Bill C-48 (Historical)

Technical Tax Amendments Act, 2012

An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation

Part 1 of this enactment implements, in accordance with proposals announced in the March 4, 2010 Budget and released for comment on August 27, 2010, amendments to the provisions of the Income Tax Act governing the taxation of non-resident trusts and their beneficiaries and of Canadian taxpayers who hold interests in offshore investment fund property.
Parts 2 and 3 implement various technical amendments in respect of the Income Tax Act and the Income Tax Regulations relating to the taxation of Canadian multinational corporations with foreign affiliates. The amendments in Part 2 are based on draft proposals released on December 18, 2009. Among other things, Part 2 includes the amendments to the foreign affiliate surplus rules in the Income Tax Regulations that are consequential to the foreign affiliate changes to the Income Tax Act announced in the March 19, 2007 Budget. The amendments in Part 3 are based on draft proposals released on August 19, 2011. Among other things, Part 3 includes revisions to the measures proposed in a package of draft legislation released on February 27, 2004 dealing primarily with reorganizations of, and distributions from, foreign affiliates.
Part 4 deals with provisions of the Income Tax Act that are not amended in Parts 1, 2, 3 or 5 in which the following private law concepts are used: right and interest, real and personal property, life estate and remainder interest, tangible and intangible property and joint and several liability. It enacts amendments, released for comments on July 16, 2010, to ensure that those provisions are bijural, in other words, that they reflect both the common law and the civil law in both linguistic versions. Similar amendments are made in Parts 1, 2, 3 and 5 to ensure that any provision of the Act enacted or amended by those Parts are also bijural.
Part 5 implements a number of income tax measures proposed in the March 4, 2010 Budget and released for comment on May 7, 2010 and August 27, 2010. Most notably, it enacts amendments
(a) relating to specified leasing property;
(b) to provide that conversions of specified investment flow-through (SIFT) trusts and partnerships into corporations are subject to the same loss utilization restrictions as are transactions between corporations;
(c) to prevent foreign tax credit generators; and
(d) implementing a regime for information reporting of tax avoidance transactions.
Part 5 also implements certain income tax measures that were previously announced. Most notably, it enacts amendments announced
(a) on January 27, 2009, relating to the Apprenticeship Completion Grant;
(b) on May 3, 2010, to clarify that computers continue to be eligible for the Atlantic investment tax credit;
(c) on July 16, 2010, relating to technical changes to the Income Tax Act which include amendments relating to the income tax treatment of restrictive covenants;
(d) on August 27, 2010, relating to the introduction of the Fairness for the Self-Employed Act;
(e) on November 5, 2010 and October 31, 2011, relating to technical changes to the Income Tax Act;
(f) on December 16, 2010, relating to changes to the income tax rules concerning real estate investment trusts; and
(g) on March 16, 2011, relating to the deductibility of contingent amounts, withholding tax applicable to certain interest payments made to non-residents, and certain life insurance corporation reserves.
Finally, Part 5 implements certain further technical income tax measures. Most notably, it enacts amendments relating to
(a) labour-sponsored venture capital corporations;
(b) the allocation of income of airline corporations; and
(c) the tax treatment of shares owned by short-term residents.
Part 6 amends the Excise Tax Act to implement technical and housekeeping amendments that include relieving the goods and services tax and the harmonized sales tax on the administrative service of collecting and distributing the levy on blank media imposed under the Copyright Act announced on October 31, 2011.
Part 7 amends the Federal-Provincial Fiscal Arrangements Act to clarify, for greater certainty, the authority of the Minister of Finance and of the Minister of National Revenue to amend administration agreements if the change in question is explicitly contemplated by the language of the agreement and to confirm any amendments that may have been made to those agreements. Part 7 also amends the Federal-Provincial Fiscal Arrangements Act and the First Nations Goods and Services Tax Act to enable the First Nations goods and services tax, imposed under a tax administration agreement between the federal government and an Aboriginal government, to be administered through a provincial administration system, if the province also administers the federal goods and services tax.
Part 8 contains coordinating amendments in respect of those provisions of the Income Tax Act that are amended by this Act and also by the Jobs and Growth Act, 2012 or that need coordination with the Pooled Registered Pension Plans Act.

Technical Tax Amendments Act, 2012

[Élaine Michaud, NDP, Portneuf—Jacques-Cartier, QC]

Mr. Speaker, I feel especially privileged to have the chance to speak twice on Bill C-48, which amends the Income Tax Act. Not everyone has an opportunity to address this highly charged issue.

As I mentioned the last time, this bill is nearly 1,000 pages long and makes a number of very technical changes to Canada’s tax system, changes that have accumulated over more than a decade. It seeks to obtain official approval for the various technical measures that have been put forward by the Minister of Finance over the years, over more than 10 years now, in fact.

We in the NDP believe that the technical changes proposed in Bill C-48 will be good for the Canadian tax system and will generally reduce tax avoidance. This is why the NDP will be supporting the bill at second reading.

The NDP believes that, as parliamentarians, as the elected representatives of Canadians, we have a duty to do whatever we can to minimize tax evasion and get rid of loopholes in our legislation, to ensure that the government has all the resources it needs to provide Canadians with the government services and institutions that they depend on and, more importantly, that they deserve.

Because of the Conservative government's budgets, we are facing drastic service cuts that will affect the Canadians who need those services the most. Money that is in the system could be invested in our social programs and in the institutions Canadians depend on, such as the universal public health insurance system. Ultimately, we could even set up other programs. Instead of being used to benefit the most privileged among us, this revenue should benefit the whole of Canadian society. It is important to do everything we can to bring the money back into the system so that the government can use it.

