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.

[Stéphane Laforest, President, Coalition des travailleuses et des travailleurs autonomes du Québec]

Good morning to all of the members of the committee.

First of all, on behalf of the Coalition des travailleuses et des travailleurs autonomes du Québec, I want to thank the committee for having us. To my knowledge, this is the first time representatives from our organization have appeared before you. Generally speaking, we are very rarely consulted, even though many legislative provisions, in particular tax provisions, concern us, and even though associations representing management and labour are called upon for opinions.

I would first like to make a comment regarding the situation of self-employed workers. In Canada, self-employed workers represent a shade more than 10% of the workforce. The number of self-employed workers increases yearly, that is to say at least two and a half times more quickly than the number of salaried workers.

The distinction between a self-employed worker and a salaried one hinges on a single factor. The employee has an employer, which means the employee is subordinate. For his part, the self-employed worker is someone who has created his own business. He did not wait for a job to be offered to him. He took some financial risks and made commitments to those who provide him with work, who are for him not bosses, but clients. The relationship he has there is the relationship between an entrepreneur and a client.

For the Canadian economy, the surge in the number of self-employed workers is primarily due to the advent of new communication technologies, but also to the need Canadian businesses have to have access to specialized workers on an ad hoc or sporadic basis, and thus have a certain flexibility in the management of their human resource requirements.

The result of that is that being able to call on self-employed workers is very beneficial for the business, but this type of lifestyle is also advantageous for the self-employed worker. It is a lifestyle he or she has chosen. He has chosen to be an entrepreneur and we want him to be treated as such. That is why the Coalition des travailleuses et des travailleurs autonomes du Québec has always objected to any type of measure which would give certain self-employed workers benefits of the same type as the benefits salaried workers have, such as those conferred by their seniority, which would skew and alter the relationship self-employed workers have with their clients.

Regarding Bill C-48, I have heard the people who are before you today, but I would in any case have some comments to make. However, what I have to say is perhaps not as weighty.

The Quebec Parental Insurance Plan provides income support to Quebec workers following the birth or adoption of a child, both self-employed workers and salaried workers.

We commended this measure when it was put in place, because for a self-employed worker to be able to benefit from this type of additional income during a certain period of time allowed his or her business to survive. Premiums paid into this system by self-employed workers are 78% higher than those paid by salaried workers. You have the exact rates in the brief. Self-employed workers pay approximately 178% more in premiums than do employees. However, they do not pay them as employees, but as entrepreneurs. The amount is not divided up. It is the amount that they would have contributed had they been salaried workers, in addition to an additional premium because they are self-employed workers. The amount is taken as a whole and is presented as such in the accounting in government reports.

In clauses 196 and 253, Bill C-48 amends the Income Tax Act in a way that will create an artificial division of this amount. In fact, the yearly premium that would have been paid by a self-employed worker will be divided up. First they will assess what he could have deducted had he been a salaried worker. Afterwards, any surplus will be subject to a distinct tax treatment. For this part, the person will be considered an entrepreneur. He will be allowed to deduct that expense from his income, which is consistent with business income tax rules under the Canadian tax system.

The Coalition des travailleuses et des travailleurs autonomes du Québec is asking that this artificial division—which is totally fictitious and adds needless complexity to the task of the self-employed worker who is going to have more paperwork to do when filing his income tax return—be grouped in a single measure which would be, in this case, the new subsection 60(g) of the Income Tax Act. This allows for a simple deduction, just like for any other expenditure incurred in the course of operating the business using business income. We are asking that the self-employed worker be allowed to deduct all of the amounts he or she will have paid and not only the part that is considered surplus. We are also asking that the self-employed worker be taxed in a manner comparable to salaried workers, which has never been the case.

And so we believe that this amendment is consistent with one of the primary objectives of Bill C-48, which is to ensure a certain consistency and harmony in the Canadian tax system as it applies to these deductions. We also propose that the process whereby taxpayers prepare tax returns be simplified and that it not be needlessly complicated.

I thank the committee.

[Kim Moody, Moodys LLP Tax Advisors, As an Individual]

Good morning, Mr. Chairman, honourable members. Thank you for the invitation to appear before your committee to speak to you about Bill C-48.

My name is Kim Moody. I'm a tax practitioner from Calgary, Alberta, and a partner in a unique tax advisory practice comprised of approximately 20 Canadian chartered accountants, U.S. certified professional accountants, Canadian lawyers, and U.S. lawyers.

We focus strictly on tax advisory matters for the private client, for the benefit of the two professions that dominate the practice of tax in Canada: accountants and lawyers. Most of our clients have direct or indirect interests with our southern neighbours, the U.S., and therefore we practise in U.S. tax law as well.

