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 Lightbound, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, the member mentioned that the budget and the bills were hard to understand at times. Legal texts are hard to understand. I have to give him credit, as his speech, in and of itself, was hard to follow. Trying to connect the dots has been a great exercise for me, with all the various avenues he has taken.

At the beginning of his speech, he questioned the definition of “middle class”. I understand he defines it in terms of what people drink. Is it beer or is it wine? I come not from the middle class but from a background where I was one of those working hard to join the middle class, and we enjoyed red wine a lot. That does not define us in any way, shape or form. Nor do the kinds of products we consume.

However, on this side, our definition of “middle class” is more with respect to the capacity people have to pay their bills at the end of the month. That is what is defining our ambition as a government, to ensure families that need it the most get the most money at the end of the month so they can pay their bills, raise their children, and have the opportunities all Canadians deserve for success. That is why we made the Canada child benefit more generous, more progressive, and tax free, while the Conservatives were sending it to millionaires. If that is their definition of “middle class”, then when they increased the TFSA limit, who were they targeting? Was it the middle class? Therefore, I would like to know his definition based of what people earn and their capacity to make ends meet more so than what they drink.

I have a comment for clarification. As we are talking about Bill C-63 and beer, we have done this. A beer concentrate has been developed. We do not want to tax it as a spirit; we want to tax it as the volume of beer it creates. We received this from the industry. We followed through on it, and stakeholders are happy about it.

[Arnold Viersen, Conservative, Peace River—Westlock, AB]

Mr. Speaker, every family looks at whether they can pay their bills at the end of the month. The government is raising taxes on everyday Canadians. The average family is paying $800 more a year in taxes. Besides that, it is adding, on average, $500 per person to the national debt of our country every year. That means when we are born, we are born with a $23,000 debt just for being alive and for being Canadian. “Welcome to Canada. You now have a $23,000 debt.”

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, I hate to correct my friend, but we have to get the terminology right. It is the middle class and “those working hard to join it.” I found out that when Liberal colleagues use that exact phrasing, including the Prime Minister, they get a cookie every time. Therefore, if Conservative colleagues are looking for the same opportunity, here is a question about the middle class, which is the obsession of the 1% finance minister, or the 1% of the 1% finance minister, because I want to get the numbers right.

The Liberals promised to curb a loophole in the Income Tax Act whereby people would be paid in stock dividends rather than by salary and would receive a much more beneficial tax treatment. They promised to shrink and close that loophole. It costs the treasury about $800 million a year. Compare that to some of the attacks the Liberals have made on small businesses, where just one portion of what they were going after. They called those “loopholes” and inferred at times that small businesses were tax cheats. That was meant to bring in about $220 million to the treasury. By actually fulfilling the campaign promise, on which the Liberals ran, to close down these CEO stock option loopholes, they would have brought in almost four times as much money.

How many middle-class Canadians does the member know in his riding who are not paid by salary or by hourly wage but by stock options from the companies for which they work?

[Arnold Viersen, Conservative, Peace River—Westlock, AB]

Mr. Speaker, I did not research it, so I do not know how many people in my riding are paid by stock options. However, what I did research was the price of beer and how many Canadians consumed it. It turns out that 44% of Canadians consume beer. It is interesting that when it comes to beer, nearly a majority of Canadians enjoy their beer. The government is raising the taxes on that significantly, in perpetuity. Therefore, I appreciate the comments we received from the member, but when it comes to closing tax loopholes, obviously the government is closing the tax loophole on beer, ensuring we have to pay a tax on beer.

[Marwan Tabbara, Liberal, Kitchener South—Hespeler, ON]

Mr. Speaker, I will be splitting my time with the member for Thunder Bay—Rainy River.

Those in Waterloo region are very fortunate. The national unemployment rate is 6.2%, a nine-year low. Kitchener's unemployment rate is just 4.5% and it is experiencing an almost 5% job growth.

Our plan seems to be working. Canada's economy is the fastest-growing economy in the G7. Canada's economy is growing faster than it has in a decade. Job growth is among the highest in a decade. In just two years, over 450,000 jobs have been created. Canada has the lowest unemployment since 2008.

Youth unemployment is the lowest on record. In 2015, the national unemployment rate was around 7% and youth unemployment was double the national average. In my riding of Kitchener South—Hespeler, our doubling of the Canada summer job program has meant that for the past two summers, we have made a half a million dollars available to help social service agencies and private enterprises create summer jobs for young people, which will help them build their work experience, their resumés and equip them with the necessary skills they will need after graduating to secure good, well-paying jobs.

