Bill C-15 (Historical)

Budget Implementation Act, 2016, No. 1.

An Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures

Part 1 implements certain income tax measures proposed in the March 22, 2016 budget by
(a) eliminating the education tax credit;
(b) eliminating the textbook tax credit;
(c) exempting from taxable income amounts received as rate assistance under the Ontario Electricity Support Program;
(d) maintaining the small business tax rate at 10.‍5% for the 2016 and subsequent taxation years and making consequential adjustments to the dividend gross-up factor and dividend tax credit;
(e) increasing the maximum deduction available under the northern residents deduction;
(f) eliminating the children’s arts tax credit;
(g) eliminating the family tax cut credit;
(h) replacing the Canada child tax benefit and universal child care benefit with the new Canada child benefit;
(i) eliminating the child fitness tax credit;
(j) introducing the school supplies tax credit;
(k) extending, for one year, the mineral exploration tax credit for flow-through share investors;
(l) restoring the labour-sponsored venture capital corporations tax credit for purchases of shares of provincially registered labour-sponsored venture capital corporations for the 2016 and subsequent taxation years; and
(m) introducing changes consequential to the introduction of the new 33% individual tax rate.
Part 1 implements other income tax measures confirmed in the March 22, 2016 budget by
(a) amending the anti-avoidance rules in the Income Tax Act that prevent the conversion of capital gains into tax-deductible intercorporate dividends;
(b) qualifying certain costs associated with undertaking environmental studies and community consultations as Canadian exploration expenses;
(c) ensuring that profits from the insurance of Canadian risks remain taxable in Canada;
(d) ensuring that the dividend rental arrangement rules under the Income Tax Act apply where there is a synthetic equity arrangement;
(e) providing specific tax rules in respect of the commercialization of the Canadian Wheat Board, including a tax deferral for eligible farmers;
(f) permitting registered charities and registered Canadian amateur athletic associations to hold limited partnership interests;
(g) providing an exemption to the withholding tax requirements for payments by qualifying non-resident employers to qualifying non-resident employees;
(h) limiting the circumstances in which the repeated failure to report income penalty will apply;
(i) permitting the sharing of taxpayer information within the Canada Revenue Agency to facilitate the collection of certain non-tax debts; and
(j) permitting the sharing of taxpayer information with the Office of the Chief Actuary.
Part 2 implements certain goods and services tax/harmonized sales tax (GST/HST) measures proposed in the March 22, 2016 budget by
(a) adding insulin pens, insulin pen needles and intermittent urinary catheters to the list of GST/HST zero-rated medical and assistive devices;
(b) clarifying that GST/HST generally applies to supplies of purely cosmetic procedures provided by all suppliers, including registered charities;
(c) relieving tax to ensure that when a charity makes a taxable supply of property or services in exchange for a donation and an income tax receipt may be issued for a portion of the donation, only the value of the property or services supplied is subject to GST/HST;
(d) ensuring that interest earned in respect of certain deposits is not included in determining whether a person is considered to be a financial institution for GST/HST purposes; and
(e) clarifying the treatment of imported reinsurance services under the GST/HST imported supply rules for financial institutions.
Part 2 also implements other GST/HST measures confirmed in the March 22, 2016 budget by
(a) adding feminine hygiene products to the list of GST/HST zero-rated products; and
(b) permitting the sharing of taxpayer information in respect of non-tax debts within the Canada Revenue Agency under certain federal and provincial government programs and in respect of certain programs where information sharing is currently permitted under the Income Tax Act.
Part 3 implements certain excise measures proposed in the March 22, 2016 budget by
(a) ensuring that excise tax relief for diesel fuel used as heating oil or to generate electricity is targeted to specific instances; and
(b) enhancing certain security and collection provisions in the Excise Act, 2001.
Part 3 also implements other excise measures confirmed in the March 22, 2016 budget by permitting the sharing of taxpayer information in respect of non-tax debts within the Canada Revenue Agency under certain federal and provincial government programs and in respect of certain programs where information sharing is currently permitted under the Income Tax Act.
Division 1 of Part 4 repeals the Federal Balanced Budget Act.
Division 2 of Part 4 amends the Canadian Forces Members and Veterans Re-establishment and Compensation Act to, among other things,
(a) replace “permanent impairment allowance” with “career impact allowance”;
(b) replace “totally and permanently incapacitated” with “diminished earning capacity”;
(c) increase the percentage in the formula used to calculate the earnings loss benefit;
(d) specify when a disability award becomes payable and clarify the formula used to calculate the amount of a disability award;
(e) increase the amounts of a disability award; and
(f) increase the amount of a death benefit.