I've had the pleasure in my 20-plus years of practice in tax to serve for some of the distinguished organizations representing our profession. For example, I'm the immediate past chair of the board of the Canadian Tax Foundation. I'm also the immediate past chair of the Society of Trust and Estate Practitioners, STEP, and I've volunteered extensively for the Canadian Institute of Chartered Accountants in various tax capacities. I'm a current member of the CBA /CICA Joint Committee on Taxation.

However, my remarks today are not at all to be associated with these prestigious organizations. Instead, my remarks to you today represent the views of myself and our firm. At the outset, our firm supports the passage of Bill C-48. While some of its contents are not perfect, as I'll comment later, it is important to get it passed.

More than 200 years ago, Adam Smith, in his landmark book, The Wealth of Nations , laid out the basic principles of a good taxation system. Overly simplified, those principles are fairness, certainty, convenient to pay, and administratively simple. While we could debate those four principles for a long time, it is the certainty principle that would be compromised by not quickly passing Bill C-48. We believe that certainty in tax matters has been severely compromised by the inability to pass the collection of technical amendments that comprises Bill C-48. We expressed this view to the Auditor General when we were interviewed by her office prior to the release of her fall 2009 report.

As a private practitioner, do we advise clients to adhere to existing law or proposed law? Not an easy question to answer, given the recent history of how long it takes to get technical amendments passed. As you know, Mr. Chairman, some of the content of Bill C-48 originates from 1999.

As mentioned, Bill C-48 contains technical amendments that are by no means perfect. For example, there is proposed subsection 56.4, the restrictive covenant proposals, about which I wrote a paper for the Canadian Tax Foundation in 2008. They're very wide-sweeping and can have significant unintended consequences. If you're interested in good bedtime reading, I'd be glad to give you a copy of my 60-plus-page paper.

Second, there are the non-resident trust proposals in proposed section 94. Such proposals are extremely broad and nearly incomprehensible.

There are compelling arguments—which our firm agrees with and are consistent with Adam Smith's principles—that wide-sweeping, imperfect, and incomprehensible draft legislation should not be passed. In a perfect world, such draft legislation would be more targeted, have fewer unintended consequences, and be understandable. However, Bill C-48 contains measures that reflect good tax policy—reasons for its inclusion. To not pass such imperfect legislation would compromise Adam Smith's fairness principle, which at this point is critically important to consider. We only hope that such imperfections can be later fixed.

Our firm is sympathetic to some of the factors that have led us to where we are today. We commend the Department of Finance for the hard work they obviously do to ensure, to the best extent possible, that Canada's tax legislation is fair.

We would encourage the government to explore better ways to pass important tax proposals into law in a more timely, accurate, and comprehensible manner. For example, it would be ideal for the Department of Finance to engage the private and academic tax community on tax policy matters on a regular basis. Our firm's clients are usually successful private clients. Such businesses and individuals contribute greatly to the economic success of this country and deserve a certain tax system.

Thank you for your time. I'd be pleased to respond to your questions.

[Brigitte Alepin, Chartered Accountant, Tax Expert, Tax Policy Specialist, Author, As an Individual]

Ladies and gentlemen, good morning. Thank you for the invitation.

In light of the length of Bill C-48 and of the short notice for its analysis, I was allowed to focus my opinion on a specific section of the bill.

I chose the upstream loans rules, because according to Department of Finance officials who appeared before this committee at a previous meeting, they are one of the main elements of the bill you are studying.

In order to understand these rules, we need to know that the Canadian multinational companies that do business in tax havens are taxed according to the following basic principles, which I will present in a very summary way. If the multinationals earn income, Canadian income tax is levied as soon as that income is made. If the multinationals earn business income, it is during the year wherein that income is brought back to Canada that Canadian income tax becomes applicable.

In order to get around this repatriation income, multinationals and their affiliates set up in tax havens used to put strategies in place involving loans, that is to say that rather than paying taxable dividends to bring the income back into Canada, the sums were simply lent to Canadian multinationals.

The purpose of the rules on upstream loans initially proposed in 2011 was to put a brake on these strategies by considering such loans as dividends, as explained several times before this committee during the previous weeks. On their own, these rules are very sensible, to such an extent that one wonders why tax authorities waited so long to propose them. However, when they are analyzed in light of the Income Tax Act as a whole and recent amendments made to it, these rules lose all relevancy, and even though they may appear to have teeth, their effect on public finances may well turn out to be quite minimal.