As a result of the excellent growth of our economy, government revenues have grown by more than an estimated $6.5 billion annually, on average, improving our budget to the extent that we are able to index the Canada child benefit two years ahead of our original plan.

In the last month for which I have figures, the Canada child benefit has meant that in my riding of Kitchener South—Hespeler, a total of 10,770 payments were made, benefiting just over 19,000 children. That is more than $6 million a month that moms and dads in Kitchener South—Hespeler have to buy clothes for their kids, shoes, school supplies, nutritious food, and learning and recreational activities. That money can now be spent locally in my riding.

Not only do nine out of 10 families in Canada now have more money to spend, not only have 300,000 children been lifted out of poverty, but economic experts, including the governor of the Bank of Canada, tell us that the Canada child benefit has been highly stimulative, which means that it has been very good at growing our economy. That should not surprise anyone.

The North American economy, Canada's economy included, is consumer-driven. When parents' responsibilities require them to spend on necessities for their children, the economy improves and grows, sales increase, profits rise, and employment increases. Therefore, the Canada child benefit helps parents raising the next generation and, at the same time, helps grow our economy.

As promised in our election campaign platform, we are lowering the small business tax rate from 11% to 9% to help small businesses invest, create jobs, and grow. Dan Kelly, with the Canadian Federation of Independent Business, said, “This decision will pump hundreds of millions of dollars back into the small business community, helping them create more jobs and grow the economy.” Therefore, not only have we improved the situation of families with children and caused the economy to grow, thereby improving business, but we have also reduced the tax burden on household businesses.

We have also been investing in transit, such as the Waterloo region LRT. We are investing in Canada and Canadians. Over the past year, I participated in a number of announcements and investments in my riding of Kitchener South—Hespeler, and I would like to outline some of those now.

There was a $15.8-million investment in Conestoga College Institute of Technology and Advanced Learning. As a result of this investment and investments like it, students, professors, and researchers will work at state-of-the-art facilities to advance the country's best researchers. They will collaborate in specially designed spaces that support lifelong learning skills and training. They will work in close proximity with partners to turn discoveries into products and services. In the process, they will train for and invent the high-value jobs of the future. Their discoveries will plant the seeds for the next generation of innovators.

We will be investing $2.7 million in 3E Nano Inc. of Kitchener. 3E Nano produces a window coating that will make it easy to defrost car windows and make windows more energy efficient by increasing energy retention or rejection without reducing clarity.

We will make a repayable contribution of up to $3 million to Grand River Foods Ltd. in Hespeler to increase production and explore new export opportunities.

Our government will provide $96 million to widen Highway 401 from six to ten lanes for a distance of approximately five kilometres, between Hespeler Road and Townline Road. The work includes new high occupancy vehicle lanes and the replacement of two bridges at Hespeler Road and Franklin Boulevard over Highway 401. Once completed, the project will help improve safety and traffic flow by easing congestion and providing faster and more reliable travel and commute times on one of Canada's most important trade corridors. The addition of high-occupancy vehicle lanes will promote environmentally friendly transportation, such as carpooling and the use of public transit. By widening and improving the highways, we can get products to market faster, adding to the growth rate and continued success of our current economy.

We are also building an innovative economy that will create more good jobs for the middle class today and in the future. As part of our innovation and skills plan, we are investing nearly $1 billion over five years to create jobs and accelerate innovation through superclusters.

Superclusters are innovation hotbeds. They are areas of high growth, like Silicon Valley, that bring together the most talented people, the newest technologies, and the fastest growing companies. This is what we want to create in regions across Canada.

This legislation will take the next steps in our innovation and skills plan, an agenda that focuses on people and addresses the changing nature of the economy to ensure that it works for all Canadians. It will enact several key parts of our plan, including $600 million in new financing for clean technology firms and $400 million to put into place the venture capital catalyst initiative.

I want to conclude by mentioning some of the initiatives that our government has put forward. We have put forward an economic plan that has created 450,000 jobs in two years. The unemployment rate was at 7% when we took office and it is now down to 6.2%. The economy is growing faster, at an average pace of 3.7%. Canada has the fastest growing economy in the G7. Nine out of ten families have benefited from the child benefit, and we have lifted over 300,000 children out of poverty.

I want to share that record with the members of the House to show that our record is successful, it is working, and it is working for most Canadians.

[Colin Carrie, Conservative, Oshawa, ON]

Mr. Speaker, it is really important as parents that we talk to our kids about financial literacy. Our government put that concept forward and I think the Liberal government has put some resources toward it.

