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

[Ken McDonald, Liberal, Avalon, NL]

Mr. Speaker, I will stand proudly with the minister responsible for ACOA from Mississauga, because under his rule as minister, Newfoundland has benefited more than it has in the past 10 or 12 years, in total probably in just one year. My riding alone has received millions of dollars from ACOA through the help of the minister and I certainly do not ask for any apologies from him for being from Mississauga.

[Alice Wong, Conservative, Richmond Centre, BC]

Mr. Speaker, we all understand that small businesses are job creators and the Liberals broke their promise and increased small business taxes. That is the first question. Why did they break their promise?

The second question I would like to ask is this. They will not help seniors at all by putting a carbon tax on everything. Seniors have to pay for their heating and groceries, and that is most important. The Liberal government has also cut the TFSA. Statistics have shown that it is seniors who save money for their retirement days, and yet the Liberal government took that away.

I would ask why the government has broken all of its promises.

[Ken McDonald, Liberal, Avalon, NL]

Mr. Speaker, to answer the first part of her question, as a former small business owner, what I found most important was that my customers had the money to avail themselves of my services. We have done that. Through tax cuts to the middle class and the new Canada child benefit, we have put more money into the pockets of people who use small businesses each and every day. That makes small businesses better off, a lot longer than a 1% or 0.5% cut in the income tax rate.

On the issue of seniors, we are working to make the lives of seniors better. As I mentioned in my speech, over $900 will go to single seniors and the most vulnerable with low incomes, as well as the affordable housing program for seniors. In Newfoundland alone, I believe $200 million is allocated for that.

We do care about seniors, we care about the middle class, and we care about small businesses.

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

Mr. Speaker, I am wondering if my colleague could comment on the reduction from 67 to 65 of the age of retirement. I would ask him to provide his thoughts on that.

[Ken McDonald, Liberal, Avalon, NL]

Mr. Speaker, I was a resident when that was brought in by the former government. I was not in favour of it then and when I became part of the Liberal government here today, I was certainly glad to see it reduced back to 65. A lot of people plan for retirement. To increase it from 65 to 67 with no consultation and no consideration of people not being prepared for it was totally irresponsible of the former government.

[Michael Levitt, Liberal, York Centre, ON]

Mr. Speaker, I am pleased to rise today to speak on Bill C-29, an act to implement provisions of budget 2016.

I would like to focus on my riding of York Centre, the wonderful and diverse community I represent, and how measures in the budget implemented by this bill are helping the middle class in my riding.

I am a firm believer in engaging with constituents, not just at election time but between elections, and hearing about what matters to them so I can bring their priorities and concerns to this House and represent them fully. Just this past weekend, I held what I call “coffee with your MP” in my riding. The idea is that I sit in four coffee shops for an hour each and invite members of the community to come and meet with me to talk about their concerns. It is a wonderful way to directly engage with my constituents and to also support local small businesses.

Each day I meet and talk to people from York Centre and beyond, and they tell me how positive they are feeling about this government's actions so far. I talk to parents of young children who now have the support they need to make ends meet. The Canada child benefit introduced in this budget, the benefits that would be indexed to inflation by this bill, is a revolutionary program to help the middle class and those working hard to join it.

I have met far too many families who constantly struggle to keep up with expenses. These are single mothers who face the challenge of supporting their children on a single income, and parents who face stagnant wages as the cost of raising their families increases. This is why the government introduced the new Canada child benefit. It is to give Canadian families more help with the high cost of raising children.

The Canada child benefit is simpler. Most families receive a single payment every month, tax free. Families do not have to pay taxes on payments. It is better targeted to those who need it most. Low and middle-income families get higher payments, and those with the highest incomes receive less than under the previous system.

It is also much more generous. Families benefiting will see an average increase of almost $2,300 in the 2016-17 benefit year. With the Canada child benefit, nine out of 10 Canadian families are receiving higher monthly benefits, and hundreds of thousands of children are being lifted out of poverty. To ensure that benefits match the cost of living, these benefits will be indexed. I cannot stress enough how important this investment is for the middle class of Canada and particularly for my riding of York Centre.

An incredible number of young families make York Centre their home and raise their children there, but as our community grows, our infrastructure has to grow and adapt with it. As I talk to my constituents, many of the concerns they raise relate to how their neighbourhoods are affected by aging infrastructure and how to adapt to growing density in their area. They are concerned about transit, about being able to get to work on time and about getting home at a reasonable hour.

