Bill C-29 (Historical)

Budget Implementation Act, 2016, No. 2

A second 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 eligible capital property rules and introducing a new class of depreciable property;
(b) introducing rules to prevent the avoidance of the shareholder loan rules using back-to-back arrangements;
(c) excluding derivatives from the application of the inventory valuation rules;
(d) ensuring that the return on a linked note retains the same character whether it is earned at maturity or reflected in a secondary market sale;
(e) clarifying the tax treatment of emissions allowances and eliminating the double taxation of certain free emissions allowances;
(f) introducing rules so that any accrued foreign exchange gains on a foreign currency debt will be realized when the debt becomes a parked obligation;
(g) ensuring that amounts are not inappropriately received tax-free by a policyholder as a result of a disposition of an interest in a life insurance policy;
(h) preventing the misuse of an exception in the anti-avoidance rules in the Income Tax Act for cross-border surplus-stripping transactions;
(i) indexing to inflation the maximum benefit amounts and the phase-out thresholds under the Canada child benefit, beginning in the 2020–21 benefit year;
(j) amending the anti-avoidance rules in the Income Tax Act that prevent the multiplication of access to the small business deduction and the avoidance of the business limit and the taxable capital limit;
(k) ensuring that an exchange of shares of a mutual fund corporation or investment corporation that results in the investor switching between funds will be considered for tax purposes to be a disposition at fair market value;
(l) implementing the country-by-country reporting standards recommended by the Organisation for Economic Co-operation and Development;
(m) clarifying the application of anti-avoidance rules in the Income Tax Act for back-to-back loans to multiple intermediary structures and character substitution; and
(n) introducing rules to prevent the avoidance of withholding tax on rents, royalties and similar payments using back-to-back arrangements.
Part 1 implements other income tax measures confirmed in the March 22, 2016 budget by
(a) allowing greater flexibility for recognizing charitable donations made by an individual’s former graduated rate estate;
(b) clarifying what types of investment funds are excluded from the loss restriction event rules that otherwise limit a trust’s use of certain tax attributes;
(c) ensuring that income arising in certain trusts on the death of the trust’s primary beneficiary is taxed in the trust and not in the hands of that beneficiary, subject to a joint election for certain testamentary trusts to report the income in that beneficiary’s final tax return;
(d) clarifying that the Canada Revenue Agency and the courts may increase or adjust an amount included in an assessment that is under objection or appeal at any time, provided the total amount of the assessment does not increase; and
(e) implementing the common reporting standard recommended by the Organisation for Economic Co-operation and Development for the automatic exchange of financial account information between tax authorities.
Part 1 also amends the Employment Insurance Act and various regulations to replace the term “child tax benefit” with “Canada child benefit”.
Part 2 implements certain goods and services tax and harmonized sales tax (GST/HST) measures proposed or confirmed in the March 22, 2016 budget by
(a) adding certain exported call centre services to the list of GST/HST zero-rated exports;
(b) strengthening the test for determining whether two corporations, or a partnership and a corporation, can be considered closely related;
(c) ensuring that the application of the GST/HST is unaffected by income tax amendments that convert eligible capital property into a new class of depreciable property; and
(d) clarifying that the Canada Revenue Agency and the courts may increase or adjust an amount included in an assessment that is under objection or appeal at any time, provided the total amount of the assessment does not increase.
Part 3 implements an excise measure confirmed in the March 22, 2016 budget by clarifying that the Canada Revenue Agency and the courts may increase or adjust an amount included in an assessment that is under objection or appeal at any time, provided the total amount of the assessment does not increase.
Division 1 of Part 4 amends the Employment Insurance Act to specify what does not constitute suitable employment for the purposes of certain provisions of the Act.
Division 2 of Part 4 amends the Old Age Security Act to provide that, in the case of low-income couples who have to live apart for reasons not attributable to either of them, the amount of the allowance is to be based on the income of the allowance recipient only.
Division 3 of Part 4 amends the Canada Education Savings Act to replace the term “child tax benefit” with “Canada child benefit”. It also amends that Act to change the manner in which the eligibility for the Canada Learning Bond is established, including by eliminating the national child benefit supplement as an eligibility criterion and by adding an eligibility formula based on income and number of children.
Division 4 of Part 4 amends the Canada Disability Savings Act to replace the term “child tax benefit” with “Canada child benefit”. It also amends the definition “phase-out income”.
Division 5 of Part 4 amends the Royal Canadian Mint Act to enable the Royal Canadian Mint to anticipate profit with respect to the provision of goods or services, to clarify the powers of the Royal Canadian Mint, to confirm the current and legal tender status of all non-circulation $350 coins dated between 1999 and 2006 and to remove the requirement that the directors of the Royal Canadian Mint have experience in respect of metal fabrication or production, industrial relations or a related field.
Division 6 of Part 4 amends the Financial Administration Act, the Bank of Canada Act and the Canada Mortgage and Housing Corporation Act to clarify certain powers of the Minister of Finance in relation to the sound and efficient management of federal funds and the operation of Crown corporations. It amends the Financial Administration Act to provide that the Minister of Finance may lend, by way of auction, excess funds out of the Consolidated Revenue Fund and, with the authorization of the Governor in Council, may enter into contracts and agreements of a financial nature for the purpose of managing risks related to the financial position of the Government of Canada. It also amends the Bank of Canada Act to provide that the Minister of Finance may delegate to the Bank of Canada the management of the lending of money to agent corporations. Finally, it amends the Canada Mortgage and Housing Corporation Act to provide that the Bank of Canada may act as a custodian of the financial assets of the Canada Mortgage and Housing Corporation.

