Bill C-45 (Historical)

Jobs and Growth Act, 2012

A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures

Part 1 implements certain income tax measures and related measures proposed in the March 29, 2012 budget. Most notably, it
(a) amends the rules relating to Registered Disability Savings Plans (RDSPs) by
(i) replacing the 10-year repayment rule applying to withdrawals with a proportional repayment rule,
(ii) allowing investment income earned in a Registered Education Savings Plan (RESP) to be transferred on a tax-free basis to the RESP beneficiary’s RDSP,
(iii) extending the period that RDSPs of beneficiaries who cease to qualify for the Disability Tax Credit may remain open in certain circumstances,
(iv) amending the rules relating to maximum and minimum withdrawals, and
(v) amending certain RDSP administrative rules;
(b) includes an employer’s contributions to a group sickness or accident insurance plan in an employee’s income in certain circumstances;
(c) amends the rules applicable to retirement compensation arrangements;
(d) amends the rules applicable to Employees Profit Sharing Plans;
(e) expands the eligibility for the accelerated capital cost allowance for clean energy generation equipment to include a broader range of bioenergy equipment;
(f) phases out the Corporate Mineral Exploration and Development Tax Credit;
(g) phases out the Atlantic Investment Tax Credit for activities related to the oil and gas and mining sectors;
(h) provides that qualified property for the purposes of the Atlantic Investment Tax Credit will include certain electricity generation equipment and clean energy generation equipment used primarily in an eligible activity;
(i) amends the Scientific Research and Experimental Development (SR&ED) investment tax credit by
(i) reducing the general SR&ED investment tax credit rate from 20% to 15%,
(ii) reducing the prescribed proxy amount, which taxpayers use to claim SR&ED overhead expenditures, from 65% to 55% of the salaries and wages of employees who are engaged in SR&ED activities,
(iii) removing the profit element from arm’s length third-party contracts for the purpose of the calculation of SR&ED tax credits, and
(iv) removing capital from the base of eligible expenditures for the purpose of the calculation of SR&ED tax incentives;
(j) introduces rules to prevent the avoidance of corporate income tax through the use of partnerships to convert income gains into capital gains;
(k) clarifies that transfer pricing secondary adjustments are treated as dividends for the purposes of withholding tax imposed under Part XIII of the Income Tax Act;
(l) amends the thin capitalization rules by
(i) reducing the debt-to-equity ratio from 2:1 to 1.5:1,
(ii) extending the scope of the thin capitalization rules to debts of partnerships of which a Canadian-resident corporation is a member,
(iii) treating disallowed interest expense under the thin capitalization rules as dividends for the purposes of withholding tax imposed under Part XIII of the Income Tax Act, and
(iv) preventing double taxation in certain circumstances when a Canadian resident corporation borrows money from its controlled foreign affiliate;
(m) imposes, in certain circumstances, withholding tax under Part XIII of the Income Tax Act when a foreign-based multinational corporation transfers a foreign affiliate to its Canadian subsidiary, while preserving the ability of the Canadian subsidiary to undertake expansion of its Canadian business; and
(n) phases out the Overseas Employment Tax Credit.
Part 1 also implements other selected income tax measures. Most notably, it introduces tax rules to accommodate Pooled Registered Pension Plans and provides that income received from a retirement compensation arrangement is eligible for pension income splitting in certain circumstances.
Part 2 amends the Excise Tax Act and the Jobs and Economic Growth Act to implement rules applicable to the financial services sector in respect of the goods and services tax and harmonized sales tax (GST/HST). They include rules that allow certain financial institutions to obtain pre-approval from the Minister of National Revenue of methods used to determine their liability in respect of the provincial component of the HST, that require certain financial institutions to have fiscal years that are calendar years, that require group registration of financial institutions in certain cases and that provide for changes to a rebate of the provincial component of the HST to certain financial institutions that render services to clients that are outside the HST provinces. This Part also confirms the authority under which certain GST/HST regulations relating to financial institutions are made.
Part 3 amends the Federal-Provincial Fiscal Arrangements Act to provide the legislative authority to share with provinces and territories taxes in respect of specified investment flow-through (SIFT) entities — trusts or partnerships — under section 122.1 and Part IX.1 of the Income Tax Act, consistent with the federal government’s proposal on the introduction of those taxes. It also provides the legislative authority to share with provinces and territories the tax on excess EPSP amounts imposed under Part XI.4 of the Income Tax Act, consistent with the measures proposed in the March 29, 2012 budget. It also allows the Minister of Finance to request from the Minister of National Revenue information that is necessary for the administration of the sharing of taxes with the provinces and territories.
