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

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, I would like to clarify the record. I think there is quite a difference between the official opposition requesting to adjourn at 11:45 p.m. and the government trying to stop debate at four o'clock in the afternoon. I understand it is tea time in some parts of the world, but we are elected to debate and that is what the official opposition would like to do.

I would like to bring attention to the comments of Sheila Fraser, the former Auditor General of Canada, whom I think the whole House has a high degree of respect for. Her comment was, ”No income tax technical bill has been passed since 2001”.

One of my colleagues has quietly pointed something out, which is a bit surprising to us. Generally speaking, the Conservative government thumbs its nose at any bill passed by a previous government, particularly a Liberal previous government. Therefore, we are a little surprised that it is now enacting tax amendments that would have been brought forward by a previous Liberal government. So be it, but finally, to the Conservatives' credit, a non-partisan bill.

Sheila Fraser further said:

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...

Why is that important? Because, with the comfort letters, until legislated, one must assume what the law is, which is fine if one has an accounting firm doing one's taxes. However, many small businesses, individuals and seniors do not have high-paid chartered accountants advising on what the law is, including new rules not even enacted yet.

The final comment I would like to make, and would appreciate a response to, is the minister said that there were many experts that came to committee who were in support of it. This is one amendment that the Certified General Accountants Association of Canada called for because it was clearly fed up waiting for more than 10 years to finally get these amendments. It called upon the government to implement a sunset provision to prevent future legislative backlogs.

Will the minister tell us today that this will not happen again? Can we anticipate that we will have annual updates to the tax code so all Canadians have equality when they fill out their tax returns to submit?

[Gail Shea, Conservative, Egmont, PE]

Mr. Speaker, that is exactly why it is important that we pass this legislation and soon, because it does date back so long.

We have applauded the Office of the Auditor General for its report on this issue and its success in highlighting the need for action both from government and from Parliament. The Auditor General made a series of recommendations to help deal with this issue going forward, and we agree with each of those recommendations.

For instance, the Auditor General recommended that the Department of Finance use an integrated and consistent process for reporting, tracking and prioritizing all technical issues for possible legislative amendment. We agreed and moved to consolidate the Department of Finance's system to ensure technical issues would be documented and catalogued consistently and that the system would be maintained and kept up to date.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Mr. Speaker, as the Minister of National Revenue herself has said, this legislation has been 10 years in the making.

The NDP has not been opposing this legislation for 10 years. This delay is where the whole problem of the backlog comes from. The government has obviously not been very serious about following up on the implementation of tax legislation and drafting and passing new legislation. We are not the only ones saying so. For 10 years now, all stakeholders have been calling for more rigorous management of tax legislation.

Therefore I would like to ask the government representative and Minister of National Revenue how combining all this in one bill and hastily voting on it is going to protect us from the mistakes that have been plaguing this legislation for 10 years.

Rather than breaking up this bill, taking the time to consider it more thoroughly and ensuring that we will never again have to deal with a 10-year delay, the government is going full steam ahead with a single bill.

How can all these problems possibly be addressed by this—please excuse my language—last-minute bullshit?

[Gail Shea, Conservative, Egmont, PE]

Mr. Speaker, all these amendments are currently being used in our tax system and that is why it is important they be enshrined in legislation as soon as possible. Most of what is in this technical tax bill has been discussed at length with the professional organizations.

I also want to add that in the Auditor General's report, he also recommended the Department of Finance regularly develop and release draft technical amendments, including those that arose from comfort letters, so taxpayers and tax practitioners would know what change would be made and could provide input. Again, we have agreed with that and we are formally committed to bringing technical amendments packages forward for consideration where appropriate, notwithstanding the fact that the prior technical amendments had not yet been adopted by Parliament.

In fact, this past December, the Department of Finance released a package of draft legislative proposals for public comment relating to a number of technical tax changes.

We know we have to do a better job going forward and a more consistent job so that we do not end up with very large bills like this, which has been a backlog for the last 10 years.

[The Acting Speaker, Barry Devolin]

It is my duty to interrupt the proceedings at this time and put forthwith the question on the motion now before the House.

The question is on the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

No.

[The Acting Speaker, Barry Devolin]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Acting Speaker, Barry Devolin]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Acting Speaker, Barry Devolin]

In my opinion the yeas have it.

And five or more members having risen:

Call in the members.

(The House divided on the motion, which was agreed to on the following division:)

Vote #696

Technical Tax Amendments Act, 2012

[The Acting Speaker, Barry Devolin]

I declare the motion carried.

[For continuation of proceedings see part B]

[Continuation of proceedings from part A]

The House resumed from May 27 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 third time and passed.