Budget Implementation Act, 2016, No. 2

[Anthony Housefather, Liberal, Mount Royal, QC]

Madam Speaker, I would like to thank my colleague from Oshawa for his kind remarks at the beginning of his statement.

Former prime minister Mulroney is a fine man. I have had the pleasure of meeting him on many occasions, and while I disagree with his comments in this case, I think he also has a very open mind to look at things in a fair-minded way. We all have to do that.

I disagree. The budget is actually putting forward measures that would enhance Canada's innovation and would ensure that Canada is able to compete on worldwide basis. I also agree with my colleague that we need to look at each and every measure. We need to ensure we are on a level playing field. We cannot go to either extreme.

Government has a role and so does private industry. We have to work together to make them thrive. Therefore, while we may disagree on this point and on carbon pricing, on the whole, we agree in principle that government has a role in the economy, but so do other parts of the economy, including, very importantly, private business.

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

Madam Speaker, obviously, I am in favour of the Canada child benefit, but under the bill before us, the benefit will not be indexed for four years. That does not create the new day care spaces we need. I was looking at how much it costs to put a child in day care. It can cost from $35 to $73 an hour. This benefit, which is not even indexed, will pay only a fraction of the cost of day care.

In addition to the Canada child benefit, why does the government not also create, as we suggested, day care spaces and affordable day cares that cost $15 a day to help women return to the labour market after having a baby?

[Anthony Housefather, Liberal, Mount Royal, QC]

Madam Speaker, I thank my colleague from Hochelaga for her question. I really appreciate it.

The family allowance is a very important measure that this government put in place. I am very proud of the fact that we are now sending money to those who need it most. We are going to lift thousands of Canadian children out of poverty.

During the election campaign, the NDP was the one that had a day care plan. The Liberal Party had no such plan. We said that we would rather give that money to the parents of the children and that is what we are doing with the family allowance.

I appreciate my hon. colleague's question.

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

Madam Speaker, I would like to thank my hon. colleague for his wonderful speech. I would suggest that he is a rising star in the House.