Part 4 enacts and amends several Acts in order to implement various measures.
Division 1 of Part 4 amends the Trust and Loan Companies Act, the Bank Act, the Insurance Companies Act and the Jobs and Economic Growth Act as a result of amendments introduced in the Jobs, Growth and Long-term Prosperity Act to allow certain public sector investment pools to directly invest in a federally regulated financial institution.
Division 2 of Part 4 amends the Canada Shipping Act, 2001 to permit the incorporation by reference into regulations of all Canadian modifications to an international convention or industry standard that are also incorporated by reference into the regulations, by means of a mechanism similar to that used by many other maritime nations. It also provides for third parties acting on the Minister of Transport’s behalf to set fees for certain services that they provide in accordance with an agreement with that Minister.
Division 3 of Part 4 amends the Canada Deposit Insurance Corporation Act to, among other things, provide for a limited, automatic stay in respect of certain eligible financial contracts when a bridge institution is established. It also amends the Payment Clearing and Settlement Act to facilitate central clearing of standardized over-the-counter derivatives.
Division 4 of Part 4 amends the Fisheries Act to amend the prohibition against obstructing the passage of fish and to provide that certain amounts are to be paid into the Environmental Damages Fund. It also amends the Jobs, Growth and Long-term Prosperity Act to amend the definition of Aboriginal fishery and another prohibition relating to the passage of fish. Finally, it provides transitional provisions relating to authorizations issued under the Fisheries Act before certain amendments to that Act come into force.
Division 5 of Part 4 enacts the Bridge To Strengthen Trade Act, which excludes the application of certain Acts to the construction of a bridge that spans the Detroit River and other works and to their initial operator. That Act also establishes ancillary measures. It also amends the International Bridges and Tunnels Act.
Division 6 of Part 4 amends Schedule I to the Bretton Woods and Related Agreements Act to reflect changes made to the Articles of Agreement of the International Monetary Fund as a result of the 2010 Quota and Governance Reforms. The amendments pertain to the rules and regulations of the Fund’s Executive Board and complete the updating of that Act to reflect those reforms.
Division 7 of Part 4 amends the Canada Pension Plan to implement the results of the 2010-12 triennial review, most notably, to clarify that contributions for certain benefits must be made during the contributory period, to clarify how certain deductions are to be determined for the purpose of calculating average monthly pensionable earnings, to determine the minimum qualifying period for certain late applicants for a disability pension and to enhance the authority of the Review Tribunal and the Pension Appeals Board. It also amends the Department of Human Resources and Skills Development Act to enhance the authority of the Social Security Tribunal.
Division 8 of Part 4 amends the Indian Act to modify the voting and approval procedures in relation to proposed land designations.
Division 9 of Part 4 amends the Judges Act to implement the Government of Canada’s response to the report of the fourth Judicial Compensation and Benefits Commission regarding salary and benefits for federally appointed judges. It also amends that Act to shorten the period in which the Government of Canada must respond to a report of the Commission.
Division 10 of Part 4 amends the Canada Labour Code to
(a) simplify the calculation of holiday pay;
(b) set out the timelines for making certain complaints under Part III of that Act and the circumstances in which an inspector may suspend or reject such complaints;
(c) set limits on the period that may be covered by payment orders; and
(d) provide for a review mechanism for payment orders and notices of unfounded complaint.
Division 11 of Part 4 amends the Merchant Seamen Compensation Act to transfer the powers and duties of the Merchant Seamen Compensation Board to the Minister of Labour and to repeal provisions that are related to the Board. It also makes consequential amendments to other Acts.
Division 12 of Part 4 amends the Customs Act to strengthen and streamline procedures related to arrivals in Canada, to clarify the obligations of owners or operators of international transport installations to maintain port of entry facilities and to allow the Minister of Public Safety and Emergency Preparedness to require prescribed information about any person who is or is expected to be on board a conveyance.
Division 13 of Part 4 amends the Hazardous Materials Information Review Act to transfer the powers and functions of the Hazardous Materials Information Review Commission to the Minister of Health and to repeal provisions of that Act that are related to the Commission. It also makes consequential amendments to other Acts.
