Multilateral Instrument in Respect of Tax Conventions Act

An Act to implement a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting

This bill was last introduced in the 42nd Parliament, 1st Session, which ended in September 2019.

Sponsor

Bill Morneau  Liberal

Status

This bill has received Royal Assent and is now law.

Summary

This is from the published bill. The Library of Parliament often publishes better independent summaries.

This enactment implements a multilateral instrument in respect of conventions for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.
The multilateral instrument is an international treaty developed as part of the G20 and OECD’s project to tackle base erosion and profit shifting (BEPS). The purpose of the multilateral instrument is to modify, in their application, tax conventions between two or more parties to the multilateral instrument so as to further the objectives of the tax convention. The multilateral instrument operates alongside tax conventions to modify them in their application; it does not directly modify the text of the tax conventions. The multilateral instrument will apply to a Canadian bilateral double tax convention only if both parties to the convention notify the depositary that the convention is intended to be covered by the multilateral instrument. The Secretary-General of the OECD is the depositary of the multilateral instrument. The implementation of the multilateral instrument requires the enactment of this Act.

Elsewhere

All sorts of information on this bill is available at LEGISinfo, an excellent resource from the Library of Parliament. You can also read the full text of the bill.

Votes

April 8, 2019 Passed Concurrence at report stage of Bill C-82, An Act to implement a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting

Multilateral Instrument in Respect of Tax Conventions ActGovernment Orders

October 15th, 2018 / 1:40 p.m.
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Conservative

Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB

Mr. Speaker, the member for Timmins—James Bay makes a great act of standing up for people in his riding who are affected by CRA, so I had to look up how he voted on Motion No. 43 by my colleague from Calgary Rocky Ridge. That motion aimed to give the Canada Revenue Agency an enforceable duty of care. Had it passed and our colleague's initiative gone forward, the member's constituents would have had recourse, a greater ability and greater tools to demand that they be treated properly and fairly by the government. I do not know whether that member remembers the vote. It took place in September 2016. He voted against that motion by my colleague from Calgary Rocky Ridge.

Could the member explain to the House why, after so passionately defending the situation of single mothers who are being attacked by the CRA, he voted against Motion No. 43 by my colleague from Calgary Rocky Ridge?

Multilateral Instrument in Respect of Tax Conventions ActGovernment Orders

October 15th, 2018 / 1:40 p.m.
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NDP

Charlie Angus NDP Timmins—James Bay, ON

Mr. Speaker, it is fascinating that the party that has never stood up for the working class in this country had a motion that was going to fix everything. No, it is the party that has undermined tax fairness in this country from the get-go. The Liberals and Conservatives have done this back and forth because they are representing each other. What we need to do is to start going after fiscal parity, the issue of offshore tax havens. We have never seen, and will never see, the Conservative Party stand up on that. It will never happen, but we will continue to fight for that.

Multilateral Instrument in Respect of Tax Conventions ActGovernment Orders

October 15th, 2018 / 1:40 p.m.
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Conservative

The Deputy Speaker Conservative Bruce Stanton

Before we resume debate and go to the hon. member for Sherwood Park—Fort Saskatchewan, I will let him know that we will need to interrupt at about the 15-minute mark, of the 20 minutes that he would usually have for his remarks, for the usual statements by members followed by question period. He will have, of course, his remaining time when the House next gets back to debate on the question.

Resuming debate, the hon. member for Sherwood Park—Fort Saskatchewan.

Multilateral Instrument in Respect of Tax Conventions ActGovernment Orders

October 15th, 2018 / 1:45 p.m.
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Conservative

Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB

Mr. Speaker, before I get to my prepared remarks, I just cannot let this moment with my colleague from Timmins—James Bay pass. It really is incredible to see the other parties, the Liberals and New Democrats, stand up as if they are champions of the underdog, yet when they have an opportunity to pass real, substantive measures that would hold government accountable, that would require government to treat people consistently with fairness and respect, every time they have a chance to put their votes where their mouths are, they are found wanting. Given the passion of that member today, I could not believe that he would have voted against the motion I referred to, so I had to look it up and confirm that it was only Conservatives who voted in favour of imposing a duty of care on the Canada Revenue Agency.

