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

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

Madam Speaker, I am sure the member would not be surprised if I said I totally disagree with his assessment. At the end of the day, what we have seen is a proactive government that has come up with a plan that will put more money in the pockets of Canada's middle class and those aspiring to be a part of it. It enhances the child benefit program. It has the most significant infrastructure from every region of our country.

I believe that Canadians understand and appreciate the degree to which the government truly cares about the economy, and we see that in the actions the government has taken. We could also talk about trade and so forth.

Would the member not agree, at the very least, that the Canadian economy as a whole is doing better than other countries around the world in economic performance, and acknowledge that there is a different approach and style of government between this government and the Harper government? We have a more proactive government wanting to see the economy do better, and, in particular, a special focus on the middle class. That was lacking from the previous Harper government.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Madam Speaker, if the member had listened to my speech, he would know that I said there are areas, such as the child care benefit changes and the middle-income tax cut, as the Liberals like to call it, that were part of the platform and they had a mandate to implement that.

I would step back and say that we have projections from the parliamentary budget office that the tax cut will cause us to go into deficit. If we are reducing taxes for people who are in the $100,000 to $199,000 income range, and they end up having to pay that money back later on, it is a wash.

Going to the child benefit, all you are doing is redistributing the same amount of money but in fewer hands. Bloomberg did a study that said only 15% of that amount has actually gone out, when your government expected 50% of that to be invested in the economy.

[The Assistant Deputy Speaker, Carol Hughes]

I want to remind the member that when you are speaking, you need to be speaking to the Chair and not to the individual members. Resuming debate.

[Randy Boissonnault, Liberal, Parliamentary Secretary to the Minister of Canadian Heritage]

Madam Speaker, I am honoured to share my time with the member for Gatineau.

It is with immense pleasure and pride that I rise to speak in favour of Bill C-29, A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures.

Our government knows that many Canadians are struggling to get ahead. These struggles are very real in my home province of Alberta, where people are continuing to face an economic downturn brought on by the extended low price of natural resource products.

The people of Edmonton Centre, and Albertans at large, asked for a partner in the federal government, and our government has responded with historic investments. It did so and will continue to do so because it knows that Alberta helped the Canadian economy for years. It is committed to helping Alberta in its time of need. It also did so and will continue to do so because it makes good economic sense at this time.

What exactly has the federal government done? It has provided $250 million to the Government of Alberta as a fiscal stabilization fund; $750 million to the EDC to assist with companies that are looking to export and provide financial services to SMEs in the oil and gas sector; $500 million from the Business Development Corporation for loan guarantees and services to SMEs directly in the oil and gas sector; and recently, another $0.5 billion from the BDC, matched by the Alberta Treasury Branch Financial corporation, to help with stressed businesses.

In addition to that, there was $307 million through the disaster financial assistance arrangement, through the Government of Canada to the Province of Alberta, to help Fort McMurray recover. That was the first time in history that the Government of Canada has moved so quickly to respond to a natural disaster in partnership with a provincial government.

There is a growing consensus in Canada and around the world that governments need to invest, not only to boost short-term economic growth, but to set the stage for long-term and sustainable growth as well. In fact, Christine Lagarde, president and CEO of the International Monetary Fund, has said that Canada's investment strategy needs to let loose, needs to go viral around the world, because our policies are smart economic policies for the long term.

Canada has the lowest debt to GDP ratio of any G7 country, and interest rates are at historic lows. Now is the ideal time for Canada to invest in its future success. That is why Canadians elected us on a platform to make historic investments in public transit, green infrastructure, and social infrastructure.

These investments mean good, well-paying jobs for tradespeople, engineers, architects, labourers, and suppliers. Each of these jobs has a family behind it, and each of these jobs means that those families have income to support other businesses. Such investments are not only important, they are vital for Canadians and Albertans during these tough times.

That is why our government, working with the Government of Alberta, is investing $1.08 billion in public transit, water maintenance, in Alberta. That multiplier effect will mean over $3 billion in real projects taking place on the ground in Alberta. It is why we have worked with the Government of Alberta to invest $130 million more into affordable housing. It is why we have made the historic down payment on the Fort McMurray rebuilding program.

This is only phase one. This government is there for Alberta now, and will continue to be a partner in growth for all Albertans. We understand, as well, that a strong economy starts with a strong middle class. When middle-class Canadians have more money to save, invest, and grow the economy, everyone benefits. A strengthened middle class means that hard-working Canadians can look forward to a good standard of living and better prospects for their children.

