Bill C-74 (Historical)

Budget Implementation Act, 2018, No. 1

An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures

Part 1 implements certain income tax measures proposed or referenced in the February 27,2018 budget by
(a) ensuring appropriate tax treatment of amounts received under the Veterans Well-being Act;
(b) exempting from income amounts received under the Memorial Grant for First Responders;
(c) lowering the small business tax rate and making consequential adjustments to the dividend gross-up factor and dividend tax credit;
(d) reducing the business limit for the small business deduction based on passive income and restricting access to dividend refunds on the payment of eligible dividends;
(e) preventing the avoidance of tax through income sprinkling arrangements;
(f) removing the risk score requirement and increasing the level of income that can be deducted for Canadian armed forces personnel and police officers serving on designated international missions;
(g) introducing the Canada Workers Benefit;
(h) expanding the medical expense tax credit to recognize expenses incurred in respect of an animal specially trained to perform tasks for a patient with a severe mental impairment;
(i) indexing the Canada Child Benefit as of July 2018;
(j) extending, for one year, the mineral exploration tax credit for flow-through share investors;
(k) extending, by five years, the ability of a qualifying family member to be the plan holder of an individual’s Registered Disability Savings Plan;
(l) allowing transfers of property from charities to municipalities to be considered as qualifying expenditures for the purposes of reducing revocation tax;
(m) ensuring that appropriate taxpayers are eligible for the Canada Child Benefit and that information related to the Canada Child Benefit can be shared with provinces and territories for certain purposes; and
(n) extending, by five years, eligibility for Class 43.‍2.
Part 2 implements certain excise measures proposed in the February 27,2018 budget by
(a) advancing the existing inflationary adjustments for excise duty rates on tobacco products to occur on an annual basis rather than every five years; and
(b) increasing excise duty rates on tobacco products to account for inflation since the last inflationary adjustment in 2014 and by an additional $1 per carton of 200 cigarettes, along with corresponding increases to the excise duty rates on other tobacco products.
Part 3 implements a new federal excise duty framework for cannabis products proposed in the February 27,2018 budget by
(a) requiring that cannabis cultivators and manufacturers obtain a cannabis licence from the Canada Revenue Agency;
(b) requiring that all cannabis products that are removed from the premises of a cannabis licensee to be entered into the Canadian market for retail sale be affixed with an excise stamp;
(c) imposing excise duties on cannabis products to be paid by cannabis licensees;
(d) providing for administration and enforcement rules related to the excise duty framework;
(e) providing the Governor in Council with authority to provide for an additional excise duty in respect of provinces and territories that enter into a coordinated cannabis taxation agreement with Canada; and
(f) making related amendments to other legislative texts, including ensuring that any sales of cannabis products that would otherwise be considered as basic groceries are subject to the GST/HST in the same way as sales of other types of cannabis products.
Part 4 amends the Pension Act to authorize the Minister of Veterans Affairs to waive, in certain cases, the requirement for an application for an award under that Act.
It also amends the Veterans Well-being Act to, among other things,
(a) replace the earnings loss benefit, career impact allowance, supplementary retirement benefit and retirement income security benefit with the income replacement benefit;
(b) replace the disability award with pain and suffering compensation; and
(c) create additional pain and suffering compensation.
Finally, it makes consequential amendments to other Acts.
Part 5 enacts the Greenhouse Gas Pollution Pricing Act and makes the Fuel Charge Regulations.
Part 1 of that Act sets out the regime for a charge on fossil fuels. The fuel charge regime provides that a charge applies, at rates set out in Schedule 2 to that Act, to fuels that are produced, delivered or used in a listed province, brought into a listed province from another place in Canada, or imported into Canada at a location in a listed province. The fuel charge regime also provides relief from the fuel charge, through rebate and exemption certificate mechanisms, in certain circumstances. The fuel charge regime also sets out the registration requirements for persons that carry out certain activities relating to fuels subject to the charge. Part 1 of that Act also contains administrative provisions and enforcement provisions, including penalties, offences and collection provisions. Part 1 of that Act also sets out a mechanism for distributing revenues from the fuel charge. Part 1 of that Act also provides the Governor in Council with authority to make regulations for purposes of that Part, including the authority to determine which province, territory or area is a listed province for purpose of that Part.
