges.

There is also more public information available today on the activities of registered charities. This helps increase accountability in the sector by providing prospective donors with information to determine for themselves whether they would like to donate to a particular charity. Under the Income Tax Act, all registered charities are required to complete a registered charity information return. This in turn is published on the CRA website and includes information about compensation.

What is more, our Conservative government recently made a key change to further improve the accountability surrounding charities. Up until 2008, charities were required to report on the compensation of the five highest paid employees and indicate their salary range, with the last threshold being $119,000 and over. We have changed that. Starting in 2009, charities were required to report the 10 highest compensated positions. The annual compensation categories were also expanded, with the last threshold being $350,000 and over.

The introduction of this new reporting on employee compensation has served as a key tool to help increase transparency in terms of how charitable resources are being used. Increased transparency is providing the generous Canadians who are donating their hard-earned money with even more information to help guide their giving decisions. Such concrete measures are examples of useful initiatives that our government has taken to address the broader accountability concerns.

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Mr. Speaker, I congratulate the member on her bill, Bill C-470. She has described it as disclosure requirements for the five highest employees with a threshold of $250,000. She mentioned that the Province of Ontario requires disclosure of salaries over $100,000 for the top earners.

I would point out that in Manitoba for the last 15 or 20 years we have something called the public sector compensation act that lists all employees working for the government whose salaries exceed $50,000.

Does the member have any comments on whether this could be added into the bill at committee so that we would have more than just the top five salaries, that we would have a list of everyone earning beyond a threshold of $50,000, $75,000 or $100,000?

[Albina Guarnieri, Liberal, Mississauga East—Cooksville, ON]

Mr. Speaker, I would like to begin by thanking the Speaker for his charitable ruling. I would also like to thank the member for Newton—North Delta for seconding Bill C-470, an act to bring more transparency and charity to our nation's charities.

Every year, Canadians dig deep into their pockets to contribute billions of dollars to some 85,000 registered charities. That is one charity for every 300 Canadians. Most of the donors are far from millionaire philanthropists. They choose to make a financial sacrifice for what they hope is a worthy cause. They choose to save less for their retirement, their own children's education or some other personal investment or expenditure because they believe their dollars will be put to a higher purpose: helping sick children, aiding the poor and curing disease.

It is the goodwill and trust of these donors that must be a priority for this Parliament. However, the donors are not alone in putting their trust in charities. In the most recent year, the taxpayers of Canada contributed almost $3 billion in federal tax credits, so every Canadian has an interest in how this money is spent.

Last year, the Toronto Star shocked donors and taxpayers with the revelation that the head of one of Canada's largest charities, the SickKids Foundation, took home $2.7 million in salary and severance in a single year. Money intended for sick children was instead building a private fortune because of the lack of legislation. However, he is not alone in making charity pay. Others of the same charity reported making $430,000 and $290,000. In fact, one out of every dozen staff members was making over $160,000 U.S. to raise funds by asking others to sacrifice.

I refer to U.S. dollars because the only reason this information is public is because the United States is years ahead in transparency and this charity was registered in the United States as well as in Canada. Canadian laws keep donors in the dark about where their money is going. We know that 2,147 individuals earn more than $120,000 a year at charities. We do not know how much more. We can suspect that it might be a lot. We can suspect that because the average salary at charities is $71,000 compared to only $51,000 in private business.

It might be that people working in call centres are making $70,000 a year. However, it is more likely that they are making near-minimum wage while executives are earning many hundreds of thousands and driving up the average. Why should we not know? Why should donors not know? Why should taxpayers not know?

Six years ago, the United States recognized that it too had a significant problem with salaries at charities. At that time, the internal revenue service announced a new enforcement effort to identify and halt abuses by tax-exempt organizations that pay excessive compensation and benefits to their officers and other insiders. At the time, the IRS said:

We are concerned that some charities and private foundations are abusing their tax-exempt status by paying exorbitant compensation to their officers and others.

That was 2004. Where are we in Canada? The Library of Parliament has to scrape together bits and pieces to get any picture at all as to how executives at charities are spending money and, particularly, how much they take home for themselves.

