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.

The House proceeded to the 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.

Speaker's Ruling

[The Assistant Deputy Speaker, Anthony Rota]

There are 24 motions in amendment standing on the Notice Paper for the report stage of Bill C-29.

Motion No. 4 will not be selected by the Chair as it could have been presented in committee

All remaining motions have been examined and the Chair is satisfied that they meet the guidelines expressed in notes to Standing Order 76.1(5) regarding the selection of motions in amendment at report stage.

Motions Nos. 1 to 3 and 5 to 24 will be grouped for debate and voted upon according to the voting pattern available at the table.

I will now put Motions Nos. 1 to 3 and 5 to 24 to the House.

Motions in Amendment

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

moved:

Motion No. 1

That Bill C-29 be amended by deleting Clause 1.

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

moved Motions Nos. 2 and 3.

Motion No. 2

That Bill C-29 be amended by deleting Clause 29.

Motion No. 3

That Bill C-29 be amended by deleting Clause 44.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

moved Motions Nos. 5 to 23.

Motion No. 5

That Bill C-29 be amended by deleting Clause 117.

Motion No. 6

That Bill C-29 be amended by deleting Clause 118.

Motion No. 7

That Bill C-29 be amended by deleting Clause 119.

Motion No. 8

That Bill C-29 be amended by deleting Clause 120.

Motion No. 9

That Bill C-29 be amended by deleting Clause 121.

Motion No. 10

That Bill C-29 be amended by deleting Clause 122.

Motion No. 11

That Bill C-29 be amended by deleting Clause 123.

Motion No. 12

That Bill C-29 be amended by deleting Clause 124.

Motion No. 13

That Bill C-29 be amended by deleting Clause 125.

Motion No. 14

That Bill C-29 be amended by deleting Clause 126.

Motion No. 15

That Bill C-29 be amended by deleting Clause 127.

Motion No. 16

That Bill C-29 be amended by deleting Clause 128.

Motion No. 17

That Bill C-29 be amended by deleting Clause 129.

Motion No. 18

That Bill C-29 be amended by deleting Clause 130.

Motion No. 19

That Bill C-29 be amended by deleting Clause 131.

Motion No. 20

That Bill C-29 be amended by deleting Clause 132.

Motion No. 21

That Bill C-29 be amended by deleting Clause 133.

Motion No. 22

That Bill C-29 be amended by deleting Clause 134.

Motion No. 23

That Bill C-29 be amended by deleting Clause 135.

[The Assistant Deputy Speaker, Anthony Rota]

The member for Saanich—Gulf Islands is not in the chamber this morning, and I will not be able to move Motion No. 24.

The hon. government House leader.

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

Mr. Speaker, what a privilege it is once again to stand and talk about a bill that is going to be implementing our national budget. It is a budget that I believe is unprecedented in so many ways. If I were to think about a single message that comes out of this budget, it is the issue of Canada's middle class and those aspiring to become part of our middle class. We would have to go back many years or decades to see a budget that has done so much in terms of what I suggest is a redistribution of Canada's wealth, but with a special focus on our middle class.

Over the last decade, we have seen a great deal of concern in regard to how well Canada's middle class has been doing. Not only here in government but even when we were the third party, there was a constant theme being raised, and that was a caring attitude toward our middle class and those aspiring to be part of Canada's middle class.

We have a Prime Minister and a Minister of Finance who have put our middle class as priority one.

There is so much in this budget we can get behind and support. We often hear from opposition benches about the importance of Canada's middle class. For the first time, in a tangible way, they have the opportunity to vote for a budget that does a great deal for Canada's middle class. Let me explain why I believe that to be the case.

Shortly after the election, we had a substantial increase in taxes for Canada's wealthiest, the 1%, if I can put it way. Most significantly, we had a substantial decrease in taxes for Canada's middle class. What does that mean? Someone who is a factory worker or a health care worker, a person in the middle class, is seeing a substantial decrease in taxes, which means that we are putting more money in the pockets of Canada's middle class.

Many of my colleagues who have had the opportunity to talk about this budget have said that we even go beyond the middle class, and that is true. There are a number of initiatives within the budget that address other issues. I would like to focus on a couple.

One deals with Canada's children. We have the Canada child benefit program, a program that has been enhanced by seeing more money going toward children. The biggest benefactors are going to be those children who are in the lower-income strata. For example, we will see thousands of children being lifted out of poverty as a direct result of the budget. We will see taxable income considerations given as part of the Canada child benefit program.

Someone who is a multi-millionaire does not need the tax credit as much as a single parent who has two or three children and is finding it difficult to make ends meet. I think Canadians would see that as a fair taxation policy. It is a great program, and as I said, it will lift literally tens of thousands of children out of poverty.

