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

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

Mr. Speaker, my colleague across the aisle spent considerable time talking about the legacy that his party left. On that same note, the last time the Liberal government was in power for a sustained period was between the years 1996 and 2005. During that there was not a single trade deficit and there were nine straight fiscal surpluses. In the period after 2005, it left the Conservative opposition with a record $13 billion surplus, which was completely eradicated within two years on the basis of a program of austerity and cuts, and that was two years before the great recession hit.

Canadians rejected that in 2015, thankfully. They rejected trickle-down economics, which does not work. The way we are going to get ourselves out of debt is by investing in the middle class.

[Some hon. members]

Oh, oh!

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

So I wonder what my hon. colleague might say—

[The Assistant Deputy Speaker, Anthony Rota]

Excuse me, the hon. member for Eglinton—Lawrence, I am having a hard time from some buzzing in my left ear. Could the hon. members maybe keep it down while the hon. member for Calgary Signal Hill answers the question, if they do not mind.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Mr. Speaker, if we go back and look at the record of the previous Liberal government, it ended up balancing that budget on the backs of the provinces. If we look at transfer payments to the provinces, these went down every year. I know that for a fact, because I was a minister in a provincial government in Alberta during that time. The Liberals were cutting transfer payments to the provinces on an annual basis. When the Conservatives took over, the Conservative government reinstated those transfer payments. Look what is happening with the health care transfer payments right now. We are seeing it happen all over again.

It is one thing to balance the budget on the backs of the provinces. It is another thing to balance the budget by watching the spending. That is exactly what the Conservative government did when it left these guys with a balanced budget a year ago.

[Mark Warawa, Conservative, Langley—Aldergrove, BC]

Mr. Speaker, my political career began in local government. During the 1990s, the Liberal government at that time did the same thing. It cut $30 billion in transfer payments to local governments and the provinces. Instead of the federal government doing its fair share, the local governments had to increase taxes. The federal government did not directly but indirectly caused this massive tax increase across Canada in the 1990s.

I have also heard recently that Canadians are saying, “Fool me once, shame on you. Fool me twice, it isn't going to happen again”. The government of the day has fooled Canadians and it is doing the same thing the government did in the 1990s. I would ask the member to comment on that. Is this another fool me twice?

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Mr. Speaker, obviously, my answer to the other member's question was along the same lines as my colleague's question. However, the other thing the member alludes to is, “Fool me once, shame on you. Fool me twice and you'll pay the price”. We are seeing that.

If we recall, prior to our government's taking office, we had one of the largest scandals ever in government under the Chrétien-Martin Liberals. It was called the Quebec issue. What we are seeing now with all of these fundraisers, as a result of Kathleen Wynne's Liberal advisers now advising this government, is the same kind of scandal, which will bring down this government three years from now.

[Adam Vaughan, Liberal, Parliamentary Secretary to the Prime Minister (Intergovernmental Affairs)]

Mr. Speaker, I would just ask members of the House who keep standing and saying that the infrastructure bank was not part of our campaign platform to please go online. It is still there. They should read the section on affordable housing. I would ask them to reflect on the words, “We will direct...the new Canada Infrastructure Bank to provide financing”. Is that good enough for them to admit that it was actually in our platform?

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Mr. Speaker, if it were part of the platform, quite frankly, I have not spent any time looking at the Liberal platform because most of it is no longer relevant anyway.

If that were part of their election platform, why did they appoint this advisory committee they now are giving all the credit to when they had this in their platform originally? I challenge the member with that comment.

[Chris Bittle, Liberal, St. Catharines, ON]

Mr. Speaker, it is my honour to rise today and speak on the importance of Bill C-29, which seeks to implement key provisions of budget 2016.

It was seven months ago to the day that I rose in this place to address hon. members about the important impact that our budget would have on Canadians. Today, I am grateful to use the opportunity as a mid-term checkup to look back at what has been accomplished, how our budget has benefited my riding of St. Catharines and in fact all of Canada, and how it will continue to bring Canadians the real change we promised just over a year ago.

As I noted in my remarks on April 14, the shifting world economy resulted in many jobs lost in much of our heavy local manufacturing industry. Plants closed, thousands lost their jobs, and many more were forced to find new employment at significantly lower wages. These were unfortunate years to which I do not wish to see a return.

