Bill C-208 (Historical)

An Act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation)

This enactment amends the Income Tax Act in order to provide that, in the case of qualified small business corporation shares and shares of the capital stock of a family farm or fishing corporation, siblings are deemed not to be dealing at arm’s length and to be related, and that, under certain conditions, the transfer of those shares by a taxpayer to the taxpayer’s child or grandchild who is 18 years of age or older is to be excluded from the anti-avoidance rule of section 84.‍1.

Economic and Fiscal Update Implementation Act, 2021

[Larry Maguire, Conservative, Brandon—Souris, MB]

Madam Speaker, I want to ask my colleague from the Bloc a question with regard to small businesses. He and a member from the NDP, both of whom are in the House today, supported and helped me with Bill C-208 on qualifying small businesses and interfamily transfers last summer. I wonder if he could just remind my colleague from Winnipeg North that major accounting firms in Canada said that passing this bill did more for small businesses in Canada than probably any other finance decision for those qualifying small businesses in the last 25 years. I wonder if he could also remind my colleagues on the Liberal side of the House that it is this kind of support for small businesses that is really needed, as opposed to some of the things the Liberals have talked about. We know polices were needed to get things going. The problem with the government spending now is that only part of it can be traced to the need to keep small businesses and families going through the pandemic.

[Glen Motz, Conservative, Medicine Hat—Cardston—Warner, AB]

Mr. Speaker, before I begin today, I just want to take a moment to thank our former leader, the member for Durham. He worked hard for the Conservative caucus and for the country. He served in the military, and as an MP in cabinet and opposition leader. I thank him for his service and dedication to our party and country, and I thank Rebecca and his family for their sacrifices.

I am pleased to rise today to speak on Bill C-8.

Expectations were high after the unnecessary election that cost taxpayers over $600 million, which was called during a pandemic in an attempt by the Prime Minister and his government to further their own self-interests. However, the results were clear. Canadians, 67% to be exact, voted against giving the Liberals more power and overwhelmingly against the corruption scandals and overreach by the Liberals by a 2:1 margin.

What have we seen since the election? The Prime Minister took a vacation during the first National Day for Truth and Reconciliation. He delayed the return of Parliament by 60 days and he broke his promise to deliver action in the first 100 days. Instead of rebuilding the country at a time of crisis, the Prime Minister has repeatedly alienated western and rural Canadians. He has played the worst kind of divisive politics and attempted to label those who disagree with him as being hateful. No responsible person, let alone the leader of our country, should ever throw around words like “misogynist” or “racist” so casually and recklessly.

No one knows how easily the Liberals will sacrifice good, hard-working people than Albertans. Almost every year, the Liberals have squeezed more and more of Alberta's jobs out of the province. They then killed four pipelines with their no more pipelines act. They have ignored the cries of indigenous communities who rely on resource development agreements. They have created political problems with key trading partners that hurt farmers in the west and have sought to fight Alberta's provincial government at their return. The irony is that their drive is to make a green, clean energy grid, but the likelihood is of that is delayed, even by a decade or more, as many energy companies who invested heavily in renewable energy and new technologies left the country or simply pushed their investments to another location.

While providing some money in the economic and fiscal update for COVID testing, for business loans and school ventilation was good, the update was silent on the top demand from provinces for the last two years. They needed new funding for health care. The pandemic has strained health care workers, hospitals and the overall system to the point of near breaking, with thousands if not tens of thousands of delayed surgeries and procedures. There is no doubt that there will be many more preventative measures that have been missed and undetected illnesses that will demand emergency action instead of early intervention. All of that will drive up health care costs, with health care costs all but guaranteed to increase.

Provinces are on even more shaky financial ground. For example, Newfoundland has already had a bailout of sorts while other provinces could even be headed towards economic crisis after the debt piled on during the pandemic. With the excessive spending before and during the pandemic, the federal government is not well positioned to help. According to the Parliamentary Budget Officer, one-third, or about $177 billion, of pandemic spending was unrelated to the pandemic response plan, which is about six years of military spending, six years of health care in Alberta or more than double provincial and territorial transfers.

I come from a riding with a large rural economy where farmers have endured extreme hardships from a severe drought and the impacts of the pandemic. Our agricultural sector is critical to our trade, our international relations, our domestic economy and our rural economy for that matter.

Farmers and rural Canada were ignored in the throne speech, and we do not know why. For the last five years, they have paid enormous carbon tax bills, some in the tens of thousands of dollars. Their costs have been driven up, and the costs of food products in Canada are continuing to rise.

