Bill C-13 (Historical)

Keeping Canada's Economy and Jobs Growing Act

An Act to implement certain provisions of the 2011 budget as updated on June 6, 2011 and other measures

Part 1 of this enactment implements income tax measures and related measures proposed in the 2011 budget. Most notably, it
(a) introduces the family caregiver tax credit for caregivers of infirm dependent relatives;
(b) introduces the children’s arts tax credit of up to $500 per child of eligible fees associated with children’s artistic, cultural, recreational and developmental activities;
(c) introduces a volunteer firefighters tax credit to allow eligible volunteer firefighters to claim a 15% non-refundable tax credit based on an amount of $3,000;
(d) eliminates the rule that limits the number of claimants for the child tax credit to one per domestic establishment;
(e) removes the $10,000 limit on eligible expenses that can be claimed under the medical expense tax credit in respect of a dependent relative;
(f) increases the advance payment threshold for the Canada child tax benefit to $20 per month and for the GST/HST credit to $50 per quarter;
(g) aligns the notification requirements related to marital status changes for an individual who receives the Canada child tax benefit with the notification requirements for the GST/HST credit;
(h) reduces the minimum course-duration requirements for the tuition, education and textbook tax credits, and for educational assistance payments from registered education savings plans, that apply to students enrolled at foreign universities;
(i) allows the tuition tax credit to be claimed for eligible occupational, trade and professional examination fees;
(j) allows the reallocation of assets in registered education savings plans for siblings without incurring tax penalties;
(k) extends to the end of 2013 the temporary accelerated capital cost allowance treatment for investment in machinery and equipment in the manufacturing and processing sector;
(l) expands eligibility for the accelerated capital cost allowance for clean energy generation and conservation equipment;
(m) extends eligibility for the mineral exploration tax credit by one year to flow-through share agreements entered into before March 31, 2012;
(n) expands the eligibility rules for qualifying environmental trusts;
(o) amends the deduction rates for intangible capital costs in the oil sands sector;
(p) aligns the tax treatment to investments made under the Agri-Québec program with that of investments under AgriInvest;
(q) introduces rules to strengthen the tax regime for charitable donations;
(r) introduces anti-avoidance rules for registered retirement savings plans and registered retirement income funds;
(s) introduces rules to limit tax deferral opportunities for individual pension plans;
(t) introduces rules to limit tax deferral opportunities for corporations with significant interests in partnerships;
(u) extends the tax on split income to capital gains realized by a minor child; and
(v) extends the dividend stop-loss rules to dividends deemed to be received on the redemption of shares held by certain corporations.
Part 1 also implements other selected income tax measures and related measures. Most of these measures were referred to in the 2011 budget as previously announced measures. Most notably, it
(a) accommodates an increase in the annual contribution limit to the Saskatchewan Pension Plan and aligns its tax treatment with that of other tax-assisted retirement vehicles;
(b) clarifies that the “financially dependent” test applies for the purposes of provisions that permit rollovers of the assets of a deceased taxpayer’s registered retirement savings plan or registered retirement income fund to an infirm child or grandchild’s registered disability savings plan;
(c) ensures that the alternative minimum tax does not apply in respect of securities that are subject to the election under section 180.01 of the Income Tax Act;
(d) clarifies the rules applicable to the scholarship exemption for post-secondary scholarships, fellowships and bursaries; and
(e) amends the pension-to-registered retirement savings plan transfer limits in situations where the accrued pension amount was reduced due to the insolvency of the employer and underfunding of the employer’s registered pension plan.
Part 2 amends the Softwood Lumber Products Export Charge Act, 2006 to implement the softwood lumber ruling rendered by the London Court of International Arbitration on January 21, 2011.
Part 3 amends the Customs Tariff in order to simplify it and reduce the customs processing burden for Canadians by consolidating similar tariff items that have the same tariff rates and removing end-use provisions where appropriate. The amendments also simplify the structure of some provisions and remove obsolete provisions.
Part 4 amends the Customs Tariff to introduce new tariff items to facilitate the processing of low value non-commercial imports arriving by post or by courier.