The Canada child benefit, the income tested tax-free child benefit, was a promise that effectively became our biggest strength during the campaign. In my riding we have young people who for the first time are involved in sports, in the arts and culture, and dance lessons. This is an incredible policy. Are you seeing the positive effects that I am seeing in your riding, such as food bank usage going down and things like that?

[The Assistant Deputy Speaker, Carol Hughes]

I am not sure if I am seeing the positive effect in his riding, but the member needs to address the question to the Chair.

The hon. member for Mount Royal, please.

[Anthony Housefather, Liberal, Mount Royal, QC]

Madam Speaker, I would love to bring you to my riding to show you the positive effects that my colleague from Dartmouth—Cole Harbour speaks of.

Yes, in the poorer sections of my riding where there are many people who really need government help, I have seen more kids involved in those types of programs. I want to thank him for his incredibly kind comments and let me return the favour by saying the same about him.

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

Madam Speaker, I would first like to thank my colleague opposite for mentioning the sometimes non-partisan work done by both sides of the House. The opposition's role is to acknowledge the government when it does something right. Unfortunately, the opportunity does not present itself very often. However, the government gives us ample opportunity to criticize it for not doing things right. Our job is to make Canadians aware of the government's mistakes, oversights and broken election promises.

We will always gladly collaborate at committee or through parliamentary associations to move issues forward, but sometimes, and people need to understand this, the role of the opposition is to look for things that might be wrong. This role is easier to play when the government gives us a lot of material, like the current Liberal government. Still, I wanted to acknowledge my colleague and his presentation, in which he mentioned the non-partisan work we do in this House.

I would also like to thank our new finance critic, the member for Louis-Saint-Laurent, who has done a great job since his appointment. To be put in charge of a file like a budget implementation bill and have to study it and give a speech on it with only a few days' notice is no easy task.

Bill C-29 implements the Liberal government's first budget. Honestly, I think our colleague has done a great job pointing out the inconsistencies in Bill C-29 and, therefore, the inconsistencies in the Liberal government's first budget.

Usually, we expect a bill to implement a newly elected government's first budget to include the new government's plan, the plan promised by the Liberals to Canadians during the last election campaign. After careful consideration of the budget and Bill C-29 which we are discussing today, I find that, instead, Parliament is faced with a glaring example of Liberal void.

I would like to go back in time a little bit. Since the Liberals came into power, the legislative agenda is the lightest it has been in two decades. I can quote one of my colleagues who did some research with the help of the Library of Parliament:

The first few months of Prime Minister Justin Trudeau's government have been the least productive of any government in over two decades...

I am not making this up. The Library of Parliament looked into the matter.

Ten bills have been passed by Parliament during the first nine months of Mr. Trudeau's tenure. By comparison, the Conservatives passed 18 pieces of legislation, nine of which were passed in their first 23 days. These statistics, which were provided by the hon. member for Durham, speak volumes.

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

Madam Speaker, pardon me for interrupting the debate, but the Prime Minister's name has been said twice now. I would like to remind my colleague that members' names are not to be used in the House.

[The Assistant Deputy Speaker, Carol Hughes]

I did not hear it, but if the member said the Prime Minister's name or that of any other member of the House, he should take note that names are not to be used.

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

Thank you, Madam Speaker. I did use the Prime Minister's name, and I apologize. I got a little carried away in my fervour, but I will not let that happen again.

Still, I can talk about former prime ministers, including former Liberal prime minister Paul Martin. Internationally, he was seen as indecisive, but he found ways to pass more legislation as he tried to keep his struggling minority government afloat. During his first nine months in government, 36 bills became law.

How about another one? During Liberal prime minister Jean Chrétien's first nine months in office, 34 bills received royal assent in 1994, and 38 more were passed after the 1997 election. The current Prime Minister has managed to pass a mere 10 bills.

It is with that in mind that we begin our study of Bill C-29. This being a budget implementation bill, one would expect to find the government's promises in it. It should include massive infrastructure investments, a modest deficit, tax cuts for small businesses, home mail delivery, an agreement on diafiltered milk, a softwood lumber agreement, and plenty more. Unfortunately, none of those things are in Bill C-29.

