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.

Mackenzie Valley Resource Management Act

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Madam Speaker, it is my turn to rise in the House to speak to Bill C-88, an act to amend the Mackenzie Valley Resource Management Act and the Canada Petroleum Resources Act and to make consequential amendments to other acts, at second reading. This bill was introduced by the Minister of Intergovernmental and Northern Affairs and Internal Trade on November 8, 2018.

Before I begin, I would like to say that I have never had the opportunity to visit these northern territories, but I have made two trips to Nunavik, in Quebec's far north. Once someone goes to these areas and speaks with the people who live in Canada's far north, they gain a completely different view, a different perspective, of northerners' potential and desire for self-determination, their desire to take charge of their land. During my two visits, I felt that the people in this area truly wanted to look after their own affairs and contribute to Canada's social and economic development in their own way. They want to be a part of this great big country that we share.

The bill consists of two parts. Part 1 amends the Mackenzie Valley Resource Management Act. It repeals the provisions that would consolidate the Mackenzie Valley land and water boards into a single board. Those provisions were introduced by the previous Conservative government in Bill C-15. Part 2 amends the Canada Petroleum Resources Act to allow the Governor in Council to issue orders to prohibit oil and gas activities, freeze the terms of existing licences and prevent them from expiring during a moratorium, if it is in the national interest to do so.

Part 1 undoes what the Conservatives did, and part 2 announces that the Liberal government is going to make things worse. That is what I get from Bill C-88. Overall, what I get from Bill C-88 is that it is a Liberal anti-energy policy that will drive even more energy investments out of Canada. It will cost Canadian workers their jobs, and that certainly will not help improve the quality of life of residents of northern Canada. Bill C-88 reveals a full rejection of calls from elected territorial leaders for increased control of their natural resources.

The previous government believed the north would be a key economic driver for decades to come. Other Arctic nations, such as China and Russia, are exploring similar opportunities. Unfortunately, the Liberal government decided to take a different tack.

I was mayor of Thetford Mines for seven years. My community has grappled with major problems. It was an asbestos mining community where companies dug up white gold, as it was known then, for years. We see asbestos in an entirely different light now. For years, we were exploited by outsiders who came into our community and left nothing but deep scars, from mountains of tailings to infrastructure that still mars the landscape. We wish we had had a say in all of those projects. We wish we could have played a role and worked with the people who operated the mines. We could have influenced how it was done, and we definitely could have told them where to put the massive piles of tailings, how to dispose of it all, and how to improve our people's quality of life.

In some territories, when one is elected to represent a community, the more control that territory has over its own affairs, the more one can contribute, the more decisions are made at the local level, and the more one understands the impact of decisions. Unfortunately, in this case, just before Christmas 2016, the Liberal government cavalierly decided to force the territories to do things its way.

During a trip to Washington, the Prime Minister took the opportunity to announce a moratorium. There was no consultation with people in the north, despite the same old tune from the Liberals that consultation is important. Despite the countless consultations that were held in this case, the Liberal government did not feel obliged to consult the people of the north. The decision was made unilaterally by the Prime Minister's Office. Then we learn that the leaders of these territories were informed just one hour before the government announced important changes that would affect them.

I will quote the leaders of the affected communities. The Premier of the Northwest Territories published a red alert for a national emergency debate on the future of the Northwest Territories. He said that the promises of the north are fading and the dreams of northerners are dying as we watch a resurgence of colonialism. Whether we are talking about ill-conceived ways to fund social programs or new, disconcerting restrictions on their economic development, he says, their spirit and energy are being eroded.

Then, he said that staying in the middle class or trying to join it is becoming a distant dream for many. He says that means that northerners, through their democratically elected government, have to have the power to determine their own destiny and that we can no longer allow the bureaucrats and governments in Ottawa to make the decisions. He says that decisions concerning the north have to be made in the north. He says that unilateral decisions made by the federal government without consultation to impose a moratorium on offshore oil and gas development in the Arctic is just an example of how their economic self-determination is thwarted in Ottawa.