Part 5 amends the Canada Education Savings Act to make the additional amount of a Canada Education Savings grant that is available under subsection 5(4) of that Act available to more than one of the beneficiary’s parents, if they share custody of the beneficiary, they are eligible individuals as defined in section 122.6 of the Income Tax Act and the beneficiary is a qualified dependant of each of them.
Part 6 amends the Children’s Special Allowances Act and a regulation made under that Act respecting payments relating to children under care.
Part 7 amends the Canada Student Financial Assistance Act to provide that the maximum aggregate amount of outstanding student loans is to be determined by regulation, to remove the power of the Minister of Human Resources and Skills Development to deny certificates of eligibility, and to change the limitation period for the Minister to take administrative measures. It also authorizes the Minister to forgive portions of family physicians’, nurses’ and nurse practitioners’ student loans if they begin to work in under-served rural or remote communities.
Part 7 also amends the Canada Student Loans Act to authorize the Minister to forgive portions of family physicians’, nurses’ and nurse practitioners’ guaranteed student loans if they begin to work in under-served rural or remote communities.
Part 8 amends Part IV of the Employment Insurance Act to provide a temporary measure to refund a portion of employer premiums for small business. An employer whose premiums were $10,000 or less in 2010 will be refunded the increase in 2011 premiums over those paid in 2010, to a maximum of $1,000.
Part 9 provides for payments to be made to provinces, territories, municipalities, First Nations and other entities for municipal infrastructure improvements.
Part 10 amends the Canadian Securities Regulation Regime Transition Office Act so that funding for the Canadian Securities Regulation Regime Transition Office may be fixed through an appropriation Act.
Part 11 amends the Wage Earner Protection Program Act to extend in certain circumstances the period during which wages earned by individuals but not paid to them by their employers who are bankrupt or subject to receivership may be the subject of a payment under that Act.
Part 12 amends the Canadian Human Rights Act to repeal certain provisions that provide for mandatory retirement. It also amends the Canada Labour Code to repeal a provision that denies employees the right to severance pay for involuntary termination if they are entitled to a pension. Finally, it amends the Conflict of Interest Act.
Part 13 amends the Judges Act to permit the appointment of two additional judges to the Nunavut Court of Justice.
Part 14 provides for the retroactive coming into force of section 9 of the Nordion and Theratronics Divestiture Authorization Act in order to ensure the validity of pension regulations made under that section.
Part 15 amends the Canada Pension Plan to include amounts received by an employee under an employer-funded disability plan in contributory salary and wages.
Part 16 amends the Jobs and Economic Growth Act to replace the reference to the Treasury Board Secretariat with a reference to the Chief Human Resources Officer in subsections 10(4) and 38.1(1) of the Public Servants Disclosure Protection Act.
Part 17 amends the Department of Veterans Affairs Act to include a definition of dependant and to provide express regulation-making authority for the provision of certain benefits in non-institutional locations.
Part 18 amends the Canada Elections Act to phase out quarterly allowances to registered parties.
Part 19 amends the Special Retirement Arrangements Act to permit the reservation of pension contributions from any benefit that is or becomes payable to a person. It also deems certain provisions of An Act to amend certain Acts in relation to pensions and to enact the Special Retirement Arrangements Act and the Pension Benefits Division Act to have come into force on December 14 or 15, 1994, as the case may be.
Part 20 amends the Motor Vehicle Safety Act to allow residents of Canada to temporarily import a rental vehicle from the United States for up to 30 days, or for any other prescribed period, for non-commercial use. It also authorizes the Governor in Council to make regulations respecting imported rental vehicles, as well as their importation into and removal from Canada, and makes other changes to the Act.
Part 21 amends the Federal-Provincial Fiscal Arrangements Act to clarify the legislative framework pertaining to payments under tax agreements entered into with provinces under Part III.1 of that Act.
Part 22 amends the Department of Human Resources and Skills Development Act to change the residency requirements of certain commissioners.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

And we totally agree with you. That's why we were pushing for it. The other one was more an economic multiplier, so it was just a fact.