No one could tell me where those promises came from. From the beginning, the opposition has been reminding everyone and repeating the same thing. I took the time to confirm everything and went back a year in time to see exactly what these infamous Liberal promises were. I found a lot. I do not understand why they have not introduced more legislation, considering all the promises the Liberal Party made during the last election campaign.

First of all, let us talk about modest deficits. On page 11 of the Liberal plan, or what I call the Liberal void, it states:

We will invest now in the projects our country needs and the people who can build them.

They do say “now”, and not in 10 years or five years. Page 12 continues:

We will run modest short-term deficits of less than $10 billion in each of the next two fiscal years to fund historic investments in infrastructure and our middle class.

After the next two fiscal years, the deficit will decline and our investment plan will return Canada to a balanced budget in 2019.

That is one promise the Liberal government has broken. There was another promise about modest deficits. It is worth reading. Page 73 states:

We will be honest about the government of Canada’s fiscal position, and base our projections on the recent report by the Parliamentary Budget Officer, instead of April’s outdated budget figures.

If the parliamentary budget officer is so important to the Liberals, why did they refuse, about 50 times, to allow the parliamentary budget officer's reports to be tabled right here, before parliamentarians?

Once again, they say one thing, but then do the exact opposite once they are in power. There is another interesting promise on the same page:

We will run modest deficits for three years so that we can invest in growth for the middle class and credibly offer a plan to balance the budget in 2019.

That is just one more promise the Liberals have broken.

To sum up deficits, I will quote someone who is not an opposition member. A TD Bank representative said:

The federal government’s deficit this fiscal year will be about $5 billion higher than Ottawa predicted in its March budget...

That is what the TD Bank is predicting. It blames the sluggish economy. According to TD Bank:

Over a five-year span, the cumulative deficit is likely to be $16.5 billion higher than forecasted in the last budget.

The forecast in the last budget was not $10 billion. It was not a modest deficit of $10 billion annually, but $30 billion annually. TD Bank tells us it will be even higher:

The higher-than-expected deficit will soak up the $6-billion annual cushion and then some that the government built in to its finances to protect against unforeseen events.

This could go beyond that even. The Liberals promised modest deficits, but I have to say that they did not keep their word.

As such, when it comes to budget implementation, the opposition parties feel quite reticent about trusting the other measures contained in Bill C-29.

Nonetheless, let us move on because there were other promises in the Liberal plan, or the “Liberal void” I should say. The plan says, “As we reduce the small business tax rate to 9 percent from 11 percent”. Not only did the government not reduce the small business tax rate to 9%, but it imposed a tax on carbon, which will greatly hinder small and medium-sized businesses in Canada. That is another broken promise.

With regard to agricultural producers, we find this little sentence on page 16: “We will help Canada’s agriculture sector be more innovative, safer, and stronger.” How will they help the agricultural sector be stronger? They will “defend Canadian interests during trade negotiations, including supply management.”

The diafiltered milk problem was an urgent issue and a solution had to be found. The solution was simple, but it lay in the hands of ministers. Unfortunately, despite the numerous promises of the Liberal government and the fact that producers from all over Quebec and Canada came right here, to Ottawa, to practically beg for action on diafiltered milk, there is not even a single measure in the budget on this subject. There we have another broken promise of the Liberal government.

In the softwood lumber file, a file that directly impacts every region of Canada that has trees, those magnificent works of nature that grow and enable us to develop our economy, we were supposed to conclude an agreement. We had one year to try to reach an agreement with the Americans. Unfortunately, Bill C-29 contains absolutely nothing on the possible implementation of a new softwood lumber agreement.

However, the Liberal platform says, “Canada’s economic success relies on strong trade relationships with our closest neighbours: the United States and Mexico.”