It is all well and good to cut a little bit here, there and everywhere, but we must be able to generate the revenue we need so that we can maintain what we have achieved, improve and enhance existing programs, and then come up with new programs that meet the needs of Canadians. I think that if a government is not able to do this, it is not doing its job. Unfortunately, this is true of the current Conservative government. This is what the NDP will be changing in 2015, when it forms the government, of course.

Since the Conservatives would have us believe that they are good managers of public funds, I find it really surprising and very disappointing that they waited so long before doing what was needed to get the technical amendments in Bill C-48 through Parliament.

In fact, the most recent technical tax bill was passed in 2001. That is more than 10 years ago. By 2009, at least 400 technical amendments had still not been enacted.

Bill C-48 is huge, nearly 1,000 pages, and it clearly shows that this government must be more responsible in managing tax legislation.

It is absolutely unacceptable to penalize taxpayers and the business sector by perpetuating so much uncertainty and unpredictability in Canada’s taxation amendment process.

Furthermore, because the Conservatives are so slow, we are once again dealing with a massive omnibus bill and we have very little time to really study it and to examine the implications of its legislative measures.

It really is a shame that the Conservatives persist in using this strategy, which, frankly, hinders the work that we in the House must do, that is, to study and consider bills and their impact on the Canadian public. The fact that we are prevented from conducting our parliamentary work properly has a direct impact on Canadian democracy and Canadians’ trust in their elected officials.

At least things are a little better this time around because the Conservatives had the decency to combine a series of bills dealing with the same subject in Bill C-48. It is actually quite refreshing compared to Bill C-38 and Bill C-45, bills that sought to hide a raft of drastic and socially harmful changes in areas such as environmental protection, immigration, employment insurance, old age security and many more.

Despite all that, although tax measures are involved and it is all one subject, in general we are in favour of the bill’s content. However, the fact remains that we are dealing with a document that is incredibly long. We do not have much time to study the amendments, which are technical and relatively complex and merit careful study. A number of them have already been implemented by tax professionals, accountants and businesses, but some things are still not clear and should perhaps be given further consideration. Once again, we do not have an opportunity to do so, because this is an omnibus bill.

Every week, my constituents come into my office in Portneuf—Jacques-Cartier to tell me that they are tired of seeing these kinds of bills in the House, tired of seeing these huge documents and tired of seeing that their elected officials, whom they elected to represent them, are incapable of doing their job.

Canadians are fed up with the way this government operates. Things have to change and quickly. The government needs to stop dragging its feet and establish a truly efficient process for quickly and regularly enacting the technical amendments in the comfort letters issued several times a year by the Department of Finance.

I think the message is clear. I will repeat what a number of my colleagues have already said: we will be supporting the bill. However, we must ensure that a situation like the one we are faced with today will not occur again, and we must ensure that the government will present us with technical amendments on a regular basis so that we can do our job properly.

The House resumed from February 15 consideration of the motion that Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation, be read the second time and referred to a committee.

[The Chair, Conservative, James Rajotte]

Okay.

I have two reminders for the committee, very briefly.

I still need from members their interest on which clauses of Bill C-48 they want officials to address. I don't need that right at this meeting, but I would like it today. The government has indicated, in terms of focus, they'll agree to whatever officials the opposition wants to focus on, if I understand that correctly. That's the first item.

The second item is estimates. Supplementary estimates have been sent to the committee, and will be sent to members' offices today. If the committee wants a meeting, please talk amongst yourselves and with your colleagues in your party as to whether you would like a meeting on the supplementary estimates.

Ms. Nash.

[Élaine Michaud, NDP, Portneuf—Jacques-Cartier, QC]

Mr. Speaker, I must admit I am very disappointed to learn I will have so little time to talk about a matter that so fascinates people, as I have seen here today. However, I will nevertheless add my voice to those of my colleagues in speaking about Bill C-48, a new bill nearly 1,000 pages long that makes many highly technical changes to Canada's tax system, changes that have been piling up for over a decade.

As I have mentioned several times in this House, most of the changes contained in Bill C-48 have been announced over the 11 years since the most recent technical bill was passed in the many news releases and comfort letters of the Department of Finance and in the budget. These amendments have been brought into effect, but they have not been made the subject of a technical bill. Now the government seeks to enact them all more officially.

In addition to the measures we already know of, Bill C-48 introduces three new measures never previously announced. First of all, it repeals certain tax restrictions to assist labour-sponsored venture capital corporations in addressing some transitional problems. It amends the formula for allocating the taxable income of airline corporations to ensure that taxable income stays in the provinces or territories where those corporations are permanently established. It also provides for the implementation of a measure respecting the tax treatment of shares owned by short-term residents of Canada for departure tax purposes.

We in the NDP believe that the technical changes this bill will make to Canada's tax system will be beneficial and will generally have the effect of discouraging tax avoidance. That is why we will support this bill on second reading.

Tax avoidance is a problem often criticized by people across the country, particularly in my riding of Portneuf—Jacques-Cartier. These are honest taxpayers who pay their taxes and who see more privileged Canadians benefiting from privileges to which honest Canadians who pay their taxes do not have access. They want their members of Parliament to address this problem.

As representatives of these people, we have the responsibility to do everything it takes to minimize tax evasion and eliminate loopholes in the legislation. We must ensure that the state has all the resources necessary to guarantee that Canadians have the services and public institutions they depend on and deserve.