I will read to the House some of what little we know. Some of our charities spend money on dining club memberships, golf memberships, fitness memberships, business-class travel, so-called flexible expense account provisions and even scholarship programs for their own kids. It is reported that of those who receive benefits, there is an average of $6,000 in retirement benefits, $4,000 in fringe benefits, $4,000 in auto benefits and another $4,000 in health benefits.

That is what we know from only one charity in one thousand responding to a survey. It is also far beyond what most donors could even hope for themselves.

The Province of Ontario requires charities that receive direct money from the province to disclose salaries above $100,000. Even in this small category, the top salary was more than half a million dollars.

We know that Canadians and taxpayers are contributing billions every year. We hope that most of it is spent with frugality and purpose. We know that some of it is spent on luxury rather than on charity.

I believe that the Minister of National Revenue has the moral imperative to ensure that donors know exactly how their dollars are spent. Bill C-470 is a basic first step.

Years behind the United States, Bill C-470 would not deal with many of the practices that have grabbed attention in recent years. From fundraising organizations that get a $180 commission for signing up a donor, regardless of the amount contributed, or to other high-class fundraising techniques that cost more than 30¢ of every $1, all that is left up to the minister to explore.

Bill C-470 would require charities to disclose the salaries of its five highest paid employees. In addition, a charity could be deregistered by the Minister of National Revenue if it pays any employee more than $250,000 in a single year. The threshold of $250,000 is more than a minister or a deputy minister earns to run a federal department. More important, it is about five times what the average donor earns.

At present, the revocation of a charity that violates the requirements of the Income Tax Act is at the discretion of the minister. Bill C-470 would not reduce that ministerial discretion. It would simply add to the existing grounds available to the minister.

An effective date of 2011 is included in the legislation so that charities would have time to adjust.

Bill C-470 would give the minister a much needed additional tool in the interests of the millions of Canadians who donate billions of dollars to charities every year.

Bill C-470 would also give charities a powerful incentive to maintain the trust of their donors while giving the minister the responsibility, the capacity and the discretion to respond to breaches of that trust.

I will respond to some of the usual resistance we can expect from those who do not wish to disclose and others who may want to maintain the luxury to which they have become accustomed.

First, on disclosure. Governments across Canada are forcing disclosure of top salaries of all those who rely on the taxpayer for their income. It does not matter whether one is the chief executive of a crown corporation or a transit worker with a lot of overtime, the person could find his or her name and income published. The principle is clear. If people take home taxpayer money, they cannot hide how much. As Canadian charities distribute almost $3 billion a year in tax credits, taxpayers have every right to know whether the salaries they are subsidizing are excessive.

Even more important, however, is the individual sacrifice of the donor. Publicly-traded corporations need to disclose their top salaries to the public. Why should donors not be told how much the top five employees at their chosen charity make? What is the excuse for that secrecy?

Perhaps a donor may decide that his or her money is better spent on charities that take less home for themselves. Charities that are really in it for the cause would benefit at the expense of charities that operate like a business, marketing a cause like it was a COLA, and being richly rewarded for every dime that comes in.

We all know people who have visited the offices of some charities and looked at the marble and grandeur and said that they do not need our money. All Canadians should have the same right to compare and direct their generosity to where it is most frugally managed.

One can only expect a hail of complaints and cries of impending doom from charities that pay more than $.25 million. They will say they need that money to attract top fundraising talent, people who know how to market a charitable cause.

I would submit that they will not because all 85,000 Canadian charities will be under the same rules competing for the same donor dollar. Therefore, charities would not need to keep upping the ante to keep the top people from going down the street because the charity down the street would have the same cap. The result would be that more money would end up where the donor actually intended it to go, not in the paycheques of executives but in the programs that the charity is there to serve.

Filings in the United States indicate that some very large Canadian charities are run by people earning very reasonable salaries. The CNIB, United Way and World Vision all reported top salaries far less than the $250,000 limit proposed in Bill C-470. Clearly, it is not necessary to pay people exorbitant sums to attract talent. However, we have an obligation to assure Canadian donors that whenever they donate to charity their dollars are not siphoned into luxury lifestyles.

This bill also aims to replace doubt and cynicism about the management of charities with the confidence that the personal financial sacrifice of donors is managed by people who are paid well but no so well as to make a mockery of the concept of charity.

Bill C-470 is about charity, transparency and respect for the generosity and sacrifice of millions of Canadian donors.

