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

[Colin Carrie, Conservative, Oshawa, ON]

Mr. Speaker, I absolutely do not object. I think innovation is the way to move forward. What I was talking about is the message the Liberal government is sending industry. I talked about the language, the ideology, and how the Liberals have changed even the way Canadians talk. I said that 20,000 manufacturing jobs are gone, and it is 39,000 in the oil, gas, and mining sector, an industry that creates jobs. A record number are now gone within a year.

I get upset when I hear colleagues talk about innovation. There will be nothing left to innovate if we do not start concentrating on Canada's strengths. It was our strength in our manufacturing and natural resources sectors that brought our country to the forefront in the world, yet the current government seems determined to shut it all down. In other words, there will be no industry left if the Liberals continue forward with the way they are addressing this issue.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Mr. Speaker, the member for Oshawa talked about competitiveness, and how the Liberal tax and regulation regime has resulted in fewer manufacturing jobs when our dollar being this low typically results in an increase in manufacturing jobs. On that same vein, I would like him to expand on what he thinks will happen if we introduce a carbon tax, which the government is forcing on the provinces and Canadians, when our biggest competitor to the south is a few days away from a presidential election, and neither Hillary Clinton nor Donald Trump has even said that they would act at all. They would not put a national carbon tax in place. Does the member think that will put us at a further economic disadvantage?

[Colin Carrie, Conservative, Oshawa, ON]

Mr. Speaker, I thank my colleague for his excellent question because this is really the important part of this debate. He noticed that it is not even a topic in the United States. This is what frustrates me about the Liberal government selling out Canada's advantage. We all know that Mr. Obama goes to the climate conferences and signs on. However, at the end of the day, he also knows that the U.S. will not put federal or state carbon taxes in place. The states we compete against, Michigan, New York, Ohio, and Tennessee, will not be putting a state carbon tax in place. Therefore, when looking at competitiveness, the Liberal government is tying the hands of our industry not only today but into the future. It is also basically putting a halt to any new investment into our communities with respect to anything that utilizes carbon.

My colleague is absolutely correct that this is decreasing our competitiveness. It is foolish that the Liberals would move ahead without being in lockstep with the United States, our biggest trading partner. It is something we have to push back on, because it will kill our economy and our jobs.

[Wayne Long, Liberal, Saint John—Rothesay, NB]

Mr. Speaker, I felt compelled to stand up when the member opposite talked about shell games, because his government played the ultimate shell game with Canadians by balancing its last budget using money from the rainy day fund: the EI surplus and the GM stocks. They threw those in. That was the ultimate shell game the Conservative government was playing with Canadians. Obviously the results, which happened last year, are well documented.

Under regressive policies and trickle-down economics, the manufacturing sector in Canada was ravaged over the past 10 years. Therefore, I would like the member to give examples of where the manufacturing sector excelled over the past 10 years in Canada.

[Colin Carrie, Conservative, Oshawa, ON]

Mr. Speaker, as for the first part of his question about the shell game, I hope the House recognizes what the member actually said, because at the end of the fiscal year, he may be eating some of those words. We know that the Liberals have a bit of an opportunity; I think it is $6 billion they may be playing with.

As for the second part of his question on whether manufacturing has really excelled in Canada over the last few years, it certainly has not in Ontario. Some 300,000 manufacturing jobs have been lost because of the policies of the provincial government in Ontario, the exact same policies the Liberals want to establish federally. The proof is there. Why would it replicate these job-killing policies from Ontario for the entire country?

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Mr. Speaker, it is a pleasure to rise on behalf of my constituents to talk about Bill C-29.

The first thing I note about Bill C-29, a second act to implement certain provisions of the budget tabled in Parliament, is that it is an omnibus bill. In terms of size, it is 230 pages of omnibus legislation. I remember well when the member for Beauséjour was the House leader for the Liberals and they were the third party in the House, how he used to rail against bills of this size. It did not matter what was in them; it was the fact they were omnibus bills that created so much angst.

The member for Winnipeg North made a career in the last Parliament out of railing against omnibus legislation. It was said to be dastardly thing for a government to choose to implement its budget via a budget implementation act. That is what is happening today. We are talking about an omnibus budget bill. I guess the principles and policies the Liberals had when they used to sit in the third party seats change a little when they cross over to the government side. Now they are a big fan of omnibus bills. That was the first thing I wanted to mention.

This bill is supposed to be the plan to implement the budget. The government clearly has no plan when it comes to budgeting. During the election campaign, Liberals promised there would be a $10 billion deficit that would be paid back within the mandate of a majority government. How long did it take them to abandon that promise? Was it 10 minutes?

