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

[Chandra Arya, Liberal, Nepean, ON]

Madam Speaker, the hon. member talked about the debt, and I will come back to that a bit later. We have made significant investments in the middle class and in infrastructure, have reduced taxes on the middle class, and made enormous investments in infrastructure. All of that is paying off. The GDP growth rate is the best among the G7 countries. In my riding of Nepean and in Ottawa, the unemployment rate is the lowest in the last 10 years. Last month alone, we created 35,000 full-time jobs in Canada.

When we look at Canada's debt from 1997 to the current date, only between the years 1997 to 2008 did it actually go down. We have made a commitment to keep the debt to GDP rate low and are willing to do that. Can the hon. member comment on the growth rate we are achieving and our intention of maintaining a lower debt to GDP ratio?

[Ed Fast, Conservative, Abbotsford, BC]

Madam Speaker, the fact that Canada is experiencing growth and job creation today is because of a Conservative government that invested heavily and responsibly in infrastructure before 2015. It kept taxes low on Canadians, moved infrastructure projects forward, and was supportive of the resource sector.

Today, we know there are lots of red flags in our economy. We know that foreign investment is fleeing Canada. It is avoiding Canada because we do not have regulatory certainty anymore. When a company from abroad wants to invest in Canada, it asks how long it will take to get its project approved, and it is told that it could be many years, or maybe never. Therefore, it is not going to be investing in Canada.

That is the sad part of this Liberal government. It has overturned all of the goods things our previous Conservative government did to lay the basis for a sound economy.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Madam Speaker, I would like the member to return to the Asian Infrastructure Investment Bank for a second. As a former trade minister, the hon. member knows a lot about how these international commercial arrangements in fact work.

I find it strange that a government that promised infrastructure in Canada for Canadians is now resorting to promising infrastructure and legislating infrastructure for Asian billionaires. Can the hon. member expand upon this, based on his tremendous experience with commercial agreements and international trade?

[Ed Fast, Conservative, Abbotsford, BC]

Madam Speaker, when we were in government under Stephen Harper, we looked very carefully at the Asian Infrastructure Investment Bank and said no. Why? It was because it did not promote Canada's interests. It was not going to create jobs in Canada. As my colleague said, it would be creating jobs in China for Chinese billionaires.

Another thing that will happen as we help the Chinese build out their Asian infrastructure is that we will improve their competitiveness and that of other Asian economies and undermine our own. We should be investing in Canada. That is the sad thing about the Liberal government: it invests in infrastructure in foreign countries, which will create an unlevel playing field between them and Canada when it comes to competitiveness.

The government takes $2.6 billion of Canadian taxpayers' dollars and puts it into something called the green climate fund at the United Nations that is supposed to help other countries mitigate or adapt to climate change. There are no safeguards; there is no oversight of this money. When this money gets sent abroad, guess what happens? In many cases, it falls through the cracks and disappears without any accountability. That is not the kind of government we ran. We were a strong Conservative government that was financially accountable, and accountable to taxpayers. That is what we are not seeing from the Liberal government.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Madam Speaker, I am very pleased to rise today to support Bill C-63, a second act to implement certain provisions of the 2017 budget.

We have come a long way since we were elected in 2015. I am proud of the record of our government, which is now more than halfway through its term in office. When I was the president of the Regroupement des gens d'affaires de Boisbriand, I remember that the economic conditions were bleak and sluggish. Now that the 2008 economic crisis is behind us, let us be proud of our economic numbers. Canada weathered the 2008 economic crisis better than any other G7 country, and that is something Canadians can be proud of.

During the last election campaign, we proposed an ambitious plan for Canadians. This plan was based on solid evidence and a belief that the entire economy would benefit if we invested in the middle class, in our workforce, and in training for our young people and workers. The numbers now speak for themselves and show that this inclusive plan is working.

Statistics Canada’s labour force survey of October 2017 shows that our economy created more than 500,000 new jobs since we came to power. The Canadian economy is growing faster than it has in more than a decade, and the unemployment rate has fallen to its lowest point since 2008. There is more good news: the most dramatic rise in employment was in Quebec, with 18,000 net new jobs in October 2017, mainly in the manufacturing sector.