[The Deputy Speaker, Conservative, Andrew Scheer]

I am now prepared to rule on the point of order raised by the hon. Parliamentary Secretary to the Leader of the Government in the House of Commons, concerning the requirement for a ways and means motion for Bill C-470, An Act to amend the Income Tax Act (revocation of registration), standing in the name of the hon. member for Mississauga East—Cooksville.

I would like to thank the hon. parliamentary secretary for having raised this matter, as well as the hon. member for Mississauga East—Cooksville, the hon. member for Mississauga South, the hon. member for Scarborough--Rouge River, the hon. Parliamentary Secretary to the Minister of International Cooperation, the hon. member for Algoma—Manitoulin—Kapuskasing, the hon. member for Eglinton—Lawrence, and the hon. member for Brampton West for their comments.

The parliamentary secretary pointed out in his remarks that the purpose of Bill C-470 is to allow for the revocation of the registration of a charitable organization, public foundation or private foundation, if it provides annual compensation in excess of $250,000 to any of its executives or employees. On this point, he and the member for Mississauga East—Cooksville agreed.

Beyond that, however, the parliamentary secretary contended that such a revocation would extend the incidence of a tax to organizations which are not currently subject to it. Specifically, he noted that such organizations, on losing their registration, would be subject to the revocation tax imposed by subsection 188(1.1) of the Income Tax Act, since the revocation tax is a tax imposed on a charitable organization which loses its official registration under the act.

He further characterized the effect of the bill as follows in the House of Commons Debates of December 1, 2009, at pages 7410 and 7411:

Upon deregistration of an entity in the circumstances proposed by Bill C-470, that entity loses its tax exempt status as a registered charity and, assuming it remains a charity, it will not be able to benefit from the other exemptions from tax provided for in subsection 149.1.

In other words, Bill C-470 would result in an extension of the incidence of a tax by including entities that are not already paying the revocation tax, or potentially, a tax on their income.

Finally, the parliamentary secretary noted that the issue of ways and means is one which the Chair takes very seriously. He referred to a November 28, 2007, Speaker's ruling regarding the case of Bill C-418, An Act to amend the Income Tax Act (deductibility of remuneration), introduced in the second session of the 39th Parliament. That bill had the effect of removing an existing deduction, and hence of increasing the amount of tax payable by certain corporations. It was clear that the bill, in removing a tax exemption, effectively increased the tax payable and therefore required that it be preceded by a notice of ways and means.

In her submission, the member for Mississauga East—Cooksville, in Debates of December 1, 2009, page 7,458, contended that the purpose of Bill C-470 is simply to add another reason that would allow the minister to revoke the registration of a charitable organization.

Bills involving provisions of the Income Tax Act can be complex and confusing. However, after careful examination of Bill C-470, as well as the authorities cited and the provisions of the Income Tax Act referred to by the parliamentary secretary, I have found the following reference from House of Commons Procedure and Practice, 2nd edition, page 900, particularly relevant. It states:

The House must first adopt a ways and means motion before a bill which imposes a tax or other charge on the taxpayer can be introduced. Charges on the people, in this context, refer to new taxes, the continuation of an expiring tax, an increase in the rate of an existing tax, or an extension of a tax to a new class of taxpayers.

It seems clear to the Chair that Bill C-470 does not propose a new tax, nor does it seek the continuation of an expiring tax, nor does it attempt to increase the rate of an existing tax.

The question which remains to be asked is the following: Does the bill extend a tax to a new class of taxpayer?

A close examination of the provisions of Bill C-470 indicates that the bill targets all registered charitable organizations, public foundations and private foundations, and seeks to introduce consequences for those within that class which pay to a single executive or employee annual compensation that exceeds $250,000.

I have difficulty in regarding organizations finding themselves in that situation as constituting unto themselves a “class of taxpayer”.

In the Chair's view, class of taxpayer refers in this case to registered charitable organizations, public foundations and private foundations, and Bill C-470 does not seek to alter that class.

It seems to me that the bill instead seeks to provide a new criterion that would allow the minister to determine into which existing class of taxpayer an organization falls. The existing tax regimes and the existing tax rates are not affected.

Accordingly, I rule that Bill C-470 does not extend the incidence of a tax to a new class of taxpayer and therefore need not be preceded by a ways and means motion.