In fact, while these rules on upstream loans were being introduced in order to catch Canadian multinationals who attempt to bypass repatriation income tax, amendments to subsection 5907(11) of the Income Tax Regulations were implemented. May I remind you that it is by virtue of these amendments that Canadian multinationals no longer have to pay income tax on the business income they make through affiliates they have set up in countries with whom Canada has signed an agreement to exchange tax information, that is to say Anguilla, Aruba, the Netherlands Antilles, the Bahamas, Bermuda, Costa Rica, Dominica, the Isle of Man, the Cayman Islands, the Turks and Caicos Islands, Jersey Island, Saint Kitts and Nevis, Saint Martin, St. Vincent and the Grenadines, and Saint Lucia. The list may get even longer since negotiations are currently underway with other tax havens including Antigua and Barbuda, Bahrain, Belize, Brunei, Gibraltar, Grenada, the Cook Islands, the British Virgin Islands, Liberia, Liechtenstein, Panama, Uruguay, etc.

This total tax exemption on income earned by Canadian multinationals in these tax havens, which represent most of those with whom Canadian businesses do business, calls into question the purpose of putting in place tax regulations for the purpose of ensuring that taxes on repatriated income will be complied with, since that income tax is in the process of disappearing. In fact, since January 1, 2013, that form of taxation no longer exists on Canadian income exported to several tax havens.

To conclude, despite the limited practical scope of the rules on upstream loans, and despite the dangerous complexity of Bill C-48 as a whole, I recommend, in these circumstances, that the bill be adopted because the time has come, frankly, in this time of economic crisis or pre-crisis, for our public servants to do something different. They have to rethink tax laws and adapt them to the realities of the 21st century. In order to be able to do so, we have to avoid mobilizing them around this technical bill whose adoption or non-adoption will do little to arrest the force of the global movement toward legal tax exemptions on vast corporate and personal fortunes.

Thank you. I will be happy to reply to your questions.

[The Chair, Conservative, James Rajotte]

I call this meeting to order.

This is the 110th meeting of the Standing Committee on Finance. Our orders of the day, pursuant to the order of reference of Friday, March 8, 2013, are to study 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.

I want to thank all of our witnesses for being here. I think because of the weather some colleagues are still making their way to the committee.

We have with us six organizations, six individuals, who are here to present to the committee.

Our first guest, speaking as an individual, is Ms. Brigitte Alepin, who is a chartered accountant.

We have Mr. Kim Moody, with Moodys LLP tax advisers.

We also have with us Mr. Stéphane Laforest, president of the Coalition des travailleuses et des travailleurs autonomes du Québec.

From Ernst & Young, we welcome Mr. Greg Boehmer, partner.

From KPMG, we have Lorne Shillinger, also a partner.

By video conference

From Montreal, we have Mr. Gérald Tremblay of the Federation of Law Societies of Canada. Welcome to you all.

Each of you will have five minutes for an opening statement.

We will begin with Ms. Alepin.

Technical Tax Amendments Act, 2012

[Murray Rankin, NDP, Victoria, BC]

Mr. Speaker, I am pleased to rise and speak to Bill C-48 as well. Before doing so, I would like to acknowledge that I am speaking today on International Women's Day. I would like particularly to salute the contributions of the remarkable women in my community of Victoria.

The official opposition will support the bill at second reading stage. This legislation is called the technical tax amendment bill, and for a very good reason. However, we should not forget the enormity of its importance.

One of the witnesses appearing before finance committee, of which I am honoured to be a member, noted that 80% of the government's revenue is collected from income tax and excise taxes. Therefore, this is an important bill, although it is masquerading as a very technical, and some would say, dry subject.

We heard many witnesses. Many speakers today have remarked that over 1,000 pages of legislation is at issue, but that needs to be put into context. That is on top of the 2,882 pages of the Income Tax Act.

This is important but convoluted legislation. A lot of it has to do with comfort letters that need to be turned into real legislation so that Canadians have the certainty to know what the law on taxes would be.

In her 2009 report, the Auditor General noted serious problems, and I quote:

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.

It is inexcusable that this legislation, 1,000 pages in length, has taken 11 years, since the last technical amendment bill. I want to talk today about the content of the bill very briefly, why we say the delay has occurred, the consequences of that delay, some process questions and suggestions. That is where I would like to go in the time available to me.

There is much in this bill to like. Several provisions close tax loopholes, and some are of great interest to the opposition, because we are studying tax havens and tax evasion at committee stage. I am honoured to be part of that study.

These rules are also going to frustrate those who are involved in aggressive tax planning and tax avoidance transactions, rules to deal with foreign tax credit generators and specified leasing rules. There is some important legislation here to close loopholes. This could not in any way, shape or form be construed as a partisan piece of legislation. Going after tax havens, getting more money for the Canadian fisc, is obviously something people on all sides of the House would agree with.