Part 2 of that Act sets out the regime for pricing industrial greenhouse gas emissions. The industrial emissions pricing regime requires the registration of any facility that is located in a province or area that is set out in Part 2 of Schedule 1 to that Act and that either meets criteria specified by regulation or voluntarily joins the regime. The industrial emissions pricing regime requires compliance reporting with respect to any facility that is covered by the regime and the provision of compensation for any amount of a greenhouse gas that the facility emits above the applicable emissions limit during a compliance period. Part 2 of that Act also sets out an information gathering regime, administrative powers, duties and functions, enforcement tools, offences and related penalties, and a mechanism for distributing revenues from the industrial emissions pricing regime. Part 2 of that Act also provides the Governor in Council with the authority to make regulations for the purposes of that Part and the authority to make orders that amend Part 2 of Schedule 1 by adding, deleting or amending the name of a province or the description of an area.
Part 3 of that Act authorizes the Governor in Council to make regulations that provide for the application of provincial laws concerning greenhouse gas emissions to works, undertakings, lands and waters under federal jurisdiction.
Part 4 of that Act requires the Minister of the Environment to prepare an annual report on the administration of the Act and to cause it to be tabled in each House of Parliament.
Part 6 amends several Acts in order to implement various measures.
Division 1 of Part 6 amends the Financial Administration Act to establish the office of the Chief Information Officer of Canada and to provide that the President of the Treasury Board is responsible for the coordination of that Officer’s activities with those of the other deputy heads of the Treasury Board Secretariat. It also amends the Act to ensure Crown corporations with no borrowing authority are able to continue to enter into leases and to specify that leases are not considered to be transactions to borrow money for the purposes of Crown corporations’ statutory borrowing limits.
Division 2 of Part 6 amends the Canada Deposit Insurance Corporation Act in order to modernize and enhance the Canadian deposit insurance framework to ensure it continues to meet its objectives, including financial stability.
Division 3 of Part 6 amends the Federal-Provincial Fiscal Arrangements Act to renew Fiscal Equalization Payments to the provinces and Territorial Formula Financing Payments to the territories for a five-year period beginning on April 1,2019 and ending on March 31,2024, and to authorize annual transition payments of $1,270,000 to Yukon and $1,744,000 to the Northwest Territories for that period. It also amends the Act to allow Canada Health Transfer deductions to be reimbursed when provinces and territories have taken the steps necessary to eliminate extra-billing and user fees in the delivery of public health care.
Division 4 of Part 6 amends the Bank of Canada Act to ensure that the Bank of Canada may continue to buy and sell securities issued or guaranteed by the government of the United Kingdom if that country ceases to be a member state of the European Union.
Division 5 of Part 6 amends the Currency Act to expand the objectives of the Exchange Fund Account to include providing a source of liquidity for the government of Canada. It also amends that Act to authorize the payment of funds from the Exchange Fund Account into the Consolidated Revenue Fund.
Division 6 of Part 6 amends the Bank of Canada Act to require the Bank of Canada to make adequate arrangements for the removal from circulation in Canada of its bank notes that are worn or mutilated or that are the subject of an order made under paragraph 9(1)‍(b) of the Currency Act. It also amends the Currency Act to provide, among other things, that
(a) bank notes are current if they are issued under the authority of the Bank of Canada Act;
(b) the Governor in Council may, by order, call in certain bank notes; and
(c) bank notes that are called in by order are not current.
Division 7 of Part 6 amends the Payment Clearing and Settlement Act in order to implement a framework for resolution of clearing and settlement systems and clearing houses, and to protect information related to oversight, by the Bank of Canada, of clearing and settlement systems.
Division 8 of Part 6 amends the Canadian International Trade Tribunal Act to, among other things,
(a) create the position of Vice-chairperson of the Canadian International Trade Tribunal;
(b) provide that former permanent members of the Tribunal may be re-appointed to one further term as a permanent member; and
(c) clarify the rules concerning the interim replacement of the Chairperson of the Tribunal and provide for the interim replacement of the Vice-chairperson of the Tribunal.
