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

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, I listened to my colleague's speech.

I know that it focused on culture, but since we are talking about Bill C-29, I am honour bound to bring up another aspect of this bill, which is just as critical and which seems to be central to the government's plan, and that is infrastructure.

Of course, we have talked about the infrastructure bank, but right now the government is also undertaking initiatives that could potentially lead to the privatization of ports and airports. In fact, the government has already given mandates to Credit Suisse and Morgan Stanley.

I would like to hear what my colleague has to say about the potential privatization of our ports and airports. I think he will agree with me that this infrastructure is key to our economic development. I would therefore like to know what he thinks about his government's idea to potentially privatize ports and airports.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Mr. Speaker, I want to thank my neighbour from Kitchener Centre for his work in his riding.

I do not think anyone in the House is denigrating the arts. However, we all know that whatever project we want to support, there has to be money to support it. When we are borrowing money on more money on more money to build up a deficit of $30 billion, adding $10 billion per year in interest costs alone over the next four years, this is a concern. Could my colleague comment on the costs of his proposals?

Also, there was a question that I asked the Minister of Finance this morning, which we did not receive an answer to. It is found in the Order Paper today. It refers to Bill C-29. Motion No. 1 by the member for Winnipeg North proposes that one of the clauses of Bill C-29 be deleted. Could my colleague explain why a member of the government would move to delete a clause in a government bill?

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

Mr. Speaker, I want to thank the hon. member for the question, because it gives me an opportunity to be more complete in my answer as to why Bill C-29 is not going to be supported.

First, the tax break for the middle class does not include the middle class in my riding, which starts at around $20,000. There is no national poverty strategy in the bill, which is really needed for Canada.

During the election, the Liberals promised to bring down the tax rate from 11% to 9% for small businesses. That never happened. There is no cap on credit card fees. Privatization of infrastructure is going to increase costs for Canadians. There is no indexing of the Canada child benefit. That is why we are not going to support Bill C-29.

The House resumed consideration of Bill C-29, A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures, as reported (with amendment) from the committee, and of the motions in Group No. 1.

Consumer Protection

[Simon Marcil, Bloc, Mirabel, QC]

Mr. Speaker, I guess Toronto banks are keen to see Bill C-29 passed considering the minister of high finance is imposing closure. He is anxious to legalize hidden fees in Quebec, authorize misleading advertising, allow banks to change our contracts without our consent, and eliminate our recourse or any sanctions.

How far is this government of banks prepared to go to quash consumer rights in Quebec to the benefit of high finance in Toronto?

The day that Quebeckers no longer have rights, will they have to cut a cheque to the government, like the Chinese billionaires did?

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

Mr. Speaker, we will speak on behalf of consumers.

For my hon. colleague's sake, I would like to review the consumer protection principles underlying Bill C-29. I am sure he will agree with me.

The first principle states that basic banking services should be accessible to all; disclosure of information should enable an institution's customers and members of the public to make informed financial decisions; an institution's customers and members of the public should be treated fairly; and complaints processes should be impartial, transparent, and dynamic. That is what it means to protect Canadians.

[Louis Plamondon, Bloc, Bécancour—Nicolet—Saurel, QC]

Mr. Speaker, in Quebec, consumers whose credit card is stolen are liable for, at most, $50. That is the law.

At the federal level, the credit card issuer can stipulate liability in the contract. If Bill C-29 passes, banks will have free rein to demand that clients pay back every penny spent by a credit card thief.

Does the minister of high finance see the difference between being protected by the law and being at the mercy of the banks?

Report Stage

[Louis Plamondon, Bloc, Bécancour—Nicolet—Saurel, QC]

Madam Speaker, I have a rather simple question for my colleague.

The four parties at the Quebec National Assembly unanimously passed a resolution denouncing Bill C-29, since Quebec has consumer protection legislation. For example, in Quebec, an individual whose credit card has been stolen is liable for a maximum of $50 only. However, this bill gives the bank full discretion to claim the full amount that was stolen. Quebec has been operating this way for 40 years now.

As a member from Quebec, how can my colleague steamroll the very clear will of the Government of Quebec, here in the House of Commons?

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

Madam Speaker, I am pleased to speak to the House today about Bill C-29 and to invite my colleagues on both sides of the aisle to support this bill, which is a step forward for Canadian society and the country. As I said earlier, this bill will help families and all Canadians. Naturally, I encourage our colleagues to support it.

Our government made a solemn promise to Canadians. We promised to help members of the middle class who work hard every day and those who are working hard to join it. The government built its 2016 budget around them, and I am proud to speak in favour of that budget in the House today. I am particularly proud to speak in favour of the Budget Implementation Act, 2016, No. 2, which is before us today.