The Premier of the Northwest Territories was rather quick to respond.

In an interview on national television on December 22, 2016, another premier, the Premier of Nunavut, said that they want to get to a point where they can make their own determination of their priorities, and the way to do that, he said, is by gaining meaningful revenue from resource development. Meanwhile, when one potential revenue source is taken off the table, it puts them back at practically square one, where Ottawa will make the decisions for them.

Those statements are rather clear. These are not extremists who wanted to attack the government. They just wanted to be consulted on important decisions related to natural resource development on their lands. It is important to hear those messages and act accordingly. When the government is making these kinds of decisions, it is even more important to avoid concentrating too much power within one office, in other words, the Prime Minister's Office. This helps ensure that decisions are not made for purely political reasons. That is unfortunately what happens when the PMO is given so much decision-making power that a moratorium can be imposed without having to consult.

On October 22, 2018, the mayor of Tuktoyaktuk said the following to the Standing Committee on Indigenous and Northern Affairs:

I was talking to [the Liberal member for the Northwest Territories], and he said, “Yes, Merven, we should be doing something. We should be helping you guys.”

I agree the Liberals should be helping us. They shut down our offshore gasification and put a moratorium right across the whole freaking Arctic without even consulting us. They never said a word to us.

We're proud people who like to work for a living. We're not used to getting social assistance and that kind of stuff. Now we're getting tourists coming up, but that's small change...[We don't just want to sell] trinkets and T-shirts and that kind of stuff.

Those messages are clear. I hope that the government will listen to elected officials from these territories and reconsider Bill C-88.

National Defence Act

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Madam Speaker, I would like to begin by thanking my colleague for his speech. The general public may not be very familiar with military justice—as his colleague pointed out earlier—but there is no doubt these changes are desperately needed. They are tackling issues that have caused a lot of well-documented harm.

Based on his experience, would my colleague agree that this government's legislative agenda will have been rather slim?

Few substantive bills have been passed, and now that the end is in sight, they decide to move this sensitive subject forward. How long did it take them to get to this point—two years?

Last fall, when Bill C-15 came into force, the government could have made amendments that would have implemented all this right away. Victims in the military community are suffering. Why did the government take so long to introduce this?

[Col Stephen Strickey]

I'll let Colonel Lortie fill in the gaps, but generally speaking vis-à-vis restitution, since restitutions have been allowed.... You may recall that on September 1, 2018, through Bill C-15, the restitution provision was brought into force. Since then, five courts martial have been completed. None featured a restitution order. Certainly Bill C-77 will allow a restitution to be made at the request of a victim rather than just the director of military prosecutions. It will also require the court martial to inquire of the prosecutor, after a finding of guilt and before imposing the sentence, if the victim is seeking restitution.

That's the restitution aspect.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

I have to say this is something I've followed since I was elected to Parliament, and finally, we're making some progress, so my congratulations to you on the progress that we are making in this area.

Two things were left out of Bill C-15 and are now before Parliament in Bill C-77 , and those were provisions with regard to victims in the military justice system and also the provisions with regard to the treatment of aboriginal offenders within the military justice system. My question is really about whether the delays in getting this legislation into force will impair the new reforms. In other words, I'm feeling things would be better if these were implemented at the same time. We have a lot of changes taking place without the victims' rights part and without the aboriginal offender part.

Do you have any comment on that? Would that require further adjustments and further training?

[Commodore Geneviève Bernatchez, Judge Advocate General, Canadian Armed Forces, Department of National Defence]

I'm pleased to confirm that the regulations that were related to the coming into force of Bill C-15 have now been completed and approved. We will see these sections and regulations coming into force on September 1, 2018.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

That sounds like very good news. I do have the twin concerns of maintaining employment and of not losing the expertise of people because of gaps in the employment, so thank you very much for that answer.