I remember Prime Minister Stephen Harper saying that the Liberals' position was that everyone should trust that it would be a modest, little deficit. How right he was. We are going to hear today at four o'clock just how much more than a $10 billion deficit the government has blown in less than a year. The fiscal update will show that the government is, by a magnitude of at least three times, past its initial deficit target. It misled Canadians during the election and has blown through it.

What do Liberals have to show for it? I would argue they have nothing to show for it. There is no increased growth and there are zero net new jobs. The parliamentary budget officer has confirmed that there are zero net new jobs as a result of $30 billion or so of borrowed money being spent. This was supposed to stimulate the economy and take us to untold heights. The Liberals have done nothing they promised and have blown through their deficit target, so they have no budget plan. The plan is just to borrow more money and spend it. Canadians know that debt has to be repaid, that borrowed money has to be paid back. If my generation does not repay it, it will be our children and grandchildren who get this bill, because eventually it will come due.

One of my constituents, a small businessman, has certainly seen that the Liberal government is no friend of his. He told me the government is like a teenager who has one parent who provides him with a credit card with no limit on it, and that parent is very popular, but the other parent who hands the credit card bill to the teenager and says it is his to pay back is the less popular parent. Right now, the Liberals are playing the role of the sugar daddy who hands out the cash, but what Canadians will soon realize is that the bill will be paid by them. That is clearly what is happening.

What have the Liberals done in less than a year? They borrowed $30 billion, as I said, and they have also misled small businesses. All parties agreed that the small business tax rate would be lowered from 11% to 9%. How long did it take the Liberals to break that promise? It was broken in their first budget. They broke their promise to small businesses, and I think we know why.

During the election campaign, the Prime Minister made it clear that there were an awful lot of people who were using small businesses to avoid paying their fair share of taxes. That is what the Prime Minister said about the industry that creates the most jobs in this country. He said that small business was just a tax avoidance scheme. We found out during the election campaign that he has set up some of those companies himself to avoid paying a lot of taxes, so perhaps he knew what he spoke of. However, that is not what was promised to small businesses.

I spoke earlier this month in the House about Bill C-26, a bill dealing with CPP rates. Again, that would do nothing for seniors. It would do nothing for people approaching retirement. In fact, the finance minister has admitted that it would do nothing for anyone for more than 40 years. However, what it would do is reduce the incomes of Canadian families by up to $2,200. That $2,200 is taken from the paycheques of Canadians to go into a fund they likely will never be able to access. That is in addition to the $1,100 coming out of the pockets of small businesses who are paying their portion of that tax.

So they are increasing taxes on small businesses. They are also increasing taxes on Canadians through a carbon tax.

I was honoured to be given the role of critic for natural resources. Since the government has taken office, over 100,000 energy workers have lost their jobs. What do we see from the government? We see no jobs plan. We see no lifeline to families in the energy sector. Instead, we see them being thrown an anchor, the anchor of a carbon tax.

What would that do? The member for Oshawa talked about what it would do for manufacturing.

I will tell members what it would do for the energy sector. It would put an already crippled energy sector at an even greater disadvantage vis-à-vis the people we are trading with, the U.S., which has no intention of implementing a federal carbon tax any time soon. They are our major customer.

When we moved a motion at the natural resources committee to have the Liberal members tell us what analysis they have done to show what impact the carbon tax would have on the natural resource sector, they voted against it. We know why. It is because they have not done any economic analysis of that impact. They do not care. They do not care about those 100,000 family-supporting jobs that have been lost. We have seen they do not care about that sector because they continue to layer regulatory burden after regulatory burden upon a sector that is already suffering. When there are pipelines to be approved, they do not allow for evidence-based scientific policy to take place. They layer on an extra political layer in which the minister will make the final decision, in which the cabinet will make the final decision, in which red tape is layered upon an already burdensome process. That would do nothing to protect public safety. It would simply add to the regulatory burden.

The government is fond of saying how it has cut the taxes of middle-class Canadians. It is just not true.

The average income of people in my riding is under $40,000 a year. Guess how much they receive from the income tax cuts from the Liberal Party? Zero. They receive nothing. The most vulnerable, low-income Canadians got nothing from the Liberal tax cuts, while people like members of Parliament, who make up to $150,000 a year, get the most benefit one could possibly get out of that tax cut. The Liberals have done nothing for an average family in Chilliwack—Hope with that tax cut, and anything they have done for some families, they are going to tax back with the extra carbon tax and additional payroll taxes. Canadians are not better off.