Another issue that is often talked about among my colleagues is the guaranteed income supplement. We know first hand, because shortly after the election, we engaged in a discussion on the types of things we heard at the door from our senior population, those who were finding it very difficult to make ends meet. We have seniors who are put in a position of having to decide on food versus medication. Far too often, they put their health in jeopardy as a direct result of not having enough money. The substantial increase to the GIS will make a difference, particularly for single seniors, who will receive, in the worst conditions, in excess of $900 more per year. If they are making $10,000 or $12,000 a year, that $900 is going to make a significant difference. I talked about lifting children out of poverty. This would lift seniors out of poverty.

I have brought up those three major points: tax cuts for the middle class; the helping hand; and addressing the issue of poverty, whether for seniors or children. This is one of the reasons I believe that what we have before us is a progressive budget that would move Canada in a forward direction. The redistribution of wealth would also help Canada's economy. We believe that if we have a strengthened middle class and more money in the hands of those individuals who are spending the money and cultivating the economy, we are, in fact, giving more strength to Canada's economy. That is indeed warranted.

There is so much in the budget one could talk about. We can talk about the importance of health care. I can make reference to the commitment not only in terms of dollars but in terms of a Minister of Health who is working diligently with our provinces and territories to try to get a new health care accord. We might have to be patient. It is more important that we get it right, but for the first time, we have a government that is attempting to get a new health care accord.

We can talk about the environment. We have a progressive government that is dealing with environmental issues. One can cite the Paris agreement to a price on carbon as being positive. Only the Conservative Party seems to be offside of all the political entities across the country on that front, and I must say, on a number of other fronts.

We can talk about infrastructure and the record amount of money being put into Canada's infrastructure, unlike the Conservatives, who would talk about putting money into it, but it never really materialized. We have a government that already, within 12 months of being in office, has hundreds of projects up and running, in co-operation with the different stakeholders, in particular our provinces and municipalities, which have done a phenomenal job getting those projects up and running. We have a government that is committed to Canada's infrastructure in every region of our country. This is something that I believe is being well received.

The bottom line is that it is a good-news budget. If members support tax decreases for our industrial workers and professionals, whether health care workers, firefighters, or any profession out there getting those tax breaks, this is a budget they should seriously look at voting in favour of. This bill we are talking about would implement that budget.

If they are concerned about issues such as poverty, this is a budget they should be voting for.

The only real and consistent criticism from the Conservative Party with respect to this budget is related to the issue of money, or the deficit. I am anticipating that will likely be one of the questions asked. I will let the opposition know that, as a party—

My time has run out. Hopefully I will be able to provide that answer shortly.

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

Mr. Speaker, my question will not be about the deficit but about the frankness of politicians.

Each one of us was elected on a platform. People have the right to decide if we are on the right side or the wrong side. Yes, we are democratic and respect democracy, but we also respect that we must be very frank with people.

The Liberals were elected under a platform in which they said there would be a small deficit of $10 billion, but they tabled a budget with a $30-billion deficit.

Why did they not tell Canadians the truth?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I anticipated that I would be asked a question of that nature, and that is why, in my concluding remarks, I was getting to the issue of budget deficits.

To assure Canadians very clearly, if we look at it from a historical perspective, Liberal administrations have cleaned up Conservative administrations with regard to budgets. The preoccupation that the Conservatives have on this is unjustified. If we look back, the Conservatives accumulated a debt of over $150 billion, a record amount, under Stephen Harper.

Yes, there is a budget deficit. We told Canadians that there would in fact be a budget deficit. We believe it is time to start investing in infrastructure and Canadians. At some point, as Liberals have done in the past, there will be a return to a balanced budget. Now is the time that we should be investing in Canada's infrastructure and Canadians, and that is what this budget is doing.

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

Mr. Speaker, there are so many things I could say. I will focus on Bill C-29 because we will be studying it at third reading.

I would sincerely like to know why the member was the first to speak this morning. Is it because the Liberal Party, the government, decided to move deletion of clause 1, the bill's short title, which is “Budget Implementation Act, 2016, No. 2”?

I would like to know why the government wants to delete the short title. Is there a valid reason why it wants to delete its own proposed title? Was this just a political ploy to usurp the opposition's traditional right to be the first to speak to these bills and amendments?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I can assure that when we look at the amendment that has been proposed, for the most part it is about ensuring that debate occurs at the report stage. We are already into that debate. I would encourage other members to participate. At the end of the day, this is a responsible approach. There are always tactics on both sides of the House. I can assure the member that it is not coming just from one direction. This is, in good part, a response to opposition and the concerns that might arise.

