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

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Mr. Speaker, my hon. colleague across the way seems to think that perhaps the louder he speaks, the more the opposition will believe him.

For the benefit of our hon. colleague across the way, the Liberals have created no new jobs. They are spending billions of dollars on the backs of our future. They are going to tax the next generation, which they say is the most important generation coming forward, and they want to do things for that next generation.

So that our hon. colleague can perhaps understand it, hear it, and maybe believe it, the Liberals have created no new jobs. What are they going to do? What is this budget going to do to create jobs in my riding?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, the member is wrong. He can tell that to those holding the 139,600 jobs that were actually created with assistance.

Again, members across the way heckle that some of those are part-time jobs. Well, part-time jobs, full-time jobs, jobs are a good thing. The point is that the member has it wrong.

At the end of the day, we have a government that is putting in place an economic strategy that would in fact benefit all Canadians. The member made reference to tax breaks, but he will be standing up shortly to vote against one of the most significant tax breaks for the middle class. I do not know how he justifies that to Canadians and to his constituents.

We are literally going to be putting hundreds of millions of dollars in the pockets of many of his constituents.

[Dan Vandal, Liberal, Saint Boniface—Saint Vital, MB]

Mr. Speaker, I thank the member very much for an impassioned and reasoned speech. There are so many good things in this budget for Manitobans, both in the city and outside of the city.

For example, the town of Gimli in Selkirk—Interlake—Eastman is getting $3.5 million for a new water treatment plant. The town of Selkirk in the same riding is getting $3 million for a new waste water treatment plant. The town of St-Pierre-Jolys in southern Manitoba in the riding of Provencher is getting $3 million for a lagoon expansion. This is all in rural Manitoba, all represented by Conservative representatives, and yet the Conservative Party is going to vote against this budget.

Can the member explain why members of the Conservative Party would vote against their own interests when they would get millions in their own ridings in budget 2016?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, my colleague and friend across the way brings up a number of examples of rural and urban infrastructure dollars that are being spent. I would emphasize the magnitude of how this government is committed to building Canada's infrastructure. It does not matter whether it is a Conservative, Liberal, New Democratic, Green, or Bloc riding, the infrastructure program is about Canadians and investing in Canada's infrastructure. There is a huge infrastructure deficit, and for the first time in many years, this is a government that is prepared to invest in Canada's infrastructure.

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

Mr. Speaker, I listened carefully to the member's speech this afternoon, and I have to admit that for the most part, he did a good job, but parts of it were truly laughable.

He stated that all Canadians should get behind this budget. We are getting behind with this budget, but it is $30 billion behind that we are getting. What we are getting, right in the behind, is a $30-billion deficit. The member talked about hundreds of millions of dollars in tax cuts, but he has not talked about the $30-billion deficit, which he needs to pay attention to.

He talked about all the benefits, but what he has not talked about are all the extra taxes that will be added on, more taxes than we can shake a Liberal stick at: taxes on employment; taxes on medical benefits; taxes on small businesses, which the Liberals did not remove as they promised; and taxes on everything we buy, through the carbon tax.

How can the member opposite explain the kick-start to the economy his government promised, when it has put this on the backs of taxpayers and has created zero new full-time jobs?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, with respect to the issue of the deficit, the first thing I would say is that the Conservative Party has absolutely zero credibility on the issue of deficit financing or balanced budgets, because when Mr. Harper became the prime minister of Canada, he inherited a proven, well-demonstrated, multi-billion dollar surplus. Before the recession even kicked in, he not only got rid of that surplus, he got us into a deficit situation. That continued to the degree that he accumulated $150 billion. There are no lessons to be taught by the Conservatives on the issue of deficits.

On the issue of jobs, I can assure the member that there have been in excess of 139,600 jobs. That is not bad for one year.

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Speaker, I appreciate the volume. It is the first time I have been in this House in a year that I do not need to listen with my earpiece, because of his screaming. It reminds me a lot of Nigel Tufnel of Spinal Tap, who claimed that most people have their speakers up to 10, but his cranks up to 11.

I just want to comment and correct a couple of things.

With respect to infrastructure spending in Alberta, back in the 10 years before the Harper government was in power, the Liberal government contributed a combined $350 million over 10 years. During the Harper period, it was $3.5 billion.

Transit infrastructure spending under this Liberal plan shortchanges Alberta on a per-capita basis by 12%, so the government is actually underfunding. I wonder if the minister would stand up for Alberta and get this fixed, unlike the infrastructure minister, from Edmonton Manning, who is happy to underfund Alberta on transit infrastructure spending. Will you stand up and tell this House that you will back Alberta for the full amount per capita we should get?