A question for Mr. Myers. In your brief you mentioned that we should invest in R and D. In Bill C-13 there is a capital cost allowance for clean energy generation and conservation of equipment. Can you tell us, if we were to move toward a cleaner energy, greener economy, how that would benefit your members and the economy in general, and why it would be better for us to invest in that type of energy?

[The Chair, Conservative, James Rajotte]

I'll just respond to that point of order.

It's not a point of order, and it's not beyond the scope because I allowed the questions from Mr. Hsu who brought up the issue of something that was not in Bill C-13.

Mr. Lake.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you, Mr. Chair.

I understand Mr. Lake has been brought in late on this. He may not be aware of the details on Bill C-13, but that is indeed what we are speaking to, and I'm sure his colleagues on the Conservative side understand that's completely out of the scope of what we've asked witnesses to come here to speak on tonight.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thanks to our witnesses for coming forward. We apologize for the delay as we were sorting out our committee business. It's very good that you're here this evening.

I wanted to start with Mr. Buda and Mr. Vrbanovic on the issue of infrastructure generally. We heard testimony yesterday that we have an infrastructure deficit that was evaluated before the stimulus program at about $125 billion. But of course, as you know, there is an ongoing year-to-year stimulus deficit. In transit alone it's been estimated to be about $10 billion a year.

This is an important step. It's only a very small first step to what's needed to address the deficit on an annual basis and the overall infrastructure deficit that exists across the country--or the infrastructure debt, if you like.

If you could, I'd like you to speak to the issue of the gas tax transfer and to what extent that addresses the annual deficit, where you see the FCM's evaluation overall as to the infrastructure deficit generally across Canada, and what measures could be taken to increase the amount set aside in Bill C-13 to seriously address on an ongoing basis the deficit that exists in infrastructure in this country.

[Berry Vrbanovic, President, Federation of Canadian Municipalities]

Thank you very much, and good evening, Mr. Chairman and members of the House finance committee.

On behalf of the 2,000 member cities and communities of the Federation of Canadian Municipalities, I want to thank you for the opportunity to speak to you again this evening as you consider Bill C-13, and in particular part 9 as it relates to the gas tax legislation.

Our central message is brief and has three points.

One, the government's recent budget commitment to develop a long-term infrastructure plan, which would provide permanent long-term stable funding, holds great promise for Canada's cities and communities.

Two, the gas tax fund should be the cornerstone of this new infrastructure plan.

Three, as this new plan is developed, we must ensure that the gas tax fund is indexed to protect its purchasing power over time.

That's the only way for all the governments to continue reversing our infrastructure decline. The gas tax fund was a great way to address the infrastructural issue in Canada.

From 2005 to 2014, the fund will invest $13 billion in municipal infrastructure, from new drinking water facilities to public transit, from roads and bridges to waste water facilities. The GTF has gone a long way to slowing the decline of our economic infrastructure.

We all know how inflation, no matter how mild at the moment, erodes buying power. For example, between 2005 and 2009, the construction price index, tracked by Statistics Canada, increased by 21%, more than double the consumer price index we're familiar with. Without indexation, the gas tax fund will effectively shrink while infrastructure costs rise. In fact, the gas tax fund will lose one-third of its purchasing power over the next 20 years. That means the fund will be able to invest in one-third less infrastructure in 2030 than it does today. That means our cities and communities will be back to juggling priorities and delaying much needed infrastructure investments.

Let me be quite clear. We applaud the government's economic action plan and its commitment in the budget to developing a new long-term infrastructure plan. The success of the economic action plan demonstrated that when governments work together we can provide better value, services, and programs for Canadians. We know that if governments work together we can restore aging roads, bridges, water systems, and public transit and still provide people with the everyday services they need. We can continue to do all this if we work together to develop a truly long-term, fully financed plan to invest in our country's public infrastructure.

Financing is the foundation of any long-term infrastructure plan, particularly long-term financing. Infrastructure projects are long-term projects requiring long-term commitments, so we need a frank and serious discussion about protecting the value of the gas tax fund into the future. The most appropriate venue for this discussion is the long-term planning process being led by Minister Lebel, and I fully hope and expect that this discussion will occur.

