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

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Mr. Speaker, I would like to thank the member for Northumberland—Quinte West for his praise of the government's economic record, which is quite far removed from the reality of Bill C-48. That is something we can agree on.

However, he mentioned something in his speech that particularly caught my interest. According to him, corporate tax cuts encourage investment. One very worrisome symptom we have been noticing for years is the dramatic increase in private corporations' cash reserves. In fact, these reserves almost equal the amount of Canada's federal public debt.

What explanation can my colleague give for this lack of investment by private corporations? How does he explain this? How does he think this is dangerous?

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Mr. Speaker, my hon. friend is right that there is a lot of money, liquid assets, we want to see invested in Canada. If we make Canada a fertile place in which to grow businesses, which we have already done with our low-tax scheme for the average Canadian, the people who work for these companies, we will encourage these companies to invest. Quite frankly, it is the global economic uncertainty that is prohibiting these companies from investing the funds. In a recent statement, the president of Cisco Systems said that Canada is one of the best places to do business. What we are doing is setting up a system so that people will invest in Canada.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Mr. Speaker, I want to begin by thanking my colleague for his obvious enthusiasm for these measures and for explaining them in a manner that people watching across the country can easily understand.

In the last number of years, on occasion, I have had to look some of my constituents in the eye and explain what the government is doing to get their jobs back. I often think that my opposition colleagues across the way have never had that opportunity, because all they seem to want to do is pile taxes on corporations and make them less competitive and drive them out of the country.

I would ask my colleague how he would compare and contrast the tax policies of our Conservative government with those that are likely to occur if the opposition ever manages to be in a position to govern.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Mr. Speaker, there is a distinct difference between this side and that side of the House. We look at lowering taxes. We look to incent businesses, especially small and medium-sized enterprises, to create jobs. Indeed, small and medium-sized enterprises are the engine driving our economy right now.

The difference, quite frankly, is that the other side would bring in schemes to raise taxes for the average Canadian to provide programs that in the end would mirror countries in eastern Europe, and in particular, in western Europe. I think of countries like Greece, where people live beyond their means. We know what has happened there.

If something like a carbon tax is brought in, yes, it will raise lots of revenue, and governments will have lots of money to spend on programs, but it is a disincentive for investment. That is the difference between this side and that side of the House. We want to make sure that there are fewer obstacles for businesses so that they can grow, employ Canadians and grow the economy, whereas the other side wants to create those obstacles. That is basically, in the simplest terms, what my fellow caucus mate was referring to.

[Tarik Brahmi, NDP, Saint-Jean, QC]

Mr. Speaker, it is a great honour today to take part in the debate on Bill C-48, the short title of which is the Technical Tax Amendments Act, 2012. Its full title is 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 is obviously an enormous bill, comprising nearly 1,000 pages. More particularly, it is a very technical bill for the majority of members and myself, who are not tax specialists.

The purpose of Bill C-48 is to make amendments to the Canadian tax system that have been developed over more than a decade. Although we may wonder why the bill is long and voluminous, we can downplay that aspect because this bill nevertheless deals with a single subject, which was not the case with the mammoth bills the government previously introduced, Bills C-38 and C-45. Those bills concerned matters that were unrelated but that had nevertheless been grouped together based on an utterly debatable and debated logic.

Let us talk a little about the importance of taxation to Canadians, especially in this month of March when all our constituents are completing their tax returns. I do not believe our constituents are opposed to the idea of paying taxes, but they are appalled at times to see how their taxes are used at every level of government.

We are currently thinking of Quebec, in particular. In my riding, I hear a lot of talk about the Charbonneau commission and about the investigations that UPAC is conducting in Quebec on how taxes have been diverted from their primary purpose, the creation of infrastructure, at the provincial and municipal levels. Faced with misappropriation and corruption, Canadians—and I believe this is particularly true here in Quebec—are appalled at times by the wrongful manner in which their taxes are used; they are not being used properly.

When taxes are used properly, to expand infrastructure, for example, Canadians are quite happy to take part in this national effort. They are even asking us to do more, particularly with regard to infrastructure.

Although we can only be pleased that good measures are finally being included in Canada's tax legislation, we have reason to be concerned about the size of a bill that is nearly 1,000 pages long. Although it is true for all governments, this nevertheless shows that this government in particular should manage the tax code more effectively and work harder to ensure that statutory measures designed to enact tax proposals are regularly introduced.