In addition, it contains transitional provisions that provide, among other things, that the Minister of Veterans Affairs must pay, to a person who received a disability award or a death benefit under that Act before April 1, 2017, an amount that represents the increase in the amount of the disability award or the death benefit, as the case may be. It also makes consequential amendments to the Children of Deceased Veterans Education Assistance Act, the Pension Act and the Income Tax Act.
Division 3 of Part 4 amends the sunset provisions of certain Acts governing federal financial institutions to extend by two years, namely, from March 29, 2017 to March 29, 2019, the period during which those institutions may carry on business.
Division 4 of Part 4 amends the Bank Act to facilitate the continuance of local cooperative credit societies as federal credit unions by granting the Minister of Finance the authority to provide transitional procedural exemptions, as well as a loan guarantee.
Division 5 of Part 4 amends the Canada Deposit Insurance Corporation Act to, among other things, broaden the Corporation’s powers to temporarily control or own a domestic systemically important bank and to convert certain shares and liabilities of such a bank into common shares.
It also amends the Bank Act to allow the designation of domestic systemically important banks by the Superintendent of Financial Institutions and to require such banks to maintain a minimum capacity to absorb losses.
Lastly, it makes consequential amendments to the Financial Administration Act, the Winding-up and Restructuring Act and the Payment Clearing and Settlement Act.
Division 6 of Part 4 amends the Office of the Superintendent of Financial Institutions Act to change the membership of the committee established under that Act so that the Chairperson of the Canada Deposit Insurance Corporation is replaced by that Corporation’s Chief Executive Officer. It also amends several Acts to replace references to that Chairperson with references to that Chief Executive Officer.
Division 7 of Part 4 amends the Federal-Provincial Fiscal Arrangements Act to authorize an additional payment to be made to a territory, in order to take into account the amount of the territorial formula financing payment that would have been paid to that territory for the fiscal year beginning on April 1, 2016, if that amount had been determined using the recalculated amount determined to be the gross expenditure base for that fiscal year.
Division 8 of Part 4 amends the Financial Administration Act to restrict the circumstances in which the Governor in Council may authorize the borrowing of money without legislative approval.
Division 9 of Part 4 amends the Old Age Security Act to increase the single rate of the guaranteed income supplement for the lowest-income pensioners by up to $947 annually and to repeal section 2.‍2 of that Act, which increases the age of eligibility to receive a benefit.
Division 10 of Part 4 amends the Special Import Measures Act to provide that a finding by the President of the Canada Border Services Agency of an insignificant margin of dumping or an insignificant amount of subsidy in respect of goods imported into Canada will no longer result in the termination of a trade remedy investigation prior to the President’s preliminary determination. It also provides that expiry reviews may be initiated from a date that is closer to the expiry date of an anti-dumping or countervailing measure and makes amendments related to that new time period.
Division 11 of Part 4 amends the Pension Benefits Standards Act, 1985 to combine the authorities for bilateral agreements and multilateral agreements into one authority for federal-provincial agreements, and to clarify that federal-provincial agreements may permit the application of provincial legislation with respect to a pension plan.
Division 12 of Part 4 amends the Employment Insurance Act to, among other things,
(a) increase, until July 8, 2017, the maximum number of weeks for which benefits may be paid to certain claimants in certain regions;
(b) eliminate the category of claimants who are new entrants and re-entrants; and
(c) reduce to one week the length of the waiting period during which claimants are not entitled to benefits.
Division 13 of Part 4 amends the Canada Marine Act to allow the Minister of Canadian Heritage to make payments to Canada Place Corporation for certain celebrations.
Division 14 of Part 4 amends the Jobs, Growth and Long-term Prosperity Act to authorize the Minister of Infrastructure, Communities and Intergovernmental Affairs to acquire the shares of PPP Canada Inc. on behalf of Her Majesty in right of Canada. It also sets out that the appropriate Minister, as defined in the Financial Administration Act, holds those shares and authorizes that appropriate Minister to conduct, with the Governor in Council’s approval, certain transactions relating to PPP Canada Inc. Finally, it authorizes PPP Canada Inc. and its wholly-owned subsidiaries to sell, with the Governor in Council’s approval, their assets in certain circumstances.
Division 15 of Part 4 amends the Canada Foundation for Sustainable Development Technology Act to modify the process that leads to the Governor in Council’s appointment of persons to the board of directors of the Canada Foundation for Sustainable Development Technology by eliminating the role of the Minister of Natural Resources and the Minister of the Environment as well as the consultative role of the Minister of Industry from that process. It also amends the Budget Implementation Act, 2007 to provide that a sum may be paid out of the Consolidated Revenue Fund to the Foundation on the requisition of the Minister of Industry and to clarify the maximum amount of that sum.

