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.

Bill C-29--Time Allocation Motion

[The Assistant Deputy Speaker, Carol Hughes]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Assistant Deputy Speaker, Carol Hughes]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Assistant Deputy Speaker, Carol Hughes]

In my opinion, the yeas have it.

And five or more members having risen:

Call in the members.

(The House divided on the motion, which was agreed to on the following division:)

Vote #144

Budget Implementation Act, 2016, No. 2

[The Speaker, Geoff Regan]

I declare the motion carried.

I wish to inform the House that because of the proceedings on the time allocation motion, government orders will be extended by 30 minutes.

The House resumed from November 14 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 and of the amendment to the amendment.

Second Reading

[Robert Aubin, NDP, Trois-Rivières, QC]

Mr. Speaker, let us imagine that I am a television game show host who has a multiple choice question for those who are following the debate on Bill C-29.

I will give a few numbers and they can tell me which political party those numbers make them think of. For example, I am thinking of a bill with 146 clauses. That is a fairly common occurrence. However, the bill I am thinking of also amends 13 laws. People may now be starting to get a better idea of which party I am talking about. Another hint is that the bill is 234 pages long and has to be examined at record speed. Also, as of just a few minutes ago, the bill became subject to a time allocation motion, or what is commonly known as a gag order. If people answered “the Conservative Party”, they are incorrect, but I understand their reasoning. What this clearly shows is that the Liberal Party does not seem to have brought real change. Once again, the government is using the same old strategies to ram through bills that should be debated more extensively in the House.

That is exactly the situation that we find ourselves in right now. Once again, when it comes time to debate a bill like Bill C-29, a second act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures, we do not have enough time.

There are some aspects of this bill that I could get on board with. However, since I have only 10 short minutes to share my views on this bill, I will focus on the aspects that I find completely incomprehensible and even surprising.

The first example I would like to talk about is the infrastructure bank. There was no mention of this type of measure during the election campaign. It came as a total surprise, and God knows that not all surprises are good ones. We have to discuss this. For those who are watching, I would like to show just how harmful this approach will be.

Taxpayers like me, hon. members, and all citizens heard no mention of this before. During the election campaign, the Liberal Party told us that it was going to invest heavily in infrastructure by borrowing money, supposedly because interest rates are so low. That message struck a chord, 39% of Canadians thought it was a good idea, and now we have a Liberal government. No matter how low the interest rates are, we are going to have to pay back these billions of dollars one day. I see no way to pay back these low-interest loans other than through taxation. We might feel a bit better if there were a plan for paying back these loans, but it seems that issue has been left for another day. The modest $10-billion deficit is now hovering around $30 billion.

Worse yet, now we learn something that was never mentioned before, namely that the government wants to privatize a significant portion of our public infrastructure. I want to emphasize the word “public”. The Liberal strategy involves transferring $15 billion earmarked for infrastructure into a bank that will be used as a lever to attract private investors.

The first problem is that those $15 billion, which are actually in the infrastructure bank, are earmarked for infrastructure projects of $100 million or more. The result is that $15 billion is taken out of the public infrastructure budget for projects under $100 million. A town like Trois-Rivières and a region such as Mauricie have much infrastructure they would need to build or upgrade, and these projects seldom come in at more than $100 million. The Liberals have just taken $15 billion that could have been used to fund these projects, and there will be interest to pay.

Once the $15 billion is in the bank, the government wants to attract many more hundreds of millions of dollars from private investors: pension funds, retirement plans, major corporations, and private investors.

Government finances and personal finances are subject to the same main principles of sound management. If I invest $100, I am looking for the best return. I imagine that those who are going to invest billions in a public investment bank will also want a return well above the low interest rate on the loans that the government talks about making. We even heard Michael Sabia, of the Caisse de dépôt et placement du Québec, say that he hopes for a rate of return of 7% to 9% on the investments made by the infrastructure bank.

Second, who will be paying these returns? The citizens, as always. I would remind members that they have already paid once by paying the interest on government loans. Now, they will be paying a second time by offering a return on the investments of private companies. If there is one thing we agree on, it is that Quebec and Canada have an infrastructure deficit. Our infrastructure is in bad shape and needs major investments. Many economists agree that we need about $500 billion. We could debate that amount, but let us just say that it is somewhere in that range. There is too much of a gap between $500 billion and $15 billion. They really need to do something else.

Too often, we forget to talk about how economists estimate that, over the past 10 years, as the corporate tax rate fell from 28% to 15%, the government missed out on $15 billion to $20 billion per year, money that it could not invest in updating our infrastructure. The government called its economic approach revolutionary. It said that corporations would inject the money they were able to save back into the economy, that they would create jobs, that everything would go gangbusters and be totally awesome, but in fact, that did not happen.

Even more unbelievable is the fact that the money corporations saved is now available to be invested in an infrastructure bank. Not only did taxpayers forgo the fair share that all members of society should pay, but also, if corporations take the money they were allowed to keep in the hope they would create jobs, and if they invest it in this bank, it will cost us to pay them a return on their private investments, which they expect to be between 7% and 9%, investments that they will make using money they saved at the expense of the public purse.

