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

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

Mr. Speaker, my colleague talked about the child tax credit and all the things being done for youth. Can he explain to the House why removing the tax credits for arts programs, sports programs, and text books for students is actually helping our youth?

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

Mr. Speaker, the new Canada child benefit plan is more inclusive. It is helping those who need it most. We made sure that the child benefit plan, the tax plan that is coming to middle-class families, goes to the ones who will get the most, and we decreased and eliminated it for those who have a family income of more than $200,000. This is going to directly impact families who need it most.

Also, our government has put in a policy that students who graduate and make less than $25,000 do not have to pay back interest on their loans.

[Arnold Chan, Liberal, Scarborough—Agincourt, ON]

Mr. Speaker, I want to ask my hon. colleague a question related to his comments near the end of his speech. It related to the necessary measures to bring Canada from a low-growth situation to a path to greater prosperity.

Does the member have a particular thought on the types of investments and how we could ultimately amplify the proposed investments in the budget implementation plan in terms of what the Minister of Finance announced with respect to the infrastructure investment bank? Does he think that amplification by using private capital will help accelerate growth?

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

Mr. Speaker, in my riding of Kitchener South—Hespeler and the greater Waterloo region, we are getting light rail transit. This is an infrastructure project that is going to help our region move goods and services to market quickly, and we will be able to move people quickly around the city. Light rail transit, for our region, is going to increase the number of jobs in the skilled trades in our riding. Literally every street in my riding is closed down. There has been bit of controversy with some of the councillors, and we poke fun at them.

It is short-term pain for long-term gain in our region. I am really thankful for the infrastructure plan we have put in place.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Mr. Speaker, the member mentioned being out in the community and talking to members of the community. I am curious to know if, while he was out knocking on doors, he heard that a carbon tax is the answer or that moving from a $10-billion deficit to a $30-billion deficit is the answer.

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

Mr. Speaker, in my region of Waterloo we had a consultation on the environment. A lot of people in my riding were concerned about the environment, and they wanted to make sure that the government was taking positive steps. I received many emails after the consultation and after we announced it in the House. There was really good feedback on the approach we are taking, which is balancing the economy while maintaining the environment. The constituents in my riding know that we need to balance both, and we are doing that.

[Ramesh Sangha, Liberal, Brampton Centre, ON]

Mr. Speaker, it is a pleasure for me to address the House on the debate on the implementation act 2016, the complete measures we have introduced in budget 2016.

We have completed more than a year in the Government and have brought the changes we promised to Canadian during the last year election.

I was successfully elected as the first member of Parliament from the newly formed riding of Brampton Centre. The mere reason for our success in the election was because our constituents believed us and the policies we gave to them. I believe we all must listen to Canadians, otherwise we will not be here the next time.

During my door-to-door campaign, I met many Canadians who told me stories of their economic condition. I was told that they were working hard, trying to make their life easier, but things were not working because of the bad economy and lack of jobs. People were struggling to make ends meet. They were working hard, but were unable to cope with their own expenses.

People were concerned about their children's care and maintenance, their education and then about their employment. They were worried about their jobs. We came across issues of employment insurance, affordable housing, and senior poverty anxieties. They were worried about how they would be able to better care for their kids and grandkids.

After over a year in government, we have brought many of the changes we promised Canadians. As a government, we are proud of our first budget. As we promised, the government will take solid steps to bring real changes for the betterment of the middle class, and for those working hard to join it. We know the middle class is the backbone of Canada. If the middle class is strong, Canada is strong. When middle-class Canadians have more money to save, invest and spend, everyone benefits.

The budget implementation act 2016, No. 2 complies with the implementation of the outstanding measures we introduced in budget 2016. It will build a strong economy for Canada. It will give the middle class and those working hard to join it more money in their pockets to save, invest, and to grow the economy.

I firmly believe that we as a government are focused on exactly the right things. We are focused on people and growing the economy for the long term in a way that will benefit all Canadians. Canada's middle class will drive our economy forward.

The following are a few important steps taken by the government toward helping families regain their confidence in the government.

To meet our platform promise, we told the 1% of wealthiest Canadians to pay more taxes, and we gave tax benefit breaks to those who earned less to help fund the middle class.

In budget 2016, we introduced the new Canada child benefit. This benefit will help parents better support what is most precious to them, their children, by putting more money into the pockets of families with children. The Canada child benefit will lift hundreds of thousands of children out of poverty. Nine out of 10 families now receive more money than they did under the previous system. The Canada child benefit is simpler, more generous, and also tax-free. Its attractiveness is that it helps those who need it most in our society. It will put extra money directly into the hands of families to buy school supplies, groceries, and warm clothes for the winter.

The Canada child benefit will help parents cover the growing cost of raising their children. Families can count on this extra assistance today for years to come because this Canada child benefit will be indexed to inflation.