It is unreasonable for someone who lives in York Centre and works in downtown Toronto to have a two-hour commute, when it should take less than 45 minutes. It is unreasonable to wait in traffic for an hour to move half a kilometre. This is not hyperbole. It is the daily reality faced by too many of my constituents.

On Dufferin Street at Finch Avenue, thoroughfares in York Centre, there is near constant gridlock. Residents in my riding waiting for a bus can wait for almost an hour to find one they can board. Residents suffer, businesses suffer, and our economy suffers because of these harsh realities. This intersection is also listed every year near the top in the annual CAA worst road for driving survey, another manifestation of our crumbling infrastructure.

There is a consensus that investing in infrastructure is the right thing to do, which is yet another reason I am proud of this government's investment in our country's infrastructure.

When we invest in our country and our communities, we are not just helping Canadians now but are investing in greater economic growth for the long term. The benefits will be felt by our children and by our children's children.

Budget 2016 is committed to doubling infrastructure investments over the next 10 years, including dedicated funding for public transit. We are working in partnership with all three levels of government to build rapid transit that will benefit communities for years to come.

What does this look like? In York Centre, we are seeing investments in transit across the board. The Spadina subway, which ends in my riding at Downsview, is being extended with federal funding, and we can expect it to open next year. This is just the beginning. The ambitious 10-year infrastructure investment presented by the government is a bold plan that will spur growth and help this country and York Centre get moving again.

It is not just transit. Community infrastructure and investments in affordable housing will help make our cities and communities more livable and more affordable.

York Centre has an aging stock of affordable housing, and families are deeply affected by the lack of availability. There is a 97,000-family wait list for Toronto community housing. As our population ages, we are facing shortages of affordable housing that meets seniors' needs as well.

I hear these concerns nearly every day from constituents concerned about being able to afford retirement, both those looking to retire and those who are currently retired. They worry about being able to stay in their homes. That is why I am pleased that budget 2016 is investing $2.3 billion over two years to give Canadians greater access to more affordable housing.

Far more than just bricks and mortar, infrastructure is a key driver of any community's social development. That is why the government recognizes that investing in infrastructure is essential to equipping municipalities with the building blocks they need to support a high standard of living for all Canadians.

Investing in public infrastructure is about creating good, well-paying jobs. It is about protecting the environment and improving public health. It is about developing recreational and cultural centres where people can enrich their lives and strengthen community ties.

I was privileged to announce back in June funding for the Jewish community centre's new campus in York Centre. This investment will lead to an incredible number of community resources being made available to young families, students, and seniors: fitness and recreation programs and facilities, health and wellness programs, arts and culture, and early child education. Healthy, active, well-connected communities are happier communities, and this investment will make a real difference in the lives of those who live and work in York Centre and North Toronto.

On a personal note, when I first moved here from Scotland as a teenager, my mother and I frequented the Bathurst Jewish Community Centre where this expansion is taking place. It was an essential resource for us when we felt like strangers in a big city, a feeling I know is shared by so many new immigrants today, many of whom call York Centre home. I remember the fun I had taking drama classes and doing sports programs in the gym. My own kids shared that positive experience there as well.

As MPs, we know the significant needs that exist among young families, new immigrants, and seniors, to name just few of the groups that will immediately benefit from the investment in our community infrastructure.

I think I have made clear the benefits of this government's economic plan as laid out in budget 2016 that would be implemented by Bill C-29. I am proud of the investments we are making and will continue to make in strengthening and growing our economy.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Mr. Speaker, the Liberals have been asked this question again and again. If they wanted to help middle-class Canadians, why did they choose income tax changes to help wealthy Canadians?

More than half the people in the member's riding make less than $45,000, so they are not going to benefit at all from this so-called middle-class tax benefit. The child benefit the Liberals like to talk about will not help those families get the child care they need.

How is this budget going to help middle-class and lower-income families in the member's riding?

