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

[Judy Sgro, Liberal, Humber River—Black Creek, ON]

Madam Speaker, I certainly did not appear to be attacking him. He was just so rambunctious in his presentation of incorrect information, I was simply attempting to ensure he had the right information.

No document was produced by the government or elsewhere that showed the OAS at age 65 was not sustainable. In fact, it was exactly the opposite. The budget officer, who we all work with on all sides of the House, said that old age security for seniors was completely sustainable. There was no reason to be concerned about that part of it at all.

Anyone who has family or seniors who have worked in the construction industry, or mining, or maybe housework, realizes how difficult it is and how the body gets worn down. The idea of being able to work to age 67, alleluia for those who can. However, there are thousands of Canadians who cannot.

On the CPP file, it is about ensuring that the people who are behind us have a better future. By contributing a small increase every day and every month by the government or the employer and the individual, those Canadians will have a much better retirement.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

Madam Speaker, some people in this place may not know that I love to cycle. One of the things I have been very happy to see is investments in active transportation. It is one of my main modes of transportation around the city. I have seen investments in bike share, bike trails, bike safety, and other forms of active transportation. I recently went on a ride with Bells on Danforth and Cycle Toronto in my community and saw how important it was there.

How is my colleague seeing the impact of investment in public transit infrastructure and in infrastructure in her community?

[Judy Sgro, Liberal, Humber River—Black Creek, ON]

Madam Speaker, due to our investments, we will have light rail transit going right through the community in my riding. That very much will help people who have to get from the subway to get home. Transit is extremely important and our government is finally investing millions and millions of dollars to ensure that people can get from point A to point B in a safe, secure way.

However, then there is the issue of the carbon tax, about which people continue to throw around and banter. That money will go back to the provinces and be invested in transit or in the people who live in the province of Ontario.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Madam Speaker, I have been in the House most of the day and have had a chance to hear the remarks of the members on both sides of the House.

One thing is crystal clear: this government has made decisions in its budget to create an annualized deficit, which is what it promised during the election campaign, specifically, a $10-billion deficit a year for about three years. Scotiabank issued a statement today, on top of all the others it has issued over the past few weeks, to inform Canadians that the deficit will not be $10 billion, as it had previously announced, but rather somewhere between $32 billion and $35 billion. That is three times higher than planned. In just one year, the Liberals will have created the deficit that was supposed to be spread over the next three years.

The government tells Canadians that it is going to invest, say yes to everyone, and hand out money like candy. However, at some point, someone has to pay for all this.

The difference between the Liberals and the Conservatives is that we managed to make many significant investments, in infrastructure among other things, without running a deficit.

During the election campaign, the Liberals said they would run small deficits of $10 billion. This is year one and we already have the deficit that was projected for year three or four. The fundamental problem with all this is that there is no plan to return to a balanced budget. I have heard that a number of times here today. No government member has talked about returning to balanced budgets. None of them have.

Later I will ask how it is that these members and this political party can run a deficit with no light at the end of the tunnel, because there is nothing to indicate an eventual return to balanced budgets. I am sure that my colleagues will continue to ask the same question tomorrow. This is an extremely dangerous road we are going down.

I heard my colleague across the way say that the government was giving an extra $900 to seniors. When the government says that it is going to hand out money left and right, the problem is that it gives with one hand from its own pocket and takes with both hands from the taxpayer's pocket. The carbon tax is a good example. It is a $2,500 tax. The government is giving $900 with one hand and taking $2,500 with the other.

[The Assistant Deputy Speaker, Carol Hughes]

I would like to inform the member that he will have seven minutes remaining when this matter returns before the House.

The House resumed from October 31 consideration of the motion that Bill C-29, A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures, be read the second time and referred to a committee, and of the amendment.

[The Speaker, Geoff Regan]

The hon. member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup has seven minutes to finish his speech.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I will continue the speech I started late yesterday evening.