If people at home believe that the Canada Revenue Agency in its interactions with taxpayers should have a duty of care, there is only one party in the House that has stood up for that. It was the Conservative Party. There is only one party that said that single moms who are being attacked by the CRA and small businesses being pursued by the CRA for money they do not owe deserve to have a duty of care imposed on the CRA for their protection. This was a great initiative put forward by my colleague from Calgary Rocky Ridge. He said that a study should be done at committee to ensure there was an enforceable duty of care between the Canada Revenue Agency and individual taxpayers, which seems pretty reasonable, and that necessary steps be taken to make the provisions of the Taxpayer Bill of Rights legally enforceable, such as by amending the Canada Revenue Agency Act to establish a duty of care.

It was a motion, not legislation, so it would have set the terms for a study to begin this process. Therefore, crucially, my colleagues across the way had no excuse to vote against it on a technicality. It was to set out direction for a study by committee to move forward with bringing about this duty of care. However, they voted against it. They had a responsibility to put their votes where their mouths were, and they did not.

The holier-than-thou member for Timmins—James Bay says that he is standing up for his constituents in the House while voting against their interests. When I asked him about his vote on Motion No. 43, he had to talk about something completely unrelated, saying that the Conservative Party does not stand up for this, that, and the other thing. That is exactly the response we would expect from someone who realizes his votes in the past do not match the comments he has made.

Mr. Speaker, I am very pleased to rise in the House to speak to Bill C-82. This is a good opportunity to clarify international tax rules, more specifically those concerning base erosion and profit shifting.

It is no secret that many multinational corporations use a multitude of strategies to avoid paying higher taxes. They shift their profits to a territory with a lower tax rate in order to avoid paying taxes. This strategy of shifting profits from one territory to another, as well as other tax evasion strategies, costs the Government of Canada billions of dollars.

This multilateral convention seeks to mitigate this problem by clarifying in which territories profits must be declared and taxed. The hope is that with these new rules, multinational corporations will no longer be able to shift their profits from Canada to another territory to lower their tax burden.

It is important to note that this convention will not affect the small businesses that this Liberal government has often attacked. This bill will have more of an impact on multinational corporations. The Liberals may have realized that they cannot keep attacking small businesses if they want to win the next election, but I am not holding my breath.

In the past, the Liberals called small business owners tax cheats. They said they were wealthy people who set up businesses to avoid paying their fair share of taxes. The Liberals created new regulations that increased the tax burden on small businesses, and they justified these measures by saying that they wanted the system to be fairer.

I do not understand how making small business owners pay more taxes will make the system fairer. Perhaps the Liberals can justify these attacks by saying that small business owners are tax cheats. I believe that the Liberals are not going to change their minds about small businesses.

The multilateral convention will also eliminate double taxation. It will clarify which territory has the right to impose a tax on which profit. The Conservative Party has always been in favour of simplifying the tax system. We believe that this convention is a good first step. Of course, we have a lot more work to do to simplify our tax system, but if we can start with the international tax regime, that is a good first step.

Since attaining the objectives of the convention requires the exchange of information with the competent authorities of other territories, this convention also includes a provision on that.

There will be strict rules on how this information can be used and when it must be protected. This information is crucial to the fair enforcement of Canada's tax laws and the enforcement of this convention and the tax laws of the signatory countries.

These reforms are also important because simplifying the international tax system will strengthen relations between Canada and the other signatories. Clearer international tax rules and laws will facilitate trade between countries. When countries trade, they prosper and are more likely to maintain peace.

I am pleased to see that for now, the Liberals have decided to stop going after small business owners and ordinary Canadians to pay for the Liberals' reckless spending. I am pleased to see that they have decided to go after national corporations' taxes instead. Unfortunately, this is not usually the case. Usually, the Liberals go after small business owners, the middle class and those who are working hard to join it.

First, they increased taxes on small businesses, claiming their owners were wealthy people who were trying to avoid paying their fair share. Now, they want to impose a carbon tax, and it is not because they want to protect the environment. This tax will do nothing for the environment. It is because they have to find some way to pay for their reckless spending. The Liberals keep going after average Canadians so that they can pay for their irresponsible deficit. The Liberals do not seem to understand that they should not be going after Canadian workers and small businesses that are already paying their fair share.

Having explained some of the particulars of the bill, in the remaining time I have before question period I want to make a few other observations about how the philosophy of this bill relates to other actions of the government.