These costs hurt farmers who cannot compete with America or other countries in costs. The prices hurt Canadian food manufacturers who want to use Canadian farm products, but they also have to do with the high cost of buying from U.S. competitors. They hurt small business owners who face higher downstream costs, as well as continually higher costs from employment taxes, the GST, etc. Who do they pass those costs on to? It is to consumers: to families, with higher grocery bills.

The government made a promise to improve, and to help farmers and everyone who consumes Canadian farm products. Conservatives provided a clear policy option in Bill C-208 that would have eliminated carbon taxes for on-farm activities. That exemption would not have required new administration costs. It would not have increased costs for businesses to track and calculate those expenses.

The Minister of Finance, who is from downtown Toronto, had a better idea. Instead of a simple solution that was easy to understand, practical to implement and would cut costs, she would create a complex tax regulation that could change on a political whim. It would not reduce costs at all and would ultimately keep prices higher for consumers, while providing little to no relief for farmers.

According to the Parliamentary Budget Officer, instead of tens of thousands of dollars less in taxes, farmers will get a rebate of between $1.47 and $1.73 per $1,000 spent on eligible farm activities. The generosity of the government to the farming community is amazing. Who determined those eligible farming activities? It was the government. What is eligible? We do not know. It is entirely up to the minister and the government.

There are many serious issues facing Canada right now that need immediate action. We have a drug addiction crisis. We have a violent crime and criminal gang shooting crisis. Canada is increasingly alienated by our allies, while facing greater global pressures and hostility. Our military is lacking key trades, trained personnel and equipment, and plans to meet its increased mandate.

Inflation is quickly eating away at working-class and lower-income Canadians. Anger, resentment and division are increasing at an alarming rate across the country, spurred on by the indifference and rhetoric from even our Prime Minister. Small businesses are struggling to hang on, and are unable to find workers. Canadian shelves are emptier and have fewer options than ever before. Worker losses and capacities increase and decrease the supply of goods.

Private-sector investment has dropped massively since 2015 and has hit records lows, suggesting Canada could face significant competitive challenges in the years ahead. Our consumer energy prices are among the highest in developed countries, and our housing prices are some of the top in the world.

We need better from the government. We need the government to swallow its pride and stop slapping band-aid solutions onto its broken policies in an attempt to address the problem. Crime is up, and the witch hunt on law-abiding firearms owners, while ignoring gangs and gun smuggling, needs to end before we can actually address crime. Inflation is up, due in large part to unchecked, uncontrolled and wasteful spending by the Liberals. We need a plan to get back to balance and to manage spending properly.

If we fix the policies that created these issues, we can begin to solve the problem. However, without acknowledging their mistakes and their failures, the Liberals will never be able to govern Canada to better days. They will be forever stuck trying to distract Canadians with social media campaigns, hashtags and undelivered commitments.

Better is possible. The people of my riding, and all Canadians, deserve to be heard and respected by their government. They deserve a clear economic recovery plan for their communities and our country. They deserve a plan to manage inflation, reduce crime, reduce everyday costs and deal with our national security. Canadians should not have to wait the better part of a decade for that to happen.

Resumption of Debate on Address in Reply

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Madam Speaker, I thank my valued colleague from Brandon-Souris for his speech. I will once again have the privilege of changing the dynamic in the House so that we stop focusing on who did what and who did it better and start focusing on constructive feedback and the content.

I would like my colleague from Brandon—Souris to tell me about the minister's mandate letter. He is right in saying that the throne speech contains absolutely nothing for the farming community; we agree on that. That is why I went back to the document, which contained a little bit of content. The minister's mandate letter talks about facilitating the transfer of family farms. We managed to work together to pass a historic law during the previous Parliament. I thank my colleague again for promoting and introducing this bill.

I would like to know if he is concerned about that note in the mandate letter. When the Liberals want to try to make changes to the great work we have done, what aspect of the law does he think we need to keep an eye on?

[Larry Maguire, Conservative, Brandon—Souris, MB]

Madam Speaker, it is my privilege to stand in the House for the first time since the election to provide a speech. It has been since last fall, so I want to thank the citizens of Brandon—Souris for allowing me the privilege of representing them here in the House of Commons again.