Why has there been the delay? We believe the reason is simply that this has not been a priority for the government. The Conservatives had a number of excuses they trotted out during the committee stage. The first reason was that there have been a lot of minority governments. However, the bill has been in Parliament at least twice, and there was unanimous agreement from all MPs to proceed with the predecessor bills. That excuse does not wash.

The Conservatives then said that it was likely that all parties would support this version. Therefore, what was the problem? What was the excuse for such a delay? In committee, the Minister of State (Finance) went so far as to blame the recession, although it is hard for me to understand what that had to do with anything here.

Last, and sadly, we were told in committee by Conservative members that the NDP was responsible for the delay, as if we were somehow trying to slow it down.

The facts are that rather than the 100 days the Conservatives claim this has taken, and that somehow there was a filibuster, this legislation has only been three days before the House. The government then invoked time allocation.

To me, there is no excuse except for a lack of prioritization, which, for reasons I have explained, is critical. These delays have consequences. It has been costly for Canadians. It is a lot of work for people who are tax professionals. That is true, but we know who pays the bills when tax professionals are involved.

The head of the Canadian Tax Foundation, Mr.Chapman, a very wise speaker, appeared before our committee, and he used a useful analogy. He said that like a home or a car, these statutes need to be repaired and maintained to properly serve their purpose. He asked us to imagine how much work would be required if no repairs had been made to a home or a car for more than 10 years. That is exactly what has happened with this legislation.

The process is what I would particularly like to focus on. A tax lawyer in my jurisdiction, Mr. Thomas McDonnell, referred to this 1,000-page technical tax bill, and wrote “This Bill will also be passed”, and he is right, “without much in the way of informed debate in the House”. We have certainly seen that. Further:

Most parliamentarians voting on it will admit that they have not read it, let alone tried to fully understand the consequences of voting for (or against) it. This is not how Parliament is supposed to deal with one of its essential functions—the raising of revenue. It's sad to say it, but I don't think most of our parliamentarians understand this aspect of the role of Parliament, or, if they do, have the courage to go to the wall in defending it.

We have a massive bill, 11 years in the making, 11 years since the last one came along, and here we are.

Going forward, how can we avoid this kind of mammoth bill being debated a decade later? This is likely the last chance we will have to talk about this kind of process question for technical tax bills. We do not know when the next one will be coming. I understand that there are still scores of changes to be addressed and comfort letters that are still outstanding and the like. We know that we are going to have another one of these bills. How can we avoid the debacle this has constituted?

At the committee stage, the Parliamentary Secretary to the Minister of Finance moved the following motion:

That the Finance Department provide an annual update to the Finance Committee on the status of all outstanding technical tax changes.

However, as my learned colleague from Rimouski-Neigette—Témiscouata—Les Basques pointed out to her, this proposed annual update actually applies only until prorogation. It will not survive until the next prorogation.

We need to make a real effort on tax simplification. Ideas such as the office of tax simplification in the U.K. have been suggested by the Canadian Institute of Chartered Accountants. I think that is an excellent suggestion.

Second is the idea of establishing an expert panel, or indeed, even a royal commission to look at tax reform going forward. A sunset clause was suggested by the Certified General Accountants. That needs study as well.

The bottom line is that we need to do something. We need to address this in terms of process, because it is just not acceptable that we would be faced with a 1,000-page bill to scrutinize in the way in which this has occurred and then have time allocation imposed upon us.

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

I have a very simple question. I listened to my esteemed colleague and he did not mention comfort letters. He did not talk about the very essence of Bill C-48, the 200 comfort letters that are being incorporated into the Income Tax Act or the 1,000 pages of text accompanying these 200 amendments.

Did my esteemed colleague bother to read these 1,000 pages? Does he understand the legislative path an Income Tax Act comfort letter takes?

His speech clearly shows that he understood nothing and that he did not read a single one of the 1,000 pages.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Mr. Speaker, I appreciate the opportunity to speak today on Bill C-48, the technical tax amendments act of 2012. The bill proposes amendments to the Income Tax Act, the Excise Tax Act and related legislation. It would close tax loopholes and create a fairer tax system for all Canadians.

The bill also contains proposals that have been public for quite some time, some going back the late 1990s, as well as measures that have been previously released for public consultation.

The proposals in the bill reflect the feedback the government has received from Canadians and aim to ensure that everyone pays their fair share of tax and is treated equitably under our tax laws.

After all, there are few areas where the integration between governments and citizens is more direct than with respect to taxation.

Our governments collect taxes to fund health care, social programs and other vital services for Canadian citizens. The vast majority of Canadians pay their taxes willingly and they pay them honestly. In return, they expect the government to manage their tax dollars wisely and to take no more from each taxpayer than is their fair share. Canadians can count on this Conservative government to do both.