Without an infrastructure investment plan that protects the value of the gas tax fund, we will see the recent advances slow and then reverse. Our cities and communities will be left without a long-term predictable funding source they can count on, and that will have a significant impact on all of us.

Canada needs first-rate and efficient public infrastructure to maintain its quality of life and its economic competitiveness.

To build and maintain that infrastructure we need that long-term plan, the cornerstone of which needs to be a permanent gas tax fund indexed to protect its value over time.

Thank you. Merci beaucoup.

[Jean-Pierre Laporte, Pension Lawyer, As an Individual]

Thank you for this opportunity to provide the standing committee with some observations about certain aspects of the proposed legislation contained in Bill C-13.

By way of background, I am a pension lawyer and I currently practise in the city of Toronto with the law firm of Bennett Jones, LLP. I've been specializing in the area of pensions and benefits since 2001, and I have a particular interest in pension law reform. Some of the committee members who served on this committee in the last Parliament may remember that I have made presentations to parliamentarians on reforming the Canada Pension Plan in the past.

One particular element of Bill C-13 that may be of interest to this committee is the provision of new rules affecting individual pension plans. I have written one of the very few academic papers on individual pension plans in Canada. In March of 2007 the Estates, Trusts & Pensions Journal said of individual pension plans, “Are they worthy of a second look?”

In the brief time allotted to me, given the relative dearth of expertise in Canada on IPPs, or individual pension plans, I thought it would be a most judicious use of your time to focus my remarks on two proposed changes that could impact IPPs.

I don't want my remarks to be overly technical. I'm sure the officials from the Department of Finance are quite capable of explaining the current regime and how the proposed new laws would work, and I leave that to them. But I want to make some general comments. My intervention is simply as a private sector service provider who's acquired familiarity with these pension rules and how they interact with the day-to-day lives of Canadians.

The two changes I want to talk about are those relating to buy-back restrictions and forced distributions at retirement. I propose to comment briefly on both.

In terms of the buy-back restrictions, this is the ability that someone has under a registered pension plan to buy back years of service at a time the plan wasn't in existence. By way of illustration, if you have an employer, for example, an individual who has incorporated a company, a small business owner who has been carrying out that business for a number of years and then decides to set up a pension plan, an IPP, if it's a defined benefit plan, which most IPPs are, the actuary for the plan would say that's going to cost, say, $600,000. In order to fund that $600,000 hole in the pension fund, you would have to transfer moneys from your existing RRSP or other registered sources, like a defined profit-sharing plan. If there isn't enough money in the RRSP, the company could make a tax deductible contribution to make you whole, so that the pension fund has enough moneys to pay the pension that was promised.

The proposed new rules would force you to not only use the money in your current RRSP, but also to use up any RRSP unused contribution room you have. This would mean that at the end of the day you would be left with no ability to tax shelter in excess of what is in your pension fund. That is a change in the law that I think may not be to the advantage of small business owners, the very people who are usually tasked with the job of creating employment and creating economic activity. So that's one concern I have with the buy-back.

The other is the new rule that would force the moneys that have accumulated in the pension fund to be distributed as if the pension fund was a registered retirement income fund, or RRIF.

Currently, in the Income Tax Act and regulations, there are some rules that say that if you have a RRIF, based on your age you have to start taking parts of it out, and of course you get taxed on that. My concern is that if the RRIF rules are such that you're forced to take more money out of the pension fund than what the pension plan itself contemplates, you're creating a bit of a deficit, because the fund was supposed to last for a number of years. Now you're increasing the amounts that are coming out of it, so you're creating an imbalance between the moneys that you had set aside for retirement and what they're supposed to do for you.

So that's another kind of issue with the proposed rules, and I just wanted to make sure that this committee had a chance to think about that, because, again, IPPs are really targeted at small business people, and those are the very people to whom we're trying to give a break, so they can keep employing people, etc.