Our plan is working. Today, more Canadians are employed, and the situation will continue to improve thanks to a plan that works. I would like to mention a few measures that directly affect the people in my riding, Rivière-des-Mille-Îles. They include a tax break for 9 million middle-class Canadians, the introduction of the new Canada child tax benefit, and the improvement of the Canada pension plan, to ensure that future generations of workers can enjoy a dignified retirement.

Since its introduction in July 2016, the Canada child tax benefit has put more non-taxable dollars in the pockets of thousands of Canadian families. When the Canada child tax benefit was established, the additional money in parents’ pockets had an immediate effect on consumer confidence and economic growth. The increased confidence this money gives families had an immediate impact on economic growth. This is excellent news.

The credit also benefits all children, unlike the tax credits for child fitness and children’s arts proposed by the previous government. In Rivière-des-Mille-Îles, 10,300 families are receiving more money thanks to the Canada child tax benefit. Also, 18,870 children directly benefit from a $530 monthly payment per family. This amount is non-taxable.

These numbers speak for themselves. The Canada child tax benefit has lifted hundreds of thousands of children out of poverty, and we are moving forward with improvements to our government’s key measure. That is why we intend to increase the Canada child tax benefit annually to keep up with the cost of living starting in July 2018, two years earlier than planned.

I will give an example: for a single-parent family with two children and a yearly income of $35,000, this increase represents an additional non-taxable $560 next year, which can be used for books, skating lessons, or warm clothing for the winter.

Another of our government’s key measures in Bill C-63 is obviously the lower income tax rate for small and medium-size businesses. Once again, no sooner said than done. As promised in our 2015 election platform, we are delivering on our commitment to lower the income tax rate for small and medium-size businesses.

That rate, which was 11% in 2015, will drop to 9% in 2019. That is excellent news for the Rivière-des-Mille-Îles businesses and business people who were more than willing to participate in a pre-budget round table with the Parliamentary Secretary to the Minister of Finance when he was in my riding in January 2016.

This great news will give our dynamic businesses more breathing room, allowing them to make capital investments, do renovations, buy new equipment, and even hire more staff.

A number of high-profile Quebeckers also welcomed the news. Here is what Michel Leblanc, president and CEO of the Chamber of Commerce of Metropolitan Montreal, had to say:

The tax cut announced by the Minister of Finance this morning is excellent news for small and medium-sized businesses in all sectors. Our economy is strong, and this announcement will make it even stronger. It is important to keep stimulating investment and making our businesses more competitive. Small businesses are the economic backbone of Canada and metropolitan Montreal. Reducing the tax rate will have a positive impact on our economy as a whole.

I fully support that statement because, when I travel around the four cities in my riding, business people tell me that this measure will help them.

Finally, budget 2017 puts the skilled, talented, and creative people of Canada 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.

For our government, relying on innovation also means relying on the know-how of Quebec and Canadian society. The role of elected officials is now to focus on the economy of the future, invest in their fellow citizens, and give the workers of Rivière-des-Mille-Îles the tools they need to succeed in this economy. It also means educating businesses to help them benefit from new free trade agreements like CETA.

Many measures have been taken to put Canada in a leadership position within the global economy. First, we invested $225 million over four years to identify and address skills gaps in the economy and help Canadians to be as prepared as possible for the economy of the future. Next, we created a new strategic innovation fund that will serve to attract, support, and grow Canadian companies in dynamic and emerging sectors, such as agrifood, which is a very strong sector in Rivière-des-Mille-Îles, digital technology, green technologies, and advanced manufacturing, thanks to an investment of $1.26 billion over five years. We also offered greater support to superclusters of companies that innovate in key sectors such as digital technology and green technology and that have the greatest potential to accelerate economic growth, thanks to an investment of up to $950 million over five years starting in in 2017-18.

I have always been proud to say that the greatest strength of Canada and of Rivière-des-Mille-Îles lies in its skilled, hard-working, and creative workforce. I am very proud of the measures in budget 2017 and their positive impact on my community.

I am confident that our plan will help our country prosper, both now and in the years ahead.

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

Madam Speaker, one thing I did not hear was any mention of the Asian Infrastructure Investment Bank.

It just seems strange to me that up until this point, and I have not been in the House for all of the debate but for a fair bit of it, none of my Liberal colleagues have commented on the fact that we are spending all these dollars for infrastructure in Asia, which taxpayers in Canada will be forced to pay for.

I am happy to invest in infrastructure; we all are, but my children and grandchildren will pay for that infrastructure in Asia. That is a bit of a question for me.