Division 9 of Part 6 amends the Canadian High Arctic Research Station Act to, among other things, provide that the Canadian High Arctic Research Station is to be considered an agent corporation for the purpose of the transfer of the administration of federal real property and federal immovables under the Federal Real Property and Federal Immovables Act. It also provides that the Order entitled Game Declared in Danger of Becoming Extinct is deemed to have continued in force and to have continued to apply in Nunavut, as of April 1,2014.
Division 10 of Part 6 amends the Canadian Institutes of Health Research Act in order to separate the roles of President of the Canadian Institutes of Health Research and Chairperson of the Governing Council, to merge the responsibility to establish policies and to limit delegation of certain Governing Council powers, duties and functions to its members or committees or to the President.
Division 11 of Part 6 amends the Red Tape Reduction Act to permit an administrative burden imposed by regulations to be offset by the reduction of another administrative burden imposed by another jurisdiction if the reduction is the result of regulatory cooperation agreements.
Division 12 of Part 6 provides for the transfer of certain employees and disclosure of information to the Communications Security Establishment to improve cyber security.
Division 13 of Part 6 amends the Department of Employment and Social Development Act to provide the Minister of Employment and Social Development with legislative authority respecting service delivery to the public and to make related amendments to Parts 4 and 6 of that Act.
Division 14 of Part 6 amends the Employment Insurance Act to modify the treatment of earnings received by claimants while they are in receipt of benefits.
Division 15 of Part 6 amends the Judges Act to authorize the salaries for the following new judges, namely, six judges for the Ontario Superior Court of Justice, one judge for the Saskatchewan Court of Appeal, 39 judges for the unified family courts (as of April 1,2019), one judge for the Federal Court and a new Associate Chief Justice for the Federal Court. This division also makes consequential amendments to the Federal Courts Act.
Division 16 of Part 6 amends certain Acts governing federal financial institutions and related Acts to, among other things,
(a) extend the scope of activities related to financial services in which federal financial institutions may engage, including activities related to financial technology, as well as modernize certain provisions applicable to information processing and information technology activities;
(b) permit life companies, fraternal benefit societies and insurance holding companies to make long-term investments in permitted infrastructure entities to obtain predictable returns under the Insurance Companies Act;
(c) provide prudentially regulated deposit-taking institutions, such as credit unions, with the ability to use generic bank terms under the Bank Act, subject to disclosure requirements, as well as provide the Superintendent of Financial Institutions with additional enforcement tools under the Bank Act and the Office of the Superintendent of Financial Institutions Act, and clarify existing provisions of the Bank Act; and
(d) modify sunset provisions in certain Acts governing federal financial institutions to extend by five years, after the day on which this Act receives royal assent, the period during which those institutions may carry on business.
Division 17 of Part 6 amends the Western Economic Diversification Act to remove the requirement of the Governor in Council’s approval for the Minister of Western Economic Diversification to enter into an agreement with the government of a province, or with a provincial agency, respecting the exercise of the Minister’s powers and the carrying out of the Minister’s duties and functions.
Division 18 of Part 6 amends the Parliament of Canada Act to give each House of Parliament the power to make regulations related to maternity and parental arrangements for its own members.
Division 19 of Part 6 amends the Canada Pension Plan to, among other things,
(a) eliminate age-based restrictions on the survivor’s pension;
(b) fix the amount of the death benefit at $2,500;
(c) provide a benefit to disabled retirement pension beneficiaries under the age of 65;
(d) protect retirement and survivor’s pension amounts under the additional Canada Pension Plan for individuals who are disabled;
(e) protect benefit amounts under the additional Canada Pension Plan for parents with lower earnings during child-rearing years;
(f) maintain portability between the Canada Pension Plan and the Act respecting the Québec Pension Plan; and
(g) authorize the making of regulations to support the sustainability of the additional Canada Pension Plan.
Division 20 of Part 6 amends the Criminal Code to establish a remediation agreement regime. Under this regime, the prosecutor may negotiate a remediation agreement with an organization that is alleged to have committed an offence of an economic character referred to in the schedule to Part XXII.‍1 of that Act and the proceedings related to that offence are stayed if the organization complies with the terms of the agreement.