[Michael Levitt, Liberal, York Centre, ON]

Mr. Speaker, as I said at the start of my speech, I am spending a lot of time in my community listening to people's reactions to our budget and to the plan we promised and are putting into action now. I have to say that I am hearing from the middle-class families in my riding, I am hearing from the seniors, and I am hearing from the people on the front lines. Contrary to the member's position, I am hearing that they are happy with the plan this government has put in place and are happy with the plan we are actioning and will continue to action.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Mr. Speaker, the member spoke at length about how he is listening to his constituents and to those in his community. I am curious to know if he has had many people come up to him and say that a carbon tax is a positive thing.

[Michael Levitt, Liberal, York Centre, ON]

Mr. Speaker, I can answer the member's question unequivocally. I have heard from people from across my riding and across my city. In fact, I have heard input from Canadians across the country who understand that in today's world, economic growth and environmental protection must go together. It is not an option anymore. Yes, the residents of York Centre, the people I speak to on the front lines, understand the need to protect our environment, and they understand that it is something that is going to be good for us, for our children, and for our children's children. In response to the member's question, the answer is yes.

[James Maloney, Liberal, Etobicoke—Lakeshore, ON]

Mr. Speaker, as a fellow Toronto-area member of Parliament, the member's comments on affordable housing resonate with me, because living in my riding of Etobicoke—Lakeshore, I see the need for improvements in affordable housing. It is one of the reasons I ran in this last election, and it is one of the reasons I am so proud to be part of this government that is making such great strides in that area.

I am wondering if my friend from York Centre could elaborate a bit more and share some specifics with respect to the impact this government is having on affordable housing in York Centre.

[Michael Levitt, Liberal, York Centre, ON]

Mr. Speaker, this is a huge priority, not just for our government but for me as a front-line MP. I see the problems associated with the decline in affordable housing stock, particularly in the city of Toronto. This is an enormous problem. As I mentioned, 97,000 families, not individuals but families, are waiting for affordable housing. There is a real lack of affordable housing that has been built over the last decade-plus.

We are committed to working with different strategies to achieve the expansion of affordable housing. In my own riding, we have private groups and charities that have also contributed to affordable housing for seniors. We have non-profits that are teaming up with different levels of government to increase the affordable housing stock.

This must be a priority. The needs are so great. The existing housing stock is crumbling. I am proud that we are investing not just in new affordable housing but in the repair of existing housing. It is a priority, and it will continue to be.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Mr. Speaker, when we are faced with 200 pages of legislation, sometimes it is very difficult for us to put a human face on the implications of the legislation. I am here today to do just that.

My constituents elected me to be a strong voice for them here in Ottawa. Guess what? Today, I am going to do that. I want to give the people in this House a little lesson on what it is like to be in Alberta right now, and what this means for the people in my riding. In 2014, 20% of Canada's GDP was produced by Alberta, which represents only 12% of the Canadian population. We have always punched above our weight. We have always done our part. We have always supported the concept of Canada as a greater whole. We have never complained about it.

Other people in other parts of the country have looked at us, derided us, and derided our industries, but we always contribute to Canada. We have always been there for Canada. We contribute billions of dollars of equalization payments to prop up failed governments, like the Ontario Liberals, which spend billions of dollars on wasteful projects, and still we do not complain.

Alberta and the people in my riding are not just these numbers; they are people. Right now, thousands of them are out of work, thousands of them. In just about a year's period, Alberta and especially Calgary, especially my riding, went from the national rate of unemployment to nearly 10% unemployment. Let us think about that for a second. Let us think about what it means for a region to have such a dramatic, significant decrease in employment in such a short period of time.

It means that everybody is affected. Albertans do not know anybody who does not have somebody out of work. It is their mom, their dad, their spouse, their kid, their neighbour, their babysitter, their teacher; it is everybody. Do we know what that does to a community? It devastates a community. It takes the soul out of a community.

When I go home and talk to people, they are furious because they want to work. We are a proud people. We do not want lip service from the government. We want action. The very soul of our province depends upon it.

There is a 30% vacancy rate in downtown Calgary. That means that swaths, whole floors of buildings, in downtown Calgary are vacant right now. When we visualize that, we can think about all the people who are sitting at home right now who just want to work. They just want to contribute to the Canadian economy, but they cannot.

Every once in a while, I will hold a job or a career services fair in my riding, and usually a few dozen people show up. This is a service fair where we have educational institutions and different employers come in. More than 500 people showed up on a Saturday morning. There was a wait list to get into this event at a church. That is how bad it is.