The efficiency and fairness of the tax system should be improved on an ongoing basis by closing tax loopholes as they are identified. The bill before us would go a long way to doing this in respect.

In the 2010 Speech from the Throne, the Conservative government committed to taking aggressive steps to close tax loopholes that allow a few businesses and individuals to take advantage of hard-working Canadians who pay their fair share of tax.

By broadening and protecting the tax base, we are helping to keep Canadian tax rates competitive and low, thereby improving incentives to work, save and invest here in Canada.

In keeping with this commitment, the legislation before us today proposes to strengthen Canada's tax system by closing tax loopholes and improving fairness for all Canadian taxpayers. The bill would also make the tax system easier to comply with, which is what Canadians have been asking for.

For example, it would make changes to the Income Tax Act to better target rules relating to non-resident trusts. The bill also includes amendments to rules dealing with foreign affiliates of Canadian multinational corporations. These changes would enhance the fairness and integrity of Canada's international tax system.

The bill before us today would also line up many loose ends already contained in the tax system. Indeed, it has been over a decade since Parliament last passed a comprehensive package of technical income tax amendments. This has created a significant backlog of outstanding measures that need to be addressed to provide certainty for Canadian taxpayers.

The Auditor General of Canada has identified the backlog of technical amendments as an issue requiring pressing attention by the government. The amendments proposed in the bill address the backlog through the inclusion of outstanding income tax and sales tax amendments, the vast majority of which have already been released for open and public consultation.

The bottom line is this: the legislation would provide certainty in the application of our tax system, making it easier to comply with and administer and improving fairness for Canadian taxpayers.

Our government has great successes in creating jobs, growth and long-term prosperity. The future of this country depends in no small part upon strengthening business competitiveness. Strong economic framework policies foster competition, attract new investment and help businesses thrive and create jobs.

In Canada's economic action plan, the government has taken action to strengthen business competitiveness by promoting an open investment framework and by making fundamental changes to reduce red tape for business. By providing a strong environment for investment and reducing red tape, our government is helping to ensure that Canadian businesses have increased access to the resources required to compete in the global economy and create high-value jobs. This plan is working.

Only today, Statistics Canada announced that employment has increased in our country by over 50,000 net new jobs created in February. Even better, the unemployment rate remains at a post-recession low of 7%, the lowest level in four years.

February's strong employment gains, along with the over 950,000 net new jobs created since the depth of the global recession in July 2009—and of these, 90% are full time and 80% are in the private sector—are very positive signs that we are on the right track with Canada's economy.

What is more, unlike what others would have us believe, Canada has the strongest job growth record among every single one of the G7 countries in recent years.

Furthermore, lower Canadian tax rates play a particularly important role in supporting economic growth by enabling businesses to invest more of their revenues back into their operations. These business investments in machinery, equipment, information technology and other physical capital will boost Canada's productivity. Additional capital boosts businesses' competitiveness, encouraging firms to grow and create more better-paying jobs for Canadians, thereby raising everybody's living standard. As a result of the bold tax reduction plan passed by Parliament in 2007, Canada's tax advantage has continually improved.

The final stage of our step-by-step reduction in the federal business tax rate came into force at the beginning of 2012. It is the accumulation of a process that has seen the federal corporate income tax rate fall from over 22% in 2007 to just 15% today. This has allowed Canadian businesses and Canadians who work for those businesses to drive Canada's economic recovery and future growth.

We eliminated the capital tax at the federal level and encouraged provinces to do the same with their general capital taxes, and the provinces have agreed to do that.

These and other tax changes have allowed Canada to achieve an overall tax rate on new business investment that is lower than any other country in the G7. Indeed, the Canadian Manufacturers and Exporters had this to say only this week about what our low-tax plan has meant for them. They said:

...lower corporate income taxes attract more investments and therefore have a positive result on government revenues, at all levels of government. This is good news for our economy, and I am confident our tax environment will attract more investments in the years to come.

There is great support for this government's tax plan. Nevertheless, Canada faces a fast-changing global environment with increasing competition from emerging market countries and a global economy that remains fragile and uncertain.

I assure members that our government remains committed to keeping Canada strong and prosperous by creating the right conditions to enable Canadians and Canadian businesses to feel confident and to invest, create jobs and grow our economy.

Canada's performance has been one of the most resilient amidst considerable global uncertainty. Compared to most advanced economies in the world, we are in a relatively good position. Since our government introduced Canada's economic action plan to respond to the global recession, Canada has recovered more than all the output and all the jobs lost during the recession.

