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

[Christine Moore, NDP, Abitibi—Témiscamingue, QC]

Mr. Speaker, regarding these measures, does my colleague believe it would be appropriate for the government in power, regardless of its political stripes, to introduce a bill every year to correct shortcomings in the tax system? When does she think would be the ideal time? I would like to hear her thoughts on that.

We are examining this bill today, but we may not have time to complete debate before tax time comes around. When would be the ideal time to introduce this kind of legislation so that the measures it proposes would come into effect in time for the next income tax period, while also giving businesses enough time to adapt to the changes?

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

Mr. Speaker, I thank my colleague for her very pertinent question.

In my opinion, we should consult the experts on this. Unfortunately, I cannot say when would be the ideal time to do this. I believe that my colleague has raised a very important point, that is when would be the best time to introduce this type of legislation in order to properly inform all taxpayers, corporations and businesses about their tax returns.

[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.

[Christine Moore, NDP, Abitibi—Témiscamingue, QC]

Mr. Speaker, several Conservative MPs have spoken about my party's platform after hearing our speeches on the bill.

I would like my colleague to remind the House how much we would save by abolishing the Senate, which is unelected and spends money hand over fist. Could he remind Canadians how much money they would save by abolishing the Senate?

[Mathieu Ravignat, NDP, Pontiac, QC]

Mr. Speaker, I thank my colleague for her question.

We would start at $90 million, which is not chump change. We would also need to strengthen the tax system to ensure everyone pays taxes. I am thinking of big businesses, mostly. Too many big businesses in Canada do not pay taxes. This translates into lost revenue for the state, revenue that could be used to fund programs to help those most in need.

[Colin Carrie, Conservative, Parliamentary Secretary to the Minister of Health]

Mr. Speaker, the last questioner did remind me that I have stood in the House a few times to ask NDP members to explain their $64 billion in unfunded platform promises, so I thought I would give it a shot again. We have another NDP speaker.

First, we are encouraged and happy that the NDP is supporting the bill to close these loopholes, but NDP members voted against the GST when we lowered it from 7% to 6% to 5%. We have lowered taxes for families and businesses in Canada 140 times. They voted against that every single time. That is $3,000 less in federal taxes that families now pay as a result.

The NDP have made $65 billion in promises but have not told Canadians how they will fund them. The question is very simple. We know about the $21 billion carbon tax, but there is still a big $45 billion gap that the NDP have not told Canadians how they would fund.

Could the member stand up and give us a straight answer and let Canadians know what the NDP plan is for all its promises.

[Mathieu Ravignat, NDP, Pontiac, QC]

Mr. Speaker, my colleague's question is founded on some premises that I would question. One of them is that somehow Canadians are largely benefiting from the tax credits provided by the government. However, when I ask people in my riding what they think about the majority of those tax credits, they say the credits either do not apply to them or “Oh, yes. Okay”.

That is not a solution. That is not a tax policy. That is not a policy that will ensure that the state has the revenue it needs to support those programs, the medical system, for example, which Canadians strongly support. We are not the ones who are cutting transfers to the provinces for these programs.

[Ted Menzies, Conservative, Macleod, AB]

Nor are we. Try to be factual.

[Mathieu Ravignat, NDP, Pontiac, QC]

There is $31 billion less in the system.

We are talking about priorities. We have different priorities than you do. You want to give tax cuts to the largest corporations—

[The Acting Speaker, Conservative, Bruce Stanton]

Order, please. Just as a reminder to hon. members, when we start using the “you” word, invariably the tenor of the debate begins to go in a different direction. I remind hon. members to direct their comments and questions through the Chair.

Questions and comments, the hon. member for Vancouver Kingsway.

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Speaker, since the hon. Conservative member raised the issue of promises and party platforms, I would remind the Conservatives that they said in their 2008 platform that they would not export bitumen. They also brought in fixed election date legislation in 2006, which they violated in 2008.

In terms of tax policies, the federal government and the Conservatives in British Columbia brought in the HST in the latter province, a tax that was roundly opposed by 80% of British Columbians and rejected in a referendum.

I am just wondering if my hon. friend would care to comment on some of the problems with the Conservatives' inability to keep their promises and their betraying the Canadian people as a result.

[Mathieu Ravignat, NDP, Pontiac, QC]

Mr. Speaker, if I had to enumerate all the promises the Conservatives have broken, I would be here all day.

Let us just start with the Senate, which is unelected, unaccountable and under investigation. It costs the taxpayer $90 million. That is respect for the taxpayer. Maybe we will finish at that.

[The Acting Speaker, Conservative, Bruce Stanton]

Before I recognize the honourable member for Portneuf, I should let her know that I will have to interrupt her at 1:30, at the end of the time provided for government business.

Resuming debate. The honourable member for Portneuf.

[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.

[The Acting Speaker, Conservative, Bruce Stanton]

The hon. member for Portneuf—Jacques-Cartier will have six minutes for her speech and five minutes for questions and comments when the House resumes debate on the motion.

It being 1:30 p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper.