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

[The Assistant Deputy Speaker, Anthony Rota]

Excuse me. I want to point out that I am trying to hear the answer, but I am having a hard time, as I am hearing some interference.

It seems to have calmed down a bit. I will let the hon. member continue.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, my concern is that the member is chewing into my time, but I suspect it will be added.

The member talks about small businesses, but get this: we have now put in place a massive reduction in taxes for small businesses, from 12% down to 9%. One would think the opposition benches would recognize it, but this is the difference. This is the reality of government policy by us that does not necessarily abide by the type of script or scenario the opposition wants to try to portray to Canadians. They will distort the facts. They will distort the reality. It is all a part of being out of touch with Canadians.

Whether it is small business or the middle class, the average Canadian is benefiting from the many initiatives undertaken by this government over the last two years, and they will continue to do so, because we in government will not take them for granted. We are committed to working hard for each and every Canadian, because we want to make a better society for all of us.

[Erin Weir, NDP, Regina—Lewvan, SK]

Mr. Speaker, my colleague from Winnipeg North spoke about opposition members wanting to stick to a script. One script the Liberal government has stuck to almost slavishly over the past two years has been to talk about the middle class and those working hard to join it. I do not know if it is a little later in the evening or if the member across the way is ad libbing a little, but he really enriched the discourse with some new permutations of that phrase through the evening. He talked about those “aspiring” to join the middle class. It was very poetic and I did want to give credit where it was due.

The question I would like to ask my colleague is about the allocation of federal transit funding among the provinces. The government has chosen to allocate transit funding mostly according to existing transit ridership, as opposed to population. My home province of Saskatchewan comprises more than 3% of Canada's population, but we are getting only about 1.5% of federal transit funding because our current transit system does not have as large a ridership. I wonder if my fellow Prairie MP is advocating for a fair share of transit funding for our province.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I would suggest that my fellow prairie member of Parliament should be delighted with the fact that we have, for the first time in the history of government, seen in excess of $2 billion allocated for rural communities. All sorts of communities will be provided an opportunity to establish priorities as to how they would like to see that money spent.

At the end of the day, no matter what region it is, we will see a commitment by the national government to infrastructure and to asking municipalities, provinces, territories, and others to get engaged to assist us in establishing those priorities. In co-operation and working with the stakeholders, we are seeing record amounts of projects under way. They are fuelled with hope, because we have a national government that is prepared to invest in Canada's infrastructure.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, it is my pleasure to rise to speak to Bill C-63. I intend to focus on commitments made by the government of the day, and the previous government, on the phasing out of inefficient or perverse subsidies for fossil fuels.

This commitment was made repeatedly since 2009 to the G20, including by the Liberal government in 2016. Canada, Mexico, and the United States committed to remove these perverse incentives by 2025. The government has voiced a commitment to phase them out in the medium term. The question then arises, as we move at a snail's pace, what exactly is the medium term?

The government also committed to take action to reduce greenhouse gases. They made that commitment in Paris, and we are now hearing from world leaders that this appears to be a sliding commitment on behalf of the Government of Canada, leading into the climate meeting in Bonn.

I would like to start off reminding those in this place of what the Prime Minister's mandate letter said about the phase-out of these perverse subsidies. The mandate letter for the finance minister is very clear.

First, his mandate was to work with the President of the Treasury Board and his colleagues in the cabinet to review tax expenditures and other spending to “reduce poorly targeted and inefficient measures, wasteful spending”, and ineffective initiatives.

Second, his mandate was to work with the Minister of Natural Resources to “enhance existing tax measures to generate more clean technology investments and work with the provinces and territories to make Canada’s tax system highly competitive for investments in the research, development, and manufacturing of clean technology.”

Third, the Minister of Finance was mandated to work with the Minister of Environment to fulfill the government's “G20 commitment and phase out subsidies for the fossil fuel industry over the medium-term.”

It does not end there. The mandate letter for the finance minister also says that if the government is to tackle climate change, the work must be “informed by performance measurement” and “evidence”. Then the mandate letter says that the government has committed to a “higher bar for openness and transparency”, and that the Prime Minister expects the minister to deliver on these commitments during this mandate in the first four years. However, two of those years are gone and we are now sliding into the third year.

What has a leading international entity said about Canada's sliding commitment to addressing greenhouse gases, including our commitment to remove the perverse incentives?