Bill C-74—Time Allocation Motion

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Speaker, I think it is really important that we have the opportunity to talk about this in the House. That is why we have spent four days debating Bill C-74. We think as well it is important that we go to the committee so that we can do a deeper dive.

To the specific questions, I think it is important to recognize what has actually happened over the last two and a half years. We find ourselves in a situation where our economy is in very good shape because, in the first instance, nine out of 10 families with children have significantly more money to invest in their families. That provides a spark plug for our economy which helps us to be in a better situation. Facts matter, and the facts are that two and a half years later, we have significantly lower employment and significantly higher growth.

We will continue on that approach of making sure the taxes for middle-class Canadians are low. As well, with respect to the member's question (b), we will continue our support for small business. We have lowered small business taxes. As of January 1, 2018, those small business taxes went down, and they will go down again on January 1, 2019. We think it is important to ensure that our economy continues to be strong.

Finally, we want to assure Canadians that we will continue our fiscally responsible approach to reduce our net debt-to-GDP ratio over time. This puts us in a very positive situation right now and also makes us resilient to deal with any challenges in the future.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Mr. Speaker, I will tell the minister what the facts are. The fact is that we are a laughing stock internationally, because we cannot apply taxes to OTTs, and stuff like that. This is a joke.

These are the facts that you are presenting to me this morning, and you know very well that we are late on these taxes. He is looking at me like he does not understand.

The truth is that the minister—

[The Deputy Speaker, Conservative, Bruce Stanton]

Once again I would ask all hon. members to direct their comments to the Chair in all speeches made in the House. The hon. member for Longueuil—Saint-Hubert.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Thank you, Mr. Speaker. You are quite right.

It is shameful that the European community's finance minister had to come to Canada to tell us that Canada's decision not to tax web giants is untenable.

If the minister would come to my community, Longueuil, he would see the situation facing community groups taking care of refugees crossing the border. Despite the minister's utter gall in saying the government is taking care of refugees, he would actually see how difficult things are for the community groups.

It is a travesty that this government is eliminating tax credits for public transit and committing atrocities like this one here today.

I therefore have to ask, why did the government decide to limit debate on this today? Is it because suddenly its spin doctors and media relations staff can no longer explain the government's bad decisions?

[Bill Morneau, Liberal, Minister of Finance]

Mr. Speaker, that is an interesting question. It is very important for us to work with our counterparts in other countries and discuss corporate and personal taxation in an international context. I was at the G20 and the G7 last week, and I can tell you that we are working together to figure out a tax system that works around the world. The OECD has produced an important report that helps countries consider how to tax companies in the digital sector. It is a crucial issue. The report offers an explanation of the current situation as well as a vision of what the international tax landscape might look like in the future. As you can see, Mr. Speaker, we are working together, because cooperation in international matters is the only way to go. We are clearly leading the way on the world stage, and we will continue working with other countries to find an appropriate solution.

[Pierre Poilievre, Conservative, Carleton, ON]

Mr. Speaker, the Prime Minister promised in the last election that this year's deficit would be $6 billion. The finance minister said a few months ago that it would be $18 billion. Today, the Parliamentary Budget Officer said that it is now $22 billion. In other words, the deficit is going to be more than three times bigger than the Prime Minister promised and 20% bigger than the finance minister said only a few weeks ago.

My question is simple. How did the finance minister get it so wrong?

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Speaker, let me first say that I appreciate the reports that come from the Parliamentary Budget Officer. It is an important function of Parliament that he comes out with reports.

I can also say that the numbers we put out in our budget remain exactly what we think our estimates will be. We have taken an approach over the last two and a half years to very clearly enunciate how we are going to make investments so that we can grow the economy, and how we are going to be able to do that in a fiscally responsible way.

Each year we have shown where those investments are going, and we have projected what might happen in terms of the growth that would come from those investments. In fact, the growth has been stronger than expected. Canadians have had a better situation in terms of job creation. Hard-working Canadians are creating jobs at a record pace, and we are in the lowest rate of unemployment that we have seen in about 40 years. It is an extremely positive situation for Canadian families as they consider how to raise their children.

We are going to continue with those investments. We are going to do it in a responsible way, while reducing our debt-to-GDP ratio over time so that we can always be prepared for the future for Canadians.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Mr. Speaker, it is disheartening to see that every day there is another broken promise from this Liberal government.

The Liberals promised they would not do omnibus bills and here we have a 540-page document to look through. They promised they were not going to run more than $6 billion of deficit this year, but we have just heard that it is likely to be $22 billion, despite their predictions that it was only going to be $18 billion. We see these kinds of broken promises going on, and we hear the finance minister say, “Yes, but we had four days of debate.” If one divides $22 billion by four, that is $5.5 billion. Is it worth taking more than a day to discuss the spending of $5.5 billion of taxpayer money?

Why does the finance minister have so much trouble keeping his promises and making his budget targets?

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Speaker, I think it is important to consider the promises that we made and the promises that have been kept. We promised Canadians that we would lower middle-class taxes. The members opposite voted against lowering middle-class taxes, but we went ahead and kept that promise. We promised that we would ensure the Canada child benefit did not go to the wealthiest so that we could give more to families. Nine out of 10 families have significantly more, on average $2,300 more, which is now indexed to inflation so that they can raise their families. These are promises kept.