Could my colleague enlighten us as to why we are spending money on infrastructure in Asia?

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Madam Speaker, I thank my colleague for talking about infrastructure.

He knows that we need to invest in infrastructure, and it is one of our key measures. In my riding of Rivière-des-Mille-Îles, construction will soon begin on the REM project, the Réseau électrique métropolitain, a 67-kilometre urban transit system with 27 stations. It is a significant investment in terms of infrastructure which will ensure the people's mobility in the greater Montreal area.

[François Choquette, NDP, Drummond, QC]

Madam Speaker, I listened to my colleague's speech but I did not hear anything about a certain issue that is making headlines.

There has been a lot of talk about the Panama papers, but last Sunday, people got the shock of their lives. Canadians are appalled by what the paradise papers reveal. These documents show us that the Liberal government's chief fundraiser and the Prime Minister's great friend was caught in what experts are actually calling a legalized scam.

When will my hon. colleague tell us their position, then? Why does the update feature no clear position on combatting tax evasion? Could it be because friends of the party are off limits?

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Madam Speaker, I thank my colleague from Drummondville, a fellow member of the Standing Committee on Official Languages. We always really enjoy working together. Here is my answer to his very relevant question.

It is very important. Our government has invested in putting a stop to these tax schemes and to tax evasion. We are making sure the tax system is fair to everyone. We will find out who is hiding income and assets abroad and who is trying to avoid paying taxes, and we will make them face the consequences.

[Chandra Arya, Liberal, Nepean, ON]

Madam Speaker, my hon. colleague came out with some excellent points in her remarks. In my riding of Nepean, 23,000 children benefited from the Canada child benefit program, with an average amount of $490, totalling about $6.2 million.

I would like my hon. friend's comments on the investments we have made through cutting income taxes for the middle class, the investments we have made through the child benefit program, and investments we have made to infrastructure, which has allowed GDP growth.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Madam Speaker, as my colleague said, this is a key element of our budget and our platform.

I care about helping the families and businesses in my riding succeed. I am proud to say that, since coming into effect, the Canada child benefit has helped 18,830 children in my riding by giving 10,300 families an average of $530 per month tax free.

When families have more money in their pockets, the whole economy benefits. Jobs are up in Quebec and across Canada. That alone shows that our approach is working.

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

Madam Speaker, in the last election the current Prime Minister looked Canadians in the eye and promised that, if elected, the Liberal Party would run budgetary deficits of $10 billion per year for the first three years and then return Canada's books to balance in 2019. What a far cry from the reality we are living in today. The government's spending is completely out of control. It is running deficits two and three times larger than initially promised, and it has absolutely no plan to get back to balance. This is not what Canadians voted for.

Our Conservative government left office with back-to-back surplus budgets, a growing economy, and a record that included the best recovery from the worst financial crisis since the Great Depression. We on this side of the aisle are proud of that.

During the election campaign, the Liberal Party promised that its $10 billion deficits would be spent primarily on two things: infrastructure and tax cuts for the middle class, oh, and for those working hard to join it. I am afraid that my colleagues in the Liberal Party might be suffering from collective amnesia, because not only have they spent far more than they promised, but they have done the exact opposite of what they promised.

First, let me talk about the government's poor record on infrastructure investment.

Bill C-63 includes half a billion dollars spent by the government on infrastructure in Asia. Yes, members heard me correctly: not Canadian infrastructure but Asian infrastructure. Bill C-63 provides Canada with a less than 1% stake in the Chinese- controlled Asian Infrastructure Investment Bank. The projects in which this bank will invest are determined by the interests of the Chinese government. Considering the sort of virtuous signalling we have seen from the government during the NAFTA negotiations, it comes as a bit of a shock that it would be willing to hand over half a billion dollars to China to spend as it wishes. Do not take my world for it. The following is taken from the Toronto Star about the Asian Infrastructure Investment Bank:

The United States opposes the institution, warning that it would provide loans to developing countries without requiring any caveats about the environment, labour rights or anti-corruption reforms, as are typically included...from the World Bank and International Monetary Fund.

I would have thought that the Liberals, who spend so much time on their image, would like to be seen as standing up for the environment, standing up for labour rights, and standing against government corruption, but I guess when push comes to shove they focus on their own best interests.

I understand that trade with China is a priority for the Liberals. The Prime Minister has made that clear by his several cash-for-access fundraisers attended by high-ranking Chinese officials. However, is it really worth forking over this sort of money with no guarantees?