The bottom line is that we have a day to debate Bill C-29, the budget and government priorities. I would encourage other members to speak. We have had plenty of time already to speak on Bill C-29, whether it was at second reading or the committee stage. There has probably been more time for debate on this budget implementation bill than many of the Harper Conservative budget implementation bills. It is a pleasure for me to put a few words on the record.

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

Mr. Speaker, I am pleased to speak at this stage of Bill C-29, which seeks to implement key measures from the budget that was tabled, voted on, and passed in the House a few months ago.

First of all, I want to set the record straight for Canadians. I want to tell it like it is and give a clear picture of the situation, ever since Canadians voted for a change in government.

Canada was in an enviable fiscal position. The Conservative administration left a surplus of $2.9 billion. Canada had the best debt-to-GDP ratio among the G7 nations. Canada was the best of the best. Canada also had the best job creation record of all the G7 nations. Canada was the country that fared best. It was also the country that recovered the quickest from the terrible financial crisis that was felt all over the globe in 2008 and 2009. That is the Conservative record. The Conservatives definitely left the house in order, so to speak. Unfortunately, the Liberals are currently destroying our economy. In fact, that is why we strongly oppose Bill C-29, which seeks to implement the measures in the budget. We think it is a very bad budget. Why?

For decades, Canadians made every effort that was required, including under the leadership of the Right Hon. Paul Martin, a distinguished and world-renowned finance minister. He fought mercilessly against the deficit. Now the current government is sending Canada down another unfortunate deficit spiral. The thing is, we are not in an economic crisis, as was the case when the Conservatives were in power and we had to deal with this difficult situation.

What does this mean? It means that we are asking our children, our grandchildren, and our great-grandchildren to foot the bill for this deficit. They are the ones who will have to pay for the current government's mismanagement. Worse yet, the party in power got elected barely a year and a half ago by saying that they would run a small deficit of $10 billion, but we would return to a balanced budget during the fourth year of their term.

Nothing could be further from the truth today. The deficit is currently $30 billion. From the economic update we know that the Liberals will continue to spiral badly by inflicting another $32 billion in spending over the next five years. The sad reality that is slapping us in the face is that the government is unable to tell us when we will return to a balanced budget.

There is not one business owner, father, mother, or head of household who manages their budget without the expectation that one day they will keep their head above water. That is exactly the situation that the government is forcing us into. We are drowning in debt, but we have no idea when we are going to come up for air. This is unprecedented and unheard of. It is unacceptable. It is the Liberal way.

If only the Liberals would at least acknowledge that they said some foolish things during the election campaign, like running small deficits, which is not at all true because the deficit is three times the amount forecast. If only they would tell us, for example, not to worry at all because they are going to balance the budget in five years. That would be very wrong, but we would at least have an idea of the situation. However, that is not the case. This short-sighted government has absolutely no idea when it will balance the budget or how it will manage to eliminate the deficit.

I can assure Canadians that the next balanced budget will be a budget tabled by the Conservative government, which will be elected by Canadians in three years. That is a fact.

I would also like to remind members that the Liberals bragged about how, in the budget, there would finally be tax cuts for Canadians and how all Canadians would benefit from them. Well, aren't they generous. The reality is quite the opposite. The measures proposed by the government will have no impact on the taxes that 65% of Canadians have to pay. There will be no tax cuts for 65% of Canadians. Who then will benefit from the announced tax cuts? It is Canadians who earn between $140,000 and $200,000 a year. Is a person who earns $199,999 a year part of the middle class? I have my doubts.

I would like to point out right away that I am in a position of conflict of interest. As an MP, I earn around $170,000 a year, so I am one of the lucky ones who will benefit from these measures. With a salary like that, I do not feel as though I am part of the middle class. The government has been boasting that it is helping the middle class, the least fortunate, and the most vulnerable. Stop right there. In reality, 65% of Canadians will not benefit at all from these measures. Those who will benefit the most are wealthier Canadians who earn between $144,000 and $200,000 a year.

What is more, this budget hinders the creation of jobs and wealth because it does not do much to help our small and medium-sized businesses. For us, the Conservatives, small businesses are the backbone of our economy. They create jobs and wealth. We need to do everything we can to help them, not hold them back. Nevertheless, that is what this government is doing with the budget. It is imposing the Liberal carbon tax. It is imposing new fees on employers and employees under the Canada pension plan. It is failing to keep its promise by not lowering the tax rate of SMEs. The government was supposed to lower the tax rate from 10.5% to 9% but failed to do so. These are three measures that work against our business owners, our job creators and our creators of wealth. That is why we are completely against this bill.

I would also like to draw members' attention to a small but very important detail. As the saying goes, the devil is in the details, and in this case we are talking about consumer protection.