With respect to the matter before us, the last technical tax bill was passed in 2001. In the update that she tabled in the fall of 2009, Sheila Fraser, then Auditor General of Canada, said she was concerned that at least 400 technical amendments had not yet been adopted. Although 200 of the amendments she referred to now appear in Bill C-48, hundreds of others have not yet been passed.

Bill C-48 includes some promising measures. Part 4, for example, provides for technical changes to the Excise Tax Act, repealing a measure that has not been used since 1999. Part 7 clarifies the minister's authority to amend tax administration agreement schedules, provided that does not make any substantial change to the terms and conditions of those agreements. Part 7 also enables the First Nations goods and services tax, imposed under a tax administration agreement between the federal government and an aboriginal government, whatever it might be, to be administered through a provincial administration system that also administers the federal goods and services tax.

This change will simplify administration of the First Nations Goods and Services Tax Act. These are quite promising measures.

This bill also addresses an aspect that is very important for Canadians and, more generally, for people around the world, and that is the problem of tax evasion. My colleague who spoke earlier mentioned Greece. One of Greece's major problems was not necessarily mismanagement or living beyond its means, but rather its level of tax evasion, which was incompatible with the revenue inflows to be expected in a country that aims to be worthy of that name, a country that should have quite a high level of taxation to pay for the goods and services that every government should provide. Where tax evasion levels are too high, they have a direct impact on essential public services. We have seen this in Greece, for example, and it is indeed a serious problem. A number of social problems result directly from those taxation problems.

Any reasonable person would agree that any amendments that increase tax revenue, discourage tax evasion and, as a result, ensure the integrity of our tax system are positive. We therefore need to adopt them as quickly as possible. What is more, most of these measures have already been in place for several years since, tax measures often take effect as soon as they are proposed.

The NDP is of the opinion that cracking down on tax evasion and avoidance should be a priority for any honest and responsible government. That is what we will do when we take office in 2015. We will do even more to make combatting tax evasion a priority.

I must also say a few words about my NDP colleagues who are members of the Standing Committee on Finance and who, since the beginning of this new Parliament, have been continually pushing the committee to complete its study of tax evasion.

One of the questions we have been considering is this: how can we successfully combat tax evasion? We must use measures targeting certain rental properties and Canadian multinational corporations with foreign affiliates. We must impose limits on them with regard to the use of foreign tax credit generators.

I would like to add that the committee heard from a number of witnesses. I would particularly like to quote Denis St-Pierre, who testified during the pre-budget consultations held on October 15, 2012. Mr. St-Pierre, chair of the tax and fiscal policy advisory group of the Certified General Accountants Association of Canada, said:

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.

This reminds us of just how much tax professionals, including chartered accountants, want to see a provision that would make their everyday work clearer.

So, for the reasons I have just mentioned, I will support Bill C-48 at second reading. The main reason is that the tax measures it contains are a step in the right direction, and it has already taken too long to incorporate them into our tax legislation.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Mr. Speaker, I was listening to my friend across the way, a person I have a great deal of respect for. He mentioned that he will support the bill.

He also mentioned that the previous Auditor General said these are measures the government should enact, and I suspect she might have used the word “must”. As well, he mentioned the certified general accountant's deposition before the finance committee, who also said that these things should be done in an expeditious manner and that he would support the bill.

I have noticed that the bill has been before the House and debated here for some 100 days. If the member supports the bill, and he has mentioned people who have stated we need to get on with this and get these tax measures completed, passed and enacted as quickly as possible, then why are we here in the House? We are now going on to over 100 days. What is the explanation for that, if it is so important, if we should do it, and if it is in the right direction, as the member stated?

[Tarik Brahmi, NDP, Saint-Jean, QC]

Mr. Speaker, I would like to thank my colleague. I certainly share his concerns. I would like to congratulate him for the work he does with us on the Standing Committee on National Defence.

I am sure the member noticed that the bill is 1,000 pages long. It contains a large number of provisions that address various aspects of the tax code.

It is important that our parliamentary and political systems provide every member with the time to debate a particular aspect or provision contained in these 960 pages if they wish to do so. As the member noted, this bill is extremely complicated and technical.