I'm really pleased that we have the judge advocate general with us today. I'd like to turn my questions now to the military justice system. Bill C-15 passed in the previous Parliament, and there were great delays in proclaiming sections of that act and getting on with the reform to the military justice system. I know you've been in the job just under a year, so I'm not going to ask you if you've finished everything, but I'd like an update on where we are, because I understand that most of the remaining sections of Bill C-15 will be proclaimed very soon, and my understanding is that those reforms should get under way September 1. Can you give us an update on those reforms?

Financial Statement of Minister of Finance

[Jenny Kwan, NDP, Vancouver East, BC]

Madam Speaker, I have had the opportunity to speak to the budget in previous years, and I often refer to budgets as showing what a government's priorities are, and more importantly, what a government's priorities are not.

The inequality gap between Canada's wealthiest and the rest of Canadians has never been greater in our country. According to the Canadian Centre for Policy Alternatives, as of 2016, Canada's 100 highest paid CEOs now earn over 209 times more than the average Canadian worker. This year, Canada's CEOs could have stopped working at 10:57 a.m. on January 2 and taken the rest of the year off and they would still make as much as an average Canadian this year. Members can think about that for a minute.

Reducing this inequality is simply not a priority of the government. Despite promising to close the stock option deduction loophole, which is projected to cost some $840 million this year alone, the government, under pressure from its wealthy friends, abandoned that promise. The finance minister has suggested that this is because small businesses and start-ups use this as a legitimate form of compensation. However, the data shows that this is not the case.

The CCPA found that 99% of benefits from the stock option deduction went to the top 10% of income earners in Canada. It found that, “In essence, there is no benefit from this tax expenditure to anyone making less than $215,000 a year.” These are not employees of small start-ups. These people are the government's wealthy backers and fellow French villa owners. This is just one tax loophole.

Unfortunately, despite its promise and its posturing as a progressive force, the government has left several of these highly regressive tax policies on the books. It has also failed to take real action on the abuse of tax havens. Tackling these issues is simply not the government's priority.

For Vancouver East, housing remains the number one issue for many of our residents. It has long been declared a basic right by the United Nations, and Canada has signed and ratified a number of international human rights treaties that identify the right to adequate housing as a fundamental human right.

The NDP introduced Bill C-325 to enshrine the right to housing for Canadians in the Canadian Bill of Rights. To my dismay, every Liberal MP joined hands with the Conservatives to vote against that bill.

At a town hall I hosted, many attendees agreed on the necessity of a real, national, affordable housing program; the need for renewed and ongoing federal housing subsidies; the need for a long-term solution, not two-year transitional measures, for co-op housing; the importance of the Liberals honouring their election promise of incentives to build rental housing; and the need for dedicated funding for aboriginal housing.

The Liberals promised to bring back a national housing strategy, and there was much fanfare, by the way, with that announcement. However, what we learned was that 90% of the funding will not actually be spent until after the next election. The issue of housing affordability constitutes a crisis, with real, immediate needs, and the government's response was to say that it will get back to us after the next election. Honestly, we do not deal with a crisis by spending over 90% of promised funding after the next election.

The NDP has urged the government to bring the funding forward by increasing housing spending to $1.58 billion in budget 2018 instead of in 2021. Sadly, budget 2018 failed to acknowledge this important call for action. According to the government, tax loopholes for the richest must continue. Funding for affordable housing can wait.

Homelessness costs Canada $7 billion annually, $1 billion in B.C. alone. Every dollar invested in providing housing has been found to yield over $2 in savings in areas like health care, the justice system, and other social supports. Each dollar invested in housing construction has also been found to result in $1.52 in GDP growth. These are investments that pay for themselves and simply should not be made to wait.

I had the opportunity, when speaking in support of Bill C-15, to draw attention to the work of the Vancouver East community and what it is doing in trying to obtain UNESCO world heritage site designation for Vancouver's Chinatown. With Canada having just celebrated its 150th birthday, partnering and investing in preserving heritage sites like this would have been welcome.

B.C. was able to join Confederation through the labour and sacrifices made by Chinese railway workers, and 2017 marked the 70th anniversary of Chinese-Canadians winning the right to vote. Vancouver's Chinatown is number three on the Heritage Vancouver Society's top 10 watch-list of endangered sites. It is on the top 10 endangered places list of the National Trust for Canada.