Jose Angel Gurría, the Secretary-General of the OECD, has expressed great pain at the sliding commitment. He says it is “a bit of a paradox” that Canada seems to be espousing the political will to reduce greenhouse gases, but does not seem to be going down that road. However, in the United States where the political will is gone, they have moved far ahead of Canada in taking action. He also stated that, “While at the same time, the local situation is showing that speed of reduction is not as fast as one would have wanted”, that emissions in Canada should have fallen 17% from 2005 levels, and instead the drop has been more like 2%. He also stated that Canada is “on a path where, by 2030, you may not be able to get to the target.”

It is very concerning. Therefore, it is not only Canadians expressing concern about the lack of commitment of the government to deliver on its commitments to reduce greenhouse gases. There will be growing concern about the failure to deliver the commitments to the G20 and their commitments in Paris.

This is reiterated by Canada's Auditor General in a letter sent by him on June 2 to the chair of the Standing Committee on Environment and Sustainable Development. It states:

This audit focused on whether the Department of Finance Canada and Environment and Climate Change Canada, in a manner consistent with their respective roles and responsibilities, supported Canada’s 2009 G20 commitment to phase out and rationalize inefficient fossil fuel subsidies while providing targeted support for the poorest.

It continues:

Overall, we found that [these departments] did not define what the 2009 G20 commitment to phase out and rationalize inefficient fossil fuel subsidies means in the context of Canada’s national circumstances.

The Auditor General then continues, and states:

We found that since 2009, six subsidies to the fossil fuel sector were reformed by legislation. Other tax measures for this sector were not reformed. We also found that the Department of Finance Canada did not consider all tax measures to determine whether they were inefficient fossil fuel subsidies under the commitment. The Department also did not develop an implementation plan with timelines to support the phase-out and rationalization by 2025 of remaining tax measures that are inefficient fossil fuel subsidies.

The Auditor General closes with this, which states:

...without a clear understanding of the fossil fuel subsidies covered by the G20 commitment and without an implementation plan with timelines, the departments cannot ensure that they are providing the support needed for Canada to meet the commitment by 2025.

Clearly serious concerns are being raised, in all quarters, about the failure of the current government to deliver on its commitments both to reduce greenhouse gases and to take more expedited action to remove the perverse subsidies. In this budget, the government appears to be partially addressing Canadian development and Canadian exploration expense deductions. With respect to the removal of these subsidies, it may be noted that the Canadian exploration expense deduction used to be 100%, but is now being slid into the Canadian development expense deduction, which is 30%. It is hard to tell from what is in the budget document how much further the government is going, but clearly it is not rapid enough to meet the demands of the Auditor General.

It is important to consider that these corporations can continue to defer the deductions. Therefore, while the budget document appears to suggest that by a certain date, which I think is 2021, they can no longer claim them, the corporations can hold those off and claim them at an end date. Therefore, we may have hundreds of millions of dollars being claimed in the near future, at a time when we need to be spending that money on supporting renewable energy.

Why is this of deep concern? I have gone through the reports where people have been adding up the subsidies and grants for the fossil fuel industry. It adds up to an astounding $5.8 billion a year, so the government has a long way to go, given the meagre measures it has in this budget document.

Therefore, the obvious question for the government is this. When will it step up to the plate, move this forward, and respond to the call by the Auditor General to provide a plan of action and a timeline? Further, is it going to begin to become transparent, instead of holding discussions on these perverse subsidies behind closed doors?

[Kellie Leitch, Conservative, Simcoe—Grey, ON]

Mr. Speaker, I have a simple question for the member. We are always hearing how the Liberal government feels that it has been so invested in making sure that the lives of average Canadians are improved, whether it be with this budget bill or with those previous. I would like to have the member's comments on how she is finding her constituents in Edmonton are reacting to this budget bill. Does she believe that this is helping her citizens, or are there things that the Liberals should be focused on to make sure that Canadians are better off than they are currently?