Furthermore, the next sentence is really worth quoting: “Unlike the Conservatives’ short-sighted approach, our focus on rebuilding relationships will build a solid foundation for greater trade, stronger growth, and more job creation.”

Here is one last little sentence: “To underscore the importance of the United States to Canada, we will also create a Cabinet committee to oversee and manage our relationship.”

We have no results on the two issues that concern the Americans, softwood lumber and diafiltered milk. Where is this committee? What is it doing? Does it exist? Unfortunately, I must once again say that this is another unkept promise by the Liberals.

I still have many pages of broken promises to mention. Let’s talk a bit about Canada Post. On page 34 of the “Liberal void”, we read: “By ending door-to-door mail delivery, Stephen Harper is asking Canadians to pay more for less service. That is unacceptable.”

One year later, absolutely nothing has changed on mail delivery. The decisions that were made by the Canada Post Corporation, an independent organization, are still the same, and home mail delivery has nowhere been restored. Once again, these are false pretexts and another promise not kept.

This is what they had to say about Iraq: “We will end Canada's combat mission in Iraq.” They withdrew our CF-18s and sent our soldiers to the front, where they are in even greater danger. We had decided to send our jets to protect Canadian soldiers. However, they decided to withdraw our planes, for strictly ideological reasons, and to send our soldiers to the front lines instead, to help the fighters there do their part. Yes, Canada must be involved, but could we have the facts? Could we be told exactly what we are doing in Iraq? This is another promise that was broken by the Liberal government.

Last week, here, in the House, I witnessed some things that impressed me. Some Liberal members introduced very interesting bills that were given the nod by cabinet.

The bill to provide a tax credit for first aid courses was of interest to me. Cabinet members voted against the bill introduced by one of their own members even though we find the following on page 30 of the Liberal platform:

We will make free votes in the House of Commons standard practice.

We will give Canadians a stronger voice in the House of Commons by limiting the circumstances in which Liberal Members of Parliament will be required to vote with Cabinet.

I am convinced that cabinet members did not read these lines because they voted against the bill of one of their own colleagues. It did not happen once or twice, but three times. It is important to mention that the promise to have free votes is, once again, a broken promise.

The Canada child benefit will not give rise to any new administrative costs. It replaces and is based on the structure and success of the Canada child tax benefit.

In Bill C-29, the Liberals confirmed that they are going to index the Canada child benefit to inflation as of January 2020. The parliamentary budget officer estimates that indexing the Canada child benefit will cost $42.5 billion over the next five years. The parliamentary secretary said that they are going to move forward with the measure despite the financial pressure it puts on the public purse. The government did not provide for this indexing in the budget. The parliamentary budget officer showed that it will cost billions of dollars more than predicted per year. Where will the Liberals find that money? The Liberals have shown us where they will get it from the outset. They will find it in Canadians' pockets.

When the Minister of Finance introduced Bill C-29, he spoke about the future. He said that the purpose of the bill was to help Canadians. He spoke about a long-term plan and how things will be tough in the short term. In fact, this is going to cost Canadians a lot of money in the short term.

Let us talk a little bit about the vision of the Minister of Finance. I was shocked to read his comments in the Edmonton Sun this weekend. The article spoke about the Minister of Finance and talked about what young people and not-so-young people would do with all the time they will save as a result of technology. As everyone knows, today's technology allows us to do a lot more than before in much less time. Back in the day, we thought that would give young people more leisure time. However, the reality is quite the opposite. The Minister of Finance was asked some questions. I will read a brief excerpt from what he said, but before I do, I would like to say that I think that all young people should take the time to read this article.

The other day, Finance Minister...told Millennials, the generation most-addicted to high technology and social media, that they had best get used to a series of dead-end jobs and continuous retraining, coupled with bouts of unemployment, and a life where job security is a pipe dream.

That is unbelievable. What kind of message is the government sending our young people?

He called it “job churn,” as in never-ending job losses and job searches, resume rejections, and living day-to-day....

