Bill C-63 (Historical)

Budget Implementation Act, 2017, No. 2

A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures

Part 1 implements certain income tax measures proposed in the March 22, 2017 budget by
(a) removing the classification of the costs of drilling a discovery well as “Canadian exploration expenses”;
(b) eliminating the ability for small oil and gas companies to reclassify up to $1 million of “Canadian development expenses” as “Canadian exploration expenses”;
(c) revising the anti-avoidance rules for registered education savings plans and registered disability savings plans;
(d) eliminating the use of billed-basis accounting by designated professionals;
(e) providing enhanced tax treatment for eligible geothermal energy equipment;
(f) extending the base erosion rules to foreign branches of Canadian insurers;
(g) clarifying who has factual control of a corporation for income tax purposes;
(h) introducing an election that would allow taxpayers to mark to market their eligible derivatives;
(i) introducing a specific anti-avoidance rule that targets straddle transactions;
(j) allowing tax-deferred mergers of switch corporations into multiple mutual fund trusts and allowing tax-deferred mergers of segregated funds; and
(k) enhancing the protection of ecologically sensitive land donated to conservation charities and broadening the types of donations permitted.
It also implements other income tax measures by
(a) closing loopholes surrounding the capital gains exemption on the sale of a principal residence;
(b) providing additional authority for certain tax purposes to nurse practitioners;
(c) ensuring that qualifying farmers and fishers selling to agricultural and fisheries cooperatives are eligible for the small business deduction;
(d) extending the types of reverse takeover transactions to which the corporate acquisition of control rules apply;
(e) improving the consistency of rules applicable for expenditures in respect of scientific research and experimental development;
(f) ensuring that the taxable income of federal credit unions is allocated among provinces and territories using the same allocation formula as applicable to the taxable income of banks;
(g) ensuring the appropriate application of Canada’s international tax rules; and
(h) improving the accuracy and consistency of the income tax legislation and regulations.
Part 2 implements certain goods and services tax/harmonized sales tax (GST/HST) measures confirmed in the March 22, 2017 budget by
(a) introducing clarifications and technical improvements to the GST/HST rules applicable to certain pension plans and financial institutions;
(b) revising the GST/HST rules applicable to pension plans so that they apply to pension plans that use master trusts or master corporations;
(c) revising and modernizing the GST/HST drop shipment rules to enhance the effectiveness of these rules and introduce technical improvements;
(d) clarifying the application of the GST/HST to supplies of municipal transit services to accommodate the modern ways in which those services are provided and paid for; and
(e) introducing housekeeping amendments to improve the accuracy and consistency of the GST/HST legislation.
It also implements a GST/HST measure announced on September 8, 2017 by revising the timing requirements for GST/HST rebate applications by public service bodies.
Part 3 amends the Excise Act to ensure that beer made from concentrate on the premises where it is consumed is taxed in a manner that is consistent with other beer products.
Part 4 amends the Federal-Provincial Fiscal Arrangements Act to allow the Minister of Finance on behalf of the Government of Canada, with the approval of the Governor in Council, to enter into coordinated cannabis taxation agreements with provincial governments. It also amends that Act to make related amendments.
Part 5 enacts and amends several Acts in order to implement various measures.
Division 1 of Part 5 amends the Bretton Woods and Related Agreements Act to update and clarify certain powers of the Minister of Finance in relation to the Bretton Woods institutions.
Division 2 of Part 5 enacts the Asian Infrastructure Investment Bank Agreement Act which provides the required authority for Canada to become a member of the Asian Infrastructure Investment Bank.