I want to speak to the throne speech today. It seems like a lifetime ago when the throne speech was tabled, only last November, and it has only given me more time to reflect on how disappointing it was to hear the lack of vision from the government for farmers, our agri-food sector and rural Canada, just as my colleague for Medicine Hat—Cardston—Warner indicated. The throne speech is not just a symbolic document wrapped up in pomp and circumstance. It is the government's first opportunity in a new Parliament to lay out its blueprint for the coming years.

I can assure members that the ministers, the deputy ministers, the Privy Council Office and the entire public service take this document quite seriously. Moving forward, they will use the throne speech, coupled with ministerial mandate letters, to set cabinet priorities and determine which government bills will be tabled and then debated. As someone who represents a vast rural constituency, where countless jobs and families' livelihoods are directly tied to the agriculture sector, I must inform these people that they do not exist, according to the Liberal throne speech. They are the invisible Canadians, out there in rural Canada. As someone who farmed for decades, I never thought I would see the day that the Government of Canada would so nonchalantly forget an industry that is so integral to our country.

Who does the government think raises and grows the food we put on the tables? We are all aware that the issue of the day is who transports that food, as well.

Canada has the potential to become a food powerhouse on the world stage, yet there is not a mention of the agricultural industry's potential. With the global population growing and wealth growing, the need for trusted food sources will only get larger. To meet the targets laid out in the Barton Report, we need a vision and a plan to get there. In the coming months it will have been four years since that report, and we have yet to see an action plan to seize the tremendous potential of our agricultural sector. Some provinces have done a better job of that than the federal government has. It has a lot of people wondering, “Where is the beef?” How do they deliver? There are over two million Canadians whose jobs are connected to the agri-food sector. It is worth billions of dollars to our economy, and its potential for growth is as large as the prairie sky.

In Manitoba, we have thousands of farmers. We also have value-added processing for such things as vegetables, dairy, sunflowers, flax seed, canola, peas, potatoes, beef and pork. If we want to grow our agri-food sector, it starts at the farm. To support farm families, I took concrete action in the last Parliament by introducing my private member's bill, Bill C-208. Despite the Liberals' attempt to quash my bill, it is now the law of the land. Bill C-208 sends a message of hope to young farmers who want to carry on what their families started. No longer will parents be given a false choice between a larger retirement package after selling to a stranger or a massive tax bill after selling to a family member, their own child or grandchild.

I will remind my Liberal colleagues that their government is still sowing confusion, as it said it was going to amend Bill C-208 sometime in November, 2021. That date has come and gone, and we are now into a new tax year. That means the government will make retroactive tax changes back to November, 2021, but it will not tell us what it actually plans until some later date. That level of uncertainty is the last thing farm families and small businesses need right now in Canada.

I was looking for a clear commitment in the throne speech on what initiatives the Liberal government planned to introduce in this Parliament. I was looking for practical steps the government would take to grow our beef herd and to support our livestock producers, who are still struggling as the drought has depleted pastures and feed costs continue to rise. I wanted to see additional supports to assist farmers and producers impacted by the drought by expediting access to business risk management programs and making up any provincial funding shortfalls. I wanted to see a commitment to amend existing laws to allow livestock owners to use local abattoirs.

We need to make permanent the temporary measures that allowed provincial authorities to enable trade across the country, and to use their abattoirs for products that would move across provincial borders. These are common-sense policies the Liberals could have announced in the throne speech that could have been welcomed across the country.

It is also clear that we need to reform and improve business risk management programs, particularly AgriInvest and AgriRecovery, as my colleague just mentioned. The throne speech should have included a commitment to bring agricultural stakeholders together for a summit-like meeting with the Minister of Agriculture to develop a way forward on insurance programs such as AgriStability.

Instead of just fully exempting farmers from the carbon tax, the Liberals announced a complicated rebate system that has been widely panned as unfair. The Grain Growers of Canada reported that some farmers are only going to get back 20% to 30% of the taxes they paid. To fix this once and for all, the Liberals could have just exempted farmers from the carbon tax in its entirety. There would be no need for rebates, no need for paperwork and no need to create unnecessary red tape. Rising input costs, such as skyrocketing fuel and fertilizer prices, are already causing financial challenges. The one thing the government could do to help farmers overnight is just exempt them from that carbon tax.

The throne speech also did not contain any clarity about the government's plans to reduce fertilizer emissions by 30%. As many western farmers can attest, any time the Liberal government muses about making changes that will impact their operations or livelihoods, there is always a sense of apprehension. As a farmer, as a farm leader and then as an elected representative, I know the disconnect between those in Ottawa who think they know best and those who sow their fields.