Division 14 of Part 4 amends the Agreement on Internal Trade Implementation Act to reflect changes made to Chapter 17 of the Agreement on Internal Trade. It provides primarily for the enforceability of orders to pay tariff costs and monetary penalties made under Chapter 17. It also repeals subsection 28(3) of the Crown Liability and Proceedings Act.
Division 15 of Part 4 amends the Employment Insurance Act to provide a temporary measure to refund a portion of employer premiums for small businesses. An employer whose premiums were $10,000 or less in 2011 will be refunded the increase in 2012 premiums over those paid in 2011, to a maximum of $1,000.
Division 16 of Part 4 amends the Immigration and Refugee Protection Act to provide for an electronic travel authorization and to provide that the User Fees Act does not apply to a fee for the provision of services in relation to an application for an electronic travel authorization.
Division 17 of Part 4 amends the Canada Mortgage and Housing Corporation Act to remove the age limit for persons from outside the federal public administration being appointed or continuing as President or as a director of the Corporation.
Division 18 of Part 4 amends the Navigable Waters Protection Act to limit that Act’s application to works in certain navigable waters that are set out in its schedule. It also amends that Act so that it can be deemed to apply to certain works in other navigable waters, with the approval of the Minister of Transport. In particular, it amends that Act to provide for an assessment process for certain works and to provide that works that are assessed as likely to substantially interfere with navigation require the Minister’s approval. It also amends that Act to provide for administrative monetary penalties and additional offences. Finally, it makes consequential and related amendments to other Acts.
Division 19 of Part 4 amends the Canada Grain Act to
(a) combine terminal elevators and transfer elevators into a single class of elevators called terminal elevators;
(b) replace the requirement that the operator of a licensed terminal elevator receiving grain cause that grain to be officially weighed and officially inspected by a requirement that the operator either weigh and inspect that grain or cause that grain to be weighed and inspected by a third party;
(c) provide for recourse if an operator does not weigh or inspect the grain, or cause it to be weighed or inspected;
(d) repeal the grain appeal tribunals;
(e) repeal the requirement for weigh-overs; and
(f) provide the Canadian Grain Commission with the power to make regulations or orders with respect to weighing and inspecting grain and the security that is to be obtained and maintained by licensees.
It also amends An Act to amend the Canada Grain Act and the Agriculture and Agri-Food Administrative Monetary Penalties Act and to Repeal the Grain Futures Act as well as other Acts, and includes transitional provisions.
Division 20 of Part 4 amends the International Interests in Mobile Equipment (aircraft equipment) Act and other Acts to modify the manner in which certain international obligations are implemented.
Division 21 of Part 4 makes technical amendments to the Canadian Environmental Assessment Act, 2012 and amends one of its transitional provisions to make that Act applicable to designated projects, as defined in that Act, for which an environmental assessment would have been required under the former Act.
Division 22 of Part 4 provides for the temporary suspension of the Canada Employment Insurance Financing Board Act and the dissolution of the Canada Employment Insurance Financing Board. Consequently, it enacts an interim Employment Insurance premium rate-setting regime under the Employment Insurance Act and makes amendments to the Canada Employment Insurance Financing Board Act, the Department of Human Resources and Skills Development Act, the Jobs, Growth and Long-term Prosperity Act and Schedule III to the Financial Administration Act.
Division 23 of Part 4 amends the Canadian Forces Superannuation Act, the Public Service Superannuation Act and the Royal Canadian Mounted Police Superannuation Act and makes consequential amendments to other Acts.
The Canadian Forces Superannuation Act is amended to change the limitations that apply in respect of the contribution rates at which contributors are required to pay as a result of amendments to the Public Service Superannuation Act.
The Public Service Superannuation Act is amended to provide that contributors pay no more than 50% of the current service cost of the pension plan. In addition, the pensionable age is raised from 60 to 65 in relation to persons who become contributors on or after January 1, 2013.
The Royal Canadian Mounted Police Superannuation Act is amended to change the limitations that apply in respect of the contribution rates at which contributors are required to pay as a result of amendments to the Public Service Superannuation Act.
Division 24 of Part 4 amends the Canada Revenue Agency Act to make section 112 of the Public Service Labour Relations Act applicable to the Canada Revenue Agency. That section makes entering into a collective agreement subject to the Governor in Council’s approval. The Division also amends the Canada Revenue Agency Act to require that the Agency have its negotiating mandate approved by the President of the Treasury Board and to require that it consult the President of the Treasury Board before determining certain other terms and conditions of employment for its employees.