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, indeed I am hearing the same kinds of concerns that all members in this place are hearing, particularly given that I am from Alberta. We know there is a downturn in the oil industry and a depleted price for oil and gas. Today I read another report on how many oil field workers are trying to get into training so they can get into the renewable sector. However, we do not see a cent from the current government towards a just transition. I am proud that the Government of Alberta is working on a strategy with unions and workers in Alberta and trying to move this forward, but where is the strategy? People across Canada need work. There are a lot of people being laid off. People want to work. They do not want to go on welfare. They want to look after their family. They would probably prefer to go back to the communities that they came from. The renewable sector can clearly provide a lot of jobs, as it has around the world. Therefore, I am deeply disappointed that there are lot of things that are not in this budget that would help Canadians obtain employment in the new energy economy.

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

Mr. Speaker, I like to think we have seen a great deal of sympathy in terms of what is taking place in Alberta. Being from the Prairies, I know there has been a great deal of concern, which goes well beyond my province. In fact, all Canadians want to see Alberta play the prominent role it has, and that I ultimately argue continues to play in Canadian society.

To try to give an impression that the government is not working for Albertans is just wrong. The member across the way talks about energy and energy jobs. We have pipelines that have been approved. We have a minister of infrastructure who has worked with other ministries to ensure that some of those infrastructure projects are expedited as much as possible to assist the province of Alberta. This is in addition to all the other benefits I was able to highlight, at least in part, such as the Canada child benefit, which is putting more money into the pockets of Albertans.

Can the member tell me what she believes the former Conservative government did that we have not done in terms of assisting the province of Alberta?

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, I am not sure I want to compare the two. I was pretty clear in my speech that it is not what I am calling for, it is what the Auditor General, OECD, and what all those countries that will be gathering in Bonn are calling for. Canada made big promises but is failing on delivery.

Frankly, I did not just speak to Alberta. I hear it day after day in my riding, and I know there are a lot of people from across this country, the Maritimes, Quebec, Ontario, and B.C., who have come to work in the oil industry in Alberta. Everyone knows there is a downturn. A lot of those young folk call me and ask what they can do to get into the renewables sector, because they know there is a lot of potential for jobs. There is a waiting list for the renewable energy program at the Northern Alberta Institute of Technology.

For heaven's sake, when is the Liberal government going to step up and give some of the money over to help with this just transition?

[Pierre Breton, Liberal, Shefford, QC]

Mr. Speaker, I am rising today to speak to the second act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures.

First, I would like to recognize the citizens of Shelford who trust me and allow me to serve in the House. It has been a great privilege for me to represent them for the past two years.

Also, as the municipal elections were held yesterday in Quebec, I want to thank the 250 candidates who ran for the various public positions in my riding. Of the 250 candidates, 20 mayors and 124 councillors were elected last night, and it will be a pleasure for me to work with each one of them for the betterment of our community.

As a preamble, I would like to point out that the government's plan to invest in the economy and to strengthen the middle class has yielded good results for my constituents in Shefford. Since the government was elected, the unemployment rate in my region has steadily decreased, and it is now—

[The Assistant Deputy Speaker, Anthony Rota]

The member for Portneuf—Jacques-Cartier is rising on a point of order.

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

Mr. Speaker, we are now debating Bill C-63. The member for Shefford just used up two or three minutes of his time to thank the candidates in yesterday's elections. We could all do the same for the 78 ridings in Quebec and thank our colleagues who ran for office. He should move on to the heart of the matter, which is Bill C-63.

[The Assistant Deputy Speaker, Anthony Rota]

Usually we let members direct their comments as they see fit. It may seem that they are taking a different direction, but they usually come back to the relevant subject. I will let the member for Shefford continue and I am sure his speech will be very interesting.

[Pierre Breton, Liberal, Shefford, QC]

Mr. Speaker, I was just saying that the unemployment rate has dropped steadily and is now at 4.1%. That is a 40-year low.

Massive job creation and the Canada child benefit are boosting consumer confidence. This key measure, which is more focused and more generous than previous benefits, has channelled $115 million into my riding since July 2016. That tax-free money was distributed to 22,000 children in my riding. It has put more money in the pockets of 15,000 families so they can invest in their children, enabling them to participate in sports, arts, ballet, and more.

At the same time, the middle-class tax cut and major infrastructure investments have helped support and grow my riding's economy. Our government is funding a new aquatic centre in Shefford. This major infrastructure project will enrich the daily lives of people in my community while creating economic growth and well-paid middle-class jobs. Other parts of my riding are benefiting too. There is going to be a bike path in Waterloo, cultural events in Valcourt, a community centre in Rougemont, water and waste water infrastructure in Ange-Gardien, and so much more.