I feel it is important for me to rise in the House today to speak to Bill C-29, which implements the measures announced in the budget presented back in March.

This budget was supposed to have a deficit of about $10 billion, but that figure is not even close to reality. The Liberal government is therefore not keeping the promises it made during the election, because it said that it would run deficits of about $10 billion a year for three years. In just the first year, it will run a deficit of $30 billion or more. The amount will probably be announced this afternoon in the government's economic statement. Not only is the government adding to the Canadian debt and placing the burden on future generations, but it is also failing to meet its commitments. More importantly, the desired results are not being achieved. Economic growth is weak at this time. Job creation targets are not being met. We have heard that the shortfall in terms of the job creation target and the actual number of jobs created is 50,000.

The economy has ground to a halt, despite the government's budgetary measures. The government spent and then spent some more. The Bank of Canada, economists at the IMF, and the OECD have all downgraded their economic forecasts for Canada for the next two years.

The current unemployment rate is 7% and has remained unchanged since the Liberals came to power. The parliamentary budget officer's report entitled “Labour Market Assessment 2016” indicates that 6,000 net jobs were lost over the past year. The government projected that 43,000 jobs would be created during that same period. That is a shortfall of 50,000 jobs, which is just terrible because we are here to create jobs. The government is spending money with no job creation to show for it.

The government should have immediately realized and admitted that it was and is going down the wrong path and changed tack. There is nothing wrong with recognizing one's mistakes and correcting them. There has been no indication so far that the government is going to fix its mistakes.

The government thought it could authorize the deficit with the stroke of a pen, but it has to answer to the opposition. The economic situation speaks for itself. It seems like the government cannot balance the budget. What I said yesterday during my three-minute speech is that the government thinks that budgets balance themselves. Anyone who manages a budget, whether it is a family budget or a business budget, knows full well that budgets do not balance themselves. There needs to be a plan to return to balanced budgets. Yesterday, not a single member was able to project a balanced budget in any way. The government seems to think that wishful thinking will balance the budget, but that is just not so.

I am still an entrepreneur. I am the co-owner of a business that employs 25 people. One thing I know for sure is that the government plans to impose new taxes. It has said as much. It also broke its promise to lower the small business tax rate from 11% to 9%. This would have helped businesses innovate and invest in new equipment to improve productivity.

I understand very well what that means because in the last few years that the Conservative government was in power, there were many tax cuts. This made it possible for us to continue to invest more and to create jobs. That is the complete opposite of what the government said it would do and, unfortunately, it did not follow through. In fact, it made an election promise to lower the small business tax rate from 11% to 9%, which it has broken.

That is making things difficult for businesses and it is really detrimental to job creation. The government increases taxes and does not lower the business tax. In a sense, that is tantamount to double taxation.

Then there is the carbon tax. This tax will be devastating for job creation not just for me, as an entrepreneur, but for all Canadians. On top of that, we have the mandatory increase in CPP contributions to look forward to.

This will have a negative impact on SME start-ups like mine. Actually, my business is not all that new. It is 25 years old. That being said, all of Canada's SMEs will have to pay higher CPP premiums for all of their workers and they will feel the effects. For me, this measure will mean that I will have to pay $1,000 a year per employee, for a total of about $25,000 a year. That represents most of one of my employee's salary. It is perhaps a little less but it is around there. That means that I might have to cut jobs. Given that SMEs are the backbone of the Canadian economy, imagine what will happen if they are all in the same situation as me.

I may be unable to absorb the cost of the CPP hike from my business profits, and I might eventually have to cut jobs. If all of Canada's SMEs have the same reaction, there are going to be job losses. Some economists already think that at least a hundred thousand jobs will be lost. What is worse is that the benefits of the CPP hike will not even be felt for 30 or 40 years.

This is a major problem for SMEs, and businesses are very concerned to see all these taxes adding up.