Budget Implementation Act, 2016, No. 1

[Alice Wong, Conservative, Richmond Centre, BC]

Mr. Speaker, first, on behalf of my constituents in Richmond Centre, I wish to send our thoughts and prayers to those affected by the wildfires in Fort McMurray and the surrounding area. We are grateful to the firefighters and first responders who are tirelessly working together to control the fire and ensure the safety of those involved. The residents of Richmond Centre stand behind them.

Today, I rise to discuss Bill C-15, the budget implementation act. I wish to articulate my concerns with the bill. There are many troubling aspects of the bill, but I will be focusing on two primary ones. First, I will discuss the small business and employment provisions and changes outlined in the budget. Second, I will comment on the changes to small business hiring. Both of these areas are of great importance to me and my riding of Richmond Centre.

This being my eighth year serving as an MP, I have had the opportunity to work alongside our previous Conservative government and witness strong fiscal responsibility. Not only were we able to leave a surplus at the end of our term, but the debt-to-GDP ratio was lower than it had been when we took office. In addition, during the economic downturn and global recession, our Conservative government created 1.2 million net new jobs. However, such success is quickly being squandered by the new Liberal government.

Before my work in politics, I spent many years as a small business owner. I have experienced first-hand the hard work and dedication required of individuals to operate a small business.

Over 10 years ago, I worked with other business leaders to develop the Women's Enterprise Society of British Columbia, which has been supporting women entrepreneurs. I also founded the Ethno Business Council to encourage and engage business from various cultural groups.

Over the years, I have been hearing the same message: small and medium-sized businesses need lower taxes and support from the government.

Since small business is close to my heart, members can understand why the budget is so concerning for me. The Liberal government has decided to break its promise to continue the outlined small business tax cuts. This broken promise will cost the small business sector $2.2 billion over the next four years. What this broken promise demonstrates is that the Liberal government believes our small business owners should be the ones to pay for its deficits, which is simply unacceptable.

Under this new budget and the proposed tax increases, the top tax bracket for over half of our provinces will be more than 50% of an individual's income. It is tax increases like this which will be punishing some of the most productive workers in our society.

What is worse is that the Liberals are accusing small business owners of manipulating the system to avoid paying higher taxes. This could not be further from the truth.

Two-thirds of small and medium-sized businesses fall directly into the middle class. In fact, there are nearly four times as many owners earning less than $40,000 than those earning more than $250,000.