The Conservatives are offering all sorts of tax cuts and tax credits to oil companies without expecting anything in return. They are forfeiting revenue that the state needs and are never able to cut spending enough to lower the deficit. The Conservatives are using smoke and mirrors every day. They want us to buy the ridiculous idea that they are good managers of public funds, but they are unable to effectively and regularly implement the new tax measures that they are proposing to improve Canada's tax laws.

It is essential that the government quickly considers this problem and takes an effective approach to enact these technical amendments and thereby eliminate the confusion and uncertainty surrounding the current system. It is important for taxpayers, businesses and tax experts.

The government must act quickly to remedy this situation, which is problematic in a number of ways. We want Canadian businesses to be competitive so that they can perform well on world markets. They must have a clear understanding of the tax laws in effect and access to up-to-date information as quickly as possible. That is what we are asking from the government.

That is why we are going to support the bill at second reading; however, there is still work to be done. This government must do the work quickly in order to help all Canadian taxpayers and businesses.

[Mathieu Ravignat, NDP, Pontiac, QC]

Mr. Speaker, I am pleased to rise in the House to support this bill on behalf of the people in my riding of Pontiac. A good housecleaning in this area can only help businesses in particular.

Bill C-48 implements over a decade of highly technical amendments to our tax system. I believe that these changes will have a positive impact on revenues and that they will generally discourage tax avoidance, which is an important element.

The very size of this bill shows that the government must manage the tax system in a more responsible manner. It must ensure in particular that it periodically passes legislation on proposed tax measures. Otherwise, there will be greater uncertainty for business people and tax experts, and it will be almost impossible for parliamentarians to deal with such lengthy bills.

I also want to point out the importance of guaranteeing the integrity of the tax system. Moreover, I believe that we must eliminate unanticipated tax loopholes in a timely manner. We must also consider the increasing complexity of tax laws and insist on the need to simplify them over time.

Like my fellow New Democrats, I think we must fight tax avoidance and tax evasion while preserving the integrity of our tax system. That is why I support the changes being made in this bill, especially those that aim to stop tax avoidance. It is a significant loss of revenue for the state, and that revenue is essential to support our social programs, which reflect the values of all Canadians.

Still, at nearly 1,000 pages, this bill is the perfect example of an omnibus bill. Fortunately, unlike the monster budget bills that contain badly designed and poorly conceived policies, this bill makes technical amendments to several closely related acts.

This bill's massive size is proof that there is still some work to be done in transforming such technical amendments into legislation and, as I said, doing that with good speed. Not doing that penalizes businesses and complicates Parliament's tasks. And that has a cost.

The harder it is for businesses to find their way around the country's tax laws and pay their taxes, the less effort they will make to pay their fair and responsible share of taxes. It is these taxes that the state uses to redistribute revenue and help the neediest people in our society and anyone who runs into problems.

In the fall of 2009, the Auditor General reported that there were more than 400 technical amendments that had been proclaimed but had not yet been enacted in legislation. Bill C-48 will enact more than 200 of these changes, or about half, but the others will be left in limbo. When can we expect to see those 200 amendments become law?

We may all wonder what is causing this delay. When the Liberals were in power, they, too, took some time integrating the technical amendments into tax law. The most recent enactment of a technical tax bill was in 2001, more than a decade ago.

I wonder why the Liberals did not pass such technical taxation bills regularly after 2001. They may have an answer. The Conservatives, too, have taken their time transforming these technical amendments into legislation.

Bill C-48 is designed to implement more than 200 of these changes. However, it is crucial that the other 200 be enacted and that the integrity of our tax system be maintained. The Conservatives should try to do a better job of incorporating these technical amendments into the legislation.

Compliance is a key aspect of maintaining the integrity of our tax system. What is the government doing to ensure that people comply with the technical changes being made in the tax system? We have not yet had an answer to that question.

The official opposition has consulted tax professionals and lawyers, who have told us that the technical changes in Bill C-48 are largely beneficial and necessary, but that there are not enough of them. That said, there have been other attempts to pass technical tax bills.

For example, Bill C-10 was introduced in October 2007 and was quickly passed by the House of Commons, but it had not passed the Senate committee stage when the 39th Parliament was dissolved in September 2008.

Governments have not been acting quickly enough. And that costs Canadian companies and taxpayers money. We want the government to act more quickly when it comes to tax changes, and we want these changes to be tabled more often. Many experts agree with us. For example, here is a quote from the Auditor General:

If proposed technical changes are not tabled regularly, the volume of amendments becomes difficult for taxpayers, tax practitioners, and parliamentarians to absorb when they are grouped into a large package....

In the 1991 Report of the Auditor General, Chapter 2, we expressed concerns that income tax comfort letters were given without public announcement. In response, the Department of Finance Canada stated that “the government intends to release a package of income tax technical amendments on an annual basis, so that taxpayers will not be subject to more lengthy waiting periods as in the past before amendments are released to the public.”... comfort letters have since been regularly released to the public...

Denis Saint-Pierre, the chair of the Tax and Fiscal Policy Advisory Group for the Certified General Accountants Association of Canada, said the following in committee:

First, the government must introduce a technical tax amendments bill. The last time a technical tax bill was passed by Parliament was over 11 years ago. Literally hundreds of unlegislated tax amendments to the Income Tax Act—which I showed this committee last year...—have been proposed, but not yet enacted, which brings uncertainty and unpredictability to the process.

In its 2012 prebudget submission—not too long ago—the Certified General Accountants Association of Canada said:

CGA-Canada strongly believes that the key to sustained economic recovery [the question was about economic recovery] and enhanced economic growth lies in the government’s commitment to tax reform and red tape reduction.