I thank the House for its attention.

[Albina Guarnieri, Liberal, Mississauga East—Cooksville, ON]

moved that Bill C-470, An Act to amend the Income Tax Act (revocation of registration), be read the second time and referred to a committee.

Royal Recommendation and Ways and Means Motions

[The Deputy Speaker, Conservative, Andrew Scheer]

Before we begin private members' business today, I would like to make a brief statement regarding the issue of royal recommendation and ways and means motions with respect to private members' business

Just as individual items of private members' business continue their legislative progress from session to session, the Chair's rulings on those same items likewise survive prorogation.

Specifically there are nine bills on which the Chair either commented, ruled or has heard a point of order with regard to the issue of the royal recommendation. There was also one bill on which a point of order was raised regarding the requirement for a ways and means motion.

The purpose of this statement is to remind the House of those rulings and of the questions that remain to be dealt with.

Members will recall that, during the last session, some private members’ bills were found by the Chair to require a royal recommendation. At the time of prorogation, there were seven such bills on the order of precedence or in committee.

Let us review briefly the situation in each of these seven cases.

Three of these bills were awaiting report stage in the House at the time of prorogation, namely: Bill C-201, An Act to amend the Canadian Forces Superannuation Act and the Royal Canadian Mounted Police Superannuation Act (deletion of deduction from annuity), standing in the name of the member for Sackville—Eastern Shore;

Bill C-241, An Act to amend the Employment Insurance Act (removal of waiting period), standing in the name of the hon. member for Brome—Missisquoi;

Bill C-280, An Act to amend the Employment Insurance Act (qualification for and entitlement to benefits), standing in the name of the hon. member for Algoma—Manitoulin—Kapuskasing.

On May 12, 2009, the chair had ruled that Bill C-201, in its form at second reading, needed to be accompanied by a royal recommendation. In committee, all clauses of the bill were deleted. In its present eviscerated form, Bill C-201 need no longer be accompanied by a royal recommendation.

As for Bill C-241 and Bill C-280, the chair ruled on April 22, 2009 and on June 3, 2009 respectively, that these bills in their present forms required royal recommendation. The committee stage has not altered this finding.

The following four bills were at committee stage: Bill C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income), standing in the name of the hon. member for Richmond—Arthabaska was before the Standing Committee on Finance; Bill C-308, An Act to amend the Employment Insurance Act (improvement of the employment insurance system), standing in the name of the hon. member for Chambly—Borduas was before the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities;

Bill C-309, An Act establishing the Economic Development Agency of Canada for the Region of Northern Ontario, standing in the name of the hon. member for Nipissing—Timiskaming, was before the Standing Committee on Industry, Science and Technology;

finally, Bill C-395, An Act to amend the Employment Insurance Act (labour dispute), standing in the name of the hon. member for Berthier—Maskinongé was before the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities.

The Chair ruled that all these bills in their present forms needed to be accompanied by a royal recommendation. The rulings were given on October 23, 2009 for Bill C-290, on October 29, 2009 for Bill C-308, on June 16, 2009 for Bill C-309 and, more recently, on November 16, 2009 for Bill C-395.

Furthermore, points of order were raised by the hon. Parliamentary Secretary to the Government House Leader at the end of the last session with respect to the need for a royal recommendation for two bills. These are: Bill C-343, An Act to amend the Canada Labour Code and the Employment Insurance Act (family leave) standing in the name of the hon. member for Compton—Stanstead and Bill C-471, An Act respecting the implementation of the recommendations of the Pay Equity Task Force and amending another Act in consequence standing in the name of the hon. member for Etobicoke—Lakeshore. Both of these bills were at second reading.

Just as was done in the last session, the Chair invites other members who would like to make arguments regarding the need for a royal recommendation for those two bills or any of the other bills on the order of precedence to do so at an early opportunity in order for the Chair to come back to the House with a ruling as soon as possible.

Finally, a point of order was raised during the last session regarding Bill C-470, An Act to amend the Income Tax Act (revocation of registration), standing in the name of the hon. member for Mississauga East—Cooksville, arguing that it should have been proceeded by a ways and means motion. The Chair has taken the matter under consideration and a ruling will be delivered in the days to come.

I thank hon. members for their attention.

