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

[Dan Ruimy, Liberal, Pitt Meadows—Maple Ridge, BC]

Mr. Speaker, I thank my colleague for her question.

When we talk about the CCB, there is a tendency to focus on the small thing. What we need to be focusing on is what it is actually impacting. I have middle-class constituents in my riding who in pre-budget consultations did not think that the CCB would benefit them. When they call me and say that they are getting $2,500 more, to me that is real change. That is the direction we want to be going in with this government and with our country. Putting money in their pockets is the important message that we have to keep sending.

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Speaker, I just want to give the member a chance to comment a bit. He talked about how higher taxes in the form of a carbon tax and increased CPP payroll taxes would put more money into people's pockets. How is this possible? There will be no benefit from the CPP changes for 25 or 35 years down the road. How would a carbon tax and a CPP tax put money in people's pockets?

[Dan Ruimy, Liberal, Pitt Meadows—Maple Ridge, BC]

Mr. Speaker, I come from British Columbia where we have had carbon pricing for some years now. The province has chosen to give that money back through income tax cuts.

The member mentioned CPP as a tax, but the CPP is not a tax. It is an investment in which people can put that money and then get it back down the line.

I am going to come back to saying the same thing. When we talk about investments, these are long-term strategies, and when we really look at it, the child benefit is all about putting more money in pockets. It is not misdirecting anyone. It is not saying, “Take this tax credit, take that tax credit and, by the way, we are going to tax people on the money that they are getting”. No, this is a tax-free, easy benefit directed into people's pockets. That is what Canadians are looking for and that is what would help them the most.

[The Deputy Speaker, Bruce Stanton]

Before we resume debate, I will let the hon. member for Windsor West know that there are only about four minutes remaining in the time for government orders this afternoon, but I will recognize him just the same. He will have four minutes for his remarks.

The hon. member for Windsor West.

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, it is a pleasure to rise here today to contribute to a very important debate about taxpayers' money and where this country is going.

One of the interesting things about the budget allocation process is the government's move to move toward public-private partnerships with respect to infrastructure, something that it did not campaign on in the past election but that is driving its actions right now because of the fire sale required to pay for some of its promises and its budgetary practices that are way out of hand. In fact, we have gone from a promised $10-billion deficit to a deficit of upwards of $40 billion. I would suggest that by the end, it will be higher than that.

Here is a situation that is interesting. On Monday, the Prime Minister and his assembled cabinet spent an afternoon at the Ritz-Carlton in Toronto to basically showcase and sell off parts of Canada, especially infrastructure, to the private sector. The private sector on that day included not only private equity firms whose investors we do not know, but also non-democratic countries who have their own infrastructure banks and monetary allotments to buy Canadian companies.

I remember one of my first notations in the House of Commons was when China Minmetals was wanting to buy Canadian natural resources and the Investment Canada Act had no national security screen on that. I worked hard to get an amendment to have such a screen as part of the Investment Canada Act because, at that time, we had a non-democratic Communist government that was using its financial resources to purchase Canadian natural resources. The ironic thing is that at that time, it was the Paul Martin administration that was selling Petro-Canada. So it was okay for the Communist government of China to purchase gas assets and resources and companies in Canada, but it was not good for Canadians to own a stake in their own company and their own natural resources, which they had already invested in in the past and were being dividends.

In fact, when we look at the books, we will find out, because we had a fire sale on, that the government lost hundreds of millions of dollars in the months after that because prices spiked after it had its fire sale. It was an interesting thing that took place and now, to this date, we have less.

When we look at the economics of this, we are looking at P3s being done in a country like Canada, which has one of the lower debt levels and some quite significant infrastructure assets. We are showcasing the strength of our capacity in that regard. We also have some of the lowest borrowing rates out there, which is important to note because those lower rates create these opportunities. Yet, the government still wants to go outside our country to bring in resources from other countries and from other private equity firms for them to make a profit over what Canadians have already paid for.

It is bizarre. When we think about the future for our children, we are sandbagging them, just like we did on the Highway 401 system that allowed these companies to get their assets and then pay for their profits at the expense of our children in the future.

I know I have to conclude, but it is a bizarre way of passing on a legacy to our kids that is supposed to about economic and fiscal responsibility.

[The Deputy Speaker, Bruce Stanton]

It being 5:59 p.m., pursuant to order made earlier today, it is my duty to interrupt the proceedings and put forthwith every question necessary to dispose of the second reading stage of the bill now before the House.

The question is as follows. Shall I dispense?

[Some hon. members]

Agreed.

No.

[The Deputy Speaker, Bruce Stanton]

[Chair read text of amendment to the amendment to House]

Is it the pleasure of the House to adopt the amendment to the amendment?

[Some hon. members]

Agreed.

No.

[The Deputy Speaker, Bruce Stanton]

All those in favour of the amendment to the amendment will please say yea.

[Some hon. members]

Yea.

[The Deputy Speaker, Bruce Stanton]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Deputy Speaker, Bruce Stanton]

In my opinion the nays have it.

And five or more members having risen:

Call in the members.

(The House divided on the amendment to the amendment, which was negatived on the following division:)

Vote #146