Our government has tabled a bold budget, one that considers all those who are supporting their families through their work and yet feel they still cannot catch up. Therefore the government is going to stimulate the economy through measures that foster the growth of the middle class, because when the economy is working for the middle class, the entire country is pushed into a cycle of growth. We listened to Canadians all over the country before tabling this budget, and what we heard is that they need a financial breather.

One of the budget’s primary measures is therefore an income tax reduction. Almost nine million Canadians have more money in their pockets thanks to one of our government’s very first measures. That measure has been to reduce income taxes for the middle class, putting them in a better position to save or invest in their own priorities.

Families are at the heart of the middle class. In this bold budget, we find a social innovation that directly affects families living in each of the constituencies represented here in the House. This innovation, called the Canada child benefit, came into effect last July 1. I will cite the numbers for the House, since they speak for themselves. Those who are watching us today know this very well. For each child under six years of age, a family can receive up to $6,400 a year, that is, $533 per month for each child.

For children between six and 17 years of age, the allowance is up to $5,400 per year, or a maximum of $450 per month for each child. This is an innovation because it is a direct investment in the country’s middle class. The Canada child benefit is producing results which can be felt all over the country, in each of our constituencies.

First of all, the Canada child benefit is much more generous than the previous benefit. For the families affected by this change, this represents close to an average of $2,300 for the 2016-17 benefit year. Next, it is simpler: families get a single payment every month. It is also tax-free, as the money received does not have to be partially refunded on the income tax return. It is also better targeted, since low- or medium-income families receive higher benefits, while families with very high incomes receive lower benefits than what they received under the previous system.

I am delighted to tell the House that the bill that we are debating today will only increase this benefit, and at the same time improve the lot of this country’s children and their families. There are also plans to index benefits to inflation starting on July 1, 2020, which means that benefits will rise with the cost of living.

In addition to helping Canadians, the bill also protects them as consumers, and that protection is tailored to their needs. This bill strengthens and modernizes the protection framework for consumers of financial products and services. We must also ensure that the financial system is adaptable. It met the challenge of the 2008 crisis and demonstrated its soundness to the world.

Traditional business models are nonetheless upset by technological innovations, new consumer demands, and new modes of consumption. Accordingly, the banking sector has to adapt.

What the bill proposes is to simplify and consolidate the current consumer provisions by grouping them under a single section of the Bank Act. It would introduce amendments to the Bank Act to improve consumer protection, that is, to guarantee better access to basic banking services, limit certain business practices, ensure that consumers have access to all the information they need to make informed decisions, ensure that complaints management is better organized, and finally, improve corporate governance and accountability.

Canada's government is showing leadership by taking this series of steps to strengthen financial protection for Canadians, wherever they may live in the country. This is a matter of maintaining public trust.

I have a little time left to talk about another important measure in this bill, specifically the legislation to combat international tax evasion and tax avoidance.

Our country already has measures to combat non-compliance with tax law. However it is important to fight tax evasion and tax avoidance in co-operation with other countries and international organizations.

This bill proposes the adoption of tools and procedures originating in the G20 and the Organisation for Economic Co-operation and Development, the OECD.

First of all, there is country-by-country reporting. This is an instrument that will oblige big corporations to report their activities and the nature of those activities in each jurisdiction where they operate. This will enable the Canada Revenue Agency to have a global view of the activities of multinationals. The interest of this tool is that it can tax the profits of companies in the countries where those profits are made. This is then an initial measure to combat aggressive tax avoidance.

A second instrument provided in the bill applies to tax evasion. It was developed by the OECD and is called the Standard for Automatic Exchange of Financial Account Information in Tax Matters. It will compel Canadian financial institutions to put mechanisms in place to identify all accounts held by non-resident Canadians. This information will have to be transmitted to the Canada Revenue Agency. The 100 or so countries and jurisdictions that have adopted this standard will also identify accounts held by foreign nationals, including Canadians. Next, a series of security mechanisms will be introduced to ensure that this information is exchanged among the standard’s signatories.

These measures constitute a step forward for compliance with tax obligations for all Canadians and all businesses established in Canada.

I encourage all members of the House to vote in favour of this bill because it will help every family in our country. There are people who expect this Parliament to take responsibility and pass this bill in order to help families in need in Canada.

The House resumed from December 2 consideration of Bill C-29, A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures as reported (with amendment) from the committee, and of the motions in Group No. 1.