It was not long ago that the Liberals called farmers tax cheats. Their 2017 proposed tax changes would have cost farm families thousands of dollars. Thanks to the farmers and entrepreneurs who loudly opposed those tax changes, and the fact that Bill Morneau is no longer the finance minister, those tax hikes are yesterday's news.

Whether the Liberals are attempting to eliminate the deferred grain tickets or doing everything in their power to delay the implementation of my private member's bill, there is enough evidence to suggest farmers' anxieties are well-founded. No details have been announced on the Liberals' plans to reduce fertilizer emissions, and this has caused all sorts of consternation within the farming community. Instead of working collaboratively with farmers, the Liberals have decided to stick out this arbitrary number with zero information on how they plan to implement it. This is not the right way to govern, nor does it inspire any confidence in the thousands of farm families across our country.

A report just released by Meyers Norris Penny outlined the potential impact of reducing fertilizer emissions by 30%, and the numbers are staggering. They have calculated that for corn, canola and spring wheat, there would be a total value of lost production of 10.4 billion bushels per year by 2030. As the report stated, this would have a dramatic impact on Canada's ability to fill domestic processing capacity. This would also reduce our ability to export, as well.

I would be remiss not to talk about the logistical challenges that farmers and agri-food processors have faced due to either the B.C. floods, the pandemic or the fact we need to vastly expand our infrastructure system. As the recent Auditor General's report stated, the Liberal government's investing in Canada plan was unable to provide meaningful public reporting on overall progress. If Canadian farmers and agri-food processors are going to continue to grow and export around the world, we need to make sure the roads, bridges, highways, railways and ports have the capacity for them to do so.

I raise these agricultural issues as I fear that farmers do not have a voice in the Liberal government. I worry their concerns fall on deaf ears. Unfortunately, the Liberal throne speech was silent on these matters and it lacked any bold vision for the sector. There is life in rural Canada. There is hope, and there is a strong future. I implore the Liberal government not to forget about farmers. Do not take them for granted. Let us work together and implement many of the ideas our Conservative team has been advocating for. Farmers are not asking for the moon. They just want to be treated fairly and want a government that is willing to listen.

Government Business No. 4—An Act to Provide Further Support in Response to COVID-19

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Madam Speaker, I certainly appreciate the member's contributions to the debate today.

In June of last year, when it came to Bill C-208, a bill that would allow someone to sell their family farm or fishing enterprise to their children and be treated the same as if selling to someone at arm's length, the government and the minister said that the coming into force date was not specified in that piece of legislation and therefore they would reinterpret it as coming into force this year.

In this bill, at least Finance Canada seems to have learned its lesson, and there is no coming into force date for the amendments here. Would the member agree that it is important for the government, and in this case particularly Finance Canada, to honour the will of Parliament and if a piece of legislation has no coming into force date when the government amends a current act, that act be deemed, once it has gone through both Houses and received royal assent, the law of the land?

Does the member believe that Finance Canada and the government have learned their lesson, and are doing that in Bill C-2?

[Trevor McGowan]

Certainly, we've gone through the Quebec intergenerational business transfer rules. They provided a great source of inspiration for the work we're currently doing on them. Some of that is probably reflected in the bullets in the July 19 press release. It is certainly a made-in-Canada set of rules to deal with issues that are the same or similar to what we're talking about right now.

It's absolutely been an important source of inspiration. I mean, we've heard about technical questions relating to the Quebec rules and the impact of Bill C-208, but I'm not an expert on Quebec's provincial tax, so I can't really comment on that sort of thing.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you, Mr. Chair.

I must say that I'm very pleased to see Mr. Maguire here. He certainly deserves the credit for bringing forward Bill C-208. As other members have also said, though, Monsieur Emmanuel Dubourg from the Liberal caucus also brought forward something very similar, as have the Bloc and the NDP over the course of the last many years.

Mr. Maguire, you also mentioned that this issue has been discussed and debated for the last 20 years. For 10 of them, there was a Conservative majority, during which time the Conservative government of the day could have brought forward these measures.

I have a few questions for Mr. McGowan.

Since this morning, people have been bringing up Quebec and the integrity measures in place there. I was wondering whether you were inspired by anything in particular. Also, could any of Quebec's rules be implemented countrywide?

Talk about that, if you would, Mr. McGowan.

[The Chair, Liberal, Wayne Easter]

That's fine, Trevor. Thank you.