[Mireille Laroche]

Bill C-45 suspends the board. Once the account is in the black, the board will determine the contribution rate based on the new approach under Bill C-38.

Starting today and until then, the rates will increase by 5¢ each year to balance out. Since the board cannot fulfill its duties as set out by the legislation, with respect to investment and funds allocated to the account, the government decided to suspend its activities and resume them once the balance is achieved.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Bill C-38 is putting in place a new method of operating that will come into effect around 2016-2017. However, Bill C-45 aims to eliminate the board immediately.

What will happen in the meantime? Bill C-45 proposes eliminating the Canada Employment Insurance Financing Board. The board won't be abolished in 2016-2017?

[Scott Brison, Liberal, Kings—Hants, NS]

Is it possible to check on that and to get back to me with the methodology?

If the 2012 calculation doesn't include the 2011 EI credit, then we'd need some clarification, because under Bill C-45, small businesses will be hit for the full EI increase in 2012.

How much revenue from EI premiums would the government have expected to collect in 2012 if the government had not raised the EI rates by 5¢ but had instead kept it at $1.78?

[Jinny Sims, NDP, Newton—North Delta, BC]

On October 31, 2012, the finance committee moved that clauses 308 to 314 of Bill C-45 be debated by the appropriate committees. I would like to move that right now.

[The Chair, Conservative, James Rajotte]

I call this meeting to order.

This is meeting number 88 of the Standing Committee on Finance. Pursuant to the order of reference of Tuesday, October 30, 2012, we are studying Bill C-45, A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures.

We have with us officials from the Department of Finance as well as other departments today to discuss division 15 of part 4. We have officials from CRA, Human Resources and Skills Development Canada, and the Department of Finance.

We want to welcome you all to the committee.

Colleagues, just for your information, in part 4 we have divisions 15, 17, 22, 23, and 24.

We have to be out of this meeting at 6:30 p.m. sharp because there are other meetings here tonight. I encourage us to get through all of this today.

We will start with division 15. I will ask members to state their questions as they did last week.

Could we have one of the officials give us a brief synopsis of these changes?

The Environment

[Kirsty Duncan, Liberal, Etobicoke North, ON]

Mr. Speaker, through economic action plan 2012 and Bill C-38, the government severely cut the budget to Environment Canada, gutted environmental legislation, cancelled the National Round Table on the Environment and Economy. The Conservatives have also silenced dissent from environmental non-governmental organizations and continue to muzzle government scientists, threatening our economy and environment.

Our world-renowned natural heritage is now being further imperilled by a government that fails to understand that water is the foundation of life, is at the centre of economic and social development and is fundamental across economic sectors, including agriculture and energy.

Through its latest anti-democratic omnibus legislation, Bill C-45, the government is stripping federal oversight from thousands of Canadian waterways. Of the roughly 32,000 lakes in Canada, just 97 lakes and 62 rivers will now be protected.

Instead of killing the Navigable Waters Act, will the government prioritize clean water and restore our freshwater ecosystems?