They also cancelled things like the child fitness tax credit, the child arts tax credit, and tax credits for textbooks. They said that is because they do not like to complicate the Income Tax Act. They do not like those boutique tax credits, they said, that help families, that help moms and dads put kids in sports and in dance lessons. However, what they do like are boutique tax credits for talk show hosts for Canadian shows, or for someone who needs to take a first aid course. They are all for those tax cuts. It does not seem to matter, as long it's not a family, as long as it is not people supporting their children. We do not want to support people like that. However, if people are creators of content, then they need a tax break from the Government of Canada.

Their priorities are wrong. They are not looking after Canadian families. They are looking after special interests. We have certainly seen that over the last little while, with the revelations about their fundraising practices, in which they are meeting with the well-heeled insiders they regulate, who are giving them money for access. It is not the right way to go. This is not a budget plan, and we cannot support it.

[The Deputy Speaker, Bruce Stanton]

The hon. member for Chilliwack—Hope will have five minutes remaining for questions and comments when the House next returns to business on this question.

The House resumed from November 1 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.

[David Graham, Liberal, Laurentides—Labelle, QC]

Mr. Speaker, I wanted to congratulate the member for Chilliwack—Hope for his omnibus speech he gave before question period yesterday. A big part of the problem with Conservative omnibus bills was that they were also ominous bills. Whatever the title, the actual result was often the opposite. The Fair Elections Act, for example, was about how to interfere with, not promote, fair elections.

In the last Parliament, the member whom I worked for as a staffer was critic for, among other things, citizen services. The Auditor General's report, the year that we got that portfolio, dealt with the websites of the Canadian government and their focus on citizen services. What we learned was that the Conservatives had, immediately upon taking power in 2006, stopped all research into how people actually used government websites. Heaven forbid they cater to the needs of the people rather than to the desires of the government.

Our government consults extensively. We do policy on the basis of evidence and on the wants and needs of the country. There is nothing ominous about that.

Does the member for Chilliwack—Hope accept the evidence of evidence-based policy, or does he continue to believe that dogma is the most important factor in policymaking?

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Mr. Speaker, I can understand why that hon. member does not actually want to talk about the budget implementation act, because he is probably, like most Canadians, ashamed of the economic record of the current government.

Just yesterday, after I gave my speech, the finance minister got up and said that after only a few months, he had already blown his economic projections out of the water in the wrong way. He had already had to use his contingency. The $6 billion contingency was gone. He had to borrow another $32 billion from future generations of Canadians.

So yes, we know that the government likes to consult Canadians, but at a cost of $1,500 apiece. We have certainly seen that from multiple ministers, selling access to themselves for $1,500 to well-heeled Canadians. I can tell the House that the 100,000 energy workers, who have been laid off since the current government took office, cannot afford the entry fee to consult with the government.

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

Mr. Speaker, I was going to pose a question in terms of the mounting deficit. As we heard yesterday, another $32 billion on top of what is already there, and no plan to pay it back.

Could the member comment on how he feels that is going to affect the next generation?

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Mr. Speaker, the member is exactly right. This will affect the next generation.

As Canadians know, when they borrow money, they have to pay it back. The members of the government broke their word to Canadians to the tune of three times the deficit they promised, when they promised a $10 billion deficit that would be reduced to no deficit in their mandate. They have blown both of those promises out of the water. It is now a $32 billion deficit, and instead of being back to balanced budgets by the end of the first four years, the Liberals have no plan.

The finance minister was clear yesterday that he has no intention and no plan to bring this back to a balanced budget. We know it will be future generations of Canadians who will have to pay this back through higher taxes, or through critical program services cuts. The Liberals are good at that. They did it the last time they were in power. They cut $25 billion from the health care budgets across this country. We are heading down that same path with this out-of-control, reckless spending plan.

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

Mr. Speaker, that is quite rich, coming from the members of the opposition who spent 10 years, the vast majority of which, delivering deficits and accumulating a $160 billion debt. What did they have to show for it? What projects did they bring in that they can show for it? No, they do not even have jobs to show for it.

The decisions from this side of the House, in terms of implementing and adding to the deficit, are for real opportunities and real job creation. The projects that will be put forward will be ones that genuinely will get the economy moving again.

I find it quite rich to hear members from the other side of the House talk about deficits and trying to lecture the government on deficits. What do the Conservatives have to say about the $160 billion of debt they added to this country? What are they going to say to the future generations about that?

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Mr. Speaker, had the member actually been paying attention in the last 10 years, he would know that the Liberal Party was demanding that we spend more and that we borrow more money.

We had a plan to get back to a balanced budget, and that is what we did. The independent parliamentary budget officer confirmed that the Conservative government left a surplus. We also left something else, a surplus of 1.3 million net new jobs. That is as opposed to the record of the government, which has borrowed $30 billion and has negative 6,000 jobs to show for it.

[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.