Bill C-19

Budget Implementation Act, 2022, No. 1

An Act to implement certain provisions of the budget tabled in Parliament on April 7, 2022 and other measures

Part 1 implements certain income tax measures by
(a) providing a Labour Mobility Deduction for the temporary relocation of tradespeople to a work location;
(b) allowing for the immediate expensing of eligible property by certain Canadian businesses;
(c) allowing the Children’s Special Allowance to be paid in respect of a child who is maintained by an Indigenous governing body and providing consistent tax treatment of kinship care providers and foster parents receiving financial assistance from an Indigenous governing body and those receiving such assistance from a provincial government;
(d) doubling the allowable qualifying expense limit under the Home Accessibility Tax Credit;
(e) expanding the criteria for the mental functions impairment eligibility as well as the life-sustaining therapy category eligibility for the Disability Tax Credit;
(f) providing clarity in respect of the determination of the one-time additional payment under the GST/HST tax credit for the period 2019-2020;
(g) changing the delivery of Climate Action Incentive payments from a refundable credit claimed annually to a credit that is paid quarterly;
(h) temporarily extending the period for incurring eligible expenses and other deadlines under film or video production tax credits;
(i) providing a tax incentive for specified zero-emission technology manufacturing activities;
(j) providing the Canada Revenue Agency (CRA) the discretion to accept late applications for the Canada Emergency Wage Subsidy, the Canada Emergency Rent Subsidy and the Canada Recovery Hiring Program;
(k) including postdoctoral fellowship income in the definition of “earned income” for RRSP purposes;
(l) enabling registered charities to enter into charitable partnerships with organizations other than qualified donees under certain conditions;
(m) allowing automatic and immediate revocation of the registration of an organization as a charity where that organization is listed as a terrorist entity under the Criminal Code ;
(n) enabling the CRA to use taxpayer information to assist in the collection of Canada Emergency Business Account loans; and
(o) expanding capital cost allowance deductions to include new clean energy equipment.
It also makes related and consequential amendments to the Excise Tax Act , the Children’s Special Allowances Act , the Excise Act, 2001 , the Income Tax Regulations and the Children’s Special Allowance Regulations .
Part 2 implements certain Goods and Services Tax/Harmonized Sales Tax (GST/HST) measures by
(a) ensuring that all assignment sales in respect of newly constructed or substantially renovated residential housing are taxable supplies for GST/HST purposes; and
(b) extending eligibility for the expanded hospital rebate to health care services supplied by charities or non-profit organizations with the active involvement of, or on the recommendation of, either a physician or a nurse practitioner, irrespective of their geographic location.
Part 3 amends the Excise Act, 2001 , the Excise Act and other related texts in order to implement three measures.
Division 1 of Part 3 implements a new federal excise duty framework for vaping products by, among other things,
(a) requiring that manufacturers of vaping products obtain a vaping licence from the CRA;
(b) requiring that all vaping products that are removed from the premises of a vaping licensee to be entered into the Canadian market for retail sale be affixed with an excise stamp;
(c) imposing excise duties on vaping products to be paid by vaping product licensees;
(d) providing for administration and enforcement rules related to the excise duty framework on vaping products;
(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 vaping product taxation agreement with Canada; and
(f) making related amendments to other legislative texts, including to allow for a coordinated federal/provincial-territorial vaping product taxation system and to ensure that the excise duty framework applies properly to imported vaping products.
Division 2 of Part 3 amends the excise duty exemption under the Excise Act, 2001 for wine produced in Canada and composed wholly of agricultural or plant product grown in Canada.
Division 3 of Part 3 amends the Excise Act to eliminate excise duty for beer containing no more than 0.5% alcohol by volume.
Part 4 enacts the Select Luxury Items Tax Act . That Act creates a new taxation regime for domestic sales, and importations into Canada, of certain new motor vehicles and aircraft priced over $100,000 and certain new boats priced over $250,000. It provides that the tax applies if the total price or value of the subject select luxury item at the time of sale or importation exceeds the relevant price threshold. It provides that the tax is to be calculated at the lesser of 10% of the total price of the item and 20% of the total price of the item that exceeds the relevant price threshold. To promote compliance with the new taxation regime, that Act includes modern elements of administration and enforcement aligned with those found in other taxation statutes. Finally, this Part also makes related and consequential amendments to other texts to ensure proper implementation of the new tax and to ensure a cohesive and efficient administration by the CRA.
Division 1 of Part 5 retroactively renders a provision of the contract that is set out in the schedule to An Act respecting the Canadian Pacific Railway , chapter 1 of the Statutes of Canada, 1881, to be of no force or effect. It retroactively extinguishes any obligations and liabilities of Her Majesty in right of Canada and any rights and privileges of the Canadian Pacific Railway Company arising out of or acquired under that provision.
Division 2 of Part 5 amends the Nisga’a Final Agreement Act to give force of law to the entire Nisga’a Nation Taxation Agreement during the period that that Taxation Agreement is, by its terms, in force.
Division 3 of Part 5 repeals the Safe Drinking Water for First Nations Act .
It also amends the Income Tax Act to exempt from taxation under that Act any income earned by the Safe Drinking Water Trust in accordance with the Settlement Agreement entered into on September 15, 2021 relating to long-term drinking water quality for impacted First Nations.
Division 4 of Part 5 authorizes payments to be made out of the Consolidated Revenue Fund for the purpose of addressing transit shortfalls and needs and improving housing supply and affordability.
Division 5 of Part 5 amends the Canada Deposit Insurance Corporation Act by adding the President and Chief Executive Officer of the Canada Deposit Insurance Corporation and one other member to that Corporation’s Board of Directors.