We will continue to treat Canadians with the utmost fairness and respect with regard to Canada's taxation system. Canadians deserve nothing less, and that is why I call upon all parliamentarians to support Bill C-48.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Mr. Speaker, it is interesting that this member would consider it a botched process.

According to the Certified General Accountants Association of Canada, they welcome Bill C-48.

As the last technical income tax bill was passed by Parliament in 2001, a significant backlog has accumulated and must be addressed.

My colleague might make comments according to your experts, but we have experts, too, who say that the bill needs to be passed. Experts and Canadians would agree that it needs to be done.

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

Mr. Speaker, as I mentioned, I have the pleasure of sitting on the Standing Committee on Finance.

However, I see that my colleague knows what he is talking about more or less.

Given the scope of the bill, I had to focus on particular sections, such as clause 195, which provides a number of definitions including the one for restrictive covenants.

Tax experts have approached me and thanked me for tackling this matter because the definition seems to be inadequate. However, we will have to pass Bill C-48 in a rather haphazard manner.

Can my colleague assure me that we will find the time to address certain problems with C-48? The proposed measures are poorly defined or somewhat obsolete.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Mr. Speaker, I am pleased to speak in this House today to Bill C-48, the technical tax amendments act, 2012.

Before I continue, I must say that I do find it remarkable that the opposition has delayed timely consideration of this highly technical bill for weeks on end, for no other reason than to stand in this House and tell us that they agree with its passage. It is truly bizarre.

Despite much of the bill's content having been made public already, despite extensive consultation and endorsement from key stakeholders, and despite pre-study by parliamentarians and the House of Commons finance committee, the NDP stands in this place once again delaying the passage of this legislation for absolutely no apparent reason.

It is not as if it does not know or will not support the bill. These are the words of the NDP finance critic speaking to our government's technical tax amendments at the committee earlier this week:

Obviously we support the goal of closing tax loopholes and making the tax system in Canada clearer and easier to understand for Canadians. [...] it is important that these technical changes be adopted so that there is clarity and certainty in our tax legislation.

However, it is not just the NDP. At the same meeting of the finance committee, the Liberal MP for Markham—Unionville made it clear that these delay tactics are nothing more than partisan games when he admitted, and I quote, “all parties are supporting this bill”. Parliamentary procedure tricks aside, delaying this legislation has very real implications for the Canadian taxpayer. Parliament has not passed a technical income tax bill in over 10 years, and both the experts and the opposition agree that it is long overdue.

For those watching at home who may not be familiar with this legislation, the technical tax amendments act moves to clear the backlog of outstanding technical tax amendments created as a result of Parliament's delay in passing such a bill.

What is remarkable with the opposition's delay tactics is that the government provided them with an advance copy of the bill before it was introduced in Parliament and indicated it would work with them to make any necessary changes to the legislation. However, that was not the opposition's only opportunity.

One would never know from the NDP's blustering partisan rhetoric that the government conducted a wide range of open and public consultations on the majority of the proposed amendments included in this legislation. Specifically, from 2009 to 2011, the government had no fear of any of these consultations that were inviting comments from Canadians, including NDP members. If the NDP had concerns, it could have shared them with the government in December 2009, July 2010, August 2010, November 2010, December 2010, March 2011, August 2011, October 2011, or at any point thereafter.

Instead of working co-operatively to bring certainty for Canadian taxpayers, the opposition has chosen petty delay tactics at the taxpayers' expense. It is not only that, but the NDP needles over a 100-day filibuster and has gotten so out of hand that groups like the Canadian Institute of Chartered Accountants have come to Ottawa to plead with Parliament to end this ridiculous charade.

The NDP has heard this message loud and clear. Why will it not show some respect for taxpayers and get moving on Bill C-48? While the NDP drone on about process, despite the bill having been before Parliament for over 100 days, failure to move it has real consequences for the Canadian economy, and the experts have warned us of these consequences.

It was just this week at finance committee that Larry Chapman, executive director and CEO of the Canadian Tax Foundation, reminded parliamentarians of the importance of swift passage of this legislation. This is what he had to say:

...it represents 10 years of repairs and maintenance in updating of the Income Tax Act and the Excise Tax Act. Its passage is important to all Canadians. [...] I want to emphasize it again, its passage is very important to all Canadians.

I urge my colleagues in the NDP to listen carefully to his words, which bear repeating. This is very important to all Canadians.

It is not just members of the tax community urging swift passage of this bill. Indeed, the Auditor General of Canada, in a recent report, identified the existing backlog of technical amendments as a pressing issue requiring Parliament's immediate attention. Our government agreed with each of the Auditor General's recommendations and moved quickly to bring forward technical amendments to address them, amendments currently delayed by the NDP in the House.