I would like to come back to the carbon tax. Businesses will not be the only ones affected. All Canadians will be. The cost of the carbon tax that companies have to pay will inevitably be passed on to consumers. The price of all consumer goods, including gas, will go up so that businesses can continue to offer the same products.

Many of the measures that the Liberals have put in place are contradictory, and unfortunately, Canadians will be the ones who pay the price.

[Joël Lightbound, Liberal, Louis-Hébert, QC]

Madam Speaker, I would like to thank my colleague for his speech, which was very interesting.

He mentioned the International Monetary Fund in his speech. What would he say to Christine Lagarde, head of the International Monetary Fund, who said that Canada's approach, which is about investing in infrastructure when interest rates are low and the economy is in a slowdown, should go viral.

I have a second question for him. He talked about the previous government's corporate tax cuts. We now know that Canadian companies are sitting on $630 billion in dead money that is not being reinvested.

Does the member think there should be a tax cut across the board or more targeted tax credits for things like innovation and hiring?

I would like to hear what the member has to say about that.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Madam Speaker, I thank my colleague for those good questions.

Ms. Lagarde does not live in Canada, so she does not have to pay the taxes that we Canadians have to pay plus the new taxes that are on the way. I believe Canada was also held up as a model of very sound management during our nine years in power. Our very meticulous plan enabled us to balance the budget while making massive infrastructure investments.

I would like to remind my colleague that, unlike the current Liberal government, we had a plan to balance the budget. They are spending like crazy and saying yes to everyone. The fact is, sooner or later, we will need a plan to balance the budget, and I am not sure my colleague will still be in his seat when the time comes to implement that plan.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Madam Speaker, I have questions for my colleague related to the carbon tax.

Has the member conducted any studies on the real risks and threats to our economy associated with climate change and the absence of any measures to counter those risks?

British Columbia's carbon tax has not had any negative impact on its economy. In fact, the carbon tax has had no negative repercussions whatsoever on British Columbia's economy. A carbon tax has been in place there for 10 years, and its economy has performed better than that of many other Canadian provinces.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Madam Speaker, I thank my colleague for her question.

To the best of my knowledge, carbon emissions in British Columbia have not necessarily gone down in recent years. Our government committed to reducing emissions with very clear targets. For years, environmental organizations all over the world regarded us as a laughingstock on environmental issues. The reality is, the current government adopted exactly the same targets as the ones we had set.

British Columbia supports putting additional pressure on all Canadian businesses to meet the targets that we ourselves had set.

[Alice Wong, Conservative, Richmond Centre, BC]

Madam Speaker, I would like to ask my colleague one very simple question. Entrepreneurs across the nation have already told us that this increase in the CPP premium, and everything else, including the carbon tax, will kill their jobs. They will stop hiring people and put those responsibilities onto existing staff. Would my colleague comment on that?

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Madam Speaker, I thank my colleague for her excellent question.

I have already mentioned a number of times that I am a businessman. Business people have decisions to make. Sometimes, when their business' very survival is at stake, they are forced to make extremely difficult decisions. When more and more taxes are piled on, there comes a point when they just cannot pay them anymore. The first thing they have to do, in the majority of cases, is not sell their equipment or buildings, but cut their staff. That is how they can reduce their expenses.

I would like to again thank my colleague for her question because it is very important to talk about Canada's economic development.

[Raj Grewal, Liberal, Brampton East, ON]

Madam Speaker, it is an honour to rise today to speak to Bill C-29, an act to amend certain provisions of the budget tabled in Parliament on March 22, 2016.

I was elected to the House just over a year ago with all of my colleagues with the purpose of speaking up and advocating for the priorities of our local constituents. For me, they happen to be the wonderful people of Brampton East. My constituents are varied, ranging from young families trying to join or stay in the middle class to students and young Canadians entering the workforce, parents whose kids are growing up and leaving home, people planning for retirement, and seniors who too often worry about their finances.