Relentless development threatens the area more and more each year. Our community was hoping that the federal government would get behind our UNESCO push and provide preservation funding. There was not anything in budget 2018 for this important work. I hope that in future budgets, there is recognition from the federal government to help revitalize Vancouver's Chinatown and Chinatowns across the country.

On another critical issue, there is not an indigenous community in Canada that has not been touched by the systemic racism and sexism that allow indigenous women to be stolen from their loved ones and allow indigenous men like Colten Boushie to be killed without repercussions.

The National Inquiry into Missing and Murdered Indigenous Women and Girls has been riddled with challenges since the beginning. The inquiry is the result of decades of work and advocacy by families and survivors. I feel very strongly that it must put the needs of families and survivors at the forefront. It is also vital that organizations that have been granted standing because of their expertise on the conditions and practices that cause and perpetuate the murders and disappearances of indigenous women and girls are also heard by the inquiry. To date, there has been no information regarding the process or the timeline for these experts and the institutional hearings of the inquiry. This is not acceptable. “No more stolen sisters” cannot just be a slogan.

Recently I had the opportunity to participate in the massive rally to stop Kinder Morgan. This call for action was led by indigenous leaders from across the country. Thousands gathered at Forest Grove park to send a clear message to the Prime Minister: no consent, no pipeline.

With eagles soaring above us, the leadership spoke eloquently and passionately about future generations and how it is our responsibility to “warrior up” to protect those who cannot speak for themselves. Their powerful and inspirational message united all of us: with one heart and one mind, let us all work together to stop Kinder Morgan.

The issue of pipelines brings us to the need for real action for a just transition to a sustainable future. What about bringing in a strategy to expand the use of solar panels for homes and public buildings? There is nothing like that in the budget.

On a critical issue, the government has also finally decided to provide the Immigration and Refugee Board with some funding to address the strain on the system caused by the significant increase in asylum claims in Canada. Unfortunately, because of how long the government put its head in the sand on the irregular crossings, this new funding will address the issue for only two years. That is not nearly enough. The added funding will only ensure that 18,000 cases are processed. At a time when there are over 40,000 cases in the backlog, which is increasing by 2,100 cases per month, this is not sufficient.

This budget does not address the real needs of Canadians. Action is what really matters. It takes courage to act, and I call on the government to act.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

Great. Thanks very much.

It wouldn't be complete unless I went back to the commodore again with one last question on military justice.

When Bill C-15 was going through the House, significant delays were being seen in military justice, and Bill C-15 was supposed to help in some ways with those delays. Then in 2016 we had a Supreme Court of Canada decision called Regina v. Jordan, which said that matters have to be dealt with within 18 months.

What is the situation on delays in military justice, and will you be able to meet the 18-month deadline? I know one case, a serious assault case, has already been dismissed as a result of delays. I would hate to see that happen again. What is the situation on the delays?

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Thank you.

As a follow-up to Mr. Garrison's comments on Bill C-15 —I believe I was parliamentary secretary at the time we brought that through—quite a bit of concern was being expressed at that time by civilian organizations like the Canadian Bar Association about transparency, accountability, and how summary convictions were being applied in the military.

In the implementation process going forward, is there going to be more of that transparency and sharing with Canadians on how convictions are reached and punishment is meted out?

[Cmdre Geneviève Bernatchez]

As we know, Bill C-15 represented significant modernization of the military justice system and had several clauses and several aspects to it that need to be implemented once the bill received royal assent in 2013. The bill incorporated recommendations that had been made by the Right Honourable Antonio Lamer in his 2003 report, as well as recommendations that had been made by the Senate committee in 2009.

It presented a gargantuan task for lawyers to be able to draft the regulations that would put Bill C-15 into force, and our team at the Office of the Judge Advocate General worked relentlessly over the course of the last several years to try to not only draft the regulations that needed to be put in place as a first order of business but also to look at the second, third, and fourth degrees of effect of having legislation that was modifying other aspects of the regulatory scheme of the Queen's Regulations and Orders.