Division 6 of Part 5 amends the Federal-Provincial Fiscal Arrangements Act to authorize additional payments to the provinces and territories.
Division 7 of Part 5 amends the Borrowing Authority Act to, among other things, count previously excluded borrowings made in the spring of 2021 in the calculation of the maximum amount that may be borrowed. It also amends the Financial Administration Act to change certain reporting requirements in relation to amounts borrowed under orders made under paragraph 46.1(c) of that Act.
Division 8 of Part 5 amends the Pension Benefits Standards Act, 1985 to, among other things, permit the establishment of a solvency reserve account in the pension fund of certain defined benefit plans and require the establishment of governance policies for all pension plans.
Division 9 of Part 5 amends the Special Import Measures Act to, among other things,
(a) provide that assessments of injury are to take into account impacts on workers;
(b) require the Canadian International Trade Tribunal to make inquiries with respect to massive importations when it is acting under section 42 of that Act;
(c) require that Tribunal to initiate expiry reviews of certain orders and findings;
(d) modify the deadline for notifying the government of the country of export of properly documented complaints;
(e) modify the criteria for imposing duties in cases of massive importations;
(f) modify the criteria for initiating anti-circumvention investigations; and
(g) remove the requirement that, in order to find circumvention, the principal cause of the change in a pattern of trade must be the imposition of anti-dumping or countervailing duties.
It also amends the Canadian International Trade Tribunal Act to provide that trade unions may, with the support of domestic producers, file global safeguard complaints.
Division 10 of Part 5 amends the Trust and Loan Companies Act and the Insurance Companies Act to, among other things, modernize corporate governance communications of financial institutions.
Division 11 of Part 5 amends the Insurance Companies Act to permit property and casualty companies and marine companies to not include the value of certain debt obligations when calculating their borrowing limit.
Division 12 of Part 5 enacts the Prohibition on the Purchase of Residential Property by Non-Canadians Act . The Act prohibits the purchase of residential property in Canada by non-Canadians unless they are exempted by the Act or its regulations or the purchase is made in certain circumstances specified in the regulations.
Division 13 of Part 5 amends the Parliament of Canada Act and makes consequential and related amendments to other Acts to, among other things,
(a) change the additional annual allowances that are paid to senators who occupy certain positions so that the government’s representatives and the Opposition in the Senate are eligible for the allowances for five positions each and the three other recognized parties or parliamentary groups in the Senate with the greatest number of members are eligible for the allowances for four positions each;
(b) provide that the Leader of the Government in the Senate or Government Representative in the Senate, the Leader of the Opposition in the Senate and the Leader or Facilitator of every other recognized party or parliamentary group in the Senate are to be consulted on the appointment of certain officers and agents of Parliament; and
(c) provide that the Leader of the Government in the Senate or Government Representative in the Senate, the Leader of the Opposition in the Senate and the Leader or Facilitator of every other recognized party or parliamentary group in the Senate may change the membership of the Standing Senate Committee on Internal Economy, Budgets and Administration.
Division 14 of Part 5 amends the Financial Administration Act in order to, among other things, allow the Treasury Board to provide certain services to certain entities.
Division 15 of Part 5 amends the Competition Act to enhance the Commissioner of Competition’s investigative powers, criminalize wage fixing and related agreements, increase maximum fines and administrative monetary penalties, clarify that incomplete price disclosure is a false or misleading representation, expand the definition of anti-competitive conduct, allow private access to the Competition Tribunal to remedy an abuse of dominance and improve the effectiveness of the merger notification requirements and other provisions.
Division 16 of Part 5 amends the Copyright Act to extend certain terms of copyright protection, including the general term, from 50 to 70 years after the life of the author and, in doing so, implements one of Canada’s obligations under the Canada–United States–Mexico Agreement.
Division 17 of Part 5 amends the College of Patent Agents and Trademark Agents Act to, among other things,
(a) ensure that the College has sufficient independence and flexibility to exercise its corporate functions;
(b) provide statutory immunity to certain persons involved in the regulatory activities of the College; and
(c) grant powers to the Registrar and Investigations Committee that will allow for improved efficiency in the complaints and discipline process.
Division 18 of Part 5 enacts the Civil Lunar Gateway Agreement Implementation Act to implement Canada’s obligations under the Memorandum of Understanding between the Government of Canada and the Government of the United States of America concerning Cooperation on the Civil Lunar Gateway. It provides for powers to protect confidential information provided under the Memorandum. It also makes related amendments to the Criminal Code to extend its application to activities related to the Lunar Gateway and to the Government Employees Compensation Act to address the cross-waiver of liability set out in the Memorandum.
Division 19 of Part 5 amends the Corrections and Conditional Release Act to restrict the use of detention in dry cells to cases where the institutional head has reasonable grounds to believe that an inmate has ingested contraband or that contraband is being carried in the inmate’s rectum.
Division 20 of Part 5 amends the Customs Act in order to authorize its administration and enforcement by electronic means and to provide that the importer of record of goods is jointly and severally, or solidarily, liable to pay duties on the goods under section 17 of that Act with the importer or person authorized to account for the goods, as the case may be, and the owner of the goods.
Division 21 of Part 5 amends the Criminal Code to create an offence of wilfully promoting antisemitism by condoning, denying or downplaying the Holocaust through statements communicated other than in private conversation.
Division 22 of Part 5 amends the Judges Act , the Federal Courts Act , the Tax Court of Canada Act and certain other acts to, among other things,