Too many middle-class families are having trouble making ends meet with the tough times in Alberta. Our government stepped up to the plate and implemented the Canada child benefit, a coherent, common sense policy that will help nearly nine million Canadians every year. The time has come for the Government of Canada to help the families who need it most and give them the money they need to be able to afford to raise their children.

It is why our government created the new Canada child benefit, or CCB, which will directly help middle-class families with the costs of raising their children. I have heard it in my own riding. Time and time again, people have come up to me and said, “Thank you. I am receiving the monthly cheques. I no longer have to make the choice between food for my children or clothes on their backs. I no longer have to make the decision between school fees or paying my rent.”

Edmonton families are using the support from the CCB to invest directly in our community in a variety of ways, from enrolling their children in after-school care, sports programs, music lessons, leadership activities, and even saving for their own post-secondary education. It is startling to think that some of the most vulnerable families in our community have trouble even putting food on the table.

In this country, too many children are still living in poverty.

As members already know, on July 20, eligible Canadian families started receiving their CCB payments. These replace previous benefits and provide more support to nine out 10 families in this country.

We ended the damaging legacy of the previous government's poorly thought out taxable benefit that left thousands of families with a surprise tax bill at the end of the year. I heard this at the door, that people were surprised and not happy. They were disappointed by that mis-thought-out policy.

The Canada child benefit is simple. It is tax-free, and it targets the families who need it most.

Our Canada child benefit is improving the well-being of families across the country, and we are giving them an opportunity to succeed. In Alberta alone, it is raising 46,000 children out of poverty and giving each one of them the opportunity for a better life.

Now more than ever, it is important that post-secondary education remains affordable and accessible. I have four remarkable post-secondary institutions in my riding: NorQuest College; the Northern Alberta Institute of Technology, otherwise known as NAIT; the MacEwan University; and the Enterprise Square campus of my alma mater, the University of Alberta. I am so proud to represent these campuses and the tens of thousands of students who attend them.

Students must have access to meaningful work at the beginning of their careers and not be burdened by increasing student debt. In this regard, budget 2016 makes post-secondary education more affordable for students from low and middle-income families and will make it easier to repay student debt. This is enabling the economy of tomorrow. I know, because I had the opportunity to access student loans and debt forgiveness. I paid my loans back, but that made all the difference in being able to pursue my own education when my family was not able to support my tuition or living costs. That is exactly what we are doing now to make post-secondary education more affordable for more Canadian students.

We also need to ensure that we are supporting Canadians who need support right now. Therefore, Canada's employment insurance program provides economic security to Canadians when they need it most. Whatever the circumstance, no Canadian should struggle to get the assistance they need.

To make sure these systems are in place, we have proposed several changes to the EI system. Changes to eligibility rules will make it easier for new workers and those re-entering the workforce to claim benefits. To ease the burden, our government has also extended employment insurance benefits in all regions in Alberta. The waiting period will also be reduced from two weeks to one week, which will provide unemployed workers with hundreds of more dollars at the time they need it the most.

Our budget has made significant new investments to support seniors in their retirement years. Increased benefits will ensure that Canadian seniors have a dignified, comfortable, and secure retirement so that my mom and all of our parents and grandparents are supported as they age.

As a matter of fairness for all taxpayers, Bill C-29 will prevent underground economic activity and tax evasion and will combat tax loopholes. We will take action to prevent tax evasion both at home and abroad. The government will invest in effective administration and enforcement of tax laws and will propose actions to improve the integrity of Canada's system.

Hard-working small business owners who create jobs and benefit the economy are the ones who need, and should be benefiting from, tax measures. Our efforts will improve the fairness and integrity of the tax system and contribute to fiscal sustainability. That is exactly what Albertans expect from us.

Finally, Canada's financial sector is world renowned and remained stable through the 2008 financial crisis and its aftermath. We have the last Liberal government to thank for putting the fundamentals in place for the most robust financial system in the G20. To keep Canada's financial sectors strong, the government will strengthen the framework that regulates financial institutions, and we will balance the need for stability and competition with the needs of consumers and businesses.

Bill C-29 also makes it clear that the shareholders and creditors of Canada's largest banks are responsible for their risks, not taxpayers. In this way, Canadians will not be stuck with the tab in the event of an economic shock.

The measures set out in this budget are essential to the proper development and well-being of all Canadians, including those who need it most, and that is why I am asking all of my colleagues in the House to vote in favour of Bill C-29.

Again, our budget is delivering on the needs of Albertans and Canadians. We were elected on a promise to increase prosperity for all Canadians, and that is a promise we are proudly delivering on.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Madam Speaker, the eloquence and quality of my hon. colleague’s presentation are truly excellent. They were excellent as well during the election campaign. In his own speech, he himself raised the fact that the Liberals had promised a whole series of things in their latest plan, in the last election campaign, and one of those things was to incur just a little deficit of $10 billion over three years.