It is clear that we must take action that is in the best interests of Canadian taxpayers, to develop a tax system that makes sense and serves everyone.

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

Mr. Speaker, this is the time of year when Canadians are going to have to start thinking about completing their income tax returns. It is not something Canadians necessarily enjoy doing, but whether we like it or not, it is a tradition. Sharing wealth is also one of Canada's traditions. Doing so enables us to have social programs so that when people fall ill, they can seek the help of a doctor, go to the hospital, and receive universal health care that is both free and accessible.

Our taxes also provide us with programs such as employment insurance. This program ensures that if a person is unfortunate enough to lose his or her job or get laid off during a plant closure—as we have seen occur over recent years—the family will still have an income. Single people will still have a roof over their heads and be able to purchase essential items, such as groceries.

Our taxes and laws also make it possible to have shared programs with the provinces for infrastructure and public transport. All of this contributes to the common good.

I am very pleased, therefore, to rise to speak about C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.

This bill is large and contains over 1000 pages. I have often risen in this House to denounce large bills, including the omnibus bills that the government has introduced as so-called budget implementation bills. The NDP has taken a strong stand against this type of legislation because many of the measures are not necessarily related to the budget. They contain any number of amendments to various pieces of legislation, and there is not sufficient time to review the measures in committee. In any event, we have been denied the opportunity to study these omnibus bills in specific committees. We have voiced our opposition to this and we shall continue to do so as much as possible in the House.

The difference in this case is that the bill amends acts that are similar and that deal with related issues. The reason it is so bulky is that over the years—in fact, since 2001—previous governments dragged their feet. They did not follow the sound advice of the Auditor General to correct things. They should have acted, they should have amended acts, but they waited and let the years go by. That is why we now have such a bulky bill. Such changes should be done on an ad hoc basis, but we did not do our homework. We did not do what should have been done.

The NDP supports Bill C-48 because it is important that this legislation continues to focus on compliance to guarantee the integrity of the tax system.

We say that tax loopholes must be eliminated in a timely fashion. This bill is very important to protect the integrity of our tax system and to have all the winning conditions.

I want to underline three points. We must fight tax avoidance and tax evasion while preserving the integrity of our tax system. This bill is a step in the right direction.

We support the changes proposed in this bill, including those that seek to reduce tax avoidance.

Again, this is a bulky bill. I explained why earlier. I believe we can do better, and Canadians deserve better. Over the years, it will be important to conduct regular and ad hoc reviews of the tax system.

Unlike the previous omnibus bill that brought major changes to all sorts of acts, this legislation proposes technical amendments to a number of acts that are closely related. We will have to ensure that ad hoc reviews are conducted.

In 2009, the Auditor General of Canada was concerned about the fact that at least 400 technical amendments had not been enacted through legislation.

Bill C-48 enacts more than 200 of these changes. There is still work to be done. It can be done, but we need to ensure that our tax system is fair and that all of the loopholes have been eliminated.

The bill has a number of parts. I would like to speak specifically about part 5 of the bill, which would implement various technical amendments, some from as far back as 2002.

I am not going to go into the history of these changes, but part 5 includes anti-avoidance measures for specified leasing property, measures to ensure that income trusts and partnerships are subject to the same loss utilization restrictions as transactions between corporations, measures to limit the use of foreign tax credit generators for the purpose of avoiding foreign tax, and measures to clarify rules on taxable Canadian property for non-residents and migrants. It also provides an information regime for tax avoidance.

Any tax avoidance transaction, that is, any transaction that is intended to obtain a tax advantage, must now be reported, even if it is not abusive. Additional reporting will be required in cases where the transaction raises red flags about its legitimacy.

According to experts, the majority of these changes were already in place and should have been even earlier. We hope that this bill will provide effective measures for fighting tax evasion. A review mechanism should also be put in place so that we do not find ourselves with another bill of this size in 10 years.

Canadians will appreciate it and it will make our work as parliamentarians easier.

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

Mr. Speaker, I thank my colleague for his speech.

He did a good job of explaining why these measures should have been in place many years ago. It is clear that, over the years, several experts, including the auditor general of Canada, have raised the issue of considerable delays.

As the member clearly explained, we are now dealing with an extremely large and complex document, and conducting a thorough review of it is no easy feat.

Nevertheless, I would like my colleague to talk about the important provisions of Bill C-48 that the NDP supports.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Mr. Speaker, I am pleased to have the opportunity to weigh in, for a few moments anyway, on Bill C-48. I commend the member for Brossard—La Prairie, not only for his speech but also for the incredibly valuable work he performed as a member of the Standing Committee on Finance. Not to put too fine a point on it, he is a brilliant deputé and made an important contribution. I know that he will make a similar type of contribution on the justice committee, where he is now focusing his attention.

We are dealing with a bill that is nearly a thousand pages long. As others have said, it deals with a huge number of needed amendments that have been outstanding for nearly 15 years. They were announced but were not enacted in legislation, creating great confusion and problems for tax practitioners and individual Canadians.

The point made by one of the groups we spoke to, and that I am sure he heard from, Blakes, was that as a result of allowing this backlog of amendments to build up, the government has increased the complexity of the tax system. That flies in the face of everything the government has claimed it stands for as it relates to things such as reducing red tape and simplifying the tax system to make it easily accessible and understood by Canadians. That is another example of how the government tells Canadians one thing and goes ahead and does something else.