(a) implement the Government of Canada’s response to the report of the sixth Judicial Compensation and Benefits Commission regarding salaries and benefits and to create the office of supernumerary prothonotary of the Federal Court;
(b) increase the number of judges for certain superior courts and include the new offices of Associate Chief Justice of the Court of Queen’s Bench of New Brunswick and Associate Chief Justice of the Court of Queen’s Bench for Saskatchewan;
(c) create the offices of prothonotary and supernumerary prothonotary of the Tax Court of Canada; and
(d) replace the term “prothonotary” with “associate judge”.
Division 23 of Part 5 amends the Immigration and Refugee Protection Act to, among other things,
(a) authorize the Minister of Citizenship and Immigration to give instructions establishing categories of foreign nationals for the purposes of determining to whom an invitation to make an application for permanent residence is to be issued, as well as instructions setting out the economic goal that that Minister seeks to support in establishing the category;
(b) prevent an officer from issuing a visa or other document to a foreign national invited in respect of an established category if the foreign national is not in fact eligible to be a member of that category;
(c) require that the annual report to Parliament on the operation of that Act include a description of any instructions that establish a category of foreign nationals, the economic goal sought to be supported in establishing the category and the number of foreign nationals invited to make an application for permanent residence in respect of the category; and
(d) authorize that Minister to give instructions respecting the class of permanent residents in respect of which a foreign national must apply after being issued an invitation, if the foreign national is eligible to be a member of more than one class.
Division 24 of Part 5 amends the Old Age Security Act to correct a cross-reference in that Act to the Budget Implementation Act, 2021, No. 1 .
Division 25 of Part 5
(a) amends the Canada Emergency Response Benefit Act to set out the consequences that apply in respect of a worker who received, for a four-week period, an income support payment and who received, for any week during the four-week period, any benefit, allowance or money referred to in subparagraph 6(1)(b)(ii) or (iii) of that Act;
(b) amends the Canada Emergency Student Benefit Act to set out the consequences that apply in respect of a student who received, for a four-week period, a Canada emergency student benefit and who received, for any week during the four-week period, any benefit, allowance or money referred to in subparagraph 6(1)(b)(ii) or (iii) of that Act; and
(c) amends the Employment Insurance Act to set out the consequences that apply in respect of a claimant who received, for any week, an employment insurance emergency response benefit and who received, for that week, any payment or benefit referred to in paragraph 153.9(2)(c) or (d) of that Act.
Division 26 of Part 5 amends the Employment Insurance Act to, among other things,
(a) replace employment benefits and support measures set out in Part II of that Act with employment support measures that are intended to help insured participants and other workers — including workers in groups underrepresented in the labour market — to obtain and keep employment; and
(b) allow the Canada Employment Insurance Commission to enter into agreements to provide for the payment of contributions to organizations for the costs of measures that they implement and that are consistent with the purpose and guidelines set out in Part II of that Act.
It also makes a consequential amendment to the Income Tax Act .
Division 27 of Part 5 amends the Employment Insurance Act to specify the maximum number of weeks for which benefits may be paid in a benefit period to certain seasonal workers and to extend, until October 28, 2023, the increase in the maximum number of weeks for which those benefits may be paid. It also amends the Budget Implementation Act, 2021, No. 1 to add a transitional measure in relation to amendments to the Employment Insurance Regulations that are found in that Act.
Division 28 of Part 5 amends the Canada Pension Plan to make corrections respecting
(a) the calculation of the minimum qualifying period and the contributory period for the purposes of the post-retirement disability benefit;
(b) the determination of values for contributors who have periods excluded from their contributory periods by reason of disability; and
(c) the attribution of amounts for contributors who have periods excluded from their contributory periods because they were family allowance recipients.
Division 29 of Part 5 amends An Act to amend the Criminal Code and the Canada Labour Code to, among other things,
(a) shorten the period before which an employee begins to earn one day of medical leave of absence with pay per month;
(b) standardize the conditions related to the requirement to provide a medical certificate following a medical leave of absence, regardless of whether the leave is paid or unpaid;
(c) authorize the Governor in Council to make regulations in certain circumstances, including to modify certain provisions respecting medical leave of absence with pay;
(d) ensure that, for the purposes of medical leave of absence, an employee who changes employers due to the lease or transfer of a work, undertaking or business or due to a contract being awarded through a retendering process is deemed to be continuously employed with one employer; and
(e) provide that the provisions relating to medical leave of absence come into force no later than December 1, 2022.
Division 30 of Part 5 amends the Canada Business Corporations Act to, among other things,
(a) require certain corporations to send to the Director appointed under that Act information on individuals with significant control on an annual basis or when a change occurs;
(b) allow that Director to provide all or part of that information to an investigative body, the Financial Transactions and Reports Analysis Centre of Canada or any prescribed entity; and
(c) clarify that, for the purposes of subsection 21.1(7) of that Act, it is the securities of a corporation, not the corporation itself, that are listed and posted for trading on a designated stock exchange.
Division 31 of Part 5 amends the Special Economic Measures Act and the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) to, among other things,
(a) create regimes allowing for the forfeiture of property that has been seized or restrained under those Acts;
(b) specify that the proceeds resulting from the disposition of those properties are to be used for certain purposes; and
(c) allow for the sharing of information between certain persons in certain circumstances.
It also makes amendments to the Seized Property Management Act in relation to those forfeiture of property regimes.