Bill C-29—Time Allocation Motion

[Bill Morneau, Liberal, Toronto Centre, ON]

Madam Speaker, as I said, counting today and tomorrow, we will have had nine days of debate on Bill C-29. We know that 60 members have had the opportunity to participate in our debate. That is very important.

We also know that corresponds to 20% of the time available for government business for this session. It is very important to have time. We have had time, and that is how we can get things done for Canadians. That is our goal.

[Bill Morneau, Liberal, Toronto Centre, ON]

Madam Speaker, I want to be clear that this is not about tactics; this is about doing work for Canadians that we know needs to be done. This is about moving forward on consumer protection so that Canadians will be protected. This is about moving forward on tax fairness so that we will have a system that will work for all Canadians.

I want to repeat that including today and tomorrow, we will have had nine days of debate on Bill C-29. That has allowed more than 60 members of Parliament so far to participate in debate. Again, with nine days of debate, including today and tomorrow, that means we will have provided 20% of the available time for government business on this bill, and this bill alone. It is important that we move forward and make a measurable difference for Canadians. That is what we intend on doing.

[Murray Rankin, NDP, Victoria, BC]

Madam Speaker, I rise and find myself in substantial agreement with the hon. member for Louis-Saint-Laurent. It is really quite disturbing that after merely one hour of debate at report stage, a bill as important as Bill C-29, the budget implementation bill after all, will suddenly be subject to this guillotine motion.

I think it is the 10th time, if I am not mistaken. Who can keep count if the government has done that. I know it is only a 10th as much as the Conservatives did, but nevertheless, any Canadian watching who thinks this is real change will have to conclude that it is not. It is a very sad day.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Madam Speaker, once again, we are very disappointed to have to rise, on this side of the House, in response to the government’s systematic obstruction of parliamentarians’ right to speak.

In both form and substance, the government is simply wrong. First, wanting to deny the right to speak, even though at this stage of the bill we have had just one hour of debate, is completely disrespectful and irresponsible on the government’s part toward the official opposition.

As for substance, it is worse. In fact, Bill C-29 concerns implementation of the government’s budget measures, a budget that, as we know, will lead to the unfortunate inflationary spiral of this government’s colossal deficits. We are headed toward a $30-billion deficit, three times higher than what the Liberal Party had promised in its election platform.

I could go on at length about this, but I am going to give the minister a chance to clearly explain himself. I am reaching out to him for the 13th time. Can he tell us when and how he intends to return to balanced budgets for all Canadians?

Report Stage

[Neil Ellis, Liberal, Bay of Quinte, ON]

Mr. Speaker, it is an honour to rise today to speak to Bill C-29, the budget implementation act.

Prior to my role as the member for the Bay of Quinte, I served for eight years as the mayor of the City of Belleville. My municipal experience gave me a full appreciation of the impact that infrastructure has on our communities.

The city of Belleville, having a population of 50,000, and being a small urban municipality, has many infrastructure deficits. Investments in infrastructure provide communities with safe roads, clean water and air, efficient transportation networks, and so much more. Our infrastructure needs have outpaced our investments for decades, and at significant cost.

The perfect storm is here. It is hurting our communities. It is very important that we keep driving investment and finding new alternative ways to support the needs of our communities.

Neglected aging infrastructure directly contributes to traffic congestion, which pollutes the air and stifles the productivity of our workers and businesses. It contributes to boil water advisories that affect the health of entire communities. It means that our seniors have a harder time accessing essential services, and that some of our population have great difficulty finding safe and affordable places to live.

As I have personally experienced, underfunded infrastructure puts our cities at a competitive disadvantage. When competing to attract top companies, either the local market or the global market, it is hard to create good-paying jobs without proper infrastructure.

The City of Belleville was like so many other communities across Canada, starved for infrastructure funding and facing a mounting infrastructure deficit. Upon being elected as mayor, I began to see first-hand just how large this infrastructure deficit was in our community, and how it was growing with no real plan to fix it.

Speaking with my colleagues at AMO, association of Ontario mayors, 444 of us excluding Toronto, I realized that most municipalities in Ontario had aging infrastructure. I was finding in my community that we were not unique. Small urban communities and cities across Canada were in a similar position. There was simply no infrastructure funding to meet the needs of municipalities. The tax system with municipalities is basically property taxes and user fees. Municipalities provide 66% of our services in Ontario, yet collect only around 8¢ on the tax dollar.

The City of Belleville, an average small city, has over $3.5 billion worth of assets. This includes roads, bridges—69 bridges, I believe—public facilities, water, waste water plants, which were all built in the forties, fifties and sixties. However, they never had an asset management plan to keep these structures in repair.