During its recent appearance before the finance committee, the Office of the Auditor General went even further and explained why delay would do nothing but fan the flames of uncertainty, resulting in lost tax revenue for the government and higher costs for taxpayers.

Let me quote one of those comments at length for the benefit of the opposition, and perhaps it will come to its senses. It states:

Our system of income taxation depends on taxpayers self-assessing their tax obligation based on a clear understanding of the law.

Legislative clarity is important if taxpayers are to easily self-assess and correctly calculate their taxes. When the intent of the legislation is not clearly conveyed by the words, taxpayers may face higher costs to obtain professional advice, may be more willing to use aggressive tax plans, and may need to re-file a tax return at additional cost.

Uncertainty about how the tax law should be interpreted can also affect the efficiency of tax administration. For example, there are higher costs for the Agency to provide additional guidance and interpretation to taxpayers and tax auditors.There are also increased administrative costs for the Agency to obtain waivers from taxpayers to extend the limitation period for audit reassessments until the uncertainty is resolved.

It may even result in lost tax revenues. One would think that those words alone would be enough to bring the NDP onside, especially with its $56 billion in proposed new spending. It could be planning to make up the difference with the $21 billion carbon tax. I do not know.

Nevertheless, the Auditor General has made it clear that we cannot put up with the NDP hyper-partisanship when it comes to the simplest of routine proceedings. While the NDP wants to filibuster a highly technical bill, the majority of which has been in the public domain for years, it feigns ignorance of the need for its timely passage.

In closing, let me recount the recent exchange between the NDP finance critic and an expert tax witness, and Canadians can decide for themselves the true motives of the NDP's needless delay. In response to a question from the member for Parkdale—High Park asking whether it is negative for our economy if we do not pass these amendments in a timely manner, expert witness Gabe Hayos of the Canadian Institute of Chartered Accountants replied, “Absolutely. [...] there's just no doubt about it”.

With that, I urge the NDP to show some concern for our economy, demonstrate respect for Canadian taxpayers and get moving on Bill C-48.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Mr. Speaker, I want to acknowledge the support and thank the hon. member for indicating that he recognizes the importance of this piece of legislation and the importance of moving it forward.

We all recognize that, due to some very extraordinary circumstances, it is absolutely time to move forward. Certainly, all the witnesses who came before committee said they were supportive of the legislation, that they have been broadly consulted and that it is time.

We look forward to the quick passage of Bill C-48.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, the Liberal Party indicated a while back that we are supportive of the bill ultimately passing. We feel there has been a fairly significant amount of time since we have had a law passed to deal with the tax changes that are required.

There is a very thick component when we look at tax guides. They have an asterisk or a grey faded colour to indicate that these are measures for which they are hoping to see legislation take place. That is what Bill C-48 would do. It would invoke a series of changes that are long overdue in their passage, and we do anticipate the bill will pass in a timely fashion.

My question to the member is: How often does she feel legislation of this nature should be brought forward on a go-forward basis?

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.

[Cathy McLeod, Conservative, Parliamentary Secretary to the Minister of National Revenue]

Mr. Speaker, I am delighted to participate in this important discussion on Bill C-48, technical tax amendments act, 2012.

This legislation, as clearly stated in its title, is technical. It is nevertheless important, especially to the many taxpayers who want certainty after over a decade without the technical tax bill being passed by Parliament.

The technical tax act, 2012, moves to clear the backlog, with the inclusion of outstanding income tax and sales tax amendments, the majority of which have already been released for public consultation. Specifically, from 2009 to 2011, in advance of the technical tax amendments act, 2012, the government engaged in open and public consultations on the vast majority of the proposed amendments included in the legislation. I should also note that the Auditor General of Canada has identified the backlog of technical amendments as an issue requiring attention.

While outlining the delays and addressing the current backlog of outstanding income tax amendments, the Auditor General made some key observations about the impact of failing to deal with this issue in a timely manner and, of course, it has very far-reaching implications.

With regard to one of the many negative effects on taxpayers from the uncertainty caused by the backlog of these outstanding income tax amendments, the Auditor General noted the following: higher costs of obtaining professional advice to comply with tax law; less efficiency in doing business transactions; inability of publicly traded corporations to use proposed tax changes in their financial reporting because they have not been substantially enacted; and increased willingness to engage in aggressive tax planning. As such, I think we need to applaud the Conservative government for taking action in this over decade-long backlog, and the Auditor General for the report that helped to crystallize this issue for Canadians.

As parliamentarians, it is important that we now move forward to address this problem. That means we all need to work together to put an end to this backlog of technical tax amendments.