[The Deputy Speaker, Bruce Stanton]

I would remind hon. members to direct their speech and questions through the Chair.

The hon. parliamentary secretary to the government House leader.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, it is very easy to get excited about this budget. When they find out the types of things that are in this budget, the members will realize why I get so passionate about it. I truly believe in this budget, because it is in the best interests of Canadians. All members should feel passionate about this budget. Some acknowledgement of the value of the budget would be great.

I can assure the member that this government looks at Alberta in a fair and equitable way, as it does all regions. We are there for Albertans, as we are there for all Canadians.

[The Deputy Speaker, Bruce Stanton]

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Essex, International Trade; the hon. member for Elmwood—Transcona, Public Safety; the hon. member for Port Moody—Coquitlam, Fisheries and Oceans.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Mr. Speaker, that is a first. Compared to the previous speaker, it seems like I am the calm one in the House. I would like to start by saying that I will be sharing my time with my wonderful colleague from North Island—Powell River. It is an honour.

I would remind the House and those watching us that, again, we are discussing the budget implementation bill under the pressure of closure imposed by the Liberal government, who promised to do politics differently, to respect the institutions, and give parliamentarians their rightful place.

It is amazing to see how the bad habits they once criticized became standard operating procedure for the Liberals, once they won their majority.

Speaking of which, since there is a lot of talk about this these days, maybe the following question could be added to the MyDemocracy.ca website: “Are you in favour of giving the Liberal Party a majority, knowing full well that it will not keep its promises?”

The first point that I would like to make with regard to Bill C-29 has to do with the changes related to banks and credit card companies. Quebec is extremely concerned about consumer protection. It is strange. Even though Quebeckers elected 40 Liberal MPs in the last election, no one on the government side has raised this issue.

Bank customers in Quebec are protected by Quebec's Consumer Protection Act. This law does all kinds of good things for people, such as limiting credit card fees. It also protects people when their credit card gets stolen and the thief uses their card to make all sorts of big purchases, such as electronics and other things. I think most people can relate to that situation. Under the Quebec law, the credit card holder is liable only for a maximum of $50.

The fact that these provisions are absent from Bill C-29 is worrisome. People do not know what is going to happen. Will the government allow credit card companies to raise the maximum liability from $50 to $200, $500, or even $1,000?

We could lose this protection, which was hard-won for consumers, and their concern is quite justified.

The host for more than 10 years of La facture, a Radio-Canada program, went to the trouble of writing an article for this morning's edition of La Presse. He told everyone to beware because we run the risk of losing all the protections that we take for granted.

I see some government members opposite nodding their heads. I hope we will be able to fix things and make amendments to preserve those protections.

There is also some uncertainty with respect to annual credit card fees. We are not quite sure what the future holds. We are concerned, and I hope that we will be able to work together to find solutions.

One thing that is bothering the NDP is the whole issue of the Liberal promise to help the middle class. The Liberals droned on about it for 78 days. They said that we would have a government that would finally meet the aspirations and the needs of the middle class. How? By cutting taxes. That is just one way. We prefer to provide services that cut costs for families, such as public, affordable, accessible child care. The Liberals talked about it, but nothing is happening right now.

When we look at the Liberal government's plan to cut taxes for families, we realize that their definition of the middle class benefits the rich. Anyone earning less than $45,000 a year will not receive any tax cuts. Anyone earning less than $23 an hour does not qualify for assistance from the Liberal government. For a single person with no children who earns $21 an hour, the Liberal government's promise is worthless.

We find this unacceptable, given that the median income in Canada is around $33,000 or $34,000. Right away at least half of the population is left out of the Liberal plan. There is still another $10,000 to go before we get to $45,000. The ones benefiting the most are those making $80,000, $100,000 or $120,000 per year. We do not believe that they are part of the middle class. They are not the ones who need help. This is extremely disappointing on the part of the Liberal government. This is another broken promise.

Bill C-29 also deals with employment insurance. We must admit that it includes a more acceptable redefinition of what constitutes suitable employment, and this is a step in the right direction. However, one of the major problems with the employment insurance system in the country right now, and this has been a problem for years, is that fewer and fewer unemployed workers qualify for benefits when they need them.

The employment insurance fund, as its name would suggest, is insurance. All workers put money into the fund so that if one day they unfortunately lose their job, because of a plant closure or if misfortune strikes, they will be able to get what they need in order to transition to another job and pay bills, the rent, the mortgage, and groceries.