The first thing we found out, and are now realizing, is that that little $10 billion per year is mutating, not into $15 billion, not $20 billion or $25 billion, but $30 billion, maybe even $35 billion. Some observers are even talking about $40 billion for the first year.

Does my colleague consider that making promises during an election campaign and not keeping them afterward is a way of respecting all of his fellow citizens and Canadian voters?

[Randy Boissonnault, Liberal, Edmonton Centre, AB]

Madam Speaker, I thank my hon. colleague for his question.

It should be noted, now that we form the government of Canada, that our approach ensures that our economy will experience full growth. That is what is behind all of our planning.

Our two strategies, our two main themes, are to invest in our economy with historic infrastructure investments, and to provide impetus for and increase the number of immigrants we invite into our country.

It is important not to forget that the ratio of our deficit to our nearly $3-trillion economy is among the lowest in the world. We are going to ensure that that ratio will continue to fall. That is what we will be talking about, and that is what we will be delivering to Canadians.

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

Madam Speaker, during the election, we had 12 community debates in my riding of Kootenay—Columbia. In every one of them, the Liberal candidate talked about how the Liberal Party, if elected, would lower the small business tax rate from 11% to 9%.

Small businesses make up almost 95% of the businesses in Canada and are very important in my riding and across Canada.

I would like to ask the member, what happened to that promise? Should a promise made during an election not be kept once a party is actually in government?

[Randy Boissonnault, Liberal, Edmonton Centre, AB]

Madam Speaker, I think what is important to note, and it is interesting that you had 12, and I think we had 13, and one of the things—

[The Assistant Deputy Speaker, Carol Hughes]

I would remind the parliamentary secretary to address the answers and questions to the House.

[Randy Boissonnault, Liberal, Edmonton Centre, AB]

Yes, Madam Speaker.

What was important in our campaign, and since, is to make sure as a government that the ratio of our deficit to the size of the economy remains among the lowest in G7, and certainly in the G20.

What is important is that we continue investing in small businesses.

As my hon. colleague knows, the more money we have in the pockets of middle-class Canadians, the more they will spend in their local economies and the more that will feed small business. We know, as well as the hon. member, that small businesses are the backbone of our community and our country. We will continue investing in programs that will benefit small businesses from coast to coast to coast.

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

Madam Speaker, the Government of Canada, in the last number of months, has increased the GIS, amended the CPP agreement, and decreased the age of retirement from 67 to 65.

Would my colleague comment on seniors and how they have benefited under the government thus far?

[Randy Boissonnault, Liberal, Edmonton Centre, AB]

Madam Speaker, it was important to us in the campaign and has been since we have been in government to make sure that we provide for the middle class, including seniors. After listening to Canadians for two years before the last election, it was clear that some of the most vulnerable Canadians are seniors. That is why we increased the GIS provisions for the most marginalized and poorest Canadian seniors; why we also made historic changes to the CPP; and why we are very committed to making sure that seniors, including my mom, aunts, and uncles, are able to retire in dignity across the country.

[Steven MacKinnon, Liberal, Gatineau, QC]

Madam Speaker, I thank my hon. colleague from Edmonton-Centre for sharing his time with me.

As always, it is an honour and a privilege to represent the citizens of Gatineau in the House. It is a great honour for any parliamentarian to represent the views and perspectives of their fellow citizens.

It is my great pleasure to add my support to Bill C-29, a second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures.

Last spring, our government tabled its first budget. On the whole, this is a budget that respects and keeps our election commitments. Furthermore, it is based on judicious investments to make our economy grow, to better help our middle class, and to ensure that our communities and our country continue to grow. Bill C-29 is also a follow-up to the plan of my hon. colleague the Minister of Finance, the plan for economic growth and fairness in Canada.

This bill provides measures that will help families, provide seniors with greater flexibility, protect consumers, and improve the fairness and integrity of the tax system.

When working-class and middle-class Canadians have more money to save, invest, and grow the economy, everyone benefits. That is why, in budget 2016, the government decided to invest in the Canadian economy to set the stage for long-term growth. Canada has the lowest debt to GDP ratio of any G7 country and interest rates are at historic lows. Now is the ideal time for Canada to invest in its future success: in our young people, in our communities, and in ourselves. When we have an economy that works for the middle class, we have a country that works for everyone.

My colleagues opposite spoke of the pressure on families. We all have in our ridings families looking for more flexibility, for help making ends meet every month, and for ways for their children to have an equal opportunity to succeed in life, go to university and take part in sports, art programs, recreational activities and so forth.