We heard from other members of this caucus that the Auditor General, in 2009, reported to the House that there were upwards of 400 tax amendments that had been proclaimed and were being carried forward but they had not been codified and enacted in legislation. That was creating a problem, a sense of confusion and an added level of complexity. He said it was simply bad practice and was not the way to run something as technical and important as the tax system under the finance acts.

Bill C-48, I understand, deals with about half of those. It does not deal with the additional ones that have been announced by the government since 2009. Therefore, even though we are dealing with a piece of legislation that is 1000 pages long and is extraordinarily complex, we will not have time to go through it in the kind of detail with which we probably should go through it. The government is still not dealing with all the changes in the tax system that have been enacted already but that have yet to be codified.

That is why the experts, such as the Certified General Accountants-Canada and the Auditor General, have said it is so important. We have comments from Thomas McDonnell, from Thorsteinssons LLP tax lawyers, and others who have said it is important to make sure that, for the tax changes that are proposed, announced and put in place by the Minister of Finance or the government, whether at budget time or at other times during the year, the government should be introducing legislation annually in the House to make sure that happens.

In 2007 the Conservatives introduced Bill C-10, which was an attempt to try to catch up to the backlog. Members will know that in 2008, they pulled the plug, because they felt that they might be able to get a majority government at the time. Even though they were flying in the face of fixed-term legislation that the Prime Minister himself lauded, they went to the polls in the fall of 2008. As a result, Bill C-10 died on the order paper.

The point is that they should not be waiting years to take care of business that should be looked after on an annual basis. It would give legislators here and experts across the country an opportunity to take a small chunk of legislation and amendments and to have a full discussion about their implications. That would be a sign of good governance.

If Parliament were up to date on those kinds of legislative changes, and the government of the day decided to prorogue the House or call an election or whatever, we would only be dealing with one year of changes next time around and would not be participating in a buildup of a backlog.

As everyone who knows about this system has said, it is extraordinarily complex. Allowing this backlog to build and bringing in amendments this way to an extraordinarily technical piece of legislation of almost 1,000 pages does not provide the clarity and opportunity for simplifying the tax system that we should be looking for. It is in the interest of all Canadians.

Since my time is winding down, I will make three points. I have said already that the bill is extremely technical. New Democrats think it does not need to be so technical.

In respect of good governance and legislative management, it should be done on an annual basis. Let me be clear that we on this side believe in cracking down on both tax avoidance and tax evasion while ensuring the integrity of our tax system. We support these changes, but we want to ensure that they happen on a more manageable basis.

This is an omnibus bill of sorts, but as opposed to Bills C-45 and C-38, it does not bring 60 pieces of legislation together with nothing that ties them together. It deals with changes to closely related pieces of legislation.

Finally, the massive size of this bill demonstrates that there is still work to be done in getting technical changes legislated in a timely fashion. As I have said and will reiterate, failing to do so hurts the business community. It makes it difficult for proper evaluation by Parliament. Ultimately, it impacts the economy of this country and individual Canadians who are trying to work with an increasingly complex tax system as they go about their business and their daily lives making sure they provide for themselves and their families and build stronger communities and a stronger country.

That is our goal. Those are the measures we would like to see the government move forward with.

We will be supporting the legislation. I urge the government to ensure that this is done on an annual basis from here on in.

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

Mr. Speaker, I really do not know what that has to do with C-48, the issue on which I was speaking. This is an important bill. However, I would like to respond to my colleague’s question.

During the election campaign, we put forward the same idea as the Conservatives did in 2008, regarding what is called a carbon exchange. My colleague does not understand the difference. I would love to explain it but unfortunately I do not have the time.

She should look at the her party’s election platform in 2008. There is a difference between a carbon tax and a carbon exchange. Perhaps my colleague should read about it and find out more about the issue. I would happily provide her with information about it.

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

Mr. Speaker, I am pleased to rise today to speak about Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.

The title is long, and the bill is voluminous. It is a necessary bill that makes amendments, and thus changes. The vast majority of the measures it contains have been in place for several years now. This bill makes them law.

Many people wonder why it has taken so long to introduce this bill. It is true that it is highly complex. Having studied law, particularly tax law, I can say that reading this bill is quite a difficult task. Let us just say that no one will be reading it for fun. The right frame of mind is essential.

I would like to thank the Department of Finance people who helped us during the briefing. They were very clear. They answered all our questions, unlike what the Conservative government is doing. The department's co-operation with us on this bill was good.

As my colleagues have already mentioned, no technical changes or clarifications have been made since 2001. That is a problem because we need more constant and regular review to achieve a degree of credibility and stability so that we can clearly understand the laws. In this case, the Conservatives have been asleep at the switch. It is time for them to wake up and do their job.

Sheila Fraser, the Auditor General of Canada, stated the following in her 2009 report:

No income tax technical bill has been passed since 2001. Although the government has said that an annual technical bill of routine housekeeping amendments to the Act is desirable, this has not happened. As a result, the Department of Finance Canada has a backlog of at least 400 technical amendments that have not been enacted, including 250 “comfort letters” dating back to 1998, recommending changes that have not been legislated.

Yet, of the some 400 amendments in question, only 200 are included in this bill. There is therefore a problem with the government's approach. The government needs to do some housekeeping. It is important in order to build some degree of stability and understanding.

In this regard, the Standing Committee on Finance—of which I was a member not long before I joined the Standing Committee on Justice and Human Rights—mentioned tax simplification in its report. Many organizations testified before the committee of its importance. Tax simplification was even included in the Standing Committee on Finance's recommendations.

What is meant by tax simplification? With this 1,000-page bill and the Income Tax Act, tax legislation is piling up and becoming increasingly complex. Tax professionals and tax lawyers are increasingly sought after in order to sort everything out.