First of all, I would like to recognize the excellent job that was done by the member for Joliette, who really did the kind of work one would expect from an opposition member. He did a great job, and I would like to commend him for that.

What happened? This has to do with the enforcement of the legislation on banks and the management of financial institutions.

Let us recall the events: in 2012, the Conservative government passed legislation to implement, across the entire country, certain measures concerning the management of financial and banking institutions. Part of that law was challenged in court. In 2014, the Supreme Court ruled specifically on the issue of the Consumer Protection Act in Quebec. The act was not constitutional, so it had to be changed.

Since we are institutional people and we respect our institutions, we are going to comply with the Supreme Court’s decision. However, in this new bill the government is proposing measures that, unfortunately, do not meet the requirements of the Supreme Court ruling. Along with the members for Joliette, Rimouski-Neigette—Témiscouata—Les Basques and others, we questioned senior officials in parliamentary committee in order to get specific answers to very specific questions, so that we could find out whether they were complying with the Supreme Court’s ruling or not.

Unfortunately, I cannot say that we were convinced. There are still flaws in the legislative measures proposed in Bill C-29 on the issue of Quebec’s Consumer Protection Act. We are not the only ones with concerns. The National Assembly has passed a motion asking the government to suspend the clauses of Bill C-29 that affect the Consumer Protection Act.

If we want to make a law that complies with the Supreme Court ruling, we have to talk to the lead stakeholders, because it is abundantly clear that if the bill is passed, it is going to be challenged in court on this issue, among others. It is not just us who are saying so, it is the National Assembly.

What is the Quebec National Assembly? Certainly it is the members of the opposition, but it is also the government. The day before yesterday, the Quebec justice minister, who is a member on the other side of the river, not so far from here, said that she was concerned about certain clauses in Bill C-29.

There is still time for the government to seize the opportunity and just do what ought to be done. It should pick up the phone, call the justice minister, and ask her what is not working and what should be drafted to make it work. That is what a government in touch with the reality of its citizens would do, much like us. I recall that we had an interpretation of the matter in 2012. The Supreme Court contradicted that interpretation; we are institutional people and we respect the Supreme Court. We therefore must make every effort to ensure that this is not challenged and it is done the right way.

I do not mean to insult any legal eagles in any way, but we must realize that it is not a humble country lawyer who will be challenging this. It is the Government of Quebec that will be going to court to challenge the provisions affecting the Consumer Protection Act.

On this point, I urge the government to go back and do its homework, and indeed I invite the government to look at the entire bill and really do its homework for the economy as a whole and for all Canadians.

[Steven MacKinnon, Liberal, Gatineau, QC]

Mr. Speaker, I thank my hon. colleague from the Standing Committee on Finance for his excellent speech. He speaks of the legacy of the Conservative government. Indeed, the Conservative legacy is one of anemic growth; they ran deficits for nine consecutive years after inheriting a healthy financial situation from Mr. Martin and Mr. Goodale, an infrastructure deficit, a social deficit, a social housing deficit, and others still.

Now we are considering ways for the Canadian economy to recover. During the federal campaign, his party and the New Democratic party said that the budget had to be balanced at any cost. His party left a legacy of anemic growth and it was going to balance the budget at any cost.

Today, I would like the member to tell us what his plan is to get us over the slump and address dropping oil prices, the infrastructure deficit and the social deficit. What is his plan? He is very good at criticizing, but what is his plan to improve and rehabilitate the Canadian economy?

[The Assistant Deputy Speaker, Anthony Rota]

Before giving the floor to the hon. member for Louis-Saint-Laurent, I would like to remind the members in the House today not to name still-sitting members of the House. The hon. member named two persons, one of whom is a sitting member. This reminder is meant for everyone present. I know that it is Friday and we are eager to return to our constituencies.

The hon. member for Louis-Saint-Laurent has the floor.

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

Mr. Speaker, I am happy to answer my colleague’s question.

Indeed, it is true that, in the opposition, we have to criticize, but we were in power, and we campaigned on a platform which, from our point of view, would have a stimulating effect on the Canadian economy. Our approach was realistic. Our government made Canada number one in terms of economic performance in the face of the worst financial crisis, in 2008-09. The OECD and the G7 both say so. That is why we left Canada's fiscal house in order, with a surplus of $2.9 billion. That is positive.

We also made Canada the first job creator in the entire G7. Canada has the best debt-to-GDP ratio in the entire G7. Why did we have to begrudgingly run deficits? Because we were facing the worst economic crisis. It is in challenging and difficult times that the truly great shine, and that is what we did. We are very proud of that.

The worst thing to do is to impose taxes and additional costs on our businesses—something we did not do and that we will never do.