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.

Bill C-48 — Time Allocation Motion

[Gail Shea, Conservative, Egmont, PE]

Mr. Speaker, the answer is, because we are the party and government that gets things done.

This bill has been in Parliament for seven months now. It has had nearly 200 days for debate and study. It is a bill that all parties support. It is a bill that has been a decade in the making. We need to move forward. This is something that non-partisan groups have been demanding of us, groups like the Real Property Association of Canada, the Canadian Institute of Chartered Accountants, the Tax Executives Institute and the Canadian Tax Foundation.

Listen to what the Certified General Accountants Association of Canada, which is a professional organization representing over 75,000 tax professionals, had to say:

Some of the measures contained in today’s bill were initially proposed as early as 1999....With unlegislated tax measures, taxpayers and professional accountants must maintain their records and forms—sometimes for years—to be in a position to comply, even without knowing when and if these measures will be approved by Parliament and enacted. This uncertainty and unpredictability places an enormous compliance burden on taxpayers, businesses, professionals and their clients.

Our government wants to do the right thing by these groups.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Mr. Speaker, it is interesting to hear the minister talk about the fact that the bill has been in the House for 200 days.

I wonder if the minister could be reminded that it is actually the government that determines what bills are coming forward. The government had ample time to bring it forward for fulsome debate. Instead, as usual, the government is invoking closure, invoking time allocation on a very complex piece of legislation. I want to reference Thorsteinssons, the tax lawyers who say:

My printed version of the changes and accompanying notes runs to well in excess of 900 pages. This Bill will also be passed without much in the way of informed debate in the House.

This seems to be a pattern in terms of the way the government is managing its business. We have seen it on the matrimonial real property bill, where there was time allocation in the House and there was time allocation in the committee. Now we have this complex piece of legislation, and the minister is quite correct, there have been changes out there since 1999 that two successive governments have failed to deal with.

I want to ask the minister if she feels, given the concerns that have been raised about the 900 pages, that parliamentarians have had sufficient time to study the 900 pages. Is the minister confident that the changes being proposed, all of the technical amendments being proposed, are actually going to do what they are purported to do?

[Gail Shea, Conservative, Egmont, PE]

Mr. Speaker, as I did say, the bill has been before Parliament for 200 days. Even before the bill was introduced it was consulted on for literally years with repeated public consultations with professional groups.

I know that at finance committee all parties have supported the bill. They voted for it at second reading and at the finance committee stage. I should note that the all-party finance committee endorsed the bill without amendment after a detailed study. Indeed, witness after witness spoke in favour of the bill. Therefore, I want to share with the House what some of those witnesses said.

The vice-president of taxation at the Canadian Institute of Chartered Accountants stated:

We support Bill C-48. [We understand] how important it is for taxpayers to have greater certainty and a clearer understanding of Canada's federal income tax system....Bill C-48 helps improve clarity and certainty, and it mitigates the negative effects of uncertainty identified by the Auditor General.

Therefore, it is important that we ensure that this bill is passed as soon as possible.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Mr. Speaker, people are watching this and they wonder how the government lost $3.1 billion through sheer incompetence. What we are seeing today is a good example.

We have a major technical bill that should be debated in the House. However, the government is trying to push it through as fast as it can because it wants to go home early and not stay and do the work for the Canadian people. Therefore, it is not allowing for a proper debate on it.

The Conservatives say that it has been in the House for 200 days. What they are not saying to the Canadian people is that it has been sitting on the minister's desk for 200 days. Therefore, when we are now supposed to debate serious technical amendments they are suddenly concerned about getting down to business. Let us see what they will slough off without having proper parliamentary scrutiny.

These are hundreds of amendments that are technical in nature. It is a tax omnibus bill that includes the issues of anti-avoidance measures on specific leasing properties, ensuring that income trusts and partnerships are subject to the same loss utilization restrictions as between corporations, limits on the use of the foreign tax credit generated for international tax avoidance, clarifying rules on Canadian tax property for non-residents and migrants, and providing an information reporting regime for tax avoidance and transactions.