I also noted that there was light at the end of the tunnel. Little did I know at the time that our progressive and forward-looking budget would have such a positive impact for my riding and, in fact, for Canada.

I will start by discussing the centrepiece of our plan: the Canada child benefit. I cannot understate the significance and drastic impact that this benefit has had on families in St. Catharines.

St. Catharines is a perfect example of a middle-class community with a lot of individuals who are struggling. When we talk about the stagnating growth of the middle class, my community is an example of that. With the loss of jobs, we now look forward to regrowth.

The Canada child benefit provides nine out of 10 families across the country—and I believe that number to be higher in Niagara—with significant and much-needed assistance. It is a story I have told in this House before.

The first time I had an opportunity to rise in this place, I mentioned that 25% of the children in my riding lived below the poverty line. I received a call later that day from a poverty advocate who thanked me for speaking on the issue of child poverty, and mentioned that this number was a very conservative figure and was probably closer to one-third. In such a wealthy country, to have one-third of the children in my community living below the poverty line is unimaginable.

The Canada child benefit seeks to lift 300,000 children out of poverty, and independent analysis shows that it will; that is a 40% reduction. This really hit home again in July when my wife and I welcomed our first child. I should mention his name for the record of Hansard, Ethan. It really put into perspective the type of community I want to see for Ethan. Becoming a father strengthened my resolve to ensure that we do everything we can, so that each child in Niagara and across Canada has the same opportunities as my son.

As I mentioned, we said that the CCB would raise 300,000 children out of poverty, and I think we are safe to say that we are well on our way to delivering on that commitment. Giving families the financial assistance they need to get by is important, but more important is the need to provide jobs so that these families can continue to thrive.

I am proud of the work we have accomplished so far. Our commitment to building an innovative and forward-looking economy is the root of the success. The Minister of Innovation, Science and Economic Development has been diligently working to ensure that we continue to invest in key sectors of our economy, so that we deliver on our promises made in budget 2016.

The previous government spent 10 years focusing on natural resources, despite the loss of manufacturing jobs in Ontario, especially in southern Ontario. The telltale signs were ominous, and the shift was occurring not only in Niagara but across Canada and throughout the world.

I am proud of the commitment this government has made. One of the first announcements my colleague from Niagara Centre and I were able to make was on the creation of a foreign trade zone in Niagara. This was followed shortly thereafter by an incredible announcement for Niagara, the construction of a new factory, which has not happened in quite some time.

General Electric announced plans to build a $260 million facility in Welland, Ontario, creating more than 220 jobs, plus all of the incredible construction jobs that will happen over the next two years. This is policy that has led to concrete action, which will lead to significant benefits across the Niagara region.

Beyond that, in focusing on an innovative economy, I am proud that the minister has also allocated funds to post-secondary institutions. The Niagara region and St. Catharines are home to Brock University and Niagara College. Both are renowned post-secondary institutions that draw students from across Canada and around the world.

Niagara College is seen as a leader in advanced manufacturing, boasting thousands of square feet in lab space to train students in a hands-on environment. These labs also provide services to local small and medium-sized enterprises, giving them access to research and development labs as well as allowing them to access the brightest minds of today and tomorrow. This gives students essential first-hand experience in the rapidly changing workforce and is a draw for business both in Canada and across the world.

Not far away and within sight of my house is Brock University, which boasts a world-class biomedical incubator. It houses research and lab space and places students and researchers on the cutting edge of innovation. Like Niagara College, Brock leverages these labs and its students to help businesses across Ontario and Canada solve the problems of tomorrow.

I was proud, with the member for Niagara Centre, to be with the Minister of Innovation, Science and Economic Development to announce $22 million for these two institutions to continue forward on their plan for innovation. Also as part of that, we were excited to see improvements to Brock University's co-generation facility, which will reduce greenhouses gases; so this is not only investing in innovation at Brock University but investing in a greener future for residents of Niagara and Ontario. Though the federal government committed $22 million to this project, it is a $64 million project that will again get the skilled trades to work. It will get construction workers back to work in Niagara, which is so desperately needed.