That's about it.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Well, they're mentioned in the briefing notes from the minister, of course, Mr. Chair, so obviously if the briefing notes from the minister talk about those three other aspects of political support, taxpayer-funded political support in the system, it is part of this committee's work to ensure that we can compare the $30 million contained within Bill C-13 to the other taxpayer-supported contributions mentioned by the minister in his briefing notes.

Part 18, page 1--the minister talks about it, so obviously it's legitimate to ask.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you, Mr. Chair. Thank you, Mr. St-Martin and Mr. Lynch, for being here this evening.

The notes on Bill C-13 actually mention other types of taxpayer support at the electoral level. It is estimated that the change set out in Bill C-13 will involve $30 million.

Could you tell me how much is spent on other things, such as the 50% reimbursement of political parties' election expenses, the reimbursement of up to 60% of eligible candidate spending in their riding and tax credits for contributions to political parties? I assume you don't have those figures, but it would be beneficial to know roughly how much the Senate costs taxpayers.

[The Chair, Conservative, James Rajotte]

Okay.

I want to thank Mr. Lalonde and Mr. Cook. We are not going to do part 2 or part 5. I apologize to those officials who stayed, but we are going to move to part 8. I understand there's one question on part 8. Could I ask the officials responsible for part 8 to come forward?

Part 8 of Bill C-13 deals with amendments to the Employment Insurance Act—hiring credit for small business. We have three officials with us. I want to welcome them to the table. If you'd like to introduce yourselves, we'll ask our questions afterwards.

Mr. Cuthbert.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Take a few minutes now to respond on those other three parts that you've mentioned. Notwithstanding that, we should come back Thursday for some of the questions we have. I think that's a way of sorting out these two agendas for one evening. We get through some of the questions, bring our other witnesses forward, get into a more general discussion on C-13, and then leave some of the questions for Thursday.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

I've been speaking to my colleagues just to understand what the purpose was this evening. It almost looks as if there were two things scheduled at once: a technical briefing or general questions on the parts of the act, and witnesses speaking more generally to Bill C-13. Would it be correct that we're actually looking at two agendas for one evening of meetings?

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

So you are confirming that a daycare claiming to have an educational component could be allowed to increase its fees by $500. That way, parents could be leaving their children in educational daycares. That's exactly how I had understood it.

In the French, this is on page 65 of your document on finance and on page 55 of your document on Bill C-13.

[The Chair, Conservative, James Rajotte]

Colleagues, please take your seat.

I apologize to the officials and colleagues. We are going to be interrupted by a vote, but we should get started on this.

It's been indicated that part 1, which is obviously a very large part of Bill C-13, is of interest to many members. I think, in the interest of time, we'll do question rounds, and I'll try to follow the same format we typically follow.

We have two officials here who are able to answer questions on part 1, so I'll begin with questions.

Perhaps I'll just have the officials introduce themselves and tell us their role with the Department of Finance.

Welcome to the committee.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

You're welcome to buy us coffee any morning.

Minister, welcome. I'm glad to see you here again.

You'll know better than most that the New Democrats and myself have been raising concerns about pensions in the House for a couple of years now. I have to say that, in my opinion, when we look at where it stands, Bill C-13 doesn't begin to address the very real pension problems facing Canadians. It also suggests, sir, that part 15 of Bill C-13, which deals with the CPP disability, could only have been agreed to at meetings of the federal, provincial, and territorial ministers. For me—and you'll know this well because I questioned you in the House prior to Kananaskis—this was a great opportunity to have started a phased in enhancement of the CPP. I have to question why instead you undertook what appears to be house cleaning. It really strikes me as strange, because we felt before that there was an opportunity here, that going forward it seemed to be something you had recognized as a serious concern.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Part 10 of Bill C-13 vests the Minister of Finance with the power to provide additional funding to the Canadian Securities Regulation Regime Transition Office.

First, could you explain why the original amount of $33 million was not enough for the Canadian Securities Regulation Regime Transition Office?

Second, most of the provinces are against this bill, and the Conservatives promised in their 2011 platform not to carry out this project before the Supreme Court had ruled on it. So, why are we going ahead with it?