In the last year we have taken monumental steps toward real change for all of these groups. We have cut taxes for close to nine million Canadians, introduced the Canada child benefit, increased student grants for low and middle-income families, and increased monthly payments for seniors. We are ensuring that Canadians today and tomorrow will be able to live comfortably and confidently. We need to build on this momentum.

As a member of the Standing Committee on Finance, I have had the opportunity to go through two pre-budget consultations. The first was in February, which gathered 92 witnesses in Ottawa, whom we heard from for over four days. These witnesses included individuals, NGOs, first nations advocates, and other valued groups. We also received 172 submissions online from individuals and groups. The responses we received varied in topic. The committee concluded its work with a report that offered 56 recommendations, many of which were included in the budget and this second implementation act.

We were elected one year ago on an ambitious new plan for a strong middle class and promised that we would do all that we could to help every Canadian succeed. Budget 2016 is an important part of fulfilling that promise. It offers immediate help to those who need it and it lays out the groundwork for sustained and inclusive economic growth that will benefit Canada's middle class and those working hard to join it.

Over the summer I knocked on doors every Tuesday throughout August with a team of volunteers. This allowed me to check in with the wonderful residents of Brampton East about their priorities for their families, their community, and future generations. This legislation would help those very same people we meet each day at the door, at our office, and at local events.

This second budget implementation act proposes items that would complete the implementation of outstanding measures from the Government of Canada's first budget, “Growing the Middle Class”. This legislation contains significant changes for seniors, improvements to protect Canadian consumers, tax fairness for Canadians, and last but not least, help for low and middle-income families with children.

The Canadian Association of Retired Persons estimates that roughly 600,000 seniors are living in poverty in Canada. This is far too many. Canadians would be shocked by that number. These seniors are our parents, our neighbours, our relatives, and our friends. For this reason, the government has made significant new investments to support seniors in their retirement years. Increased benefits will ensure that Canadian seniors have a dignified, comfortable, and secure retirement.

In Bill C-29 we are ensuring that Canadians would be protected financially by strengthening and modernizing the financial consumer protection framework in our country. Canadian families weathered the 2008 financial crisis fairly well because of our strong financial sector. We will build on this strength by ensuring that our financial structure is able to adapt to new trends, incorporate emerging financial innovations and technologies, and challenge existing business models, and more.

The bill would also modernize the financial consumer protection framework by clarifying and enhancing consumer protection. It would do so through amendments to the Bank Act to enhance consumer protection in the areas of access to banking services, business practices, disclosures, complaints handling, as well as corporate governance and accountability.

Of great importance to me is that this legislation is about fairness, one of Canada's fundamental values.

The bill ensures that the government has a plan to combat international tax evasion and aggressive tax avoidance through new measures, while building on efforts that are currently being made both here in Canada and abroad. This work will help protect all Canadians and ensure that everyone pays their fair share. Canada has the lowest debt to GDP ratio of any G7 country and interest rates are at historic lows. Now is the ideal time for Canada to invest in its future.

Last but not least, the bill ensures that Canadian families will have a little more help with the high cost of raising children through the new Canada child benefit. Simpler, tax-free, and more generous than the existing federal child benefits it will replace, the Canada child benefit will give nine out of 10 Canadian families higher monthly payments and will lift hundreds of thousands of children out of poverty. This benefit will be indexed starting in 2020. We listened to the passionate advocates who said that the CCB must be indexed to inflation. As a result, supporting this budget implementation bill will help ensure that the Canada child benefit will be indexed to inflation so that families can count on the extra assistance, not just today but for years to come.

To conclude, the bill continues to deliver on this government's plan to ensure that Canadians are well served and that more Canadians will be able to join the middle class. With these investments and inspired by a sense of fairness, we are ensuring that Canada's best days lie ahead. I look forward to supporting the bill and I urge all my hon. colleagues to do the same.