Those are only a small number of the issues to be debated in this House and the government is passing it off as quickly as it can.

I would ask the hon. member this. Given the incompetence of her government in losing $3.1 billion, why is she trying to allow this important tax bill to just slip through?

[Gail Shea, Conservative, Egmont, PE]

Mr. Speaker, that is some slip, 200 days.

I want to first point out in response to the hon. member that it was his party, the NDP, that moved to end debate last week because it wanted to go home from the House. We came here to work and we came here to work for Canadians. On this side of the House we know how important it is to pay our taxes and to collect our taxes. That is what we intend to do.

I could go on about the groups that support this bill and want to have it passed very quickly.

I will quote Larry Chapman, who is the executive director and CEO of the Canadian Tax Foundation. He stated:

Bill C-48, the Technical Tax Amendments Act....represents 10 years of repairs and maintenance in updating the Income Tax Act and the Excise Tax Act. Its passage is important to all Canadians. You heard that in the earlier presentation. I want to emphasize it again. Its passage is very important to all Canadians.

Further, he said:

Delays in the passage of tax legislation leave taxpayers and their advisers in a no man's land of uncertainty. My message for the Standing Committee on Finance is that you should encourage passage of this legislation....

That is what we intend to do.

[The Acting Speaker, Barry Devolin]

Order. Before we continue with questions, it is my duty pursuant to Standing Order 38 to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for New Westminster—Coquitlam, Search and Rescue; the hon. member for Charlesbourg—Haute-Saint-Charles, Employment Insurance; the hon. member for Kingston and the Islands, The Environment.

[Nycole Turmel, NDP, Hull—Aylmer, QC]

Mr. Speaker, I always find it interesting to hear the government talk about time allocation and about what we could have done, when this is the 34th, 35th or 36th time we have seen time allocation.

This bill has 1,000 pages, which deal with very technical issues, and the government has decided that we should be able to determine the fate of the bill in less than five hours.

What is preventing the government, the committee and the opposition from identifying the problem, making suggestions and changing the legislation to ensure that it meets the expectations and needs of Canadians and the government?

I asked this question the last time that time allocation came up, but nothing has changed. What is the government so afraid of that it is forcing us to quickly study bills? What ends up happening is that the government has to ask the Senate to make corrections. They always regret having moved so quickly.

What are you so afraid of? Why are you pushing us to pass or refuse to pass a bill because it has not been studied?

It is almost June, and as my colleague pointed out, we have to wonder whether the Conservatives want to go home early and break for the summer. We are here to work until June 20.

[The Acting Speaker, Barry Devolin]

Before I go to the minister, I remind all hon. members to address their questions and comments to the Chair rather than directly to other members of the House.

The hon. Minister of National Revenue.

[Gail Shea, Conservative, Egmont, PE]

Mr. Speaker, I will remind this member that it was the NDP members who wanted to go home early last week. On this side of the House we come to work for Canadians.

On meeting the needs of Canadians, this bill has probably been more than 14 years in the making, so it is hardly rushing anything through. There has been a lot of public consultation on the bill, and it has been before Parliament for 200 days now.

Part of the bill would also close tax loopholes. What could the opposition possibly have against closing tax loopholes? When we collect tax owed by Canadians, we can fund the services that Canadians need to have, like schools, hospitals and other services that we provide for Canadians. Bill C-48 contains measures that would implement a more rigorous information reporting regime for certain transactions associated with schemes to avoid taxes. This, along with our budget this year, contains measures as well to crack down on tax evasion and tax avoidance. We certainly hope that the NDP will be supporting not just this bill, but our budget as well.

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, with all due respect to the hon. minister, the government should have a level of confidence in the bills it puts forward, that they have been thoroughly discussed and that the government members are prepared to stand and debate them fully. Bringing in closure on something we have already indicated on this end of the House that we are supporting really makes it frustrating. Closure means to me that the Conservatives want to shut down debate because they do not believe in what they are trying to put through.

If the Conservatives had the confidence they should have in putting forth this legislation and knowing we are prepared to support it, they would want to encourage that rather than shut down debate to try to force it through, because probably they are more anxious to get out of here than anybody else in this House.