The more complicated this legislation gets, the more chances there are for loopholes or opportunities for evasion. Fortunately, this bills implements certain measures to close these loopholes.

The government is not doing enough to stop tax evasion. However, I am very pleased that our colleagues from the finance committee are currently examining the issue of tax evasion and tax havens. My colleagues know that I feel very strongly about this issue since I am the one who moved the motion. I am therefore very happy that the finance committee is moving forward on this. That being said, the government is clearly not doing enough from a practical standpoint.

In fact, the government has no estimate of how much money Canada is losing. Canada is losing billions of dollars, but they seem to be saying they are working on it. However, when we look at how the government is working on it, we see that there have been cuts at the Canada Revenue Agency and that the positions of people responsible for looking into tax evasion are even being cut.

To come back to the bill, I will say that some measures tackle tax evasion, or rather what is called tax avoidance, to close the loopholes. That is very important.

The bill is quite lengthy, but some parts are very worthwhile. As I explained, the bill is very technical and very lengthy. However, in order to understand the bill better and have a better idea of its scope, I am going to refer to a few aspects of it.

Part one deals with offshore investment fund property and non-resident trusts. The changes are aimed at taxing the worldwide income of Canadian residents.

It is therefore a good proposal.

Parts two and three deal with the taxation of foreign affiliates of Canadian multinational corporations. Again, that is an interesting and important issue.

Part four deals with amendments to ensure that provisions that use certain private law concepts reflect both the common law and civilian law in both linguistic versions.

It is quite technical, but it is important to make progress in this regard.

Part five of the bill implements a variety of technical elements.

In this case, I will not go into too many details, because it is rather tough going. Generally speaking, it is quite technical, but these are necessary amendments.

Part six includes housekeeping changes to the Excise Tax Act, repealing a provision that has not been used since 1999.

Once again, we see that the existing measures have not really been used, and that it takes a long time for the government to do something.

Part seven talks about certain powers of the minister. Certain things relating to that are dealt with.

Part eight says that Bill C-48 covers all of the amendments made in Bill C-45, which was introduced last fall.

To come back to what I was saying in relation to simplification and the fact that the government is not doing that enough, as I said a minute ago, I can tell you what people are saying about the need to make things simpler.

For this I blame both the Conservatives and the Liberals, who talk about simplifying taxes and ask why nothing has been done since the Carter Commission, that is, for several years now. Neither the Conservatives nor the Liberals have done anything in this regard. I find that quite deplorable, and I am not the only one. A number of groups, including the certified general accountants, a rather important group that has much to propose in this regard, feel the same way. I am going to read the recommendation made by that group in the pre-budget consultations.

—we strongly feel that implementing a sunset provision would ensure that tax amendments are legislated, which ultimately will eliminate the ever-growing backlog of unlegislated tax measures once and for all. With this provision, if a tax policy change is announced and not incorporated into legislation within a reasonable amount of time, the measure would lapse. This would bring greater clarity and certainty to tax legislation, reduce the compliance and paperwork burden, and, perhaps most importantly, prevent any future legislative backlogs. Those are a few simple but important steps that would go some distance in improving and strengthening Canada's tax system.

Those are a few simple but important steps that would go some distance in improving and strengthening Canada's tax system.

Again, the sunset provision is important; it should be a priority. It would keep us from having so many bills that go back more than 10 years, as has been mentioned, and whose tax measures have not been implemented.

Bill C-48 is a good start, but we would like the government to be more responsible, both administratively and fiscally.

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

Mr. Speaker, I thank my colleague for her speech, which provided us with a lot of information about the bill and how it came about.

Bill C-48, which is before us today, contains over 1,000 pages, but the question I want to ask the member has nothing to do with the number of pages. What I want to know is why it took so long to introduce the bill and address these issues. As my colleague mentioned, this bill addresses a number of technical issues that should have been dealt with long ago. When the government takes too long to introduce legislation, it leads to insecurity in the business community. This government, therefore, is a laggard.

Can my colleague tell me why this government takes so long to address problems when solving them could help the business community?

[Manon Perreault, NDP, Montcalm, QC]

Mr. Speaker, I wish to inform you that I will be sharing my time with the hon. member for Brossard—La Prairie.

I am pleased to rise today to speak to Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.

First of all, I would like to point out that this is a huge bill. It is almost 1,000 pages long and contains many technical amendments. The bill is extremely complex and only adds to the complexity of our tax system, which says a lot. It is, without question, a real omnibus bill.

However, unlike the mammoth budget bills we have seen recently, at least this one contains technical changes to a few very closely related bills. So, this represents quite a change, since we do not have to focus on a range of topics that have noting to do with the bill.

Nevertheless, the scope of this bill demonstrates just how much the government must do better to ensure the integrity of our tax system. Such a large bill can only complicate the work of parliamentarians and penalize businesspeople. Thus, it is imperative that the government do a better job managing our tax system, starting with introducing tax-related legislation on a more regular basis.

That is exactly what the Auditor General recommended in her fall 2009 report, which said:

If proposed technical changes are not tabled regularly, the volume of amendments becomes difficult for taxpayers, tax practitioners, and parliamentarians to absorb when they are grouped into a large package.

The purpose of Bill C-48 is to make some highly technical changes to our tax system that have been accumulating for a very long time. Most of these changes have been announced in press releases and comfort letters from the Minister of Finance and in budgets since the most recent technical bill passed over 11 years ago.