[Pierre Nantel, NDP, Longueuil—Pierre-Boucher, QC]

Mr. Speaker, I would like to congratulate my colleague on his speech.

We may not be tax experts, but it seems obvious to me that it would make sense to make this information available more often, instead of waiting and introducing a 1,000-page brick. What does my colleague think?

[Tarik Brahmi, NDP, Saint-Jean, QC]

Mr. Speaker, my colleague is absolutely correct. A number of members have mentioned the fact that there have not been any technical amendments to Canada's tax provisions for 11 years.

Every government should be more diligent when it comes to updating tax provisions. The reality is that tax professionals—which we are not—who, every day, help businesses and individuals make the right tax choices need certainty and clarity.

The fact that it has taken a decade to implement these amendments has only added to their lack of clarity and certainty in giving advice to their clients.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Mr. Speaker, it was quite funny to see the government play the victim yesterday in committee.

My colleague from York Centre, with whom I have the pleasure of serving on the committee, also complained that we were taking time to study this. The witnesses themselves said it is absurd to study a bill that is almost 1,000 pages long because we were going to miss certain problems.

Could my colleague from Saint-Jean tell us more about the fact that the bill is very large and very difficult to study in so short a time?

[Tarik Brahmi, NDP, Saint-Jean, QC]

Mr. Speaker, I thank my colleague from Beauport—Limoilou for the exceptional and always very focused work he does on the Standing Committee on Finance.

I have to agree with him. These bills are extremely complex, from both a quantitative and a qualitative perspective, and it is important that the committees take the time to study these points properly.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Mr. Speaker, I am pleased to rise to speak to Bill C-48, the technical tax amendments act, 2012. It is a very important piece of legislation. While the legislation may be technical, it is nonetheless important legislation that would benefit all Canadians, providing the clarity and certainty to Canada's tax system.

Our government has conducted extensive consultations on the provisions of the bill, some provisions having been announced over a decade ago. As previous parliamentarians' efforts to pass these amendments were unsuccessful, the backlog has increased over the years, and it is more important than ever to pass these technical amendments. In fact, among those calling for Parliament to quickly pass the amendments includes the Auditor General of Canada, who in a 2009 report stated:

Taxpayers' ability to comply with tax legislation depends on their understanding of how the rules apply to their own circumstances. [...] Uncertainty about how the law should be applied can also add to the time taken and costs incurred by tax audits and tax administration.

I could not agree with the Auditor General more. However, it is not just the Auditor General who is saying this; it is all the other parties in the House, as the bill has all party support. In fact, earlier this week, during the finance committee study of Bill C-48, the NDP member for Parkdale—High Park, and finance critic for her party, said, “Obviously we support the goal of closing tax loopholes and making the tax system in Canada clearer and easier to understand for Canadians”. The NDP finance critic went even further, on Bill C-48's first day of debate, saying, “the official opposition [New Democrats] will be supporting the bill”.

One would think that after making such an unequivocal statement of support for the legislation that she and all NDP members would be eager to vote on this important piece of legislation and ensure its timely passage through the House of Commons.

Alas, the actions of the NDP seem to be at odds with the NDP finance critic's statement. I have to ask: What is the reason for the NDP delay? Even more puzzling, it is not simply the NDP finance critic who is displaying these bizarre tendencies; it is every member of the NDP. My hon. colleagues have all declared their support for the bill while at the same time trying to filibuster second reading, for over 100 days. This attempt to disrupt what is only the first stage in a long legislative process continues to delay the finance committee's opportunity to formally study the bill.

I have taken the liberty of reviewing the debate on the bill and, time after time, the NDP MPs are vocal in their support for this piece of legislation. For example, the NDP member for Rimouski-Neigette—Témiscouata—Les Basques said, “We will support this bill because it eliminates some tax loopholes and other measures that lead to fiscal inequity”. The NDP member for Beauport—Limoilou said, “It will be a great pleasure for me to support this bill”.

The NDP member for Manicouagan said, “We support the changes this bill makes, and particularly those aimed at reducing tax avoidance”. This sentiment was echoed by the NDP member for Surrey North, who said: “We support the changes being made in the bill, especially those aimed at reducing tax avoidance”.

The NDP member for London—Fanshawe said, “The bill makes important and long-overdue changes to the tax laws” , and then went on to say, “New Democrats support the bill..”. The NDP member for Algoma—Manitoulin—Kapuskasing said, “As the House is aware, the New Democrats are supporting the bill...”.