In other words, this is the third time that taxpayers, including me and my colleagues, have had to use their own money to pay for the very same public infrastructure, which will be private from now on. If we compare that to the $15-billion federal infrastructure fund and the hundreds of billions the government hopes to attract, it becomes clear very quickly that the government is going to become a minority in its own regime and that our public infrastructure will be increasingly privatized. Private infrastructure automatically means additional taxes, user fees, tolls, and so on. Imagine all the systems needed to ensure good returns.

I was hoping to address a number of other topics, including EI. We have some interesting ideas on that, such as coming up with a better definition for “suitable employment”, although it is not clearly defined in the act. However, nothing has been done so far regarding accessibility.

I also would have liked to talk about SMEs. We are still waiting for support measures for them. Instead, a promise to lower the tax rate from 11% to 9% has been broken. On top of that, nothing has been done to cap credit card rates and fees for our SMEs.

I will use the few minutes I have left to answer questions.

[François-Philippe Champagne, Liberal, Parliamentary Secretary to the Minister of Finance]

Madam Speaker, I had the pleasure of listening to the long speech given by my colleague from Trois-Rivières.

I would like to come back to the example that he gave, since there are people from the Mauricie and Trois-Rivières who are watching these proceedings.

People had a choice and they chose to vote for a government that invests in the middle class and Canadian families, a government whose budget implementation bill seeks to help young Canadians to succeed, improve employment insurance, improve our seniors' quality of life, support veterans, and strengthen fiscal integrity. That is why they voted for a Liberal government, our current Prime Minister's government.

I would like to ask the member for Trois-Rivières a few simple questions. Why is he against investing in Canadian families and our country's young people? Why is he against investing in our seniors and veterans? That is exactly what the budget implementation bill does. It invests in Canadians. Ambitious, confident countries invest, and that is exactly what we are doing. Why is he not in favour of that?

[Robert Aubin, NDP, Trois-Rivières, QC]

Madam Speaker, I will give an example which aptly demonstrates the dichotomy, or should I say the yawning abyss, between the message sent and the reality.

We come from the same region. People talk to me of the middle class, but the Liberals have now defined the middle class as people earning between $45,000 and $190,000, which does not apply whatsoever to the population of the Mauricie.

In Quebec, the median wage is $31,500. In the Mauricie, the median wage is a tad below that. No one in the middle class has benefited from the government’s income tax reductions, even though the government boasts of supporting the middle class. That is true of every example I could cite. But I will not cite them all, for I do not have enough time.

With regard to employment insurance and the support being offered to small business and individuals, there is an abyss between rhetoric and reality. It is for that reason that it will be an honour for me to vote against the bill.

[Anne Minh-Thu Quach, NDP, Salaberry—Suroît, QC]

Madam Speaker, I appreciated the speech by my colleague from Trois-Rivières, who points out a great many inconsistencies on the part of the government.

I will speak a little now about employment insurance. The people on an unemployment committee in my riding have told me that, with the application of the new rules, compassionate care benefits have increased from 26 weeks to 28 weeks. A sick person, however, can only receive 15 weeks of health insurance. That makes no sense.

Something else that makes no sense is the Social Security Tribunal of Canada, of which we have been critical for a very long time. New evidence can no longer be presented. The tribunal is used to review certain cases. However, people can no longer present new evidence or new facts.

What is more, a single judge represents both employer and worker. Before, there were three judges. What does my colleague think of this?

[Robert Aubin, NDP, Trois-Rivières, QC]

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

Every constituency office deals on a weekly basis with people grappling with employment insurance. All of the cases my colleague has mentioned have this in common: most of them will at least be eligible for employment insurance and will subsequently experience all of the problems associated with that. Most people are not yet eligible. That is the crux of the matter, the first thing that should be emphasized: how to set up measures that will make a plan accessible that is paid for by employers and employees. Fewer than four workers in 10 have access to EI when the worst thing that could happen, happens: they lose their job.

I would simply recall the notion of a universal 360-hour eligibility standard.

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

Madam Speaker, in his response to the Parliamentary Secretary to the Minister of Finance, what the member did not allude to is the fact that we have the middle-class tax cut. We also have the increase in the GIS and the increase in the Canada child benefit tax-free portion, lifting thousands of vulnerable seniors out of poverty and thousands of children out of poverty. I wonder if the member might want to provide comment on that aspect of the budget.

[Robert Aubin, NDP, Trois-Rivières, QC]

Madam Speaker, once again, I could give plenty of examples, but I will only give one, that of the Canada child benefit. In theory this benefit was supposed to be more generous than the Conservatives’ benefit.

I do some door-to-door in my riding, and people have very clearly understood that they are the ones paying for their benefit, which they will hand down from generation to generation. Since it will not be indexed until 2020, it will lose its value and revert to the equivalent of what we had previously.