It being 1:35, the House will now proceed to the consideration of private members' business as listed on today's order paper.

Bill C-470

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Mr. Speaker, I rise in support of the point of order just raised by my colleague from Mississauga East—Cooksville regarding the point of order brought forward earlier today by the Parliamentary Secretary to the Leader of the Government in the House of Commons with respect to the bill being withdrawn.

In my opinion Bill C-470 does not require a ways and means motion as the bill simply broadens ministerial discretion. I firmly believe that the bill should move forward through the necessary steps in order to ensure that there be a thorough discussion on the issue in the House of Commons.

I think that we have seen, over the years, how the amounts of money being siphoned off in some of these organizations certainly do need to be addressed and I think that this is the proper venue to do that. So, again, Mr. Speaker, I ask for your consideration on this issue.

[Albina Guarnieri, Liberal, Mississauga East—Cooksville, ON]

Mr. Speaker, earlier today the parliamentary secretary to the government House leader raised a point of order asking that Bill C-470 be ruled out of order.

Bill C-470 addresses exorbitant salaries at charities that abuse the generosity of millions of Canadian donors. At present, the revocation of a charity that violates requirements of the Income Tax Act is at the discretion of the minister.

Bill C-470 does not reduce that ministerial discretion. It simply adds to the existing grounds available to the minister. That being the case, the minister would act in the same way as before, and there is no certainty of a change in tax exempt status regardless of the behaviour of a particular charity.

The bill provides an effective date of 2011, which adds to the context and the purpose of the bill which clearly is not to increase taxation or government revenues.

Mr. Speaker, let me draw to your attention to one key word in subsection 149.1 of the Income Tax Act. That word is “may”. It says:

The Minister may, in the manner described in section 168, revoke the registration of a charitable organization for any reason described in subsection 168(1) or where the organization

(a) carries on a business that is not a related business of that charity; or

(b) fails to expend in any taxation year, on charitable activities carried on by it and by way of gifts made by it to qualified donees, amounts the total of which is at least equal to the organization’s disbursement quota for that year.

If Bill C-470 becomes law:

(c) pays to a single executive or employee annual compensation exceeding $250,000.

So in addition to five requirements in section 168 and two requirements in section 149, Bill C-470 adds one more. But what it does not do is change the word “may” to “shall”. So it remains in the discretion of the minister as to whether to allow funds to be legally skimmed from charities into private fortunes.

There is no change to the tax rate or tax payable of any charity affected by this bill. It simply provides the minister with expanded grounds under which he may choose to act in the interest of Canadians.

The parliamentary secretary made reference to a case in 2007 where the chair ruled Bill C-418 out of order as it would impose a change in the tax deductibility of remuneration beyond a certain level.

Bill C-470 operates in a materially different way. It expands the requirements that a charity must comply with or be exposed to the discretion of the minister. It cannot be reasonably expected that any charity will choose not to comply and face de-registration, and it cannot be certain that the minister will revoke the status of an organization that fails to comply.

Bill C-470 does not impose a tax or other charge on the taxpayer. It does not require the imposition of a new tax, the continuation of an expiring tax, an increase in the rate of an existing tax, an extension of the incidence of a tax so as to include persons not already payers, nor an increased or accelerated tax burden on any class of taxpayers.

As such, it does not violate any of the principles set out by Marleau and Montpetit or Beauchesne.

Bill C-470 does impose responsibility on the minister. It is a responsibility to the millions of Canadians who donate billions of dollars to charity every year.

If the provisions of Bill C-470 were in place and they continue to see their donations going toward million-dollar payments to CEOs, money intended for the sick or starving going into luxury lifestyles, they would know that the minister had the power to stop it and chose not to.

Bill C-470 would give charities a powerful incentive to maintain the trust of their donors and would give the minister the responsibility, capacity and discretion to respond to breaches of that trust.

If the government does not want greater capacity to protect millions of Canadians who donate to charity, it can choose to vote against this bill. However, the facts remain clear. There is no certainty, or even likelihood, of any change to taxation that would require a ways and means motion.

[Tom Lukiwski, Conservative, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, I rise on a point of order with respect to Bill C-470, standing in the name of the member for Mississauga East—Cooksville.