When we teach our kids about financial literacy, it is important that we tell them not to borrow money on credit cards to a point where the debt cannot be paid down.

We just had the government's fall economic update. The Liberal government promised a small $10 billion deficit. This time around it is $20 billion. In the last two years, the deficit has been closer to $30 billion. The Liberals brag about all of the money they are handing out to Canadians, but the reality is that this year alone a family of four will be further in debt by $2,222 approximately. During bad times the Liberals like to spend money. Now they say we are in good times so they are spending more. The deficit is twice the amount they promised. That is Liberal ideology.

Does the member believe in financial literacy for children? If so, does he believe in financial literacy for the government, because it is putting us further in debt even in good times?

[Marwan Tabbara, Liberal, Kitchener South—Hespeler, ON]

Mr. Speaker, that gives me an opportunity to talk about this further and to address the member's question on financial literacy. One thing I want to say is that the way we grow our economy is by making investments in our middle class and in business. We have lowered the tax rate on small business from 11% down to 10.5%, and will be lowering it even further to 9%. We are lowering taxes on businesses, increasing investment, and increasing infrastructure. The latter include the highest numbers we have seen, with billions of dollars being put into infrastructure. I have seen in my riding how that will help our region. Investments are the way to grow the economy.

[Sheri Benson, NDP, Saskatoon West, SK]

Mr. Speaker, I wish to draw to the hon. member's attention to one concern that I have, which I hope we can correct at some point very soon. That is the fact that the proposed 10 days of unpaid leave of absence for victims of domestic violence might not help very many people. I will point out what I have shared with the member's colleague.

For the many women in particular who are in abusive relationships, 90% of them are also economically controlled by their partner. We can imagine a scenario in which an individual has taken unpaid leave from their job to deal with an issue, to maybe see a lawyer or to take care of some issues in order to be safe, and then come home at the end of the month and their pay is less than what it should be. That will create an unsafe scenario in some families.

I really want to call my colleague's attention to how important it is that this leave be paid if it is to be an effective policy piece by the government. I would like the member's comments on that.

[Marwan Tabbara, Liberal, Kitchener South—Hespeler, ON]

Mr. Speaker, I want to express support for this bill and address the question of the hon. member. As a result of the bill, the Canada Labour Code would allow for greater flexibility in terms of vacation days, holidays, and bereavement days. This is something that we wanted to do to ensure that the labour code is particular to the times we live in. We want to continue to work with all of our colleagues to look at ways we can help all Canadians with work-life balance. I want to work closely with my colleague and all members of the House going forward.

[Sven Spengemann, Liberal, Mississauga—Lakeshore, ON]

Mr. Speaker, my colleague hit the nail on the head when he said that we are investing in Canadians and that it is paying off. When he goes door knocking in his riding of Kitchener South—Hespeler, what is he hearing about those investments, particularly the Canada child benefit and the other investments we are making in Canadians?

[Marwan Tabbara, Liberal, Kitchener South—Hespeler, ON]

Mr. Speaker, I have friends on BBM, where we have a group chat. In our case, the topic was to alert all parents out there that the Canada child benefit would be increasing again in 2019. They were very happy to hear that because they know that the cost of raising their children is increasing and that this will go directly to their families to help them with that and to ensure that they spend more. That spending will go directly to our economy and will continue to boost it.

[Don Rusnak, Liberal, Thunder Bay—Rainy River, ON]

Mr. Speaker, I am pleased to speak to Bill C-63. We know that when it passes, this very important legislation will continue the government's plan to ensure progress for the Canadian middle class.

We are keeping our promise and delivering on what Canadians want us to do, to build an economy that works for Canadians and their families. A strengthened middle class means that hard-working Canadians and their children will reap the benefits of their work and will be prepared for the economy of tomorrow.

A vital component of that is supporting our small businesses, which are the lifeblood of the Canadian economy. Just last month, the government announced that it intends to lower the small business tax rate to 10%, effective January 1, 2018, and to 9%, effective January 1, 2019. We will make sure that the small business rate is effective in encouraging businesses to grow, buy new equipment, and hire more workers.

I would now like to focus on the state of our economy and the recent measures in the government's fall economic statement, which is a continuation of the government's plan in its past two budgets and last year's fall statement. The government's plan to invest in people and in our country's future is based on the belief that when we have an economy that works for the middle class, we have a country that works for everyone.

The Canadian economy is the fastest growing in the G7, with an average growth of 3.7% over the last four quarters. This is due in large part to increased consumer confidence, a direct result of programs like the Canada child benefit that put more money in the pockets of moms and dads, so they can pay off debt, buy hockey equipment, or buy healthier food. Everywhere we look, there are signs of progress for the middle class. The economy has created over 450,000 jobs in the last two years, and the unemployment rate has dropped to its lowest level since 2008.