Division 3 of Part 5 provides for the transfer from the Minister of Finance to the Minister of Foreign Affairs of the responsibility for three international development financing agreements entered into between Her Majesty in Right of Canada and the International Finance Corporation.
Division 4 of Part 5 amends the Canada Deposit Insurance Corporation Act to clarify the treatment of, and protections for, eligible financial contracts in a bank resolution process. It also makes consequential amendments to the Payment Clearing and Settlement Act.
Division 5 of Part 5 amends the Bank of Canada Act to specify that the Bank of Canada may make loans or advances to members of the Canadian Payments Association that are secured by real property or immovables situated in Canada and to allow such loans and advances to be secured by way of an assignment or transfer of a right, title or interest in real property or immovables situated in Canada. It also amends the Canada Deposit Insurance Corporation Act to specify that the Bank of Canada and the Canada Deposit Insurance Corporation are exempt from stays even where obligations are secured by real property or immovables.
Division 6 of Part 5 amends the Payment Clearing and Settlement Act in order to expand and enhance the oversight powers of the Bank of Canada by further strengthening the Bank’s ability to identify and respond to risks to financial market infrastructures in a proactive and timely manner.
Division 7 of Part 5 amends the Northern Pipeline Act to permit the Northern Pipeline Agency to annually recover from any company with a certificate of public convenience and necessity issued under that Act an amount equal to the costs incurred by that Agency with respect to that company.
Division 8 of Part 5 amends the Canada Labour Code in order to, among other things,
(a) provide employees with a right to request flexible work arrangements from their employers;
(b) provide employees with a family responsibility leave for a maximum of three days, a leave for victims of family violence for a maximum of ten days and a leave for traditional Aboriginal practices for a maximum of five days; and
(c) modify certain provisions related to work schedules, overtime, annual vacation, general holidays and bereavement leave, in order to provide greater flexibility in work arrangements.
Division 9 of Part 5 amends the Economic Action Plan 2015 Act, No. 1 to repeal the paragraph 167(1.‍2)‍(b) of the Canada Labour Code that it enacts, and to amend the related regulation-making provisions accordingly.
Division 10 of Part 5 approves and implements the Canadian Free Trade Agreement entered into by the Government of Canada and the governments of each province and territory to reduce or eliminate barriers to the free movement of persons, goods, services and investments. It also makes related amendments to the Energy Efficiency Act in order to facilitate, with respect to energy-using products or classes of energy-using products, the harmonization of requirements set out in regulations with those of a jurisdiction. Finally, it makes consequential amendments to the Financial Administration Act, the Department of Public Works and Government Services Act and the Procurement Ombudsman Regulations and it repeals the Timber Marking Act and the Agreement on Internal Trade Implementation Act.
Division 11 of Part 5 amends the Judges Act
(a) to allow for the payment of annuities, in certain circumstances, to judges and their survivors and children, other than by way of grant of the Governor in Council;
(b) to authorize the payment of salaries to the new Associate Chief Justice of the Court of Queen’s Bench of Alberta; and
(c) to change the title of “senior judge” to “chief justice” for the superior trial courts of the territories.
It also makes consequential amendments to other Acts.
Division 12 of Part 5 amends the Business Development Bank of Canada Act to increase the maximum amount of the paid-in capital of the Business Development Bank of Canada.
Division 13 of Part 5 amends the Financial Administration Act to authorize, in an increased number of cases, the entering into of contracts or other arrangements that provide for a payment if there is a sufficient balance to discharge any debt that will be due under them during the fiscal year in which they are entered into.