These are people who cannot pay their child support payments and their vehicles are being repossessed, and we are coming into the Christmas season. Their credit cards are maxed out, their severance has run out, and they are trying to figure out how they are going to make ends meet for their families. They are not even looking at Christmas presents right now. Our food bank usage is going up. In our local newspaper, there was a giant front-page story about how women in Calgary are having to go into prostitution to make ends meet. Do members know what it is like to come home to a spouse who has not worked for a year? Do members know what that is like?

I hope no one in this place has to feel that. That is what is happening in my riding right now, and yet we have this—this, right here. Do members know what this has? It has sweet fudge all for my riding, nothing.

Albertans look at this and they ask, “Where is our government? Why are we not in here?” There is nothing here for them, except this. There is something all right. I am sorry, constituents; there is something. There is a giant increase in their taxes. They are down, they are out, they have paid their dues, but the government wants to take more of their hard-earned money to waste on its ineffective and inefficient government.

Let us talk about that. How is the government going to take more of their money? First of all, it is implementing a carbon tax. There is no space to have a pragmatic debate about climate change, with the government, and there is no space to have a pragmatic debate about the people in my riding who are unemployed in the energy sector right now. They have been called dirty. The government uses terms like “clean jobs” or “dirty jobs”. It is a moral statement on the lives of the people in my riding.

When the government introduces or implements a $50-a-tonne price on carbon, what does that do? Is that actually going to reduce greenhouse gas emissions? No. Can the government produce any data on price elasticity of carbon that shows that demand is actually going to decrease at that price? No, it cannot.

What does that mean? It means that it is essentially implementing a GST, an increase in the GST at a time when our province is in dire straits. That is a big fallacy and it is a big problem, and it is all right here. Here is a gift for Alberta.

The other thing that the government is trying to do right now is cripple small business. The government made a big song and dance around small businesses a year ago. It tried to court them, but it is a time when—and this survey came out today—94% of the small businesses in Alberta have no faith in our provincial government. There is a great indicator to show that we should invest in business in Alberta: 94% of small businesses do not have faith in the provincial government. The present government is doing what?

[An hon. member]

A carbon tax.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

A carbon tax, Mr. Speaker, yes; of course it is doing that. That is very helpful at this point in time.

The government is increasing CPP premiums. That amounts to a payroll tax. That, in this business climate, is a small business choice between saying, “Should I keep two employees or one employee?” That is what that is code for.

It is raising EI premiums.

This is what the government is doing with this. This is not a plan. This is a 200-page road map on how to waste my constituents' money. I cannot support that.

Why is the government not talking about how to retain skilled labour? Why is the infrastructure minister not talking about how to implement infrastructure funds and get construction workers back to work in Alberta? Why does the government treat Alberta like a fart in the room that nobody wants to talk about or acknowledge? That is where my constituents have been with the present government for over a year. We are tired of it.

I watched what happened in Brexit—oh, and by the way, constituents, as I am giving this speech, there are Liberals members across the aisle who are laughing at me, and they are laughing at my constituents.

I watched what happened in Brexit, and I know that, if we do not have a space to talk about where all people can prosper and where we do not make value judgements on the efficacy of an industry or what its role is, if we do not have a pragmatic conversation, if it is just a talked-down, dictated policy from elite academics who do not humanize what is happening, then we have failed in our role as legislators. I am not going to let that happen. I really hope the government will rethink this carbon tax in light of what is happening in the U.S. I absolutely support a smart climate change policy that does not negatively impact our province and our country.

The other thing I hope this government will do, as it rolls out this tax increase mess, is stop denigrating my constituents and start standing up for all regions of the country, including Alberta. When members stand here and say it is just commodity prices and it will rebound, that is not the case. When they ask how we can support their carbon tax, they should realize that industry is not CEOs; it is the workers, the people who are sitting out of work at home right now. That is who we need to help.

The reality is that we are a proud people. We will do our part. We will stand up for what is right. We will stand up for the country. However, our voices will be heard. We will not be silent. I encourage all of my constituents, who want their voices to be heard, to participate in the Alberta jobs task force, which my Conservative colleagues in Alberta have implemented. I encourage them to come out, write these MPs from downtown Toronto who stand up here and say that it is okay, that they are dirty jobs and we do not need to worry about them. This is about Canada, and if we do not stand up for Alberta, if we do not have a strong Alberta, we do not have a strong Canada.