Mr. Maguire, you said that the government doesn't like Bill C-208. The minister made it clear that the Government of Canada is committed to facilitating genuine intergenerational share transfers, and it has raised some concerns with Bill C-208. Let's be absolutely clear on what's happening here.

We'll go now to Ms. Bendayan, and then Mr. Kelly will close it off.

[Larry Maguire, Conservative, Brandon—Souris, MB]

You know, I understand that the government doesn't like Bill C-208, but not a single amendment was put forward by the government through this whole process, and now we still don't have amendments. The government is talking about them here, but if there are amendments, why aren't we seeing them now, so that we can discuss them before a committee like today's?

Have you been asked to put forward amendments? You've had 20 years.

[Trevor McGowan]

As I've said before, both today and certainly at the Senate agriculture and forestry committee in an earlier appearance on Bill C-208, right now the tax administrators at the Canada Revenue Agency are tasked with applying the law as it stands and not anything else. The CRA, I'm sure I can say with the utmost confidence, will apply the law as it currently exists, as is their mandate. I would never want to suggest that anybody could do anything other than apply the law as it currently stands.

[Ed Fast, Conservative, Abbotsford, BC]

All right. This is my last question. The most recent press release is the July 19 one, in which the elected government did an about-face on Bill C-208. Certainly we see it as an about-face. It still suggests that some intergenerational small business transfers aren't genuine. In fact, you use the term “genuine” in that press release. I'm looking at it here.

It still suggests that small businesses are engaged in tax avoidance, in surplus stripping, in artificial tax planning and in not paying their fair share. Do you understand why many small businesses and the families who run them still feel that you and your finance department colleagues, and the government, and the Prime Minister still believe they're tax cheats? It's baked into your press release. Small businesses reading that would take from it that this government really doesn't trust small businesses and still believes they're tax cheats.

Do you understand why small businesses are concerned?

[Trevor McGowan]

In its July 19 news release, the government said it would be releasing conditions for defining what is a genuine transfer and would entitle a transfer or making use of the exception for the anti-avoidance rule in section 84.1. It said that it would allow the benefit or that it would provide conditions that would need to be met in order to be considered to be a genuine intergenerational transfer, which would apply no earlier than November 1, 2021. Right now, the law as enacted by Bill C-208 stands, and those conditions would not be implemented until after October at the earliest.

[Trevor McGowan]

Thank you. I think I understand the question now. I had been focusing on the date on which it received royal assent and amended the Income Tax Act.

In terms of the administration of the rules in Bill C-208 and whether or not the Canada Revenue Agency was ready to go on that on June 28, as it is the administrator of the Income Tax Act, I think that would be a question better put to the CRA. Certainly it monitors developments, but really it's the CRA that is tasked with the administration and enforcement of the provisions of the act.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Thank you.

We are not gathered today because of a news release that came out yesterday. We are actually here because of a June 30, 2021 news release that said, and I quote, “Bill C‑208 makes amendments to the Income Tax Act but does not include an application date.” You found that shocking as well, Mr. Chair. According to that same news release, “The government proposes to introduce legislation to clarify that these amendments would apply at the beginning of the next taxation year, starting on January 1, 2022.” It is on account of that news release that the committee was recalled and we are here today.

Yesterday, the government realized that the committee was going to meet today and that, as a result, the government was probably going to look bad. It opted to put out another news release to retract what it said in the June 30 news release. Unfortunately, the government can't undo a news release. The one put out on June 30 still exists. You and I saw it, as did a whole lot of people in the small business sector and farming world. They were shocked and upset to learn that the government had no desire to implement a bill that had received royal assent and been passed by both Houses. Unfortunately, on June 30, the government apparently decided not to implement the bill because it had come from a Conservative member this time around. The government saw the bill as dangerous and wanted to avoid giving the opposition parties any credit. Too bad for the government that the bill was passed. That is a fact.

The good news is we found out yesterday that the changes in the bill did apply in law. Nevertheless, we need to know what happened on June 30 and why we are meeting today, in the middle of the summer, during the construction holidays, to discuss the government's decision to hurt family farms and small businesses.

My question is for Mr. McGowan, and it has been put to him a number of times.

Earlier, you said that the minister made her decision. Can you tell us the name of the minister who made the decision you were referring to?

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thank you. I'm not sure that clarified it.

Mr. Chair, I'd like to ask if the people in the Department of Finance know whether the Justice officials were consulted on the illegality of delaying the implementation of Bill C-208. I'm talking about consultation, not advice, because we went through that this morning.