Budget Implementation Act, 2017, No. 2

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Mr. Speaker, I would like to thank my colleague, who acknowledges that the Conservatives practised sound management during an astronomically serious financial crisis, and that Canada was the first country to recover. Thank you for acknowledging that.

I suggest that we stop spending without a plan. There is always the possibility of running a deficit in a specific context. However, the plan must be to return to a balanced budget. The government must practise responsible management.

Some programs are poorly managed. For example, the clean water and wastewater fund (CWWF) is an infrastructure program. The government is giving municipalities a certain amount of time to make a decision and present their projects. It is closing the window as much as it can. This leads to increased costs. Then, it changes the rules. In my riding, there are municipalities that did not submit projects because they could not satisfy the requirements. The Liberals can extend the program, but they are choking municipalities so that they do not have to pay.

Let us be honest, let us respect our regions and Canadians in general, and let us practise sound management of the country’s budget.

[The Assistant Deputy Speaker, Anthony Rota]

Order. 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 Saint-Hyacinthe—Bagot, the Environment; the hon. member for Selkirk—Interlake—Eastman, National Defence; the hon. member for Regina—Lewvan, Public Services and Procurement.

[Marco Mendicino, Liberal, Parliamentary Secretary to the Minister of Justice and Attorney General of Canada]

Mr. Speaker, I am pleased to speak today about Bill C-63, the budget implementation act, No. 2.

This bill includes key measures of our government’s second budget, which will create jobs, grow our economy, and provide all Canadians with more opportunities for success.

Before I move into the details of Bill C-63, I would like to provide a brief update on the strength of the economy as we reach the midpoint of our mandate.

In 2015, we assumed office in the wake of 10 long years of a Conservative government that had run multiple deficits, despite promises to the contrary; that had cut essential services, despite the needs of hard-working Canadians; and that had led to the weakest economic performance since the Great Depression, despite claims of being a champion of growth.

Over the last two years we have turned it around, thanks to some smart investments, which have included lowering taxes for nine million Canadians; creating the Canada child benefit plan that is putting more money in the pockets of nine out of 10 families, an average of $2,300 per family, and lifting approximately 300,000 children out of poverty; making enhancements to CPP, OAS, and GIS, all of which is improving retirement security and the quality of life for seniors; adding scholarships, bursaries, debt relief, and training for students in adult learning; and creating a national strategy on innovation and climate change to foster a competitive and sustainable economy.

When we take the cumulative effect of these measures and add them to the $180 billion we have earmarked for infrastructure spending to build better transit, roads, bridges, and clean water initiatives, we see concrete evidence of an economy that is heating up. Specifically, unemployment has dropped from 7.1% to 6.2%, the lowest since 2008. The debt-to-GDP ratio is forecast to drop below 3.1% this year, the lowest in nearly 40 years, on the way to and over the next five years. Half a million jobs have been created since we were elected, the best record in over 14 years. Together these indicators demonstrate how, in just two years, we took a workforce that was sluggish and underperforming and transformed it into the fastest growing economy in the G7, with an average of 3.7% GDP growth over the last four quarters. These results are ones that every member in this House should celebrate.

To keep the momentum going with regard to our economic performance, we are proposing a number of additional measures in this bill, which represents the second phase of the budget implementation act for 2017. Let me highlight a number of those now.

I will start with the measures to support the middle class and those working hard to join it.

This budget implementation act protects the rights of federally regulated workers when they request flexible work arrangements from their employers. Flexible work arrangements include flexible start and finish times, the ability to work from home, and new unpaid leave to help employees manage their family responsibilities. These work arrangements benefit many women who continue to do the majority of unpaid work in the home.

Budget 2017 was the first budget in Canada's history to include a gender statement. It seeks to present a frank and honest analysis of the impact the budgetary measures will have on women. In addition, in its fall economic statement, the government announced that it would strengthen the Canada child benefit by indexing it to annual increases in the cost of living effective July 2018, which is two years earlier than planned.

What this means, in practical terms, is that for a single parent with two children and income of $35,000 the Canada child benefit will contribute an additional $560 in the 2019-20 benefit year towards the cost of raising his or her children.

Beyond strengthening the Canada child benefit, starting in 2019 we will also add $500 million to the working income tax benefit, sometimes referred to as the WITB. This will put more money in the pockets of low-income workers, including families without children and the growing number of single Canadians. These two actions alone will boost the total amount the government spends on the WITB by about 65% in 2019, increasing benefits to current recipients and expanding the number of Canadians receiving this support, which is essential for those who need it the most.

Finally, our government is going to help small and medium-sized businesses by lowering their tax from 10.5% to 9%, effective January 1, 2018, and then again January 1, 2019. This will provide a small business with up to $7,500 per year in corporate tax savings to reinvest in and grow its business. These kinds of savings are crucial for small business to grow, which is the engine of our economy.

The steps taken to date are having a positive impact on our economy and for all Canadians. Optimism is on the rise, and with good reason. Job creation is strong. As I said, there have been 500,000 new jobs created in the last two years, most of them full-time.