[Nicholas Schiavo, Director, Federal Affairs, Council of Canadian Innovators]

Good morning to the chair, vice-chairs and members of the Standing Committee on Finance. Thank you for the opportunity to present today on Bill C-19 and the implementation of certain provisions in budget 2022.

My name is Nick Schiavo and I am appearing today as the director of federal affairs on behalf of the Council of Canadian Innovators. I am joined today by CCI vice-president of strategy and advocacy, Dana O'Born.

We are a national business council representing 150 of Canada's fastest-growing companies. Our member companies are headquartered here in Canada, employ north of 52,000 employees across Canada, and are market leaders in the sectors of health, clean, financial technologies, cybersecurity and more.

Following the release of budget 2022, CCI celebrated the strong investments in Canadian innovation. We were pleased to see a focus on supporting Canadian innovators, bolstering intellectual property generation, driving clean economic growth, and doubling down on Canada's fastest-growing sectors. These investments are a critical step to support Canada's rapidly growing innovation sector and ensure we generate true economic prosperity in the knowledge-based and data-driven economy.

However, there is more the government can do to ensure our innovators can scale up and remain competitive in the fast-paced global economy of today. First, Canada's tech sector is facing a skilled talent crisis that is threatening to suffocate innovative companies and slow new job creation. New strategies and investments to train, attract and retain top talent are desperately needed and if done right, these measures will improve Canada's innovation outputs.

The shift to remote work, especially in the tech sector, means that Canada's skilled workers are now part of a global labour market where geography is no longer as important. Our domestic innovators are finding themselves in fierce competition with highly profitable foreign tech giants that can offer significantly higher salaries for the same pool of high-skilled workers.

In April, CCI released our talent and skills strategy, with 13 key recommendations to meet the talent needs of our country's fastest-growing companies. Broadly speaking, these recommendations present ideas for the attraction, generation and retention of skilled talent in Canada.

The federal government has started to work on valuable investments in upskilling, which is an important step forward in generating more skilled talent. Deploying funding in ways that create the maximum benefit for innovators should be a key priority in the months ahead. Recently we have seen Canadian technology companies take the lead in developing their own skills training programs. The federal government should support these types of company-led initiatives and tailor funding to ensure we are generating skills to meet market needs.

Moreover, the government's funding for skills development programs should be bolstered with policies to ease immigration pathways for skilled workers. Immigration is the fastest route to boosting the supply of skilled labour in Canada, and the federal government should consider policies like a high potential tech talent visa, and a digital nomad strategy.

The second item I'd like to speak about is the scientific research and experimental development tax incentive program, lovingly known as SR and ED in the innovation ecosystem. This $3 billion program is intended to incentivize research and development, but in practice the program is overly complicated, bureaucratic and restrictive. We were pleased to see in budget 2022 that the government is moving ahead with a review of SR and ED to modernize and streamline the program. We are currently undertaking the policy work to offer detailed and substantive recommendations for how to ensure that SR and ED is fit for purpose.

However, in broad terms we believe that SR and ED reform should focus on expanding the tax credit to include intellectual property as a key component of R and D. In the 21st century knowledge economy, patents and other forms of IP are the most critical sources of economic advantage for firms and economies.

In 2020, more than 91% of the value in the S&P 500 came from intangible assets. As the pandemic continues to drive a wave of digitization, we believe that algorithms, patents, data and other intangible assets will only become more important. As Canada looks towards the postpandemic economy of tomorrow, Canadian intellectual property and its acceleration by programs like SR and ED will be a driving force.

Including a patent box tax structure in SR and ED would be a big step in the right direction to ensure that IP generated in Canada continues to reside in Canada, and we were pleased to see this idea mentioned in budget 2022. We also believe costs associated with developing and prosecuting intellectual property should be eligible under SR and ED.

Lastly, but perhaps most importantly, SR and ED eligibility criteria and processes should be streamlined and clarified. Today, many tech companies rely on costly consultants to help them navigate SR and ED and we would all be much better served if that money were spent on innovation outputs, rather than a cottage industry of professionals who help navigate the thicket of confusing regulations.

To conclude, we are pleased to see budget 2022 offer a number of smart investments for Canada's innovation ecosystem. It's clear that the government is thinking about how best to position the Canadian economy for the 21st century. To ensure they have the maximum impact on our shared prosperity, we look to the government to implement these policies in the most effective and strategic way possible.

Thank you. We look forward to your questions.

[The Chair, Liberal, Peter Fonseca]

Welcome to meeting number 48 of the House of Commons Standing Committee on Finance.

Pursuant to the order of reference of May 10, 2022, the committee is meeting on Bill C-19, an act to implement certain provisions of the budget tabled in Parliament on April 7, 2022, and other measures.