Canadian economic growth has accelerated sharply since the second half of 2016. Over the last four quarters, the Canadian economy has had its fastest rate of growth in more than a decade, and growth is forecast to be 3.1% in 2017, significantly above expectations at the beginning of the year.

These gains, coupled with a better than expected fiscal outcome in 2016-17, have resulted in a really positive improvement in our budget outlook. In fact, Canada's fiscal outlook has improved by over $6.5 billion annually, on average, compared to what we were expecting in March, and the federal debt to GDP ratio has been placed firmly on a downward track, with Canada's net debt to GDP ratio projected to remain the lowest in the G7.

How did we get here? In the short term, we did what Canadians asked us to do, by making smart investments to grow the economy, and strengthening and growing the middle class. We asked the wealthiest 1% to pay a little more so we could cut taxes for the middle class. We increased the guaranteed income supplement for low-income seniors. We introduced a new tax-free Canada child benefit, CCB, to replace the previous child benefit system.

The CCB provides greater support to those who need it most: low and middle-income families. Sixty-five per cent of families receiving the maximum CCB amounts are single parents, of whom 90% are single mothers. Nine out of 10 families are receiving more support under the CCB than under the previous system. The CCB has helped lift 300,000 children out of poverty, and by the end of this year, child poverty will have been reduced by 40% from what it was in 2013.

In the fall economic statement, the government proposed strengthening the CCB by making annual cost of living increases starting in July 2018, a full two years ahead of schedule. The government had previously committed to indexing the CCB to inflation starting in 2020, but a growing economy and improved fiscal track means that the government can deliver on this commitment a full two years ahead of schedule.

We are also strengthening the Canada pension plan, reaching an historic agreement with the provinces that will increase the maximum benefit by 50% over time.

However, there is more work to do, and as our plan helps grow the economy, we are investing that growth back in the middle class and those working hard to join it. For those working hard to join the middle class, such as young single workers just getting a foothold in the workforce, the government proposes to offer even more help by further enhancing the working income tax benefit, or WITB. The WITB is a refundable tax credit that supplements the earnings of low-income workers. It provides important income support and helps ensure that work is rewarded. In the fall economic statement, the government proposed to further enhance the WITB by $500 million annually, starting in 2019. This enhancement would be in addition to the increase of about $250 million annually that would come into effect in that year as part of the enhancement to the Canada pension plan.

The enhancement proposed in the fall economic statement will give a needed boost to over 1.5 million low-income workers as they work long hours, sometimes in more than one job, to advance their careers, support themselves, and their families. Whether this extra money is used to help cover the family grocery bill or for work-related expenses, the improved benefit will help low-income working Canadians make ends meet.

The investments we have made in people, in our communities, and in our economy will put more money in the pockets of those who need it most, create more well-paying jobs, and give Canadians greater confidence in their future.

Our budget is a call to action. It calls on each and every one of us to take this moment in history and to make it ours. That is why I would strongly encourage all members of the House to support this legislation.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Mr. Speaker, the last member quoted Dan Kelly from the Canadian Federation of Independent Business. It is amazing that he would quote him, given what the CFIB has said about the government's plan and continuing intentions to attack small business. Indeed, Mr. has Kelly stated:

These proposals, while intended to target the wealthy, will hurt middle-class business owners from every sector of the economy. These are shop owners, farmers, doctors, financial planners, homebuilders and trades in all sectors...

As well, Perrin Beatty, the CEO of the Canadian Chamber of Commerce has said:

In 10 years at the Canadian Chamber, I’ve never seen an issue that has generated greater concern among our members.

That is quite incredible. I wonder if the member could comment on that.

Mr. Speaker, before I do, I wonder if you would see whether we have a quorum in the House at the moment.

[The Assistant Deputy Speaker, Liberal, Anthony Rota]

On that point of order, we do not have a quorum. Please ring the bells.

And the bells having rung:

We now have a quorum.

The hon. member for Thunder Bay—Rainy River.

[Don Rusnak, Liberal, Thunder Bay—Rainy River, ON]

Mr. Speaker, the hon. member is quoting articles from when the government first put out its proposals. I have often said that no government in history has put out proposals and asked for consultation as we have with the minister's tax fairness plan.

We have listened to and heard Canadians. We have made changes to the tax plan. The minister has said from the beginning that he did not want any unintended consequences in terms of tax fairness, and I think that is what has been delivered.