Growing the Canadian economy helps the government improve its record. Canada's financial situation remains solid, and the government will see to keeping the debt-to-GDP ratio on its downward trend.

Every Canadian deserves to benefit from this economic growth. The government has lowered taxes for middle-class Canadians and has committed to ensuring that the tax system does not offer unintended benefits to the wealthiest Canadians or those with high incomes.

For all these reasons, I urge all hon. members to vote for this bill that will benefit all Canadians.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, I have a question for the parliamentary secretary in his role in justice. I am deeply concerned about the lack of access to justice by Canadians. We heard a major report on CBC today about how many people are having to represent themselves in court, causing further delays in the judicial process and ending with some serious cases being dropped that should proceed.

In my province of Alberta, even though the provincial budget may be stressed for dollars, it has increased legal aid, yet in this budget, we see no increase whatsoever for legal aid so that all Canadians can have access to justice, including middle-class families.

Can the member speak to that and to why this budget update does not include additional monies for legal aid, which is a pressing need in the country?

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

Mr. Speaker, let me begin by saying how proud I am of the work the Minister of Justice is doing on this side of the House to advance access to justice. She is doing so in several concrete ways. First, with regard to our judicial appointments process, we renewed that process so it would be open, transparent, and focused on merit-based appointments. In the last two years, we have appointed 130 judges. In my hon. colleague's province, I am very proud to tell her that she has received 19 new federal judges since we have taken office. These are extremely capable and well-respected individuals who reflect the best this country has to offer. Simply by having them on the bench, we are enhancing justice.

We are also providing additional training. We have topped up legal aid in the last two years. We are running two pilot projects on providing additional legal services and advice to victims of sexual assault so they can have access and have their day in court. All these things together are speeding up trials and enhancing access to justice.

[Alupa Clarke, Conservative, Beauport—Limoilou, QC]

Mr. Speaker, one of the key promises the Liberals made in 2015, before they were in government, was to invest $120 billion in infrastructure. The Conservative Party supported the idea from the get-go; indeed, it ran the largest infrastructure program in Canada when Mr. Lebel headed the infrastructure department. This program had planned investments totalling $80 billion, which was unprecedented in Canada.

That said, what I find interesting is that, today, two years after the election, very rarely do we hear about a specific project benefiting from the $120 billion that have supposedly been invested since 2015.

I wonder if my colleague is able to name a single project in a single province that has benefited from this $120-billion investment in infrastructure.

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

I thank the member for his question, Mr. Speaker.

We are no longer at $120 billion; since we have increased our investments in infrastructure, we are now at $180 billion. Among others, these investments are funding projects in Montreal, Quebec, aimed at expanding and improving public transit. This is great news for the people of Montreal and Quebec.

[Rodger Cuzner, Liberal, Parliamentary Secretary to the Minister of Employment]

Mr. Speaker, in the member's last response, he talked about services to Canadians.

Canadians have benefited from the Canada child benefit, seniors from the guaranteed income supplement, and WITB gives the most vulnerable Canadians more money in their pockets. However, it is on the services to Canadians, where we saw the past government cut jobs in EI processing and call centres, and the Phoenix fiasco that began with the 700 jobs cut from payroll departments, that I would like a comment.

Can my colleague comment on where those reinvestments are being made in the public sector, so that Canadians can get the services they expect and deserve?

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

Mr. Speaker, I want to thank my hon. colleague, who is a role model for every member on this side, for his thoughtful question.

In short order, one of the ways we are reinvesting in the public sector is by showing good faith when it comes to collective bargaining. The Conservative opposition spent 10 years eroding labour rights. On this side of the House, we believe in every single member of the public service who provides world-class service to Canadians.

I want to thank the hon. member for all of the work he does in that portfolio.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Mr. Speaker, I am happy to rise in the House to discuss Bill C-63, which arises from the budget, of course. On March 22 the Minister of Finance introduced his second budget, which basically seeks to create growth for the middle class and those who work hard to join it.