We are discussing the issue of tax avoidance. One observation that should come out of this is that those who have greater wealth and a greater capacity to hire lawyers to study the rules often have a greater capacity to engage in activities that involve tax avoidance. When we have a more complicated tax system, it generally advantages those who are well off, because they have the capacity to develop mechanisms for avoiding those taxes. However, in this party, we advocate simple, clear, low taxes that ensure that the benefits of low taxes are accrued equally, and in particular that we deliver tax relief to those who need tax relief the most. That has always been the record of Conservatives.

When we were in government, we lowered the lowest marginal rate of tax. We lowered the GST. We raised the base personal exemption. We increased the amount of money that a Canadian could earn before they pay any income tax. All of our tax measures were targeted on the income tax side and were targeted at those who needed the relief the most. We are very proud of that record. However, what has the current government done? It raised taxes in the name of helping the middle class. In reality, it never closed the tax loopholes that are advantageous for themselves and their friends.

When it comes to the capacity for tax avoidance, let us talk about the carbon tax. A single mother who is barely getting by cannot afford the home retrofits that might be required if she were to make a substantial change in the carbon tax she was paying. How about giving people the capacity to make decisions that are good for themselves and the environment rather than punishing people who actually do not have the capacity to make those kinds of investments?

There are some Canadians who have the wealth and resources to take advantage of things like the programs that the previous Ontario Liberal government put in place that really directed resources towards the wealthy, towards those who could take advantage of those opportunities. When we think that a climate policy is hitting people with a stick instead of giving them a carrot, if those are people who cannot actually change their situation because they do not have the capacity to participate in tax avoidance types of activities by changing aspects of their lifestyle, then they are stuck paying higher taxes.

We see consistently with the government, through aggressive tax policies, increases in taxes that perversely target those who can accept those increases the least. Meanwhile, when Conservatives were in government, we cut taxes and we have always targeted tax relief to those who need the tax relief the most.

Multilateral Instrument in Respect of Tax Conventions ActGovernment Orders

October 15th, 2018 / 1:55 p.m.
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Conservative

The Deputy Speaker Conservative Bruce Stanton

The hon. member for Sherwood Park—Fort Saskatchewan will have seven minutes remaining for his remarks when the House next gets back to debate on the question and, of course, the usual 10 minutes for questions and comments.

The House resumed consideration of the motion that Bill C-82, An Act to implement a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting, be read the second time and referred to a committee.

Multilateral Instrument in Respect of Tax Conventions ActGovernment Orders

October 15th, 2018 / 3:30 p.m.
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Liberal

The Speaker Liberal Geoff Regan

The hon. member for Sherwood Park—Fort Saskatchewan has seven minutes remaining in his speech.

Multilateral Instrument in Respect of Tax Conventions ActGovernment Orders

October 15th, 2018 / 3:30 p.m.
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Conservative

Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB

Mr. Speaker, we are continuing the discussion on Bill C-82, which is a bill dealing with implementing certain provisions of an international agreement with respect to tax avoidance. In my remarks prior to question period, I discussed the particulars of the bill. I discussed our support for the bill. I also touched on a number of other issues that have been important in the debate on this bill and relate to its provision. I want to come back to those likely areas of disagreement among the different parties.

This bill deals with, in substantial part, the activities and operations of the Canada Revenue Agency. It has been interesting throughout this debate to hear various members of different parties talk about how the CRA interacts with different people, how it should treat people. All of us as members of Parliament hear these stories when people come into our offices. We hear of people who have just had terrible disruption occur in their lives as a result of actions of the Canada Revenue Agency, people who are treated unfairly, who may actually have been in the right but are put through a long, disruptive process and are ultimately not compensated for the disruption that is caused to them as a result of CRA activities.

Very early in this Parliament, a member of the Conservative caucus, the member for Calgary Rocky Ridge, decided to do something about this. My colleague from Calgary Shepard seconded that motion and was very active in this initiative as well. Motion No. 43 was put forward. It created the opportunity for progress toward establishing a duty of care, which should not be that revolutionary, that in interacting with individual taxpayers, the tax authority has a duty of care, that it ought to be fair to them and accord them certain rights and the taxpayers bill of rights ought to have some concrete enforceability. I think if any members asked their constituents whether CRA should have a duty of care, they would say yes. If they asked constituents whether the taxpayers bill of rights should be enforceable, they would say yes.