Further, budget 2016 makes post-secondary education more affordable for students from low and middle-income families. It will be easier for them to repay their student loans. The increase in Canada student grants for students from low and middle-income families and for part-time students is a big incentive for them to join the workforce. It will also help young Canadians gain the much-needed experience, the income they need and to find good jobs after graduation.

Working toward poverty reduction, budget 2016 also improves the employment insurance regime. Canada's employment insurance program provides economic security to Canadians when they need it most.

Whatever the circumstances, no Canadian should struggle to get the assistance when they are in need. To ensure Canadians get help when they need it, several changes are being proposed in the EI system. Changes to eligibility rules will make it easier for new workers and those re-entering the workforce to claim benefits. The waiting period will also be reduced from two weeks to one week. This improvement in employment insurance will provide money to unemployed workers with hundreds of dollars more at the time they need it most.

In budget 2016, we increased the monthly payment for the most vulnerable seniors. The government reverted the pensionable age to 65 and will index seniors' pension.

Restoring the eligibility age for old age security and guaranteed income supplement benefit to 65 will put thousands of dollars back into the pockets of Canadians as they become seniors and look to retire.

This second budget implementation bill would amend the Old Age Security Act to make the program more flexible. When couples who are receiving the guaranteed income supplement and the spouse's allowance must live apart for reasons beyond their control, each of them will receive benefits based on their individual income.

By extending this treatment to couples receiving the guaranteed income supplement and spouse's allowance, the government is improving fairness for seniors and helping them live with the dignity they deserve and need in retirement. That is the right thing to do.

The government realizes that our veterans have dedicated their lives to the defence of our country and they deserve our unwavering support. We owe them. It is a sacred obligation that we must meet with respect and gratitude.

Budget 2016 has provisions for the measures to support Canadian veterans. The Government of Canada has a social covenant with veterans and their families.

Yesterday, in the House, our Minister of Finance highlighted in his fall economic statement and stressed that our government wanted to tell Canadians that we believed we should be focusing on making investments for today and for tomorrow that will allow us to have a higher level of economic growth in our country, and we are doing it in a fiscally responsible way.

As we promised Canadians, we will make a historic investment in green transport as well as in social infrastructure. We have already started making record investments, which will help the middle class grow and prosper today, while delivering economic growth for years to come. Infrastructure investment will shape the economy and make Canada economically strong.

I have my personal news announcement regarding infrastructure spending in my riding, which I want to share with—

[The Assistant Deputy Speaker, Anthony Rota]

Questions and comments, the hon. member for South Surrey—White Rock.

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

Mr. Speaker, my colleague talked about his government being a responsible government. Part of that responsibility includes having a plan to balance the budget. Could he explain to Canadians what that plan looks like?

[Ramesh Sangha, Liberal, Brampton Centre, ON]

Mr. Speaker, people told us to do things that would help them and their families, and to grow the economy. We intend to do just that.

We have plans to help the middle class. We started by providing them with income tax breaks. We are reducing the tax for the middle class and asking the wealthiest 1% to pay more.

We made improvements in the Canada child benefit. Nine out of 10 families will now get the benefit. We have also given benefits to seniors. This is what Canadians want us to do.

Our government has also relaxed student grants, which will give students a chance to go to college or university and pay their debt at a later stage when they are employed.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Mr. Speaker, I thank my colleague for his eloquent speech. I have a question for him about the Canada child benefit, which he mentioned a number of times in his speech.

He forgot to mention the glaring mistake that Canadians and experts noticed right away. The Canada child benefit is not indexed, and as such it will not be worth as much over the years. At the end of the day, it will be worth less than the benefit that the Conservatives came up with.

The Liberals listened to reason and announced that they were going to index the Canada child benefit, but not until 2020. I wonder why they chose 2020 to start indexing and why not 2019, 2018, 2017, or even this year so that the benefit does not lose value by 2020 and can continue to grow. Canadians' expenses keep growing, while their salaries, unfortunately, continue to stagnate.

[Ramesh Sangha, Liberal, Brampton Centre, ON]

Mr. Speaker, the member wants to know why indexing was not done at the first stage and was considered later on. I would like to bring to the attention of my friend that whenever the government works on any plan, it works through the Advisory Council on Economic Growth. The council provides advice, not decisions. Decisions are made by the government at a later stage. A recommendation was prepared and given to the government, and it is up to the government to accept it or not.

We have helped Canadians. We are trying to boost the economy. We want to work with Canadians and give them what we promised them.

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

Mr. Speaker, Bill C-29 aims to implement a series of budget measures and tax changes in budget 2016, which was tabled in Parliament on March 22 of this year. We have heard from the government over the course of this year how going into debt would help the economy and would create jobs. We also heard from the government how increasing taxes would help the economy and the middle class and create jobs. We heard from the government how the tax-free savings account was not for seniors and not for students and not for people trying to save and get ahead, and therefore, it could be cut in half and it really would not make any difference.