I'm very pleased to tell the committee today that this gargantuan task, this adventure, is coming to fruition. We're looking at the finalization of this process. We remain extremely committed to seeing it come into force in the next little while.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

I support the amendment. I think the Conservatives do. The language is more modern and inclusive. Certainly if and when Bill C-15 gets passed by Parliament and is brought into law, this kind of review will be going on automatically with all legislation. To get ahead of the curve, I think it would be appropriate.

[Sarah Ryan, Senior Research Officer, Canadian Union of Public Employees]

Hi, my name is Sarah Ryan and I'm a senior research officer at CUPE. Thank you very much for inviting CUPE to present our concerns regarding the Canada infrastructure bank today.

The Canadian Union of Public Employees, or CUPE, is Canada's largest union, representing 643,000 workers across Canada. CUPE members work in health care, education, municipalities, libraries, universities, social services, public utilities, emergency services, transportation, and airlines.

As more details about the Canada infrastructure bank have emerged, CUPE members have expressed strong concerns that the bank is essentially a bank of privatization. They are deeply concerned that the bank could lead to the privatization of airports, ports, public transit, roads, highways, bridges, water and waste-water systems, hydroelectric utilities, and transmission grids. These are all key services that the Canadian public depends upon every day.

Bill C-44 states that infrastructure projects financed by the bank must generate revenue and promote the public interest. Revenues can only be generated in two ways: by charging high interest rates on loans, and by introducing tolls and user fees on new infrastructure projects or existing infrastructure assets.

The mandate of the bank is fundamentally contradictory. Private investors will be the clear winners, since revenues from projects financed by the bank will fall into their pockets. Canadians who depend every day on infrastructure to heat their homes, to get them from place to place, and to ensure they have safe drinking water will be the losers. The public will shoulder the costs of the bank's high interest rates and will be hit hard by added costs of living that will result from new tolls and fees.

Bill C-44 will also allow infrastructure projects to be privately pitched through unsolicited bids. This puts private investors in the driver's seat and allows them to set priorities on what gets built.

The bank gives investors unprecedented control over how infrastructure is built, operated, and structured. Infrastructure projects developed by private investors will be tailored to profit the projects' backers and risk being totally out of touch with the public's needs and interests. This eliminates the capacity of governments and citizens to decide what infrastructure their communities need and how it should be built and paid for. It severely limits the public's capacity to influence decision-making on infrastructure investments.

Minister Morneau said that cabinet will have the final say on what gets built, but to sustain a private investment in the bank, CUPE members are not confident that cabinet will be willing or able to deny investors' proposals. Furthermore, the private sector will still play a key role in shaping the project structure to maximize profits.

When governments propose, design, finance, and build infrastructure projects, the public can hold them to account. However, Bill C-44 limits the bank's public transparency and accountability requirements. It allows project information and investor deals to be kept secret from the public. This means that information about how community infrastructure is being funded, who is involved in projects, and how much investors are profiting will not be available to the public. This is bad news for Canadians who have a right to know how public monies, which will partially fund the bank, are being spent and how public infrastructure is being built.

In conclusion, CUPE offers the following recommendations.

First, the government should establish a public infrastructure bank that provides low-cost financing for new infrastructure projects, and that means public financing. There is no shortage of financing available for the federal government to borrow at low interest rates right now. If this is done through a public bank and lending institution, similar to the Business Development Bank of Canada, CMHC, or EDC, then its investments in borrowing wouldn't need to increase the deficit or net debt any more than the current proposal.

Second, the government should ensure there's stronger accountability, transparency, and review by auditors general over the bank and its projects. The bank should be mandated to provide full public disclosure of all business deals, value-for-money assessments, and contracts. The bank should also have public officials on its board to ensure that it acts in the public interest. Public infrastructure projects must remain public and not turn into secret deals with private corporations.

Finally, the government should not allow private corporations to determine infrastructure priorities, including through unsolicited bids. Instead, it should establish a public and transparent process using evidence-based analysis for truly objective planning of priority infrastructure projects.