The Liberal plan for youth is to teach them to get fired, get a new job, get fired, get a new job, and so on. Is that the Liberal job-creation plan? Every new hire-and-fire will count as a new job. That creates zero jobs and puts us no further ahead.

The article quoted the Minister of Finance. Is that supposed to make young people feel hopeful?

The Minister of Finance said this:

“We need to think about, How do we train and retrain people as they move from job to job to job?”.... “Because it’s going to happen. We have to accept that.”

No, we do not have to accept that. Our young people have the right to stable jobs. Our young people have the right to work. Like us, they have the right to have a career, to succeed, and to hope for something better than going from job to job to job. The Liberal hire-and-fire plan is not good enough for us.

The economic forecasts are dismal despite the Liberal government's fine promises. The Bank of Canada, the Bank of Montreal, and TD Bank all say that the economic situation has not improved under the Liberals despite their fine promises.

I will vote against Bill C-29, and I hope that parliamentarians will vote in favour of the amendment proposed by our finance critic, the member for Louis-Saint-Laurent. His amendment amends the motion considerably, making it significantly more acceptable to Canadian taxpayers.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Madam Speaker, I take exception to a number of things the member has said. I have often talked about a number of concerns. Conservative members give the impression that when they lost governance a number of months ago, there was an actual financial surplus. They are not going to fool Canadians. Canadians know the Liberal government inherited a deficit. When Stephen Harper became prime minister, the Conservative Party inherited a multi-billion dollar surplus and turned it into a deficit of over $150 billion.

The Liberal Party has taken Canada out of deficits and into surpluses. It has provided surpluses in the past to Conservative regimes that have blown those surpluses. Could the member explain to Canadians, or at the very least explain to the House, why he believes the government should take any advice with respect to surpluses from a Conservative Party that has never really delivered a surplus?

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

Madam Speaker, I recognize the talents of my colleague from Winnipeg North, who somehow managed to tiptoe his way around the fact that the parliamentary budget officer confirmed many times over the past year that the Conservatives left a surplus in the last fiscal year.

What I do not understand is why the government continues refusing to allow us to table the parliamentary budget officer's reports in the House, so that all Canadians can read them. The member needs to explain this rather puzzling decision.

How can the Conservatives be blamed for a surplus which the Liberals deny when these same Liberals prevent us from tabling unbiased proof from someone who is not affiliated with any party in the House of Commons?

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

Madam Speaker, I am not sure I understood correctly.

A Conservative member told the Liberals that they broke their promise to restore home mail delivery. If I remember correctly, during the previous Parliament, it was the Conservative government that made all those cuts and reductions to Canada Post's services.

Does this mean that the Conservatives now support restoring home mail delivery? If so, I say bravo.

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

Madam Speaker, I understand why my NDP colleague is a bit confused given all of the Liberals' broken promises. Eventually, it becomes difficult to know who said what and who promised what.

We never promised to bring back home mail delivery service. There is a simple reason for that. Canada Post is an independent corporation. The Conservatives did not decide to put an end to home mail delivery. It was Canada Post that made that decision.

However, the Liberal government promised to interfere in the management of Canada Post. How much is that going to cost Canadians?

[Kevin Sorenson, Conservative, Battle River—Crowfoot, AB]

Madam Speaker, new members of Parliament have come in as a result of the last election, and that member is one we are pleased with. I can assure his constituents that they are being well represented.

In regard to the Liberal question that was just posed, my colleague said that his government tried to table the facts. The truth of the matter is that last week the Liberal government tabled three big volumes called the Public Accounts of Canada. Those very documents show that we had a $1.9 billion surplus and that the books were balanced.

The Liberal member also mentioned how his party always brought forward balanced budgets under Paul Martin. Perhaps he could remind the House of how Paul Martin did that. He cut transfers in health care to the provinces. He cut back every transfer and balanced the budget on the back of provincial governments in all provinces.