Then we heard from the Prime Minister on September 8, 2015, while he was being interviewed by Peter Mansbridge, “a large percentage of small businesses are actually just ways for wealthier Canadians to save on their taxes”. Now even though there are 1.14 million small businesses in Canada, employing 8.2 million people, plus another 2.3 million people employed in medium-sized businesses, those small businesses did not get the reduction in taxes as promised in the platform by the Liberal government and to be clear, the promise was to reduce the small business tax from 11% to 9%, to assist with job creation. However, that did not happen.

Instead, the Liberals increased the CPP contribution so that workers would have to pay more and see less of their paycheques, and employers will also have to pay more, which goes against the internal documents from Finance Canada. Those documents show that financial officials advised the minister that higher CPP premiums will reduce job growth until 2035. That advice was ignored.

The government decided to implement the so-called tax cut for the middle class and then announced to the general public it was going to be revenue neutral. The plan is not revenue neutral. A report from the parliamentary budget officer puts the cost at $1.7 billion, which is now added to the growing tax burden for Canadians.

However, it gets better. The Liberal government told taxpayers that for a tiny small deficit of $10 billion, infrastructure projects will grow the economy and create jobs. The Liberals burned through a $1-billion surplus and created a deficit that is over $30 billion, but it still gets better. With all these job-creating measures the government has come up with, one would think that jobs were really being created. This is not so. A report just released last week by the parliamentary budget officer states that job creation over the past year was half of what it was over the past five years and that there have been no net new full-time jobs.

The Liberal job creation plan is simply not working.

Let us just recap. We have a $30-plus billion deficit, $7.1 billion spent overseas, $2.9 billion committed to an Asian infrastructure bank, new housing rules that will cost the economy $6 billion by the end of 2018, a national carbon tax that will increase the cost of heating, groceries, and gas, and just announced yesterday by the Minister of Finance was that he has spent the $6-billion contingency fund and is borrowing another $32 billion. As well, $15 billion is being put into a newly created infrastructure bank and the $15 billion “will be sourced from the announced funding for public transit, green infrastructure, social...and rural and northern communities”.

We already have a structure in place with $1.3 billion available and it is called P3 Canada. It was specifically set up to leverage private sector dollars. Pension funds can invest anywhere they choose; they do not need an infrastructure bank. That was stated by the CEO of the largest pension fund in Canada.

Let us hear from the experts. Craig Alexander, chief economist at the Conference Board of Canada stated, “The part of the fiscal plan that hasn't shown up is the infrastructure spending”. Stephen Poloz, Bank of Canada governor, said that in the data “there are no signs yet” of a boost to grow. Benjamin Reitzes, senior economist from the Bank of Montreal, said, “It's certainly very fair to say that impacts were overestimated”. The TD Bank and the Bank of Montreal projected that the government spending plan would add less to growth in 2016 than the finance department or the Bank of Canada had estimated. They have now publicly called on the government to halt additional spending.

There is a way to stimulate the economy and create the environment for job growth and job creation. The Liberal way is just not that way. Governments do not create jobs. Governments create environments in which job creation either flourishes or it stagnates. Unfortunately, what we are seeing from the current government is stagnating the environment for job growth through out-of-control spending, deficits, higher taxes, red tape, and frankly, not knowing what job creation really means.

Creating the environment for job growth means low taxes, less red tape, working with all levels of government to create livable cities, transportation to move people and goods to market, and fiscal responsibility to pay down any debt and balance the budget. In the worst economic downturn since the Great Depression, the Conservative government had the lowest taxes in 50 years, balanced the budget, completed over 7,500 infrastructure projects, and created the environment for 1.3 million new jobs. That is how it is done.

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

Mr. Speaker, I stand back and I marvel at times at the Conservative Party's view that it was such a steward of the economy. We certainly saw over 10 years what regressive policies have done for the country: two recessions and a budget that was balanced at the last moment via the shell game I talked about yesterday.

The party opposite is so big on saying that our grandkids are going to have to pay for this and that we are mortgaging our children's future. However, it was the Conservatives' own finance minister, when they doubled the TFSA or tried to, who said that Stephen Harper's grandkids could pay for that.

I am going to ask the member opposite how she squares that her own former finance minister, in the past, said that Stephen Harper's grandkids could pay for the Conservatives' promises, yet for us it is the opposite. I wonder if the member can comment on that.

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

Mr. Speaker, I am pleased that my colleague marvels at us Conservatives.

We will talk about the TFSA because in my riding I have a lot of seniors, and one thing they really wanted was to have the contribution amount left at $10,000. Unfortunately, it was the Liberals who went on this rant that nobody had $10,000 just hanging around. That was not what it was for. It was for seniors. It was for students. It was for people who were trying to save. That is exactly what we put in place. We had the lowest taxes in 50 years and created 1.3 million jobs. I am sorry, but I do not know how that is wrong.