The idea is very simple: when we lend a helping hand to our fellow citizens in need, the whole society benefits. Lowering the income tax rate for the middle class was the first thing we did when we came to Ottawa. That was a tax cut for 9 million Canadians.

The official opposition party, who supposedly is the champion of taxpayers, voted against that initiative. Today we can perhaps see why: the Conservatives voted against that initiative possibly because we also raised the income tax rate on the wealthy.

The second measure we put in place to ensure more inclusive growth in Canada was the Canada child benefit. Again, the principle is very simple: those who need it more will get more help, and those who need it less will get less help. The previous approach from the Conservatives was to send cheques to millionaires. No matter one's revenue, everyone got the same cheque. To add insult to injury, they made it taxable. In Conservative la-la land, the principle of equity simply does not exist.

Under our plan, almost 18,000 children benefited from the Canada child benefit in Glengarry—Prescott—Russell, which is my riding. Families received an average payment of $510, which is non-taxable. The Canada child benefit directly impacts families and local businesses in Glengarry—Prescott—Russell.

The official opposition likes to talk the talk on defending the taxpayer, but when it comes to walking the walk, well, they voted against our plan and in favour of a plan that would tax families, which they still defend to this day. I would like to see them quote that particular impact in the Fraser report.

The question is on whether this plan is working. The answer is yes. The unemployment rate in eastern Ontario in September 2015 was 8.7%. Today, it is almost 2% lower, at 6.8%. The economy in Canada has added more than 500,000 jobs in less than two years. We have the lowest unemployment rate since 2008, and our economy is growing faster than any of the G7 countries.

This year, GDP growth will be 3.7%. This better-than-expected rate of growth means that the government will be able to index the Canada child benefit two years ahead of our original plan. That will mean an increase of $560 a year for a mother with two children who earns $35,000. We know that this will directly contribute to our country's economic growth. We are not the ones saying that. It is the Governor of the Bank of Canada.

What is more, we are enhancing the working income tax benefit by $500 million as of 2019. That is another measure that will have a significant impact on workers in my region. We are able to implement these measures because of our strong economic growth, and we are doing so while ensuring that the debt-to-GDP ratio continues to drop.

I would like to take a few moments to talk about the reason why we decided to carefully invest rather than make cuts. We cannot talk about deficits without mentioning the infrastructure deficit in Canada. None of the mayors in my riding are asking the government to cut infrastructure programs. This year, for the first time ever, the community of Maxville will finally have access to water thanks to a federal investment of $15 million. That is going to make a real difference in the lives of Maxville residents.

What is more, there has been talk about expanding Highway 17/174 for 40 years. With the announcement of light rail, $50 million will be allocated to build the interchange at the intersection of Highway 174 and Trim Road. This will have a direct impact on people who commute to Ottawa and on those who will be travelling to Trim station to take the train. More work remains to be done, but this is a step in the right direction.

I could name other infrastructure projects in Glengarry—Prescott—Russell, but the point is that there is tremendous need for our communities. As I have said before, not a single mayor is asking me to cut funding towards infrastructure.

What is the legacy we want to leave to our children and our children's children? We could balance the budget at all cost and kick the can down the road for major repairs to infrastructure, or we could own up to our responsibilities and reduce the infrastructure deficit so that our children and our children's children can benefit down the road. I choose the latter approach, because it is the responsible approach. If we have a leaky roof, we cannot simply balance the family budget in the hopes that the leaky roof will go away. We must take responsibility.

We are doing this because although the Conservatives supposedly balanced the budget during their 10 years in office, they did so by ducking their responsibilities towards our municipalities. “Too bad, so sad” was their refrain as they told our municipalities that their citizens would have to wait for clean drinking water and that fixed-income seniors, the most vulnerable members of our society, would have to wait for social housing. However, the fact that we have an aging population did not come out of nowhere. We need to make sure that the decisions we make today have an impact on tomorrow.