These changes will definitely be revenue positive and, more importantly, help prevent tax avoidance. Accordingly, we strongly support the changes proposed in this bill. Tax evasion and avoidance are fundamental problems that we need to address.

It is therefore high time that action was taken to stop tax evasion and tax avoidance that deprive the government of large amounts of revenue. Government revenue comes in large part from taxation, and we must protect the integrity of our tax system and ensure it is equitable. We cannot just forget about this tax revenue.

While we support the amendments made by the bill, the government must make these changes in a timely fashion, instead of doing everything at the same time. The most recent technical bill was passed in 2001. Why did the government wait so long before taking legislative measures to implement the 200 or so technical amendments that were still pending?

Canada’s Auditor General noted with concern in 2009 that there was a backlog of at least 400 technical amendments that had not been enacted. The report that she released in the fall of 2009 was nonetheless very clear about this and emphasized the fact that tax practitioners had expressed a need for the legislative changes that the comfort letters identified to be enacted.

This is therefore very complex bill, and I will take this opportunity to go through some of its parts in detail, to draw attention to what it is we are discussing.

Bill C-48 deals first with offshore investment fund property and non-resident trusts. Some of the proposals in the bill were in fact part of the 2010 budget and the budget of August 2010. The amendments in this part of the bill aim primarily at protecting the integrity of the tax system and preventing tax avoidance. For instance, there are measures that are meant to guarantee the taxation of Canadian residents’ worldwide income from all sources. This was not the case in the past, and this measure will have the effect of discouraging tax evasion.

Bill C-48 also deals with the taxation of Canadian multinational corporations with foreign affiliates. Here again, the intent of these amendments is the same: to protect the integrity of the tax system and prevent tax avoidance.

There are other measures to prevent tax avoidance, such as those relating to specified leasing property, to subject income trusts and partnerships to the same loss utilization restrictions as transactions between corporations, to limit the use of foreign tax credit generators in order to avoid paying foreign income tax, to clarify the rules on taxable Canadian property of non-residents and migrants, and to establish a tax avoidance information system.

Any tax avoidance transaction, that is, any transaction that is intended to obtain a tax advantage, must now be reported, even if it is not abusive. Other reporting requirements will apply if the transaction raises questions as to its lawfulness.

This is just a brief overview of some of the amendments included in the bill. While all of these changes are important and necessary, I would still like to point out that the government has taken too long to enact these technical amendments. Knowing that the most recent technical tax bill was passed in 2001, we can say that the time frame was far too long.

In the meantime, the government racked up hundreds of outstanding technical changes over the years. Some of the changes in Bill C-48 go back as far as 1998. These changes should have been made periodically and not through a massive 1,000-page bill. This bill includes a series of beneficial and necessary measures. The government must change its way of doing things. It must considerably improve the amendment process, which is far too slow, as we have seen. The ever-growing backlog of tax measures must stop.

In other words, the government must introduce a greater number of smaller bills, in order for their provisions to be enacted in a more timely fashion. That is precisely the view of the former senior chief of the Sales Tax Division at the Department of Finance, who said the following in September 2000:

Until now, the choice has probably been more in favour of combining measures so as to put forward fewer bills. I think the lesson that we learned from this experience is that it may be preferable to change the balance somewhat. That may mean putting forward smaller bills which would contain measures that would be enacted on a more timely basis. As I said, it is a trade-off between how many bills enter onto the agenda, and their size and timeliness

Accordingly, in order to beef up our tax system, we must simplify tax legislation by making it clearer and more predictable. Obviously, that means incorporating tax policy changes into legislation on a more regular basis and therefore in a reasonable timeframe.

The complexity of our tax system creates many loopholes for businesses and individuals, which makes it especially difficult to achieve fairness in our system. I think we should seize the opportunity that this massive bill is giving us to debate the complexity and fairness of the system.

We need to have a real discussion about taxation in Canada. For example, there are many non-refundable tax credits offered by this government. These credits can only be used by people who pay taxes and, therefore, they are not available to the people most in need, who earn less. I am thinking specifically of the disability tax credit. People with the lowest incomes are exactly the people most in need of this assistance, and they should be targeted by this program. Consequently, these non-refundable tax credits have a limited ability to foster income security.

In conclusion, we support Bill C-48. However, I would like to point out that the government must improve the administration of its tax laws, especially the process for making amendments. We fully support the amendments in this bill. It includes measures to eliminate tax evasion and avoidance, while preserving the integrity of our tax system. This is an important fight for the NDP as it attempts to ensure that our system is fair.

The House resumed consideration of the motion that Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation, be read the second time and referred to a committee.

[Jonathan Tremblay, NDP, Montmorency—Charlevoix—Haute-Côte-Nord, QC]

Mr. Speaker, the actual scope of such a bill is important because legislation must be amended. The bill we have before us now is Bill C-48.

However, there is a problem because while this bill is being debated, other amendments that need to be passed pile up. This bill already contains a huge number of amendments. So, the process needs to be undertaken regularly. It is good for our economy and will combat tax avoidance. It is necessary and, in the future, it must be done every year.

[Jonathan Tremblay, NDP, Montmorency—Charlevoix—Haute-Côte-Nord, QC]

Mr. Speaker, to show support for my colleague following that last question from the government, I would like to say that we on this side will always oppose omnibus bills that directly attack the economies of our regions or certain segments of the population, even though an omnibus bill may contain some decent measures. There are always negative measures and, unfortunately, they overshadow the rest.

I am pleased to speak to Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.

Generally speaking, bills should not be this lengthy. But since it should have been introduced years ago, we can understand why it is so large. It contains amendments that should have been made long ago and that must be made now.