By eliminating the proposed tax cuts, the Liberals are directly targeting our middle class and making its financial situation more difficult.

Over the past few months, I have met with numerous organizations and individuals who represent small business owners from across the nation. Every time I hear the same concern, that small business owners are being neglected by the government. The Liberals' abandoned promise of lowering the small business tax rate is affecting all small businesses. What is more, the government is increasing red tape and making it more difficult for owners to qualify for the small business tax rate. They claim these changes are to close loopholes, but in fact, the changes are affecting all kinds of small businesses, even though their revenues are well below the $500,000 cap.

Dan Kelly, president of the Canadian Federation of Independent Business, summed up the budget well. I will quote from a news release:

“Small business owners across the country are deeply troubled by the ballooning deficit. What was proposed to Canadians as a short-term $10 billion deficit plan to invest in critical infrastructure is now $29 billion with no plan to get back to balance,” Kelly said. Most of the deficit is to cover a massive 7.6 per cent increase in program spending, which will do next to nothing to grow the economy. “Small business owners know that today’s deficits are tomorrow’s taxes,” added Kelly.

The budget and Bill C-15 have one clear loser, and that is our small businesses. As a result, I will be supporting the motion put forward by our colleague from Nepean—Carleton to strike clause 34 from Bill C-15 altogether. I encourage all members of the House to support the motion as well.

Nowhere in Bill C-15 do we see a commitment to renew the small business job credit next year. In fact, what we see instead is another broken promise to reduce employment insurance rates to $1.52. The new El spending would put pressure on the premiums paid by both employers and employees and would cost $2.4 billion over two years. We should be working to ease the premiums and hiring costs placed on employers rather than making it more difficult for them to hire workers. Once again, our small businesses are bearing the worst of all the Liberal government's irresponsible spending.

In conclusion, one thing is clear throughout budget 2016: the Liberals have demonstrated their utter disregard for responsible fiscal management and they have no plan to repay their extreme deficits. They have chosen to turn their backs on the job creators, our small businesses. The Liberals do not understand that borrowed money needs to be paid back, and instead of taking that responsibility upon themselves, they are placing it on our children and grandchildren.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Mr. Speaker, I noted in my colleague's speech that at one point she said that small business owners fall in the middle class. Would she not agree then that because we are giving a tax break to the middle class, in fact we are helping small businesses and not hurting them, as she suggested?

[Alice Wong, Conservative, Richmond Centre, BC]

Mr. Speaker, unfortunately these are not the people who would benefit from the Liberals' so-called tax cuts for the middle class. Their broken promise to reduce the taxes actually would be creating unemployment instead of employment. This is exactly what we are fighting against.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Mr. Speaker, my colleague's speech was interesting.

Something about it took me a little by surprise, however: the Conservative Party's sudden interest in helping small and medium-sized businesses. During its time in power, it did absolutely nothing to cut small business taxes as the NDP requested. It did, however, give hundreds of millions in tax breaks to banks, oil companies, and big corporations. Now, all of a sudden, the Conservatives are taking an interest in small businesses even though all they cared about before were huge corporations, not our small merchants.

[Alice Wong, Conservative, Richmond Centre, BC]

Mr. Speaker, it was the Conservative government which created 1.2 million net new jobs during the downsizing of the economy and it was the Conservative government that reduced personal taxes 120 times, putting more money into the pockets of families who then spent their money on building our economy. That is what our government did, but the broken promises by the Liberals have created $2.2 billion of costs to our small businesses. That is not the way to do business.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Mr. Speaker, I congratulate my colleague on a great speech and a great analysis on the economic and tax fronts. I hope the member would share the same view on the subject of the middle class. Most Canadians are middle class. The Liberals use the term “middle class” as a political term to win votes here and there. We understand that the Liberals played that game.

How will the borrowing habits that are going to become an ongoing thing in the next four years by the Liberal government be such a dangerous thing for the Canadian economy and for Canadian businesses?