That is why I am proud that we are investing $11.9 billion in social housing. These investments will help seniors, single mothers, and women in domestic violence situations. We know that one of the barriers women face in trying to leave an abusive relationship is a lack of housing. Incidentally, I would like to thank the Centre Novas, which continues to advocate for the most vulnerable women in Glengarry—Prescott—Russell.

This goal is within reach, because we have chosen the path of investment and growth. Our track record on growth is good, the best in the G7, but we need to keep the momentum going.

The more our companies prosper, the better it is for our economy. In order to spur that growth, we are investing $400 million over three years in a venture capital catalyst initiative that will help young businesses scale up to the next level. With leveraged funds from the private sector, we could be looking at a $1.5 billion injection into our economy.

We will also honour our promise to our small businesses to lower taxes to 9%, down from 10.5%, by 2019. This will leave more money in the pockets of our entrepreneurs, so they can in turn invest it in their businesses.

In closing, Bill C-63 to implement certain provisions of the budget supports the growth of the middle class and helps those working hard to join it. The tax cut for the middle class, the Canada child benefit, the improvement of the Canada pension plan, the investments in our sewer systems and social housing, the tax cut for small and medium-sized businesses, the working income tax benefit, the improvement of the guaranteed income supplement—all of these measures help the middle class and those working hard to join it. Strengthening this class will benefit society as a whole, and I am proud to support this bill.

[Alupa Clarke, Conservative, Beauport—Limoilou, QC]

Mr. Speaker, my hon. colleague from Glengarry—Prescott—Russell attacked us a bit in his speech when he said that the Conservatives had forgotten the municipalities. That is a bit rich because when we were in government, following the recession, we set in motion the economic recovery plan that allowed every municipality in Canada to benefit from an $85-billion infrastructure plan that did not include a portion for social housing. It was entirely for municipal infrastructure such as bridges and waterworks.

By the end of that economic recovery, we had the highest job creation rate in the G7 with 1.2 million jobs created. How does the hon. member explain his government's decision for the past two years and especially in the past few weeks to do away with the regional development minister position for good?

How does that reflect any respect for the municipalities in Canada's rural regions?

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Mr. Speaker, I would put it to my colleague that we gave power back to the members of Parliament. In his province of Quebec, it is the role of Canada Economic Development for Quebec Regions, and in mine, FedDev is still the one investing. No one has lost their voice. In fact, I made several announcements aimed at helping several businesses in my province. We do not need a minister. All members have a voice in cabinet. They have only to speak to the Minister of Innovation, Science and Economic Development. I am certain that he would be most attentive to Quebec's concerns.

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I listened to what my colleague said he liked about the budget. My question concerns something that, surprisingly, is not in the budget. During the last two election campaigns in 2011 and 2015, the Liberals were very firm in their promise to cap the amount that can be claimed through the stock option deduction. Tax fairness is actually quite important to the middle class everyone keeps talking about. The Liberals repeatedly promised to address this perceived iniquity, and yet, they went back on their promise as soon as they came to power.

My question for my colleague is as follows. Why did the government decide to renege on its promise to close a tax loophole that only benefits wealthy CEOs?

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

First, Mr. Speaker, stock options do not only benefit wealthy CEOs. They also benefit start-ups. Sometimes, it is the only option they can give investors. I like that the hon. member reminded us of the promises we made during the election, because I, too, remember a promise the NDP made during the same period, which was to balance the budget. Today, the New Democrats are saying that they want us to invest more in the fight against tax evasion, although we have already invested more than $1 billion. I wonder how the NDP would go about investing more while still balancing the budget. Perhaps we should ask the new leader of the NDP, as we are unsure what his position is. Will he balance the budget at all cost, or will he decide to invest?

[Pat Finnigan, Liberal, Miramichi—Grand Lake, NB]

Earlier, Mr. Speaker, we heard our colleague opposite speak of the recession that happened when his party formed the government. Back then, revenues were at an all-time high. Oil was selling at $110 a barrel. All of these resources boosted revenues. Now that oil is selling at $40 or $50 a barrel, sound management was needed in order to provide Canadians all of the benefits we have been able to offer. I would like to hear my colleague's thoughts on that.