Today's meeting is taking place in a hybrid format pursuant to the House order of November 25, 2021. Members are attending in person in the room and remotely using the Zoom application. As per the directive of the Board of Internal Economy on March 10, 2022, all those attending the meeting in person must wear a mask, except for members who are at their place during proceedings.

I would like to make a few comments for the benefit of the witnesses and members. Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mike, and please mute yourself when you are not speaking. Interpretation is available for those on Zoom. You have the choice, at the bottom of your screen, of either THE floor, English, or French. For those in the room, you can use the earpiece and select the desired channel.

I remind you that all comments should be addressed through the chair. For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can, and we appreciate your patience and understanding in this regard.

I'd now like to welcome today's witnesses. From the Council of Canadian Innovators, we have Dana O'Born, vice-president, strategy and advocacy; and Nicholas Schiavo, director, federal affairs. From JDRF Canada, we have Dave Prowten, president and chief executive officer, who is joined by Matt Stimpson. From the Native Women's Association of Canada, we have Christian Boucher, senior director, government relations; and Lynne Groulx, chief executive officer. Finally, from Samaritan's Purse Canada, we have John Clayton, director of programs and projects.

At this time, members, we have the opportunity to hear from our witnesses. Each of them will have five minutes for opening remarks.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

I thank Mr. Beech for his response.

I'd like to make sure that when he can, he will tell us the government's position, that is, whether it would be prepared to remove division 32 from Bill C‑19 and make it a different bill.

Thank you, Mr. Chair.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

I'm going to start by making a comment to committee members in connection with Mr. Laliberté's testimony. I will then have a question for Terry Beech in his role as parliamentary secretary, and so as a representative of the government.

Thank you for being here, Mr. Laliberté.

Your points are extremely clear. I agree with you. I think division 32 has to be separated from Bill C‑19 to be sure it can be studied properly.

If the government agreed to this proposal, that would be ideal. In fact, I'm going to ask Mr. Beech a question about that. Of course, the government might not accept it.

We have already asked that the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities study that division.

We would need to make sure that we can hold the necessary consultations and examine all the amendments relating to it. If that committee isn't able to do that, the Standing Committee on Finance will have to take it on. I will then ask that the committee take the time needed to do a thorough study of division 32 in its entirety.

As the representative of the government, can Mr. Beech tell us now whether the government would be open to the idea of removing division 32 from Bill C‑19 and making it a different bill?

If he doesn't have an answer to give us, can he consult his government colleagues and give us one?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

I'm going to address my questions to Mr. Guénette.

Just before doing that, I'd just like to point out that Mr. Giroux, the parliamentary budget officer, does studies every year and shows us that the federal government has more leeway than the provinces. Because transfers have been cut in recent years, we have to be worried about the problem that the debt load represents in the provinces, which Mr. Giroux tells us will continue to grow.

Mr. Guénette, how does Bill C‑19 meet your members' needs and respond to their requests?

If not, what is missing from Bill C-19 that should be in it, in particular regarding the labour shortage?

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

Thank you, Mr. Chair, and thank you to all of our witnesses for sharing your expertise on Bill C-19.

I will first address the representatives of the Quebec Employers Council.

Mr. Blackburn, you could start by telling us about the luxury items tax that has been proposed by the government. What will the impact of that tax be on your industries, particularly when it comes to the rebates?

[Corinne Pohlmann, Senior Vice-President, National Affairs and Partnerships, Canadian Federation of Independent Business]

Thank you.

Thanks for the opportunity to be here today. I am joined by my colleague Jasmin Guenette, who will help with answering some of the questions when we get to that point.

First of all, CFIB is a non-partisan, not-for-profit organization that represents 95,000 small and medium-sized companies across Canada. Our members come from all regions of the country and are representative of all sectors of the economy.

It's important to remember that small businesses are still feeling the impacts of the pandemic. Only two in five are making normal sales. Just over a third are reporting no pandemic-related debt. Fewer than one in five indicate that they're not holding any pandemic-related stress. This means that two-thirds of small businesses are dealing with, on average, about $160,000 in pandemic-related debt. More than 80% are still dealing with the mental health impacts of COVID.

While we're pleased that restrictions have lifted, COVID support programs have now ended. Small businesses are now facing a host of new challenges. The most notable are rising prices and inflation, supply chain challenges, increasing government costs and labour shortages, all of which contribute to the rising cost of doing business. In fact, over nine in 10 small businesses are telling us that their costs have increased substantially since the pandemic began and that this is now the number one issue facing Canada's small and medium-sized businesses.

As you might expect, our focus going into this budget was to push for initiatives that might help small businesses deal with their costs, or at least do no further harm. This is also the lens we brought to our reaction to Bill C-19, the budget implementation act. We feel that there are some elements in the act that certainly can help, but there are also a few things that worry us and a number of things that we think are still missing.

Starting with what we liked, we are pleased to see that immediate expensing is finally moving forward after being announced in budget 2021. We've had many calls from small business owners hoping to leverage this incentive, as it was supposed to come into effect as of April 2021. However, without legislation, CRA could not process claims, delaying the use of this incentive at a time when some businesses could really have used it. It's also going to unfortunately result in extra paperwork, as those businesses that may have claimed now have to refile to get the incentive passed back over to them.

We were also pleased to see the labour mobility deduction as part of this bill, as labour shortages continue to cause major issues right across Canada. Having a deduction that allows sought-after tradespeople to deduct up to $4,000 in travel and/or relocation expenses will help make it easier for some of them to accept jobs in more remote areas that struggle to find the skilled workers they need.