After examining this asset management plan, I realized that our city was in trouble. We had approximately 350 in terms of millions of dollars in a past deficit that was hidden, a deficit that was not on our books, and a deficit that kept growing out of control. It was a construction deficit that was increasing at the time between 5% and 10%. We had interest rates that we were able to acquire at approximately 2.5% locked in. It is all about capital risk. Being a small business person myself, one of the biggest problems is obtaining capital, locked in, at an amount that could get rid of the risk.

With Infrastructure Ontario, we were able to build a plan, and our solution was a build Belleville plan. This was the second infrastructure plan to try to alleviate some of the infrastructure that was stockpiled to the city over the last 25 years.

The rationale is simple. Each year that the cost of infrastructure repairs are left and not taken care of, they increase. All of a sudden, a $300-million deficit becomes a $330-million or $340-million deficit. With infrastructure, we are not quite sure what the costs will be, so it is floating.

Coming up with a plan for locking in our capital risk, recognizing that interest rates were low, it was time to launch a plan and try to convince council that we needed to mitigate the risk of bridges collapsing. We had to mitigate the risk of not having a waste water plant that was capable of meeting our industry.

City council supported build Belleville and the $91.5 million loan for the first stage of infrastructure upgrades and maintenance. The build Belleville plan was featured in many trade publications, including Canada Business Review, Municipal World, The Undergrounder and ReNew.

The program not only attracted the attention of magazines and media, it attracted a great deal of attention from municipalities. In 2008, I was asked to speak at AMO, to all mayors about the plan.

My city is also in the plan. It expanded our industrial park by extending roads and services to build our economic base. It has put us in a very great position now to attract industry and create more jobs.

This past August, I met with local mayors to announce over $7 million in federal gas tax funding. This is specifically for municipal infrastructure projects. More recently, I held an announcement event at our local college, Loyalist College, for a $1.6-million federal investment toward a $3.2-million renovation of the Northumberland wing and health and wellness centre. The wellness centre hosts the school's highly respected practical nursing program and state-of-the-art clinical simulation lab.

This investment will make for greater energy efficiency, which has positive impacts both on the environment and the school's operating budget. Of course, it will significantly improve the learning environment and hopefully keep our youth and our community educated, and help in the workforce.

These are good reasons why it is so vitally important that we continue to work with our municipal and provincial partners across the country to develop a long-term infrastructure plan that meets the real needs of all communities across Canada.

Our government will provide more than $180 billion over 12 years for public transit, green and social infrastructure, and trade and transportation. These investments will have a dramatic impact on all communities across Canada, including small communities and rural regions. The plan provides unprecedented levels of funding for projects across the country, projects that will help create long-term economic growth; build safe, inclusive, and sustainable communities; and support a low-carbon, green economy.

Budget 2016 launched the first phase of our infrastructure plan, which will invest a total of $11.9 billion. This includes $3.4 billion for public transit systems, $5 billion for green infrastructure projects, and $3.4 billion for social infrastructure, which includes affordable housing.

During my community pre-budget consultations, our not-for-profit agencies could not stress enough the importance of investment in safe and affordable housing. The first phase of this investment makes possible repairs and upgrades to long neglected critical infrastructure. Bilateral agreements were signed with all the provinces and territories, and more than 750 projects have already been improved.

Projects are already under way in our rural and smaller communities such as: waste-water upgrades in Red Deer, hard surfacing of the Trans-Labrador Highway, upgrades to the town of Lanigan's water facilities in Saskatchewan, rehabilitation of bridges in the Northwest Territories, a new Pond Inlet small craft harbour in Nunavut, and a water treatment plant upgrade in my neighbouring town of Deseronto.

We have also made major investments in infrastructure projects for public transit that once complete will help drastically reduce congestion in our cities, and get all moms and dads home earlier, hopefully, to spend time with their families and to get their families safely home. They are things like the light rail transit in Ottawa, the Toronto Toronto Commission surface track replacement program, the Waterloo Fairview Mall transit terminal, and the Trent-Severn Waterway National Historic Site, for a total investment of $267 million.

I had the great honour, on a hot summer day, to be with a great Conservative member, the member for Simcoe North, in Peterborough to cut the ribbon on the announcement of the Trent-Severn system, which affects my community, as the Trent Port Marina in Quinte West is the start of the Trent. I invite everyone to visit the Trent Port Marina in their boats this year, and come and enjoy our wineries and our cities.

Equipping municipalities with the resources they need and access to low-risk capital is essential to sustain and grow our communities, providing the building blocks they need to thrive and succeed. Infrastructure is an essential component for healthy, vibrant communities, and creates the conditions for sustainable economic growth and development. Investments in infrastructure are investments in our future and that of our children.