Another incredible aspect of our commitment to Canadians is our $20 billion investment in public transit. Niagara is a great place to live, but there are 12 municipalities within the Niagara peninsula, plus a regional government. Within that, there are eight transit commissions. For students at Brock University or Niagara College, which I just mentioned, who are looking to get around from one community to another, it can be a difficult experience. It is very difficult, and I have spoken to student union presidents at Brock University and Niagara College who told me about the challenges of trying to negotiate with so many different transit authorities. We have to get better in Niagara, and I am proud that the government has committed $20 billion, so that we can come up with a plan to integrate our transit in Niagara. It is a key focus.

I have heard far too often from individuals trying to escape the cycle of poverty, wondering how they get to a job in Niagara Falls if they live in St. Catharines and the bus runs infrequently. How do they make it to a shift if the bus only runs at limited periods of time? We want to help people. Not only does improved public transit help make for a greener economy and a brighter future, but it helps individuals and will help them break that cycle of poverty, which is so important.

Furthermore, we have a government that deeply cares about our veterans and respects the service and sacrifice our active and former military personnel make. We have a government that is willing to invest in them, and we have seen that in the opening up of those nine Veterans Affairs offices that were closed by the previous government, showing our commitment for our sacred obligation.

This has been an incredible year and incredible opportunity, and I thank the people of St. Catharines for that opportunity. There is a lot of work that is left to be done to improve lives in St. Catharines and across the country, but this is an incredible start and I am looking forward to a brighter future.

[Ted Falk, Conservative, Provencher, MB]

Mr. Speaker, I thank my colleague across the way for his presentation on Bill C-29, budget implementation act, 2016, no. 2.

I want to reference something that was mentioned by earlier speakers about the infrastructure bank that is part of the commitment of the budget, $15 billion, plus another $20 billion of debt the Liberals want to fund this bank, for a total of about $35 billion.

Today the Prime Minister is in Toronto meeting with lots of institutional investors, and he is trying to attract them to invest $180 billion in Canada's crumbling infrastructure.

I do not argue whether that money is needed. We do have lots of infrastructure that needs upgrading, but when we attract private money to the tune of $180 billion, those investors will want a premium of 7% to 8% on that money.

Currently our Canada savings bond rate is at 1%, 20-year municipal debentures can be had for 3%. Even if we increased our Canada savings bond rates up to 3%, the difference between 3% and what those institutional investors will want of 7% to 8% is 4% or 5% on $180 billion. That is between $7 billion and $9 billion that will cost Canadians extra every single year to fund these infrastructure projects, and that is not included in your budget.

What are Canadians supposed to think of that extra $7 billion or $9 billion price tag that you are putting on to this?

[The Assistant Deputy Speaker, Anthony Rota]

I am sure the hon. member did not mean my budget. He meant to speak, through me, over to the government.

The hon. member for St. Catharines.

[Chris Bittle, Liberal, St. Catharines, ON]

Mr. Speaker, my hon. friend brought up the fact that the Prime Minister is meeting with investors. I want to take this opportunity to highlight the work that not only the Prime Minister but many members of the cabinet have done over the past year.

I already mentioned General Electric, and even though provincial and municipal leaders put in a lot of work on the subject, the Prime Minister did meet with the head of General Electric to ensure and fight for a Canadian location, which will directly benefit Niagara and all of Canada.

We have heard positive announcements after meetings and consultations with Thomson Reuters, General Motors, and Amazon, so it has been an incredibly successful opportunity, and I look forward to seeing the results of this meeting with investors in Toronto.

[Wayne Stetski, NDP, Kootenay—Columbia, BC]

Mr. Speaker, Bill C-29 fails on a number of levels: the broken promise to small businesses of reducing taxes from 11% to 9%, nothing for daycare, nothing in terms of capping credit card fees. However, I want to talk specifically about privatization of infrastructure.

By definition, the private sector will expect a return on their investments, which will lead to fees for use of public infrastructure.

I would like to hear from the member. How does having fees on public infrastructure help middle-class families and those working to become middle class, and those families living in poverty?

[Chris Bittle, Liberal, St. Catharines, ON]

Mr. Speaker, from previous governments we have seen privatizations gone wrong, and we can learn from that, but this is an excellent opportunity to attract investment for projects that need funding from the private sector.

There are certain institutions where individuals pay fees; for example, a hockey arena. If we can bring in private sector investors, fees are paid, whether it is to a municipality or partially to the private sector. Public-private partnerships are a reality of our current system, and it is important that the government work for the private sector to invest, so we have lasting commitment and lasting change to our municipalities, to fix our crumbling infrastructure across the board.