We were also pleased to see some provisions that would provide CRA with the discretion to accept late applications for the Canada emergency wage subsidy, the rent subsidy and the hiring program. These programs have been essential for the survival of many small businesses but can be very complex and challenging to apply for. Giving CRA some flexibility with applications will go a long way in making sure businesses that have legitimate claims are still able to access those funds.

However, there are also several elements that we feel were missing from Bill C-19 that could have helped alleviate some of the challenges currently facing small businesses and their economic recovery.

First, we noted that one of the most significant elements of budget 2022, which was to raise the taxable capital limit to access the small business tax rate from $15 million to $50 million, was not included in the bill. This provision is important, as the taxable capital limit has not changed in more than 20 years, and it would allow more small businesses to access the small business tax rate. It's disappointing that it's not part of this bill. We hope to see it implemented very soon.

Similarly, the employee ownership trust is another announcement from that particular budget that was very well received by small business owners but is not included in this bill. Again, we would like to see some movement on that, because it's an important new option for those looking to exit their business.

We were also disappointed to see nothing to help hard-hit small businesses deal with their debt. As mentioned, there are substantial amounts of debt, averaging about $160,000 among about two-thirds of small businesses, and we had hoped the government would respond by potentially doing something like increasing the forgivable portion of the CEBA loan or potentially extending the deadline to pay it off another year.

We were disappointed to see that federal payroll taxes like CPP and EI are scheduled to go up again in 2023—well, for CPP again, and EI for the first time in three years. These types of taxes are actually particularly challenging, as they are profit-insensitive and difficult for smaller businesses to absorb. As a result, when these taxes are increased, they tend to eat into the training costs, the wages they can pay and their ability to grow their business. Finding some ways to offset these costs, at least partially—maybe through an EI tax credit, for example, that allows them to keep some of these costs in the business—would be welcome in the future.

There were also a number of other tax changes that were narrower in scope but would nonetheless have an impact on many different small businesses in the sectors affected by them. These include the introduction of a luxury tax, the ongoing escalator of the beer tax, the elimination of the excise tax exemption for Canadian wine and the introduction of an excise tax on vaping products.

While each may have a purpose on its own, it's really the accumulation of all these taxes that can be devastating for small businesses already reeling under lots of debt, dealing with higher costs of shipping and supplies and trying to find staff who can help them keep their businesses afloat.

The coming months are going to be challenging as we transition Canada from a COVID pandemic with lots of supports to a post-COVID economy with no supports but many new challenges. While supports may no longer be the right policy choices, governments must remain focused on making sure that policy decisions do not make things worse for small business.

Thank you. I look forward to your questions.

[The Chair, Liberal, Peter Fonseca]

I call this meeting to order.

Welcome to meeting number 47 of the House of Commons Standing Committee on Finance. Pursuant to the order of reference of May 10, 2022, the committee is meeting on Bill C-19, An Act to implement certain provisions of the budget tabled in Parliament on April 7, 2022 and other measures.

Today's meeting is taking place in a hybrid format, pursuant to the House order of November 25, 2021. Members are attending in person in the room or remotely by using the Zoom application. As per the directive of the Board of Internal Economy on March 10, 2022, all those attending the meeting in person must wear a mask, except for members who are at their place during proceedings.

I'd like to make a few comments for the benefit of the witnesses and members. Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mike, and please mute yourself when you're not speaking. For interpretation, those on Zoom have the choice at the bottom of your screen of either “floor”, “English” or “French”. For those in the room, you can use the earpiece and select the desired channel.

I remind you that all comments should be addressed through the chair. For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can, and we appreciate your patience and understanding in this regard. I request that members and witnesses mutually treat each other with respect and decorum.

I would now like to welcome today's witnesses.

As an individual, we have Pierre Laliberté, Commissioner for Workers. Welcome.

From the Canadian Federation of Independent Business, we have Corinne Pohlmann, who is the senior vice-president of national affairs and partnerships, and Jasmin Guénette, vice-president of national affairs. Welcome.

From the Quebec Council of Employers, we have Karl Blackburn, president and chief executive officer, and Norma Kozhaya, vice-president of research and chief economist. Welcome.

We will begin with Mr. Laliberté's opening remarks. You have up to five minutes, and the floor is yours.

[Leila Sarangi, National Director, Campaign 2000]

Hello. Thank you very much for inviting me to appear today to speak to Bill C-19.

My name is Leila Sarangi and I'm the national director of Campaign 2000, which is a coalition of over 120 organizations working to end child and family poverty.

Today, more than one in six children in Canada lives in poverty. There are measures in budget 2022 that are extremely important for these children and families: dental care for children, starting this year, and new investments in Jordan's principle to advance equitable access to services for first nations children. Infrastructure investment in housing and child care, if designed well and targeted, would also eventually help low-income children and families, but that is still years away. Today, low-income and marginalized families continue to struggle with poverty and the ongoing effects of the pandemic.

We know this budget wants to turn the page on income supports to individuals. This is where I'm going to focus my comments today, because it's so crucial to the families I'm representing.