Thank you.

Income Tax Act

[François-Philippe Champagne, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, before I begin, I would like to thank my colleague once again for raising this important issue.

I can assure him that we are listening to Canadians. I meet with people every day. I have met with accounting firms and tax firms. We understand this issue, but the most important thing we have to do, as a government, is to understand that the greatest injustice we could do would be to introduce new tax loopholes in Canada. The $800 million figure is the figure provided by the Department of Finance, which has studied this issue at least as thoroughly as my colleague on the other side of the House. The $800 million figure is just the beginning; we expect it to be higher in subsequent years.

I am rising in the House to speak to my colleague’s bill, Bill C-274. The stated objective of this bill, to facilitate the transfer of family businesses to future generations in a family, seems commendable. It is the statement of principle by my colleague across the aisle. His proposed approach is to amend two long-standing anti-avoidance rules in the Income Tax Act. Those two measures have been in the Canadian tax code for a long time.

I am so pleased to be here this evening to discuss the repercussions that these fiscal changes may have. We often talk about unexpected consequences. My colleague's principle is worthy, but we have to take a close look at the measures themselves and really understand the fiscal consequences this could have for the country. I am sure all members of the House will agree that the intention behind this bill is good, and I want to go on the record as saying that my colleague's intention is very good. There is no doubt about that. Many of us are from rural parts of Quebec and Canada. We understand how things are for our farmers and entrepreneurs. I represent Shawinigan, which is, in a way, the beating heart of entrepreneurship in Quebec. We know all about entrepreneurship. We all come from places where small businesses can prosper, and we all want a fair tax system for all Canadians.

However, when weighing the merits of this bill, it is important to consider all the potential consequences of passing it. We must not lose sight of the fact that the tax rules that Bill C-274 proposes to amend exist for a reason, and that is to prevent people from engaging in inappropriate tax avoidance in Canada. Let us be clear about what Bill C-274 is proposing, and that is to soften the rules designed to prevent tax avoidance in Canada.

Let me explain. The proposed changes would dilute the anti-avoidance rules in sections 55 and 84.1 of the Income Tax Act. To help my colleagues fully understand what that means, let us first look at section 55 of the Income Tax Act. As currently worded, section 55 of the act applies to corporations that seek to inappropriately reduce capital gains by paying tax-free dividends between corporations. In short, the anti-avoidance rules consider such dividends to be a capital gain.

Two exemptions to the anti-avoidance rule authorize business restructuring by allowing company shareholders to split company shares between them, while deferring taxes. When those exemptions apply, any dividend paid between companies in the context of restructuring is not considered a capital gain.

The first exemption applies to the restructuring of related corporations, and the second applies to all corporate restructurings. Bill C-274 would broaden that first exemption, which we can call the related corporations exemption, so that it applies to brothers and sisters.

Spouses, as well as parents and their children, are eligible for this exemption because it is presumed that they have shared economic interests. However, brothers and sisters are considered to have separate and independent economic interests and are therefore not eligible for the related corporations exemption. That is consistent with other tax rules. For example, a family farm or fishing corporation cannot be transferred among brothers and sisters on a tax-deferred basis.

That being said, although brothers and sisters cannot restructure their participation in a corporation on a tax-deferred basis under the related corporations exemption, they can do it under the second exemption I mentioned earlier, which applies to all corporate restructuring. It is called the “butterfly exemption”.

Now the question is why siblings and their companies would want to have access to the first exemption if they can already achieve the same thing through the second exemption. The answer is that the conditions are less rigorous under the first exemption. The conditions are less rigorous because the companies are linked and are considered part of the same economic group at the time of restructuring. As a result, assets can be transferred on a tax deferred basis within a group of related companies regardless of the composition of assets.

Under the second exemption, known as the “butterfly exemption”, one condition requires a proportional distribution of the various types of assets transferred. The goal of this condition is to prevent tax avoidance.