We have seen that, to some extent, all parties have publicly declared support for Bill C-48. Indeed, the NDP has spent literally days of debate, with very similar sounding speeches, to make that point. To be quite frank, their behaviour looks suspiciously like political procedure games, as we have been at second reading for over 100 days at this point. We need to move past such games and focus on what would actually help taxpayers.

I want to applaud the work of my fellow colleagues on the finance committee, from all sides. We realized the need to move forward in a timely way with this legislation and we actually started to pre-study the bill a number of weeks ago. We have already heard from witnesses. Every single one of them is supporting moving ahead with this important piece of legislation.

We have heard from groups like the Canadian Institute of Chartered Accountants, who have said the technical tax amendments associated with Bill C-48 will help to improve clarity and certainty. We greet the technical tax amendments act, 2012, with a sense of relief.

We also heard from an expert tax lawyer, who stated:

The adoption of this bill will be welcomed, as it will formally enact provisions, many of which were originally proposed in 1999, and will have effect from 2007 or 2010 and in certain instances even earlier.

He also stated that many of the amendments found in this act have been brought before the House of Commons and the Senate on a number of occasions in the past.

In my remaining time today, I would like to spotlight some of the measures that may have been overlooked in today's legislation, or certainly overlooked in the debate, because there are many technical pieces. I want to highlight a few of them.

One such group of Canadians who will be assisted will be the self-employed, as the technical tax amendment act, 2012, will make some helpful, albeit minor, changes to fully implement a very popular recent initiative of our government, and that is to assist the self-employed. I am referring to the Fairness for the Self-Employed Act.

As parliamentarians may recall, that legislation extended employment insurance special benefits, including maternity, parental, sickness and compassionate care benefits, on a voluntary basis to the self-employed. Thanks to that new initiative, self-employed Canadians will no longer have to choose between their family and their business responsibilities. I think we can all agree that this initiative was good family policy. It represents a very significant positive measure for the self-employed.

As I also noted earlier, the technical tax amendments act, 2012, would make some helpful changes to fully implement that legislation. Specifically, the measure in question would amend the Income Tax Act as a consequential enactment to the Fairness for Self-Employed Act. It would provide for a personal income tax credit in respect of premiums paid consistent with the existing credit in respect of employees' EI premiums.

Another helpful measure, and this is important, specifically in terms of some of the work we are doing currently around tax avoidance and the use of tax havens, is the multi-lateral convention on mutually administrative assistance in tax matters, which is normally known as the convention. The convention was concluded in 1988 to create a multinational network to facilitate, improve and extend the exchange of information between national tax administrators. The objective was to combat international tax evasion. In April 2009, the G20 called for action to make it easier for developing countries to secure the benefits of the new co-operative tax environment, including the multilateral approach for the exchange of information.

In response, the OECD and the Council of Europe developed a protocol to amend the convention to bring it in line with the international standard on exchange of information for tax purposes and to open it up to all countries. We call this the amended convention. This amended convention is a useful instrument to fight against offshore international tax evasion and is consistent with the government's policy on exchange of information. Previously, it was open to members of the OECD and the Council of Europe. Now, more than 40 countries, including Brazil, Germany, the U.K. and the U.S., have signed the amended convention, and many more have stated their intention to do so.

The amended convention supports Canada's G20 commitment to implement the latest OECD standard on the exchange of tax information, which is to provide that bank secrecy should not prevent a country from exchanging information for tax purposes. However, the amended convention has not yet been ratified, since section 241 of the Income Tax Act must be amended first. With the passage of Bill C-48, it would be in a position to do so. This is very technical legislation but critically important.

As members may recall, another example is the First Nations Goods and Services Tax Act, or the FNGST. This is a tax applied by participating aboriginal governments on goods and services within their reserves or lands. On reserve, it effectively replaces the GST. The longstanding FNGST arrangements promote self-reliance and political accountability of aboriginal governments to their members, as well as the effectiveness of a national tax system. The FNGST is available to both self-governing aboriginal groups and to interested Indian bands that continue to operate primarily under the Indian Act.

Under the terms of the tax administration agreement, the FNGST is collected and administered free of charge by the Canada Revenue Agency, which acts as the agent of the taxing aboriginal government. That is where the amendments in part 7 of the technical tax amendments bill come into play. These are very big improvements in terms of how we will move forward on this important issue for our aboriginal communities.

As I mentioned earlier, it has been over a decade since Parliament last passed a comprehensive package of technical income tax amendments, so we must move forward. My colleagues and I on the finance committee heard from KPMG, which asked Parliament to act decisively and pass Bill C-48 to essentially clean up the slate of this old legislation and finally bring the Income Tax Act up to date. Taxpayers could then move on and focus on running their businesses and the CRA could carry on administering—

[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.