This motion is very reflective of a Conservative philosophy toward government, which is, in this case, that government ought to be formally constrained in a way that protects the fundamental rights of individuals and that restraint requires us to constructively pass motions and initiatives that ensure government is bound to behave in a way that is proper toward citizens and that respects their rights as individuals and as taxpayers. However, when the motion came up for a vote, every member of every other party who was present chose to vote against it.

Today, when these different issues of challenges that individuals face in their interactions with CRA come up, my colleagues in other parties, the NDP and the Liberal Party, are keen to tell us about the actions they are taking and about the impact on individuals, yet they were unwilling to take the clear, obvious action which would have constrained forever the CRA from engaging in abuses of power in their interactions with individual taxpayers. Maybe I will hear from them during questions and comments. Maybe we will hear from some of the different members who have spoken already today about why they voted against providing taxpayers with that basic protection to ensure they are treated fairly.

I made the point as well that when it comes to issues of tax avoidance, a complicated tax code that limits the manoeuverability of those who cannot hire expensive tax lawyers is particularly regressive. The government has sought to implement tax changes that have always protected the most well connected and well off, while imposing new higher taxes on individuals.

I want to highlight specifically the issue of income splitting, because this is quite revealing about the approach the government took. Under the previous government, we had a policy of allowing everybody to split his or her income, recognizing that two families making the same amount of money should be able to split their incomes such that two families with the same income pay the same amount of tax. The Liberals opposed income splitting and repealed it. They repealed income splitting for the wage earner, and then they said it was a problem to have income sprinkling that potentially allows income splitting for people in the small business world, that somehow that is an inequality, an unfairness that exists in the system. There are a lot of things that argument totally misunderstands.

One could also point out that to the extent there might have been an inconsistency in terms of the ability of some people to do that and others not, it was an inconsistency created by a policy decision of the Liberal government, which was to raise taxes on families by undoing what had been the previous Conservative tax cut for families, which was to bring in income splitting.

We see all these different ways in which Liberals are increasing taxes: the carbon tax, getting rid of income splitting and refusing to pass concrete measures holding CRA accountable. It is important to note these measures target those who actually need tax relief the most. It was Conservatives who targeted tax relief to middle-income and low-income Canadians. We raised the base personal exemption. We lowered the GST. We lowered the lowest marginal tax rate. We did not make any changes to higher income brackets. That is our record: standing up for those who need the help most by cutting their taxes and giving them more power over their own lives.

Multilateral Instrument in Respect of Tax Conventions ActGovernment Orders

October 15th, 2018 / 3:40 p.m.
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Winnipeg North Manitoba

Liberal

Kevin Lamoureux LiberalParliamentary Secretary to the Leader of the Government in the House of Commons

Madam Speaker, I have had the opportunity to listen to a lot of the debate today. We often hear about issues surrounding why it is the government is not doing more in terms of providing support for the single parent.

I need to emphasize that there was a significant change with the Canada child benefit program when this government took office, which literally saw millions of dollars added to it. Thousands of children have been lifted out of poverty as a direct result. It has also seen some tax changes so that those who need it the most will, in fact, get the most compared to, let us say, the millionaire family.

Even though my colleague across the way seems to want to focus on that CRA issue, I am wondering if he can provide his thoughts on how important it is that when we take a look at the whole issue of tax it is an issue of tax fairness, and sometimes recognize, such as with the Canada child benefit, that it was a movement in the right direction.

Multilateral Instrument in Respect of Tax Conventions ActGovernment Orders

October 15th, 2018 / 3:40 p.m.
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Conservative

Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB

Madam Speaker, the government is very proud of its efforts to reorganize and repackage the universal child care benefit which was brought in by the Conservatives. I remember a time when the Liberals actively opposed direct payments to parents. They said that people would just use that for beer and popcorn, and that instead the money should be given to provincial bureaucrats. However, our policy of a universal child care benefit was so popular that eventually the Liberals saw the light. It took them a while, but eventually they came around.

I should make a couple of points about the universal child care benefit in comparison. One, it was universal. The other thing is it was a taxable benefit. The members would have to agree that taxable benefits are structurally more progressive because they are taxable based on one's level of income.

The government should be careful about patting itself on the back too quickly for simply not undoing Conservative policy in one case, because unfortunately, it has undone good Conservative policy in many other areas. It has tried to bring in a carbon tax. It got rid of income splitting. It got rid of many tax deductions targeted at making life easier for families and everyday people who do not have the kind of connections that some in the government do.

