Bill C-241

An Act to amend the Income Tax Act (deduction of travel expenses for tradespersons)

This enactment amends the Income Tax Act to allow tradespersons and indentured apprentices to deduct from their income amounts expended for travelling where they were employed in a construction activity at a job site that is located at least 120 km away from their ordinary place of residence.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much for that, Mr. Chair.

I want to come back to the issue at hand, which is how the committee is going to conduct its business over the next several weeks.

However, I thought I might start just by sharing some observations about things that have been said around the table today. I note that one member in particular expressed concern about wasting time, and I'm wondering if people who are watching at home or who will consult the record at some point in the future will feel that we've done a good job of taking to heart any meaningful concern about wasting time. It was my frustration at the end of the last meeting that we didn't come up with a plan for what to do at this meeting, and it's an ongoing frustration that we're sitting around the table blowing off steam, which is not an illegitimate thing to do around Parliament Hill, but it has its time and its place. I'd rather be blowing off steam in the context of a productive study of something and not on a kind of open-ended conversation about what we're going to put on the agenda for subsequent meetings. It seems to me that that's not the level at which we should have intractable disputes around this table.

I'll start by signalling that and saying that I'm anxious for us to come to some kind of conclusion on what the path forward is going to be for the committee because I think we'll be doing more productive work, which will include an exploration of many of the same questions that members have been exploring here today, if we're doing it in the context of a proper study. I note that some members said that the legislation isn't out of the House. That's certainly true. They say that they don't feel ready to undertake a study. I would say, given the number of comments made about the content of the fall economic statement and the legislation that's already been tabled in the House, it seems to me that members around this table are in a pretty good position to start talking about the content of the bill. In fact, they are talking about the content of the bill. My question is this: Why can't we just do that in the context of a study of the bill? Then it would actually count towards our formal study and the conclusions that we will ultimately draw, whatever they may be, about the legislation. We could be doing that, and not only could we be doing that in the context of a formal study, but we could do that with the benefit of having people at the table other than just ourselves, whether those are Department of Finance officials or whether they're stakeholders from Canadian society who have legitimate concerns about the content of the bill. I think we'd be having a better conversation if their input was part and parcel of what we are doing here today, and it could have been if we had come to some kind of agreement sooner about how we want to proceed with the study of the bill.

I accept the frustration that certain members have about the idea of a prestudy. I don't think it's a great habit, but I'll say that, in my experience around this table in this Parliament, we have often been short on time. It has often been a complaint later by the same folks who exhibit reticence to have prestudies that we don't have enough time for fulsome study.

Just so that there aren't any misconceptions, I'm talking specifically about the Conservatives here who don't let debate collapse on certain bills. Then when it comes to committee, we engage in these kinds of long, drawn-out conversations about what we're going to study or whether we're going to study it or whatever, and then there are usually certain deadlines. I would say, particularly when it comes to government legislation around a budget or a fall economic statement, there are market-moving things in those bills that are going to have real consequences. I would say in the case of this bill that we're talking about the pandemic dividend, an increase in the corporate tax rate for financial institutions and the elimination of interest on student loans. Those are things that ought to be in place for the next tax year, and there's a limited amount of time. We're beginning a five-week clock within which that legislation has to be passed or it won't be in place for the following year. Not only will it not be in place for January 1 of the following year, it also won't be in place until well into the next year because Parliament won't sit until the last Monday in January—that's when it will start up again.

So, there is a reasonable time frame there. I think that it behooves committee members to be concerned about it, and that means certain things for the passage of the bill through committee, so it make sense for us to start studying it now.

Here's a little procedural advice for members around the table: It's impossible to amend the content of a bill at second reading, so the concern that somehow the bill could change, not only radically but even just minutely, is unfounded. I hope members will receive that as information about the parliamentary process. There are three types of amendments that you can move at second reading. You can have a hoist amendment, you can have a reasoned amendment and you can have a motion of instruction at committee. Those are the three kinds. None of them change the content of the bill, which was previewed in the ways and means motion on the Friday following the economic statement.