[Alice Wong, Conservative, Richmond Centre, BC]

Mr. Speaker, I would like to reiterate what the president of the Canadian Federation of Independent Business said. He said, “Small business owners across the country are deeply troubled by the ballooning deficit”. At the end of his quote he said, “Small business owners know that today's deficits are tomorrow's taxes”. Instead of bearing the responsibility, the Liberals are now putting their responsibilities on our children and our grandchildren.

I know that the Minister of Finance said it is good for his children and his grandchildren, but I am afraid it is not to the benefit of all our children and our grandchildren.

[Gudie Hutchings, Liberal, Parliamentary Secretary for Small Business and Tourism]

Mr. Speaker, my colleague and I both share a passion for small business. I am sure she would agree with me when I say that many small businesses are in the tourism industry. I was in the tourism industry and I would have appreciated lots of marketing money being invested in the economy to bring in more customers.

Does the member not think that the investment we are making in destination Canada, the investment we are making into broadband, the investment in infrastructure which is all going to support businesses, does that all not support small business at the end of the day? We all know how important tourism is for every riding in our country.

[Alice Wong, Conservative, Richmond Centre, BC]

Mr. Speaker, I would remind the member opposite that it was our government that got the approved destination status from China which brought in lots of tourists and helped us to grow tourism. It is our government that did the job, not the Liberal government. It took them 30 years and failed.

[The Assistant Deputy Speaker, Anthony Rota]

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 Renfrew—Nipissing—Pembroke, Innovation, Science and Economic Development; the hon. member for Churchill—Keewatinook Aski, Employment Insurance; the hon. member for Vancouver Kingsway, Health.

Resuming debate. The hon. Parliamentary Secretary to the Minister of Infrastructure and Communities.

[Pablo Rodriguez, Liberal, Parliamentary Secretary to the Minister of Infrastructure and Communities]

Mr. Speaker, I want to start by telling our brothers and sisters in Alberta that the people of Honoré-Mercier stand with them. They have our support.

I am very pleased to have an opportunity to participate in this debate on a budget that clearly shows that we plan to honour our commitments. These commitments will make Canada more prosperous, fairer, greener, and more open to the world. These commitments were at the heart of our election platform and are now at the heart of our budget.

In other words, we are doing exactly what we promised to do. We promised real change, and we are keeping that promise. To do so, we must strengthen the middle class and revitalize our economy. These two issues go hand in hand. They are inextricably linked.

Our approach is clear: support those who need it most, while laying the foundation for sustainable economic growth. That is exactly what we are doing with our budget. For example, we are lowering the tax rate, which will benefit nine million Canadians. This measure will improve the quality of life of millions of people who work hard every day to earn a living. These men and women do their best every single day, and they deserve this support. This measure will put more money in their pockets, which will then help them contribute more to our economy.

I would also like to talk about our support for families and young children. We are introducing the Canada child benefit, the largest-ever family benefit. Unlike the previous benefit, our benefit is tax-free. Gone are the days of giving with one hand and taking away with the other.

This benefit will help lift hundreds of thousands of children out of poverty. This is exactly how to fight for a just society. If we truly believe in equal opportunity, then we need to start in early childhood.

It is also important to support those who want to study, and for as long as possible. In that regard, the measure of success is clear: education should be available and accessible based on each student's determination, desire, discipline, talent, and dreams, and not based on the size of their parents' wallets.

That is why our budget proposes to considerably increase Canada student grant amounts. This measure is especially directed to students from low-income families. It is a fair, generous, responsible, and forward-looking measure that gives young people a better chance, for they represent the Canada of the future.

At the same time, we also owe so much to our seniors. They are the ones who built the society we enjoy today. We are here thanks to them. Unfortunately, however, far too many seniors are still living in poverty. We must be there for them, and we will be. That is why we are increasing the guaranteed income supplement top-up benefit by up to $947 annually. This tangible measure will improve the quality of life of over 900,000 seniors living in every province of the country.