By way of illustration, I would return to the example my colleague used of three siblings who each own one-third of a family farm corporation. Those siblings could reorganize the company's assets by transferring, on a tax deferred basis, those assets to their individual farm corporations by transferring their proportionate share of each type of asset from the family farm corporation.

There are fewer tax avoidance opportunities under the butterfly exemption because of the requirement that each of the brothers’ and sisters’ corporations must receive its proportional share of the assets of the corporation being restructured. If the proposed amendment to section 55 were passed, as my colleague suggests, the siblings could undertake a business restructuring in which the dividends paid between their corporations would not be treated as capital gains. The consequence of that would be to create new opportunities for tax avoidance in Canada.

I would also like to point out that Bill C-15, which received royal assent in June 2016, included an amendment that tightened the anti-avoidance rule set out in section 55, a rule that Bill C-274 would loosen. Consequently, if Bill C-274 were passed into law, we would be sending a message that conflicts with what Parliament recently decided concerning this particular provision.

I would now like to say a few words about the other anti-avoidance rule that Bill C-274 would loosen, the rule set out in section 84.1 of the Income Tax Act. This anti-avoidance rule may apply when an individual sells shares of one corporation to another corporation that is related to the individual.

For example, an individual might sell shares to a corporation owned by his child or grandchild. In such a case, the proceeds of the sale received by the seller may be considered, in certain circumstances, to be a taxable dividend instead of a capital gain, which is taxed at a lower rate or even exempt from tax if the lifetime capital gains exemption is available to the individual.

Bill C-274 would limit the application of the anti-avoidance rule by excluding the sale of shares of a corporation owned by an individual to corporations controlled by his children and grandchildren. However, that would facilitate the conversion of dividends into capital gains that are taxed at a lower rate or tax exempt. Such conversions of corporate dividends into capital gains taxed at a lower rate could be made as often as the managing owner wants to extract the corporation’s surpluses with tax deferral.

Significant tax planning would occur if Bill C-274 were passed. For example, a high-income shareholder could reduce his income tax by $17,500 for each $100,000 in business profits.

Another important point to consider is the fact that nothing is stopping a parent from selling shares of his family corporation directly to his child or grandchild and claiming the lifetime capital gains exemption on the capital gains arising from the transaction.

In closing, I think that the most important thing to say today is that nothing in Canada’s Income Tax Act prevents corporate transfers. My colleague’s proposal would create opportunities for tax avoidance.

The government listened to Canadians, and then it pledged to do everything in its power to make tax fairness a reality in Canada.

[Pierre LeBlanc]

On your first question, as you say, in the fall economic statement we reported that the cost of indexing in the 2020-21 fiscal year would be $505 million, and in the 2021-22 fiscal year it would be $1.2 billion.

On your second question, the government didn't make the decision until after the first budget implementation act, Bill C-15, was tabled in Parliament. That's why it's in the second budget implementation act.

Budget Implementation Act, 2016, No. 2

[Marwan Tabbara, Liberal, Kitchener South—Hespeler, ON]

Mr. Speaker, I just want to take a moment to say thanks to all the Olympic athletes and Paralympic athletes who were here today. It was quite an honour to see that. For 15 minutes, the whole House kept applauding. It was great to have had them represent us in Rio the way they did. I want to give a special shout-out to Olympic boxer Mandy Bujold and Paralympic swimmer Alexander Elliot, who live in my riding of Kitchener South—Hespeler.

During last year's election campaign, I spoke confidently to the residents of my riding of Kitchener South—Hespeler about our plan to grow the middle class and revitalize the Canadian economy by doing three things.

First, I talked about our plan to reduce income taxes on the middle class and those aspiring to join the middle class. Lowering taxes means leaving more money in the pockets of those who need it most and having more money to spend on goods and services in our economy.

Second, I explained our plan to implement a tax-free, means-tested Canada child benefit to replace the patchwork of existing programs. The Canada child benefit will assist families with the high cost of raising their children.

Third, I talked about our plan to borrow at current historically low interest rates to make very large investments in both physical and social infrastructure.