Members who aren't sure where the NDP stands on that will know that we voted in favour of that ways and means motion, which contained an almost identical version of the bill. You have to get approval of the ways and means motion in order to be able to table the legislation. We voted for the ways and means motion. It contained substantially the content of the legislation. Members can expect that the legislation will find its way to this committee table, one way or the other, with the support of the NDP.

To certain members, that appears to be a contradiction. I don't think so at all. It is not a contradiction to support things that you don't think go far enough, or that don't contain things that if you had your own druthers would be in there, when you think there are other good reasons to support it. There are some things we're supporting in there. New Democrats support the share buyback. We support the pandemic dividend. In fact, that was one of the items that was in the supply and confidence agreement. We felt that it was very important that financial institutions that benefited substantially from public funds during the pandemic, something that the Conservative leader loves to talk about, should be made to pay some of that money back. That's what the pandemic dividend is about.

I have been shocked, frankly, at the silence of the Conservative leader on an initiative that is meant to take that very same public money he likes to complain about out of the pockets of financial institutions and deliver it back to Canadians. It's not so that it can go to government largesse—there are real concerns about largesse when it comes to this government—but so that it can go to fund things like the GST rebate. That had all-party support, I might add, and was something for which New Democrats were fighting for a long time. It wasn't clear when Bill C-30 was initially tabled that Conservatives would support it. They finally did, and I appreciate that. That was a good thing. But we also believe you need to have money to pay for it.

I hear Conservatives talk about government getting a lot of money and government largesse. Other times they talk about the fact that the government still has a large deficit and a huge debt. Well, where do you think paying down the deficit is going to come from if it ain't going to come from revenue?

When we're talking about things like the pandemic dividend that directly target the people who got away with more money than they should have in order to bring it back into government coffers that don't have a balanced budget, that's called tackling a problem. It's not called largesse. It's not called socialism. It's not called whatever other kinds of propagandist terms people would like to use. It's good policy. It's about actually figuring out a way to solve the problem instead of trying to complain your way into government without actually proposing any real solutions.

That's why we're willing to support this legislation. It's because we think there are things in there that will actually make a difference. We recognize that this support has to be timely in order for it to make a difference to Canadians, which is why I'm willing to put aside my normal reservations about prestudies and get on with it. I'd like to hear from other people across the country about what they think about that legislation and see if there are opportunities to make it better, with enough time to actually make it better, instead of just complaining more about how we didn't have time to make it better. That's a responsibility of members of this committee in order to be able to get on with it.

With all due respect, it's not the same as private members' bills, which are important. I support a lot of the private members' business coming to this table. But it's not as though, because we're going to engage in a prestudy for a major government bill that involves one of their two basic financial documents for the year, all of a sudden Pandora's box is going to get opened up and we should be prestudying every piece of legislation that comes through the House. It's a different kind of bill with a different kind of consequence and a different kind of timetable.

That's why I'm prepared to support a prestudy at the table. I'm also prepared to do it in a way that offers Conservatives some of what they said they want around this table, including a prompt return to the study of Bill C-241 after we have concluded this business. I do think it's important that this table takes private members' business seriously and does so in the right way. I'm happy to add that to the mix if it means we can get some agreement. I think that would be a very good thing.

I also note that the Conservatives have a motion—it may not yet be formally on notice, but it has been talked about at this table—with respect to inviting the finance minister again and the Governor of the Bank of Canada. I have expressed my willingness to support that. I think that's a good thing.

But this meeting is a meeting where we could have been doing some of that stuff, and I am frustrated that we're having another meeting and we're all chit-chatting about the many things we'd like to do around this table and not doing any of it.

Let's figure out how we move forward. If there's a way to include in the motion returning promptly to Bill C-241, if there is a way to have an agreement that will deal promptly with the motion that the Conservative finance critic has put forward at some point and then scheduling a time to deal with that, that's great, but let's create a package that allows us to have a plan for the next nine meetings that we have between now and Christmas so that we're actually doing work and we're getting these things done.

There is enough time for people to get enough things done that matter to them that I think we can work this out, but we're going to have to do better than we've done today, or we're going to burn another meeting on Wednesday, and all the more the shame. It will be hard to take people seriously when they're complaining about how fast things are moving and how little time they've had when we've burned up two meetings talking about how to schedule meetings. It's ridiculous.