On May 7, just over a week ago, all pandemic-related income benefits to individuals expired. This included the lockdown benefit, the sickness benefit and the caregiving benefit. Temporary EI eligibility requirements are set to expire on September 25 of this year, and promised permanent reform is not allocated in this budget. We have not yet turned the page on the virus and it is still out there making people sick, but now there are no income supports for people who need to isolate or care for family.

Further, budget 2022 does not deal with the punitive clawbacks to income benefits experienced by low- and moderate-income families. These clawbacks started almost immediately for people who received social and disability assistance. Taxes filed last year triggered further clawbacks on GIS and Canada child benefit payments, as well as to a range of provincial and territorial benefits. In July of this year, we expect yet another round of clawbacks to refundable tax credits, including additional clawbacks to the Canada child benefit, a program that we know is crucial to lifting children out of poverty.

I want to be really clear on this point: These clawbacks are detrimental and punitive. From the outset of the pandemic, we have been collecting stories about how income benefits help low-income earners meet their basic needs. People shopped locally and buoyed local economies with their purchases. We have been collecting stories about the shock of these clawbacks, which were not expected. These families do not have the financial resiliency to deal with unforeseen reductions, or even foreseen reductions, to their monthly budgets—budgets that have to account for every nickel and dime, because there is so little money, especially right now with rising inflation and the rising cost of living.

Now the government is seeking CERB and CRB repayments. Letters have been sent out by Service Canada and the CRA. Maternity benefits are already being garnisheed by 50% for new mothers. We understand that flexible payment plans are being offered on an individual basis, which is a nice gesture, but even a $25 monthly repayment plan means that families will skip a meal, medication or Internet bill payment to make that payment.

Clawbacks to GIS for low-income seniors have been reversed, repayment relief has been given to the self-employed and partial relief has been provided to students. Our recommendation today is to provide what we have been calling a “full CERB amnesty”. This includes immediately ceasing pursuit of people living on low or moderate incomes for repayments of CERB and CRB; legislating the reinstatement of pandemic income benefits at the full $500 weekly amount until employment insurance is reformed; refunding all lost benefit amounts related to CERB and CRB receipt; and ensuring social and disability assistance adequacy through increased investments in the Canada social transfer, tied to adequacy standards and accountability mechanisms.

Thank you for your time today. I look forward to answering any questions.

[The Chair, Liberal, Peter Fonseca]

I call this meeting to order.

Welcome to meeting number 46 of the House of Commons Standing Committee on Finance.

Pursuant to the order of reference of May 10, 2022, the committee is meeting on Bill C-19, an act to implement certain provisions of the budget tabled in Parliament on April 7, 2022, and other measures.

Today's meeting is taking place in a hybrid format, pursuant to the House order of November 25, 2021. Members are attending in person in the room and remotely by using the Zoom application. Per the directive of the Board of Internal Economy on March 10, 2022, all those attending the meeting in person must wear a mask, except for members who are at their place during proceedings.

I'd like to make a few comments for the benefit of the witnesses and members. Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mike. Please mute yourself when you're not speaking. For interpretation for those on Zoom, you have the choice at the bottom of your screen of either “floor”, “English” or “French”. For those in the room, you can use the earpiece and select the desired channel. All comments should be addressed through the chair.

For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can. We appreciate your patience and understanding in this regard. I request that members and witnesses treat each other with mutual respect and decorum.

I would now like to welcome today's witnesses. From the Coalition of Canadian Independent Craft Brewers, we have Brad Goddard. From Boating BC Association, we have Bruce Hayne, executive director. From Campaign 2000, we have Leila Sarangi, national director. From the Fédération québécoise des municipalités, we have Jacques Demers, president, and David Boulet, an economist with the policy section.

We will now begin with Mr. Goddard from the Coalition of Canadian Independent Craft Brewers for his opening remarks.

Mr. Goddard, you have up to five minutes.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Blaikie.

I want to thank the witnesses. We really appreciate your time and expertise. Thank you for coming before our committee on Bill C-19. You may submit anything that you would like to put in writing to the members, if you were not able to give a fulsome answer.

On behalf of the committee members, the clerk, the analysts, the interpreters and all the staff here, we thank you very much. Have a wonderful day.

The meeting is adjourned.

[René Bougie]

Thank you very much for the question.

Within our association, we had the opportunity to speak to some negotiators from the Quebec ministère de l'Économie et de l'Innovation. They told us that, in their negotiations, they were able to make the distinction between the various types of alcohol.

So, in talking to Australian officials who negotiated at the WTO, we learned that it was grape wine that was really targeted, a major source of aggravation for the Australians.

As we said earlier, the amount of mead we produce in Quebec is really limited, about 90,000 litres in total. However, this production is constantly increasing, and it is a growing industry.

So the fact that mead is currently classified in the same category as other types of alcohol, such as grape wine, is really a major burden for our types of businesses. What surprises us most is that the provincial negotiators were able to make this distinction and have the mark-up applied by the SAQ on meads, ciders, berry wines and maple wines removed as of December 1, 2023.

However, in the federal regulations, more specifically in Bill C-19, this distinction is not found in the exceptions section. As I said earlier, all costs are increasing, and this tax creates undue pressure on our production at a time when we are increasingly seeking to diversify and add value here in Canada. This distinction would be essential for our businesses to continue to grow.

In addition, this tax on all wines made from 100% Canadian ingredients has not been collected since 2006. Although there are some compensatory programs, we realize, when discussing with all of our colleagues at the national level, that the money that is put on the table would not even compensate for the sums that would have to be committed.