As I spoke to people, I stressed that these programs would not only help individual families that were struggling after years of stagnant growth but would grow our economy, generate economic activity, and create jobs by way of what economists call the multiplier effect.

As I spoke with people at the door, I did so with confidence, because I believed that our plan offered immediate help to those who needed it most. It set an ambitious long-term approach for growth by strengthening the heart of Canada's consumer-driven economy, the middle class.

A strong economy starts with a strong middle class. When middle-class Canadians have more money to save, invest, and grow the economy, everyone benefits. A strengthened middle class means that hard-working Canadians can look forward to a good standard of living and better prospects for their children. When we have an economy that works for the middle class, we have a country that works for everyone.

Judging from the reaction I got from people throughout my riding, the message I was delivering resonated with voters. The results of the election speak for themselves. Our message of hope caused voters across the country to raise us from a distant third place in this House to a majority government. On election night, Canadians saw the merit in our plan, and Canadians chose a plan to invest in our future for generations to come.

Our plan increased again, when legislation to reduce personal income tax rates, as promised, was introduced by this government last December as the second piece of legislation proposed in Bill C-2.

The hon. Minister of Finance tabled the government's budget in Parliament on March 22 this year. A budget is more than a mere forecast of expenditures and revenues. A budget is a financial strategy to fulfill what a government sets as its mission. A budget is a comprehensive plan of action designed to achieve the policy objectives of the government. A budget is a financial blueprint for action. A budget will remain only a blueprint unless there are the workers, materials, coordination, skills, and activities necessary to construct it.

Real change will remain only a vision unless there is legislation to implement the budget that flows from that vision. Following quickly on the heels of the budget, Bill C-15 was the first legislation introduced by the government in April. It was the first budget implementation bill. It turned the second major promise I made to the constituents of Kitchener South—Hespeler, as I went door to door during the election, into a reality.

Bill C-15 brought in the Canada child benefit. Simpler, tax-free, and more generous, the Canada child benefit replaced existing child benefits. Bill C-15 passed quickly through this House and the Senate and received royal assent in the third week of June.

Immediately afterwards, in July, the Canada child benefit payments started flowing to families to fulfill their financial responsibilities in raising the next generation of Canadians.

The Canada child benefit is a social program of unprecedented generosity. Since July 1 this year, families can receive up to $6,400 per year for each child under six and $5,400 for each child aged six to 17. Nine out of 10 families are better off. They are receiving higher monthly benefits, and hundreds of thousands of children will be raised out of poverty.

This government has taken a long-term approach to helping families, who will be able to count on extra help now and for years to come. When Canadians look towards the future and think about planning, they know that the Canada child benefit will be there to help fulfill their financial responsibilities.

Today before the House is Bill C-29. It is the second of two pieces of legislation intended to implement the budget tabled in the House in March. Bill C-29 is the second act to implement this year's budget. It contains a number of consequential housekeeping amendments to various acts, such as the Employment Insurance Act, the Canada Education Savings Act, and the Canada Disability Savings Act, to replace references to “child tax benefit”.

However, for most Canadian families, the most important part of Bill C-29 is the introduction, as promised, of indexation of the Canada child benefit. Bill C-29 would implement the budget by indexing to inflation the maximum benefit amounts and the phase-out threshold under the Canada child benefit, beginning in the 2021 benefit year. This means that the benefits will increase if prices increase, and thus the purchasing power of the benefit will remain the same after 2020.

I would now like to turn to a couple of articles.

The first article is from The Economist, which said, “Canada is in a better position than almost any other rich country to take advantage of low rates”.

With the historically low interest rates, this is the time to invest in Canadians, in our future, and in the young generation to take advantage of these low interest rates.

The second article I want to refer to is from CBC News:

The IMF head [Christine Lagarde] said economic growth has been “too slow for too long” and the IMF advocates a “three-pronged approach” from governments trying to kick-start the global economy.

She said the [Liberal] government is following that approach with monetary, financial and structural reforms that will mobilize the resources of the state to increase growth.

For those reasons, I would therefore encourage all members of this House to support Bill C-29.