That's where I'm at. Those are standing offers. I hope that people around the table will take me up on them and that we'll find a resolution today so that we can do real work on Wednesday, because I tell you, if I show up on Wednesday and we're doing more of this, my mood is going to continue to degenerate, and it ain't going to be fun, not for me and not for anybody else.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Another characteristic in the table here is the nature of the eligible expenses. Under the current provision, eligible temporary relocation expenses include—I think these were mentioned—transportation expenses of one round trip, meals during the round trip and temporary lodging, and under Bill C-241 it is expenses incurred for travelling to and from the job site.

Again, what would be the practical difference? Is it that under Bill C-241 you could have a job that's relatively far from home but still within commuting range and you could deduct some of those expenses?

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

I just want to continue on down the table here.

When we talk about the distance calculation under the two laws, there are some additional conditions for what's currently in the statute, including relocation to a temporary work location, being away from your ordinary residence for at least 36 hours and residence at a temporary lodging.

Again, I'm thinking about somebody who's working on a project in Portage la Prairie, say, who is commuting daily out of Winnipeg. They're travelling over 120 or even over 150 kilometres from their home in order to do to a job. The Roquette pea plant was a big job in the Portage la Prairie area for a while. I know a number of guys who were working on that job for a couple of years. Under Bill C-241, they would have been allowed to deduct those expenses to travel to that site, but under the current statute they would not because they would not be away from their home for 36 hours and they're not residing in temporary lodging? Is that a fair characterization of the difference between the two proposals?

[Lindsay Gwyer]

I'll start with the point on double deductions. Both deductions would, as I mentioned earlier, apply in very similar circumstances. There are restrictions on both with respect to what can be deducted and with respect to what has been deducted under other provisions of the Income Tax Act, so the same expense would not be able to be deducted under both of the deductions.

In terms of being able to go and travel abroad, as I mentioned there's no restriction in Bill C-241 as to where the workplace needs to be located. Bill C-19, the existing law, does require that the work location be in Canada. That's there to address the issue of someone going to work in another country and claiming the deduction.

Then on the last point, the existing law sets out specifically what travel expenses would be acceptable: the travel expenses relating to one round trip, so costs of a flight or of gas or of whatever means by which the commuting is done; the cost of meals incurred on that round trip; and then, potentially, temporary lodging if the person maintains their existing lodging in their ordinary place of residence.

Those are the ways those concerns are addressed through the deduction that was passed in Bill C-19.

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

Thank you, Mr. Chair. I will begin by reiterating my full confidence in the way you are managing this committee.

In the first hour of debate, our esteemed colleague Sophie Chatel raised a number of concerns about this bill. As I said earlier, our goal here, all of us together, is to improve the bill and to make sure that it fulfils its objectives. I wanted to check with you to see if you had any comments on that.

Among the points raised, our colleague said that if Bill C‑241 were to be passed, there would be a double deduction, given that Bill C‑19 has already been passed. We know this and we need to find a solution to this problem.

She also said that a worker could claim expenses for travel to the United States if they go there to work. I would like to hear your comments on this. If we wanted to limit this type of expense in the event that a person went to work abroad, how could we proceed? Again, if you don't have an answer immediately, you can provide one in writing to the committee.

Also, the Income Tax Act states that if a supervisor gives an allowance for a worker's travel, they cannot claim those travel expenses. However, what if it is not an allowance, but some other form of expense payment? Do you think this could open the door to some abuse? If so, how could the bill be improved to avoid such abuses?

[Chris Lewis, Conservative, Essex, ON]

Thank you, Mr. Chair.

Thank you to the witnesses here. I appreciate it. I have just a few questions.

In my testimony, I mentioned that CBTU did a study—commissioned a financial projection—which estimates that Canada-wide implementation of a skilled trades workforce mobility tax deduction would save the federal government an estimated $347 million annually.

Subsequently, Bill C-222 was introduced—or perhaps it wasn't even introduced. This is Mr. Green's bill. The Parliamentary Budget Officer issued a legislative costing note on Bill C-222, which is very similar to Bill C-241, on April 5, 2022, estimating the cost of this measure. In 2022-23 it's $117 million, and its five-year cost is $522 million.