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

There were changes made in Bill C-45 and Bill C-38 with regard to this. Is there a reason they weren't presented together or presented to Parliament as a package?

[The Chair, Conservative, James Rajotte]

I call this meeting to order. This is the 87th meeting of the Standing Committee on Finance. The orders of the day are pursuant to the order of reference of Tuesday, October 30, 2012, our study of Bill C-45, A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures.

We're pleased to welcome back officials from the Department of Finance to be with us today on the second look at this budget implementation bill.

Colleagues, at our last meeting we finished discussions on the corporate mineral exploration and development tax credit. The next area is the Atlantic investment tax credit, oil and gas and mining.

I've had some discussions with you. I'm going to identify the section. I'm going to ask if there are questions, and if there are, we can move right to questions and then have the officials respond. There's a fair amount to get through in the next two days, and we hope to finish with officials in this meeting and the next meeting, so that's how I will proceed.

Are there any questions dealing with part 1(g), which is the Atlantic investment tax credit, oil and gas and mining?

Mr. Cuzner, please.

Budget Implementation Legislation

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Mr. Speaker, on a point of order, I seek unanimous consent for the following motion. That, notwithstanding any Standing Order or usual practices of this House that the Standing Committee on Finance meet during the week of November 12 to 16 for the purpose of hearing from witnesses in pursuance of its examination of Bill C-45, and that the following standing committees meet during the week of November 12 to 16 for the purpose of hearing from witnesses in pursuance of their consideration of the subject matter of Bill C-45: the Standing Committee on Aboriginal Affairs and Northern Development, the Standing Committee on Agriculture and Agri-food, the Standing Committee on Citizenship and Immigration, the Standing Committee on the Environment and Sustainable Development, the Standing Committee on Fisheries and Oceans, the Standing Committee on Health, the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities, the Standing Committee on Justice and Human Rights, the Standing Committee on Public Safety and National Security and, finally, the Standing Committee on Transport, Infrastructure and Communities.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, while I do not know anything about a so-called deal that the NDP House leader talked about, I do know the Conservative Parliamentary Secretary to the Minister of Finance announced a process she was going to recommend to the finance committee to allow study of the bill, which I understand was adopted yesterday. It is a large bill, but it is not as large, of course, as the one that the Leader of the Opposition had when he was part of the cabinet in Quebec.

However, that being said, it is important that it be studied.

Consequently, as our government proposed, next week, 11 committees, including the finance committee, will study the important and necessary economic measures proposed in Bill C-45, the Jobs and Growth Act, 2012.

Yesterday, the finance committee got to work on this bill, not even 24 hours after the House passed it at second reading. This bill will implement key measures, like an extension of the small business hiring tax credit; and let me assure the House, it will definitely not implement the New Democrats' $21.5 billion, job-killing carbon tax.

Turning to business in the chamber, we will start second reading of Bill S-8, the Safe Drinking Water for First Nations Act, momentarily. I think it will be today.

Tomorrow, we will start report stage—and, ideally, third reading—of Bill C-24, the Canada–Panama Economic Growth and Prosperity Act.

As a former trade minister, I can tell you that the NDP is opposed to free trade. They have made that clear numerous times by dragging out debate, delaying and voting against free trade agreements here in the House. In fact, the hon. member for British Columbia Southern Interior outlined his party's position when he stated that “trade agreements threaten the very existence of our nation.” That is the NDP position.

We will continue debating free trade with Panama next week, on Tuesday and Wednesday. This bill will finally put into law our free trade agreement—an agreement which was signed here in Ottawa almost two-and-a-half years ago.

On Monday, we will resume the second reading debate on Bill S-9, the Nuclear Terrorism Act, before question period. Based on the speeches we heard the last time it was before the House, I hope that these two extra hours of debate will be sufficient for it to proceed to committee.

After question period on Monday, we will see Bill C-36, the Protecting Canada's Seniors Act to combat elder abuse, considered at report stage and, hopefully, third reading.