Speaking of investments, we on this side of the House put in place what is probably the most important social innovation of the past 10 or 20 years in Canada: the Canada child benefit. On July 20, families in Gatineau received their first Canada child benefit cheque, as announced in budget 2016. In the riding of Gatineau alone, the Canada child benefit is helping 10,600 families and 18,480 children.

The average monthly payment in Gatineau is around $520. That is $520 every month, tax-free, that can be used for food, skates, clothes, child care expenses, school supplies and more. That is $520 every month that goes back into the local and national economies.

On this side of the House, we are extremely proud of this social innovation, this benefit for the middle class, the parents in my community and all across Canada. It is the most important public policy in decades.

Moreover, under Bill C-29, the Canada child benefit will be fully indexed to inflation starting in 2020. This will ensure not only that this important measure will be sustainable, but also that benefits will rise every year starting in 2020.

The budget implementation act also supports our seniors by helping them to retire in more comfort and with dignity. In budget 2016, we repealed the provision in the Old Age Security Act that increased the age of eligibility for old age security and guaranteed income supplement benefits from 65 to 67, and allowance benefits from 60 to 62, over the 2023 to 2029 period. Budget 2016, also increased the guaranteed income supplement top-up benefit by up to $947 annually for the most vulnerable single seniors, starting in July 2016.

I do not know if it is the same for my colleagues, but I get asked by seniors what it means to have $80 more than expected at the end of the month. They ask me what that means for seniors on a fixed income and for their quality of life. Well, it helps them pay the rent and buy groceries, and it may even give them the means to take part in sports and other recreational activities, for example. That is very important at their age. I get comments like this a lot, as do all my colleagues in the House, I am sure.

This measure represents an investment of over $670 million per year, and will improve the financial security of about 900,000 single seniors across Canada.

That is not all. In this second budget implementation bill, we are delivering on the solemn promise we made in budget 2016 to support senior couples who face higher costs of living and are at an increased risk of poverty because they must live apart. We are all aware of cases where, unfortunately, because of health concerns or for other reasons, spouses are separated from one another because one of them has to be institutionalized.

When couples who are receiving the guaranteed income supplement and the spouse's allowance have to live apart for reasons beyond their control, each of them will receive benefits based on their individual income.

For seniors in such a situation, it will mean an average increase to household income of $3,500 per year. That is very important for our most vulnerable seniors, who will be treated more fairly and receive more help from the government through the guaranteed income supplement. These new measures enable the government to treat seniors with greater fairness and allow them to live with dignity in retirement.

Canadians deserve financial consumer protection that keeps pace with their needs. We have seen this debate all over the world in the wake of the financial crisis. Bill C-29 would amend the Bank Act in order to strengthen and modernize the financial consumer protection framework. The financial sector plays an important role in supporting economic growth. Canada's financial sector weathered the 2008 financial crisis well because it was built on solid foundations. The government is seeking to build on this strength.

Bill C-29 amends the Bank Act to consolidate and streamline provisions that apply to a bank or an authorized foreign bank in relation to the protection of customers and the public. This was another consumer protection commitment our government made in budget 2016 that will contribute to the financial security of Canadians.

The federal government is showing leadership by adopting targeted measures to better protect consumers of financial products. Regarding the tax system, our government committed to implementing an action plan to combat international tax evasion and aggressive tax avoidance.

All these measures contained in Bill C-29 or in the budget deliver on our commitment to get Canada's middle class back on its feet and make it once again a priority for the Government of Canada.

[Scott Duvall, NDP, Hamilton Mountain, ON]

Madam Speaker, during the election, the Liberals said that they would invest in Canadian infrastructure. That is on page 15 of their platform. During the last couple of weeks there have been reports suggesting the Liberals are considering selling off some of our public infrastructure, such as airports, bridges, and ports, which were not mentioned in their platform.

Since budget 2016, the government has mused about asset recycling and flywheel for reinvestment. What do the Liberals mean by these fancy words? Is it to privatize our public infrastructure?

[Steven MacKinnon, Liberal, Gatineau, QC]

Madam Speaker, the commitment we made during the campaign was to double infrastructure spending to about $120 billion over 10 years, compared to the $65 billion mentioned or promised by the previous government. That is what we are going to do.

In communities from coast to coast to coast, including in Gatineau, we are starting to feel the effects of our basic infrastructure spending in social housing, recreational infrastructure, and so on.

Our platform also included the possibility of increasing our infrastructure spending through an infrastructure bank or some other alternative funding mechanism. The goal was to offer Canadians other ways to fund strategic infrastructure in order to increase exports, create jobs, and boost trade.

I hope we will continue this debate.