The NDP member for Scarborough—Rouge River even highlights that her reason for supporting the legislation is that many of the provisions have already been announced, declaring, “Once they've been announced, people accept them as adopted. It's for these reasons that we are supporting the bill”.

These kinds of comments from the NDP continue and continue. NDP member after NDP member have all voiced their support for this piece of legislation, which has been in Parliament for more than 100 days. Furthermore, all of these statements of support came on the very first day of debate; yet more than 100 days later, we are still debating the bill at second reading.

This is simply unbelievable. Why would members of the NDP support the legislation, but not ensure its passage at second reading to the finance committee for closer examination by their own NDP colleagues? One wonders what the NDP hopes to gain by prolonging the debate. Again, perhaps the members are unaware that many of the measures have already undergone extensive debate in this House.

In fact, Bill C-48 has been before Parliament for five months now, as it was introduced in November of last year. Do members know what this means? Clearly, the NDP members do not, and so I will spell it out for them.

Let me state again that the House of Commons has had more than 100 days to examine and debate this bill at second reading stage already. We have already had days and days of debate and heard hours and hours of speeches, but what has all this debate yielded from the NDP benches? As I have highlighted, it is repetition upon repetition of support and praise for this legislation.

Well, if NDP members truly do support it, I plead with the NDP to not stall second reading in debate. Let us work together and pass this important legislation that would help Canadians. Let us make Parliament work. That would be an important change for the NDP, as its members have repeatedly shown that they have a track record of delaying and opposing legislation that would be beneficial to Canadians. For an example of this, we need look no further than our Conservative government's economic action plan legislation in these recent years.

What is more, NDP members have shown time after time that they would prefer to vote against tax relief measures that help Canadians and our economy, such as the hiring tax credit for small business and the introduction of a tax-free savings account. They even voted against a reduction of the GST to 5%.

However, we all know what the NDP does support: a carbon tax. I find this very puzzling. On the one hand, the NDP would gladly support a reckless $21 billion carbon tax that would raise the price on essential goods and services for Canadians, but it would stall well-reasoned and thoroughly examined legislation like Bill C-48.

While the NDP finds these partisan procedural games amusing, Canadian taxpayers and businesses, who are waiting for these technical amendments to be passed, certainly do not.

Despite the NDP's bizarre position on this bill, Canadians can rest assured that their Conservative government will work to ensure the passage of Bill C-48 through Parliament so that taxpayers' confidence is not lost in Canada's tax system.

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

Mr. Speaker, it was very hard to sit here and listen to a comment that parliamentary democracy in the form of debating legislation, which is the duty of parliamentarians, is somehow considered as standing in the way of legislation passing.

This comes from a member of a government that has moved time allocation to cut off debate on critical issues, preventing fair discussion by parliamentarians and preventing parliamentarians from doing their due diligence when they look at the budget and other pieces of legislation.

My question is to the hon. member across the way.

This is a critical piece of legislation. The Auditor General wrote about the urgency of these amendments in 2009. He suggested 400 outstanding technical amendments; we see only 200 of these addressed here. It took four years for the government to address 200 of those, 50% of them. How much longer is it going to take the government to address the rest of the Auditor General's recommendations?

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Mr. Speaker, these are bizarre arguments. On the one hand, opposition members are complaining about how long this bill is, at over 1,000 pages, and now we are hearing somebody complaining that not enough amendments are being addressed.

As far as debate goes, it is repetition after repetition. Is it any wonder people are calling them the new Bloc party?

[Claude Gravelle, NDP, Nickel Belt, ON]

Mr. Speaker, we can talk about bizarre. There is something that is bizarre right there. The member should stand up and apologize to every member in this House and to every Canadian for misleading them.

She said that we have been debating this bill for 100 days. I just checked with the table officers, and we have been debating this bill for nine hours. That is a long way from 100 days. In my community of Nickel Belt, miners work longer than nine hours a day. We have not even been debating this bill for a day, let alone 100 days. What a ridiculous statement.

Then the member went on to talk about the NDP cap and trade. I have in my hand a copy of the Conservative platform. Lo and behold, on page 32 of the platform, we see “Developing a cap and trade system”.

What a shame. What a bizarre thing to say on the member's part. She should stand up and apologize.