Multilateral Instrument in Respect of Tax Conventions ActGovernment Orders

October 15th, 2018 / 3:40 p.m.
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NDP

Pierre Nantel NDP Longueuil—Saint-Hubert, QC

Madam Speaker, it is rare for us to all agree in the House because we have views unique to our own very different parties. Although we often see the same problem from different angles, it is quite clear that each party has its own stereotypes and ways of doing things. We are used to Liberal spin, as they want to manipulate what we think.

We in the NDP have not had the chance to form government, so of course we cannot be blamed for the serious problems that have been affecting Canadians for a long time. The blame lies more with the Liberals or the Conservatives.

I hold my colleague in high regard, but I am sorry to hear him constantly saying that we did not vote for this or that bill they brought before us. I am not a tax expert, but that is disappointing. I do not see what your point is. The point here is to show that these people are not really doing the work necessary to fight tax avoidance and tax havens. That is clearly the point. So why are you coming after us? I do not understand.

Multilateral Instrument in Respect of Tax Conventions ActGovernment Orders

October 15th, 2018 / 3:40 p.m.
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NDP

The Assistant Deputy Speaker NDP Carol Hughes

I would remind the member to address his remarks to the Chair and not to individual members.

The hon. member for Sherwood Park—Fort Saskatchewan.

Multilateral Instrument in Respect of Tax Conventions ActGovernment Orders

October 15th, 2018 / 3:40 p.m.
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Conservative

Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB

Madam Speaker, I thank my colleague for his question. I spoke about my colleague's motion because I wanted to respond to the discussions that took place in the House regarding the CRA's actions and their implications for individuals.

His colleague spoke a lot about how vulnerable some people are to the CRA, and I thought it was important to respond to that. We had the opportunity to address that problem, but unfortunately the House decided not to.

It is certainly important to talk about the specifics of his bill, and I think that, in general, all of the parties support it, but we also need to talk about the major shortcomings in the government's approach to taxing the middle class.

Multilateral Instrument in Respect of Tax Conventions ActGovernment Orders

October 15th, 2018 / 3:45 p.m.
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Conservative

Tom Kmiec Conservative Calgary Shepard, AB

Madam Speaker, the member mentioned all of the opportunities the government and all members have had in the House to further simplify things for Canadians, both in applying for and receiving benefits from the Canada Revenue Agency and also avoiding four tax measures that would have drastically improved the lives of everyday Canadian families who are trying to make ends meet. It is a juxtaposition with Bill C-82. In this bill, the bill that I reference as the tax treaty for tax treaties, the government is proposing to make sure that large multinational corporations that are able to afford the best-paid lawyers and accountants are taken to task when they engage in aggressive tax planning.

There is also a cultural issue that has been mentioned before about the behaviour of the CRA when it comes to large corporations. We have seen it make deals with KPMG so its clients do not suffer, but the same type of willingness for the culture of settlement does not seem to exist for everyday Canadian families or single moms who are trying to get the child benefit.

Can the member comment more about his experience in his riding for families trying to comply with CRA regulations?

Multilateral Instrument in Respect of Tax Conventions ActGovernment Orders

October 15th, 2018 / 3:45 p.m.
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Conservative

Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB

Madam Speaker, I thank my colleague for his excellent question and important work on all of these issues at the finance committee and here in the chamber. I think he is exactly right that when it comes to the activities of the CRA, we often do not see the same opportunities available to people who are not in that category of well connected and able to hire lawyers. Unfortunately, this often happens when people do not have the same sort of fiscal capacity to fight back against injustices that are affecting them and are necessarily more vulnerable to the actions of government, of regulators in government departments, and so forth.

It is sometimes presumed by my colleagues in other parties that bigger, more powerful government is somehow good for those in the middle and those who are struggling. I think the opposite is very often the case, that when we have bigger government, it becomes accessible to and aligned with the interests of those who are well connected. That is precisely the reason why I think we need limited government, a constrained government. A government that is constrained by an understanding of the rights of citizens ensures that those who do not have the connections, the lawyers, the lobbyists can have their rights and interests protected. That is what Motion No. 43, seconded by my colleague, would have achieved.

Bill C-82 certainly makes progress. However, there is so much more to do that could have been done. Hopefully, after the next election and the next parliament we will have an opportunity to finally move forward with some of the measures that Conservatives have been proposing for a long time to fix the CRA and ensure that people are treated fairly.