In the 1980s, practically everyone who lost their job received EI benefits. Today only 38% of unemployed Canadians receive benefits. Most people who contribute to the kitty do not have access to it when they need it. Bill C-29 does nothing to change the situation, and that really worries us. EI is part of our values and part of our social safety net, which is supposed to ensure that no one is left behind.

No one wants to lose their job, no one wants to see a plant close, and no one wanted Canada's manufacturing sector to be eviscerated, without any industrial policies in place. We need to be able to help the unemployed. We also have to work harder to help seasonal workers who were hit hard by the actions of previous governments. There is nothing on the table right now to help the unemployed or future unemployed Canadians. That is unfortunate, because their numbers keep increasing.

What is noticeably absent from the budget implementation bill is the promise to help small and medium-sized businesses. These are the creators of new jobs, the jobs of tomorrow. These businesses invigorate our communities, whether we live in urban or rural areas. The SMEs of Rosemont—La Petite-Patrie are its lifeblood. They create jobs and wealth, which makes the riding an attractive and good place to live.

What did the Liberals tell small and medium-sized businesses? They said that they would be there for them and that they recognized their contribution as job and wealth creators in Canada. Where is the help for SMEs in Bill C-29 and in the Liberal budget?

The Liberals said they would lower their tax rate from 11% to 9%. Where does it say that? There is nothing about that in the bill. This is utterly disappointing. We had hoped that the Liberals meant what they were saying during the election campaign. We had hoped that they understood the message of those who start up small businesses, of those who work for them, and of those who have managed small family businesses for a long time.

There is one very simple way to help small businesses, but it is not in Bill C-29. More and more frequently, corner stores are not letting customers pay with credit cards because the fees are exorbitant. When people use Interac, there is a set fee that is not too high, and merchants do not complain about it much. The percentage charged on credit card payments, on the other hand, is ridiculously high. We kind of expected the Liberal government to do one simple thing to help small businesses: reduce the cost of accepting credit card payments.

The infrastructure bank is a huge scheme to privatize our public services and our infrastructure, and we should all be very worried about it. Why attract private investment with a guaranteed return of 7% when the government can borrow money at 2%?

We are extremely worried at the prospect of major economic drivers, such as our ports and airports, being sold off to private and, in many cases, foreign interests. We do not understand why the government is consulting Credit Suisse, a company that specializes in airport privatization.

That gives us great concern, and I hope we will get some answers from the government. Unfortunately, we do not have a lot of time to debate it, but then again that was the government’s decision.

[Lloyd Longfield, Liberal, Guelph, ON]

Mr. Speaker, we had an election over a year ago in which the NDP talked about balancing the budget. I have not seen the plan that we could have followed, which would have resulted in a balanced budget. So far I am hearing a lot of costs, a lot of decreased revenues, but I have not seen where that goes in balancing our budget. Could the hon. member describe to the House how we could come to a balanced budget under the NDP's programs?

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Mr. Speaker, I thank my colleague for his question, but I think he read only half of our election platform, the one where we talked about expenditures. The other half dealt with revenues, and it was particularly interesting. Yes, we wanted to help small and medium-sized businesses. However, there are some pretty simple ways to increase government revenues.

For example, could we stop giving subsidies to oil companies? Could we be much more effective than the government is at combating tax havens, tax evasion, and tax avoidance? We are losing tens of billions of dollars each year because of tax havens. The government talks tough but is doing absolutely nothing.

We are unable to help post-secondary students, create jobs or improve public services because of tax havens. I might add that we could also raise taxes on big corporations. Since 2002, the corporate tax rate has fallen from 28% to 15%. I think that they too can contribute their share.

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

Mr. Speaker, I read the platform very closely in the last election and saw the part where the day care program relied entirely on the provinces picking up the bill for it and the NDP getting the credit. The question I have for the member opposite is a very simple one. Asked a direct question by the NDP about selling airports, the answer was “no”. Why is the NDP still afraid that this is going to happen?

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

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

With respect to affordable public day care that would provide real help to families, especially families in Toronto, who pay $70 or $80 a day for child care, it is quite ironic that this question comes from a member of a party that, in its red book, promised for three consecutive elections to create a national child care program, which it has never done.

As for election promises, I would also like to remind my colleague that I read the Liberal platform. It was written in black and white that the 2015 election would be the last one under the current voting system. What does the member think now?