There is all this talk about Chinese infrastructure, but what about Canada? This week we learned that there are massive delays in federal infrastructure spending. Billions of dollars are being carried over year after year in unspent funds as the Liberal government cannot figure out how to get shovels in the ground and get projects under way.

It seems clear to me that it is becoming increasingly clear to Canadians that the Liberal government is spending more time trying to build bridges, fix roads, and prepare water pipes in China than it is here at home in Canada. Again, this is not what Canadians voted for in the last election.

One other thing that Canadians did not vote for in the last election was the Liberal government's attack on middle-class Canadians, the very people it claims to want to help.

We all know that small business in Canada employs 70% of private sector workers. In Canada, 55% of businesses have fewer than four employees. An attack on small business is an attack on ordinary hard-working Canadians. Where would the jobs be if it were not for small business?

This summer in an attempt to quietly sneak by Canadians, the Liberals introduced a number of tax measures that would have had devastating effects on Canada's farmers and small business owners. The backbone of our economy, small business owners, were targeted as tax cheats.

For weeks and months after the plans were made public, my office was inundated with calls, emails, and visits from my constituents, who could not believe that the Liberal government would be increasing their taxes so high that they might have to fire staff, close up shop, or relocate their businesses to other countries. I am sure my colleagues in the House all were recipients of those emails and phone calls.

I heard from one constituent who lives in Elmira. He runs a financial service practice in the greater Waterloo region. He shared with me this email, which states that, for the first 12 years of his self-employed life, it was a real struggle. Trying to run a business and balancing a young family of four children, it was not easy. In 2011, after a particularly bad day, he considered packing it all in, but he didn't. He continued to persevere and try new ways to build his practice. In the summer of 2012, he took the biggest risk ever and he bought a practice from another adviser. That meant taking on a $250,000 debt to do that. He also incorporated at that time, on his accountant's advice. He then took an even bigger risk, hiring two staff members to help him run a more efficient practice. In 2015, he had paid off the $250,000 loan, bought another practice for $500,000, and hired another staff member. He feels he's paid his fair share of taxes, both corporately and personally, over the years. Now he is being told that small business owners are wrongfully using the tax system, unfairly and perhaps crookedly. That is not right, he says.

I also heard from a veterinarian operating a clinic for large animals. His clinic not only employs Canadians but also sponsors four local fairs, two soccer teams, a baseball team, two hockey teams, three plowing matches, two 4-H clubs, a dance studio, and a local volunteer fire department. He sent me an email, which states that, as a veterinarian, he has worked hard over many years to reach the pinnacle of his profession. He's spent many years in university studying veterinary medicine and many more years building his practice and working very hard to serve his clients and their animals. The government referring to his use of the tax laws as a manipulation of loopholes makes him feel ashamed of the success he has strived to achieve. He asks if he is expected to apologize for the success and the rewards he has earned. He says this is divisive, inflammatory, and flies directly in the face of the Canadian dream many of us share: that from hard work comes success.

I heard from a farm family in Elmira who are afraid of what these changes will mean for a farm that has been in the family for generations. The owner wrote as follows:

These proposed changes, will add uncertainty and complexity to farmers and small business owners across the country. I am particularly concerned with the impact these changes would have on succession planning. It is unacceptable that the government of Canada would make it easier and more beneficial from a tax perspective for a farmer to sell their farm business to a stranger, rather than their own child or grandchild. This type of policy threatens the tradition of the Canadian family farm.

Lastly, I would be remiss if I did not mention my friend Mike from Tri-Mach. I was glad the Leader of the Opposition, the leader of the Conservative Party of Canada, visited Mike last month to share our positive Conservative plan to lower taxes on the middle class and small business. Tri-Mach employs more than 100 Canadians and has been considering—

[The Speaker, Liberal, Geoff Regan]

I apologize. The hon. member for Kitchener—Conestoga will have a minute and a half left following question period. We need to get on to statements by members. I am sure members will look forward to his last minute and a half, followed by questions and comments.

The House resumed consideration of the motion that Bill C-63, A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures, be read the second time and referred to a committee.

[The Speaker, Liberal, Geoff Regan]

The hon. member for Kitchener—Conestoga had a minute and a half remaining when I so rudely cut him off before question period. The hon. member for Kitchener—Conestoga.