I also want to convey to everyone in my riding and indeed to all Canadians that the two budgets tabled by our government are working and producing meaningful results in creating jobs, strengthening the middle class, and helping others to join it. For two years now, our government has worked tirelessly to boost the economy and improve the financial situation of Canadians who could use some support.

One measure that I am particularly proud of is how we improved income security for low-income seniors. Canadian seniors who live alone and are the most vulnerable could receive up to $947 more annually in the guaranteed income supplement top-up benefit. Thus, our government is improving the financial security of 900,000 seniors across the country, including 3,000 in my riding.

Another key measure was the increase in the student grant program, which will allow students to focus on their studies and continue working hard to realize their dreams without having to worry about student debt. We have increased Canada student grant amounts by 50%, thereby helping over 350,000 students in Canada. On the heels of budget 2016, budget 2017 offers immediate help to those who need it most and helps guarantee everyone a real and fair chance of success.

More specifically, budget 2017 is part of the government's ambitious plan to make smart investments that will create jobs, grow our economy, and provide more opportunities for the middle class and those working hard to join it. It puts the skilled, talented, and creative people of Canada right at the heart of a more innovative economy of the future, an economy that will create jobs for the middle class of today and tomorrow.

I want to stress the fact that the investments that our government has made in people, our communities, and our economy are working. Among the G7 countries, Canada's economy is growing the fastest, and we are reinvesting the profits from that growth into the people who are contributing the most to this success. Thanks to this solid economic growth, the government has enjoyed better results and has been able to do more to help people in the middle class. For example, we kept our promise to lower the small business tax rate. The rate that was 11% in 2015 will drop to 9% in 2019.

Small businesses are key to growing our economy. We are committed to giving them full support to grow, invest, and create stable, well-paying jobs for the middle class. We also enhanced the Canada pension plan.

In that vein, I applaud the Quebec government's initiative, which adapts the Canadian formula to Quebec society. The Canada pension plan will get a boost from coast to coast to coast thanks to the Government of Canada's efforts.

This means young workers and young families can rest assured that they will have a better and more secure retirement. What they save now will be returned to them at the end of their working lives.

Of course, there is also the working income tax benefit. Just like everywhere else, some people have trouble getting off social assistance. They find it difficult to choose between getting back into the job market and continuing to receive social assistance. The measures we just announced will enhance this tax credit, which will make it easier for people to choose to go back to work, get back into the job market, and contribute more to society because they know they will get a tax credit, they know the federal government supports them, and they know that, financially, going back to work makes sense.

The budget implementation act we are debating today has the same objectives as previously stated, namely to grow our economy and to support the middle class and those working hard to join it. For example, more flexible work arrangements are being provided to federally regulated employees in order to help them balance their work and personal responsibilities. In practical terms, this measure will ensure they have more flexibility to take vacation and other annual leaves, such as up to 10 days of bereavement leave to deal with the loss of a loved one. There would also be more flexibility in granting unpaid leave for employees to manage various family responsibilities. Through those measures, the government is showing compassion and taking concrete steps to make life easier for hard-working people.

Students are not being forgotten. In my riding of Shefford, 160 organizations received $1.2 million over the last two years, to create 380 jobs. That is a major achievement.

Budget implementation act, 2017, No. 2 will also enable us to pursue our innovation and skills plan through an investment of $600 million in clean technologies and businesses.

It is an honour for me to be part of a government that works very hard to strengthen the middle class, grow the economy, and help families in tangible ways. I am convinced that our budget is excellent for my constituents. They give me confirmation of that every day. On their behalf, I congratulate the government and acknowledge the thousands of constituents in my riding who put their trust in me.

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

Mr. Speaker, my colleague mentioned near the end of his remarks that the budget is good for the middle class. A recent study has shown that 81% of middle-class families are paying more taxes now than they were two years ago, when the government took office. The average middle-class family is currently paying $840 more in tax than it did two years ago.

I want to ask my colleague the same question I asked a colleague earlier, who sort of skirted around the answer. Why would the government, through the budget implementation act, be investing millions of dollars in an infrastructure bank that would benefit Asians but would take money from middle-class families in Canada to pay those taxes? How does investing in infrastructure in Asia help middle-class families in Canada? In fact, it would hurt them by making them pay for something they will never get to use.