We will also invest in upgrading, renovating, and building affordable housing for our seniors because we know that quality of life has a lot to do with the dignity of access to decent housing. That is fundamental, and we know it. That is why we are going to take action right now.

That brings me to a key component of our budget: infrastructure investment. Our government promised to double infrastructure spending over the next 10 years. We are planning to spend over $120 billion, which is an absolutely historic commitment. That includes $60 billion in new money for public transit, green infrastructure, and social infrastructure. Sixty billion in new investments out of a total of $120 billion over the next 10 years is absolutely unprecedented.

These investments will happen in two phases. Phase one starts right away, today, with $11.9 billion: $3.4 billion for public transit, $5 billion for green infrastructure, and $3.4 billion for social infrastructure. That is happening today. Those are major investments.

In the coming months, our government will work closely with our provincial, territorial, and municipal partners to present phase two of our long-term plan. We want this phase to begin as quickly as possible. We do not need to wait for phase one to end before phase two begins. Why are we doing this? We believe that investing in infrastructure means investing in our future; it means building the Canada of tomorrow. It means taking action today for a better tomorrow.

Maintaining and improving our roads, public transit, and water systems are crucial aspects of what we are doing. This is what we are doing, and we are doing it right.

However, there is a lot more to infrastructure than just that. It is also about protecting our environment, building recreation and cultural centres where people can learn, have fun, and grow. It is about providing affordable housing to those who need it. Investing in infrastructure also means building quality facilities for our children. It is about providing a safe shelter for women and children who need to flee domestic violence. In other words, our infrastructure plays an absolutely crucial role in supporting our communities.

Let us think about everything we can do and everything we can do together. With our partners, we are going to invest significantly in public transit. An additional $20 billion is going to public transit. That will help us reduce commuting time, take cars off the road, and reduce pollution. We are going to make our communities more sustainable through environmental infrastructure. We are going to make communities more inclusive by adding more affordable housing and facilities for our children. We are also going to improve and speed up the approval process for projects to ensure that the money is released as soon as possible.

As hon. members can see, our government has big ambitions for our country. We offered real change to Canadians, and that is what we are delivering. We are going to strengthen the middle class, improve Canadians' quality of life, create jobs, and stimulate the economy to make Canada more prosperous and inclusive.

I could go on, but I will stop there and simply say that our budget is more than just an economic statement. It is a beacon that guides our commitment to a Canada that is more prosperous, fairer, greener, and more open to the world.

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Speaker, I would ask the member about the comment “supporting those who need it most” with regard to the middle-class tax cut. Statistics show that 66% of Canadians who pay income tax make below $45,000, which is not at all addressed in the middle-class tax cut.

How would it help those who need it most if the government is excluding two-thirds of Canadians?

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Mr. Speaker, I invite my colleague to read the entire budget, which outlines tax cuts, of course, but also the Canada child benefit. Infrastructure investments for social housing are also included in the budget.

I said earlier that the budget is a substantive and inclusive document that allows us to reach out to all Canadians and improve their quality of life by implementing a series of measures.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Mr. Speaker, I would like to thank my colleague for his speech, which was full of hope and enthusiasm for the future.

With regard to the fight against inequality and lifting people out of poverty, the NDP proposed setting the minimum wage at $15 an hour. A recent study by IRIS in Quebec showed that this would allow people working full time to rise above the poverty line. It is a simple measure that would show leadership on the part of the federal government. However, this measure is not in the budget, and I do not understand why.

My colleague will remember that in September 2014, the NDP moved a motion in the House to set the federal minimum wage at $15 an hour. The Liberal Party supported the motion, but it does not seem to have any recollection of it today. Why is this not in the budget?

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Mr. Speaker, I want to tell my colleague that the government has shown leadership in this budget. It has made courageous decisions, and they include making historic investments in infrastructure, increasing the guaranteed income supplement for seniors, and lowering taxes for the middle class. Once again, this budget sets out a series of progressive measures to give our children and our workers a better quality of life than they had before.