I ask the minister, does she have confidence in the bill that is before us, and if so, why is it necessary to bring in closure because she does not have the confidence to stand and debate it fully?

[Gail Shea, Conservative, Egmont, PE]

Mr. Speaker, if both opposition parties have said that they support the bill and have supported the bill, one can assume they have read the bill and they are fine with the bill.

Let me just quote a tax partner from KPMG, Paul Hickey. He said:

[I] ask Parliament to act decisively and to pass Bill C-48 to essentially clean the slate of this old pending legislation and to finally bring the Income Tax Act up to date. Taxpayers could then move on and focus on running their business, and the CRA could carry on administering and collecting tax in a more stable system.

I believe this is what all Canadians want. It is obviously what the professionals are asking for. I urge the opposition members to support the bill.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Mr. Speaker, I have listened to the minister try to rationalize why the government has to move closure for the 34th time in this very short Parliament and so far I have not found anything persuasive. Frankly, I am not sure whether she has been following the debate on this bill at all. On this side of the House, we are supporting the bill. We are not trying to hold it up unreasonably. We, like she purports to, believe in cracking down on both tax avoidance and tax evasion, but it is a 1,000-page bill.

Whatever happened to the way this place used to run? It is not that I have been here forever, but this is my third term and there were times when House leaders would come to the table, ask each other how much time they needed to debate the bill, what they thought due diligence would look like on a bill and they would negotiate. That is why we did not have these massive numbers of time allocation motions because Parliament worked like it was supposed to. There is a bit of give and take, some bills members pass very quickly, they agree to do that and other bills merit more debate.

Frankly, government members sometimes wanted more debate because they thought the content of their bills was so good, they wanted to ensure every Canadian knew about them. They wanted to have consultations in committee and extensive committee hearings so their supporters could tell everybody that the government was doing a bang-up job. I guess not very many Canadians think the current government is doing a bang-up job because it is sure afraid of hearing from Canadians.

There is nothing wrong with giving a bill good, detailed scrutiny. That is what our job is as parliamentarians. Could the minister explain to the House why her government is so afraid of detailed scrutiny of their bills? What it is trying to hide? What does it not want Canadians to know about?

[Gail Shea, Conservative, Egmont, PE]

Mr. Speaker, as I have said, this bill is more than 10 years in the making and throughout that time, extensive consultations have been had with industry and professional associations on many aspects of this bill.

I will quote Carole Presseault, who is the vice-president of Government Regulatory Affairs for the Certified General Accountants Association of Canada. In her remarks to the committee, she said:

—I wish to say that we support the tabling of the bill and that we encourage you to move swiftly to pass this important piece of legislation. The bill deals with a massive backlog of unlegislated tax measures. Its passage would, in our opinion, bring greater clarity to the tax system and strengthen the integrity of our laws.

We intend to support requests such as Carole Presseault's and pass this legislation swiftly.

[Bruce Hyer, Independent, Thunder Bay—Superior North, ON]

Mr. Speaker, as a small business person, I have been aware for 60 some-odd years, though recently it has changed a bit, that nothing is certain but death, taxes and time allocation motions by the Conservatives. I hope we get that list back down to just two.

I want to go on record as saying that as a small business person representing other small business people, I do not know yet how I will vote on this legislation. I really need more information and debate on it. I want to hear the opinions of others and I really hope this is one that we decide not to put time allocation on.

[Gail Shea, Conservative, Egmont, PE]

Mr. Speaker, I applaud the hon. member for being a small business owner because our government has done a lot to support small businesses since we became government, probably more than any other government in history.

One of the changes I am very proud of is that we have lowered taxes for small businesses a number of times to allow them to keep more of their own money and invest in their own businesses. Small business is the backbone of the Canadian economy.

As I said, this is a very technical bill. The hon. member wants to hear the opinions of others before he makes his decision. I have just shared the opinions of six or seven professional associations, which they shared in the finance committee. This represents a wide variety of Canadians from coast to coast to coast, who urge us to pass this bill swiftly to give them certainty in their professions.