I would like to congratulate the minister on finally introducing this bill, given that the last time Parliament passed a technical tax bill was in 2001. I believe we can say that this is long overdue.

In her 2009 fall report, the Auditor General at the time, Sheila Fraser, said this:

No income tax technical bill has been passed since 2001. Although the government has said that an annual technical bill of routine housekeeping amendments to the Act is desirable, this has not happened. As a result, the Department of Finance Canada has a backlog of at least 400 technical amendments that have not been enacted, including 250 “comfort letters” dating back to 1998, recommending changes that have not been legislated.

How is it that the last technical tax bill was passed in 2001, when the government acknowledged the need to introduce such a bill every year? Perhaps those were simply meaningless words from the minister. It happens all the time with bills. This is not the first time this sort of thing has happened with a bill.

A few months after he came to the position, the Minister of Finance introduced the first version of a bill to make technical reforms to the tax system. I say “introduced” rather than “enacted” for a reason.

It was not possible to enact that bill, and not because it had not gone through all the necessary steps in the House; rather, it was because the government decided to throw everything out and prorogue the first session of the 39th Parliament, in 2007. The bill was reintroduced, but it must be noted that two elections and three prorogations later, no legislation has yet been enacted.

It is all very well to recognize that a bill like Bill C-48 needs to be introduced every year, but let us not forget to pass it. Let us hope that in the case of this bill, the Conservatives are not preparing us for another prorogation.

Bill C-48 implements about 200 technical amendments to the tax system, spread over more than a decade. It is therefore essential that we pass it, because ultimately, these changes to the system will have a positive impact on revenues and will deter tax avoidance.

We in the New Democrats have long spoken out against tax avoidance, unlike former governments. We believe that we must fight tax avoidance and tax evasion, while preserving the integrity of our tax system. For that reason, I will be supporting the changes made by this bill. It does not solve everything and we will have to do more to deal with tax evasion, but this kind of bill needs to be passed.

I would now like to talk about how thick Bill C-48 is. In the last year and a half, we have learned how fond the Conservatives are of giving us a lot to read. But they do not give us figures, testimony, scientific studies or exhaustive data to read—just a lot of different laws in a single omnibus bill.

It is not reasonable for one bill to lead to so many changes to so many laws. For once, at least, the laws are closely connected. I will therefore not accuse the minister of putting everything but the kitchen sink into one bill, this time.

I simply want him to understand that if he had done his job properly and each year we had passed a bill like this one, we would not be having to consider a brick like this. The work of Parliament would then be much more effective, and more importantly, much more transparent, not to mention the fact that we would have a good administrator for a government. This government is unfortunately proving that the opposite is true.

The massive size of the bill proves that there is still much work to be done in order to transpose these kinds of technical changes into legislation. If the job is not done, it will penalize the business community and complicate the process of the evaluation that Parliament must do.

However, I would like to reassure the minister: he is not the only one to blame. He did introduce a similar bill in the past, but we might say that his boss did not think it important enough to be passed. He preferred to keep opening Parliament and shutting it down.

It is difficult for a bill of this magnitude to get through the whole legislative process. We must not forget that the Liberals are also partly responsible. They were in power for the first five years after the last such bill was passed in 2001. What is more, some Department of Finance comfort letters date back to 1998. I am not an accounting expert, but according to my calculations, fifteen years have passed since 1998. The government should have been doing this work regularly every year for a long time now.

There were also warnings when the Liberal government was in power. For example, Marlene Legare, former senior chief of the sales tax division of the Department of Finance, said the following when she appeared before the Standing Senate Committee on Banking, Trade and Commerce on September 20, 2000:

Until now, the choice has probably been more in favour of combining measures so as to put forward fewer bills. I think the lesson that we learned from this experience is that it may be preferable to change the balance somewhat. That may mean putting forward smaller bills which would contain measures that would be enacted on a more timely basis.

Yet, here we are 12 years after the most recent technical bill. The idea of a greater number of “smaller bills” does not apply here. At this very moment, as we debate this bill, there are still 200 more changes announced in comfort letters, which are agreements approved by Parliament. As everyone knows, in Canada, Parliament passes laws. That is the case even though we sometimes get the impression that some people would prefer that it be done another way.

Bill C-48 contains a number of positive changes. I would like to mention three changes that have not yet been pointed out by the government. First, some income tax restrictions have been removed to help labour-sponsored venture capital corporations address transition issues resulting from the elimination of the support program for such corporations.

Second, the formula for allocating the taxable income of air transportation companies has been changed to ensure that the income generated by taxing these companies is allocated to the provinces and territories where the company is permanently located.

Finally, there is the implementation of a measure concerning the tax treatment of shares held by short-term residents, for the purposes of the air transportation tax, according to the comfort letters dated 2003 and 2007. The bill is not a step in the wrong direction. I simply want the minister to understand that in the future, it should not take so long to get this through.

To conclude my speech, I would like to quote Denis St.-Pierre, chair of the tax and fiscal policy advisory group of the Certified General Accountants Association of Canada:

First, the government must introduce a technical tax amendments bill. The last time a technical tax bill was passed by Parliament was over 11 years ago. Literally hundreds of unlegislated tax amendments to the Income Tax Act—which I showed this committee last year by bringing the Income Tax Act, if you recall—have been proposed, but not yet enacted, which brings uncertainty and unpredictability to the process. Second, we strongly feel that implementing a sunset provision would ensure that tax amendments are legislated...

He went on to say that it was necessary and healthy for our economy to introduce amendments annually or on a regular basis.