Our first demand is therefore that the exemption be maintained and that our products be included in the exceptions. If this is not possible, we would at least like to have access to compensatory programs that would allow our producers to be compensated at their fair value, especially since our products were not taxed before.

We would therefore like to obtain the committee's support so that the special nature of our businesses is recognized and their products are included in the exceptions.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

I would like to greet all the witnesses and thank them for their presentations. I also thank them for being with us today.

My first questions will be for Mr. Bougie or Mr. Lambert.

In Bill C-19, the government is imposing the excise tax on wine producers as a result of a WTO dispute.

The problem in your case, Mr. Bougie and Mr. Lambert, is that at the federal level, when we talk about wine, that includes mead. That is not the case in Quebec.

Can you confirm that and explain to me once again how imposing the excise tax on wine will have an impact on producers in your sector?

Thank you.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

I really appreciate that. Thank you.

I just want to take a moment to ask the folks from Publish What You Pay Canada something, with my remaining 90 seconds.

If I could, I wanted to go back. Your organization was one of the driving forces behind the push to adopt a beneficial ownership registry. Bill C-19 has taken the first step towards that with the amendments to the Canada Business Corporations Act. Can you tell us why a beneficial ownership registry is so critical?

[Sasha Caldera, Campaign Manager, Beneficial Ownership Transparency, Publish What You Pay Canada]

Thank you very much, Mr. Chair and House finance committee members. Thank you for inviting me to speak today.

I might have connection difficulties. If I am lagging, please let me know, and I will turn off my screen.

My name is Sasha Caldera, and I am the beneficial ownership transparency campaign manager at Publish What You Pay Canada. Publish What You Pay Canada is part of the global Publish What You Pay movement of the civil society organizations working to make oil, gas and mineral governance open, accountable and responsive to all people. For the past four and a half years, I have been leading a coalition consisting of three civil society organizations to advocate for a publicly accessible beneficial ownership registry with our partners Transparency International Canada and Canadians for Tax Fairness.

In budget 2022, we applaud Minister Freeland's commitment to accelerate the timeline for a publicly accessible corporate beneficial ownership registry by 2023. This commitment is two years earlier than anticipated and includes participation from willing provinces and territories. Budget 2022 also includes a commitment for discussion with provinces and territories for a beneficial ownership property registry. Together these announcements are important to combat the proceeds of crime from entering Canada's economy.

Experts estimate that $45 billion to $113 billion is laundered annually into the country. Canada's announcement for a publicly accessible beneficial ownership registry is in line with other G7 and G20 countries committing to deploy such registries. These tools are now urgent national security priorities to prevent Russian oligarchs and other corrupt foreign officials from hiding dirty money in liberal democracies. Currently 105 countries around the world have made commitments to implementing publicly accessible registries.

The commitment in budget 2022 for a public registry includes ensuring that provinces and territories can participate in a registry system. As a vast majority of companies are registered within provinces, Ottawa will need to offer a blueprint that provinces can get behind. We recommend that the federal government reach an agreement with provinces and territories to allow provincially registered companies to send beneficial ownership information directly into a central registry that is managed by the federal government.

In turn, provinces can mirror legislation to their own business acts based on legislative amendments to the Canada Business Corporations Act. Using this approach, provinces would not have to devote resources to upgrading their own business registries, and provincial authorities can access the back end of the registry for investigations. Additionally, provinces can use beneficial ownership property registries to track down properties that might be owned by oligarchs on sanctions lists. We hypothesize that provinces can reap substantial revenues from asset forfeitures, as we recognize that properties are commonly used as vehicles to launder money in Canada.

Ottawa's leading the design, staffing and maintenance of a registry would be practical for a number of reasons. First, it would be appealing to smaller provinces that might not have the resources to collect and scrutinize beneficial ownership information. Second, Ottawa can commence work with willing provinces and eventually expand the registry to cover the entire country. Finally, if provinces start to collect and publish different information about beneficial owners on their own, it will be frustrating for businesses that require consistent data to fulfill anti-money laundering reporting requirements. Businesses having access to a free and searchable registry with verified data can reduce administrative costs to carry out due diligence checks and improve compliance with federal regulations.

With respect to the legislative changes in Bill C-19, I would recommend that under division 30, proposed subsection 21.21(1) should be revised to as follows: “The corporation shall conduct ongoing monitoring and, at least once each financial year, ensure that it has identified all individuals with significant control over the corporation and that the information in the register is accurate, complete and up to date.”

This revision is necessary because companies controlled by criminal organizations that wish to abuse the system or to evade taxes can delay updating beneficial ownership information by simply relying on this annual reporting requirement. The proposed change places the onus on the company to be proactive and ensures that the director of Corporations Canada is kept informed. Moreover, the public registry will possess the most accurate information about individuals of significant control.

Moving forward, we urge the federal government to ensure that all design elements of a publicly accessible registry are included in the second budget implementation act in order to meet the federal government timeline of 2023.

Furthermore, stakeholder consultations must be carried out in the most transparent manner, where a diverse cross-section of civil society, journalist and industry submissions are made public. We see this approach to be consistent with the goal of a publicly accessible registry, which is a crucial anti-money laundering tool that can strengthen the integrity of Canada’s economy.

Thank you so much for your time, and I'm happy to take your questions.