Also Monday will be the day designated, pursuant to Standing Order 66(2)(a), for resuming the adjourned debate on the seventh report of the Standing Committee on Government Operations and Estimates.

Finally, next Thursday, we will consider Bill C-44, the Helping Families in Need Act, which I understand was considered clause by clause at the human resources committee this morning. Given the unanimous endorsement the bill received at second reading, I hope it could pass and be sent to the other place before we rise for the constituency week.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, I am honoured to rise on behalf of the official opposition to ask the government what it has planned for the House for the remainder of this week and for next week.

Today, I will ask questions about Bill C-45, a monster bill from the government, which does not seem to understand the situation at all. The 450-page bill combines issues such as reducing funding for research and development, or protecting lakes in Muskoka, but nowhere else in the country. All of that is found in and among budgetary measures.

What makes even less sense than the bill itself is the lacklustre effort the government made to be transparent about its plan to have the bill studied in committee.

Let us recap where we have come to so far with the government and how its plan, if we can call it that, is going ahead.

Two weeks ago, the government announced a deal to have the committee study the bill, apparently giving it powers for amendments. Since then, motions to conduct these studies at individual committees have been introduced and then suddenly disappeared.

Yesterday, in question period, the Conservative committee chairs refused to answer questions; they did not know or they did not understand them. Just one hour after question period, the finance minister made a commitment that something else would actually happen to perhaps amend the bill.

Now committees can recommend to the FINA committee, but those amendments have no more precedence than motions moved at the committee itself. It only looks like it was a plan written on the back of a napkin, but that would be insulting to plans written on the back of a napkin.

This is the budget of Canada we are talking about. I know relationships take a lot of work, but perhaps the House leader, maybe the whip and the finance minister, could actually get together to organize a conversation to proceed in some logical manner that would allow the bright light of sunshine—

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

I must say that we would have liked to study those measures, which are included in Bill C-45, and to hear testimony on the subject.

Do you think it would have been appropriate for the Standing Committee on Industry, Science and Technology to examine that?

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Thank you, Mr. Chair.

I want to thank the witnesses for being with us today.

In my riding, LaSalle—Émard, 6,000 jobs depend on the manufacturing sector. Here we are talking about 120,000 jobs in the greater Montreal area. That sector has been hard hit in recent years and we have seen a large number of businesses close their doors. Many of those jobs have disappeared.

Bill C-45, which is before the House of Commons, proposes changes to the research and development program. As I mentioned, research and development lead to innovation. As regards the changes, there is a reduction from 20% to 15%, among other things, and capital expenditure eligibility is being amended. We touched briefly on that aspect.

I would like you to give us more details on the consequences this will have for your members, particularly for our competitive power, especially with the United States.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Sure.

That, the Standing Committee on Transport, Infrastructure and Communities conduct a study on the subject matter of the sections of Bill C-45, An Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures, which directly fall within the mandate of this committee, especially the changes proposed to the Navigable Waters Protection Act and its ramifications for pipeline crossing reviews and the integrity of Canada’s streams and lakes...

As well, I move that that the committee also consider clauses 156 to 165, 179 to 184, 316 to 350, and 411 to 424, and schedules 1 and 2, and that the committee report this motion to the House.

Mr. Chair, you will notice that I moved my motion and then also incorporated the motion from the Standing Committee on Finance, in which paragraph (a)(x) refers to this committee, so I incorporated pieces of it into my motion.

I think it is important that we consider the many lakes, rivers, and streams across Canada and how we need to continue to protect them, and I thought this would be the committee that should do the study. Thank you, Mr. Chair.

[Mike Sullivan, NDP, York South—Weston, ON]

Thank you, Mr. Chair.

As I stated earlier, the Finance Committee has referred some parts of Bill C-45 to this committee, and therefore I'm seeking unanimous consent to adopt the following motion:

That, the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities immediately commence a study, as has been requested by the Standing Committee on Finance in their motion adopted on October 31, 2012, into the subject matter of clauses 219 to 232 in C-45, A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures, and that the committee report to the finance committee suggested amendments to these clauses by November 20th at 5:00 p.m.