Without commenting on the merits of Bill C-470, An Act to amend the Income Tax Act (revocation of registration), I submit that the bill would extend the incidence of a tax and therefore should have been preceded by House concurrence in a ways and means motion for the bill.

The second edition of House of Commons Procedure and Practice states on page 900 that:

The House must first adopt a ways and mean motion before a bill which imposes a tax or other charge on the taxpayer can be introduced.

In addition, citation 980 of the sixth edition of Beauchesne's Parliamentary Rules and Forms states:

A ways and means motion is a necessary preliminary to the imposition of a new tax, the continuation of an expiring tax, an increase in the rate of an existing tax, or an extension of the incidence of a tax so as to include persons not already payers.

I would further note that on page 898 of the 23rd edition of Erskine May, it states:

A Ways and Means motion resolution is required to authorize extension of the scope of a tax, for example, to cover new classes of tax-payers.... The requirement for a Ways and Means resolution also applies to any proposal for a change in tax law or the administration of tax collection which may lead, albeit incidentally, to an increased or accelerated tax burden for any class of taxpayers.

By way of precedent, on November 28, 2007, the Speaker ruled in the case of Bill C-418, An Act to amend the Income Tax Act (deductibility of remuneration) that:

If adopted, this measure would therefore have the effect of increasing the tax payable by certain corporations.... In other words, the bill deals with an issue of ways and means....

In my view, Bill C-418 imposes a charge on the taxpayer, but it was not preceded by a ways and means motion....

Accordingly, the Chair must now direct that the order for second reading of the bill be discharged and the bill withdrawn from the order paper.

The purpose of Bill C-470 is to allow the revocation of the registration of a charitable organization, public foundation or private foundation, if a particular entity is paying an annual compensation that exceeds $250,000 to any of its executives or employees.

Let me explain why the bill would result in the extension of a tax. For the information of members, subsections 149.1(2) to 149.1(4) of the Income Tax Act provide rules upon which the Minister of National Revenue can deregister a charity. Bill C-470 would amend the Income Tax Act by adding paragraph (c) to subsection 149.1(2) of the act, adding paragraph (f) to subsection 149.1(3) and adding paragraph (e) to subsection 149.1(4). This would add a new condition where the Minister of National Revenue can deregister a charity. Let me explain in detail, if I may, how that may work.

At present, upon the issuance of a notice of revocation of its registration under any of the current subsections from 149.1(2) to 149.1(4), an entity is facing an additional tax burden. Subsection 188(1.1) of the Income Tax Act, read in conjunction with subsection 188(1), provides that such an entity is liable to a tax calculated in accordance with the formula found in subsection 188(1.1). This additional tax liability is known as the revocation tax.

Bill C-470 would add the new circumstances described in subsections 149.1(2) to 149.1(4) for deregistration of charities by providing that the Minister of National Revenue can, in addition to the current circumstances described in the Income Tax Act, deregister an entity on the basis that it pays more than $250,000 in compensation to one of its executives or employees.

Charities that would be deregistered under the new circumstances in Bill C-470 would be liable to pay the revocation tax imposed under subsection 188(1.1).

In addition, paragraph 149(1)(f) of the Income Tax Act provides that registered charities are exempt from taxation. Upon deregistration of an entity in the circumstances proposed by Bill C-470, that entity loses its tax exempt status as a registered charity and, assuming it remains a charity, it will not be able to benefit from the other exemptions from tax provided for in subsection 149.1(1).

In other words, Bill C-470 would result in an extension of the incidence of a tax by including entities that are not already paying the revocation tax or, potentially, a tax on their income. This means that the bill should have been preceded by the concurrence of the House in a ways and means motion for the bill.

As a result, I submit that the order for second reading of the bill should be discharged and the bill be withdrawn from the order paper.

Income Tax Act

[Albina Guarnieri, Liberal, Mississauga East—Cooksville, ON]

moved for leave to introduce Bill C-470, An Act to amend the Income Tax Act (revocation of registration)

Mr. Speaker, I would like to thank my colleague from Brampton West for graciously seconding the bill before us.

Seven thousand years is how long it would take for a typical $30-a-month donor to the Sick Kids Foundation just to pay the salary and severance of its CEO.

This bill would limit the bounty of charities by putting a quarter million dollar cap on their taxpayer-supported salaries.

(Motions deemed adopted, bill read the first time and printed)