What we put in this budget, of course, are some new promises. We said that the Canada child benefit will keep up with inflation. We said that the Canada workers benefit will help those in the most challenged situation to do better over time. We are keeping our promises to Canadians. What we are doing with Bill C-74 is making sure that we continue with these positive economic results. We have had four days of debate on this bill. We think it is appropriate for the bill to go to committee so that we can examine it in more detail. That is responsible.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

The Minister of Finance takes us for fools, Mr. Speaker; how very sad. Liberal spin doctors have been working to throw us off the scent for a long time now. The minister knows perfectly well that it is unacceptable that the services in question are not subject to any transaction tax, which includes GST, QST, and the other provincial harmonized taxes.

Because of this, we are the laughingstock of the international community. We were led to believe that this issue would be discussed at the G7 summit in Charlevoix, and the Liberals are definitely going to be laughed at if they bring it up, because everybody in the entire world charges tax on services.

I wonder why the Minister of Finance is acting like nothing is wrong and evading the issue by saying it will be discussed. Give me a break. Last week, the European Union's finance minister said it was an untenable position. I would like to get an answer in that regard.

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Speaker, I urge the hon. member to familiarize himself with the OECD's reports. We are working with the other countries on possibly creating an international tax system that works. It is very important. We know that international companies have many options as to where they will invest their money. That is why we need to work together and that is what we are doing.

I was with G20 and G7 representatives last week and I can assure the House that we will continue to work together on finding a solution. These things take time, of course, because we have to do our due diligence to ensure that major investments continue to be made. In the meantime, we will continue to ensure that the system performs well in the future.

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Speaker, I find it disgraceful that the government is moving to end debate on the budget. If we keep in mind that for every day we have debated the budget it has cost Canadians about $5.5 billion of debt, maybe cutting off a day will save Canadians money.

The PBO report said that international growth is going to be 4% this year and 4% next year. That comes from the OECD. For the U.S., it is going to be 2.8% and 2.4% real GDP growth. Canada lags behind at 1.9% and 1.9%.

Considering we are falling behind a booming economy around the world, and rather than just accepting falling further behind, I am curious as to why the government would choose to end debate instead of discussing ways to increase our economy.

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Speaker, I will continue to speak up for how great Canada is doing. We are in a fantastic situation internationally. The member opposite can talk about his hypothetical idea of where the future may or may not be going, but what we can do instead is rely on facts.

What are the facts? The facts are that since this government has had the opportunity to come into office, we have made investments. Since this government has come into office, the rate of growth in this country has increased significantly. We only need to look at the last year and a half to say that Canada has grown faster than any other G7 country. That is just a fact.

We only need to look at what has happened in unemployment over the last two and a half years to say that we are at the lowest unemployment rate we have seen in 40 years. That includes the entire period of time the previous government was in office.

As we consider facts, let us think about the real facts. These are the real facts that Canadians are experiencing today.

We are going to continue with positive economic results by putting forward Bill C-74.

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

Mr. Speaker, over the years I have witnessed budgetary measures that continue to support and enhance Canada's middle class and those who want to be part of it and the impact that has had in getting Canadians involved in the success stories that the Minister of Finance is talking about.

I am wondering if the Minister of Finance could provide some thoughts on how we as a government are able to work with Canadians to increase their disposable income and how that is fostering a healthier economy.

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Speaker, when we get really positive results, we go back and see what actually happened to get ourselves those positive results, because clearly, we want to do more of that.

What has changed over the last two and a half years? Middle-class taxes have gone down. The Canada child benefit has gone up. Canadians have had the ability to invest more in their families, and as a result, our economy has done better. These are just the facts. The economy has done better. We have lower rates of unemployment. As we looked at that, we said to ourselves that we want to make sure we continue to advantage Canadian families.

That is why we indexed the Canada child benefit, so that benefit can keep up with the cost of inflation.

That is why we also introduced the Canada workers benefit. We took what was there before, the working income tax benefit, and improved it and added funds to it, so that there would be more of an incentive for people to get into the workforce. In addition, we made it automatic, so that people who were not getting it before would have a greater incentive to get into the workforce. What we are going to see from this is not only an increase in the size of the workforce but increased potential for our economic growth.

That is how we are going to continue with the very positive last two and a half years through the course of the next period that Bill C-74 represents.