Does it not make sense to keep the money in the pockets of the skilled trades workers if the government's going to rake in $347 million and it's only going to cost them $117 million a year?

Mr. Maxson.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Is Bill C-241 any different in that respect or would it likely operate in the same way?

[Mark Maxson]

This is again a place where the CRA would have to ultimately interpret the language, but one possible implication is that the language under the existing deduction is explicitly intended to say that you moved closer to the work site. You found temporary lodging that was closer to the work site than your home was. In Bill C-241, if the work site is at least 120 km away from where you live, travel to and from the work site is deductible.

It's unclear to me whether this means that, if you have lodging near the work site, you can deduct your commuting expenses back and forth from your temporary lodging to that work site. That might be 15 kilometres, because that work site is 120 km away from your home. I don't know if that's the intention or not, but that would be one possible difference. The existing deduction is only for travel between your home and the work site.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

It is possible that the CRA could adopt the same regulation as is identified in Bill C-19 as a way of interpreting what's in Bill C-241.

In terms of minimum required distance, I think that one's pretty straightforward. There is a slight difference in the distance, but we're talking about a 30-kilometre difference.

Another main characteristic is the distance calculation method. In the table, it says that, under the existing law, it's calculated on the one hand between the ordinary residence and each temporary work location or, on the other hand, between each temporary lodging and each temporary work location, whereas in Bill C-241 it's calculated between the ordinary place of residence and the job site.

Are there any practical implications for those differences?

[Mark Maxson]

I guess I can give a first answer, but others may wish to jump in.

In terms of practical differences, it's challenging to lay out the concrete implications. One of the difficulties in terms of lacking some definitions is that essentially it means that the Canada Revenue Agency will be required to put forward interpretation and guidance as to what the different terms mean, and that's not something that we can do ourselves.

As an example, Bill C-19 defines “construction activities” and Bill C-241 does not, so in the case of Bill C-241, the CRA would have to put forward guidance in terms of exactly what that means. Whether it ends up being different in certain cases is hard for us to say, and that would be true of certain other undefined terms as well. That's a potential confusion for the taxpayer question—

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much, Mr. Chair.

I don't think there's a lot to say that hasn't already been said, but I do think that one of our tasks here is to try to appreciate the differences between what was passed in Bill C-19 and what's proposed in Bill C-241.

Thank you to our committee analysts, who prepared a pretty decent table that lays them side by side. I want to walk through that table while we have the government's own tax experts here so they can give us a sense of what these differences in the table will mean practically for folks who are filling out a tax return.

In terms of characteristics to compare between the two acts, first in the table are conditions related to the taxpayer. In the Bill C-19 version, you have to be an eligible tradesperson—earn employment income as a tradesperson or apprentice in the construction activities referred to—and then there's a regulation that defines that. In Bill C-241, you have to be employed as a qualified tradesperson or an indentured apprentice for construction activities at a job site.

Is there any real practical difference in those two definitions that the committee should be aware of?

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

Thank you, Mr. Chair.

Mr. Leblanc, Mr. Maxson and Ms. Gwyer, thank you for being here to answer our questions.

Mr. Leblanc, thank you for your preamble, first of all. I thank all three of you for all the information that you have subsequently provided to the committee.

The purpose of a committee's work is to improve bills, to make sure they meet their objective and to amend them as necessary to make them the best they can be in the end.

So I was a little surprised when you said at the beginning of your presentation, Mr. Leblanc, that the bill referred to several terms that were not defined. Obviously, in our role as legislators, we work with a team of legal experts. So if these terms are not already defined in the Income Tax Act, for example, it would be preferable that they be defined in the bill. If senior officials feel that there are problems with the definitions, it would be important for your team to provide the committee with the technical details in writing, such as the terms that would benefit from being defined and the definitions that could be proposed. In this way, we could propose amendments as needed to improve and clarify the bill.

I also have a message for the government party. It is important in the culture of committee work to take bills from members of the opposition parties seriously. I think it is best to assume that if the bill goes to committee, it can just as easily be sent back to the House afterwards. If the government party finds that a bill has problems in its technical aspect or its applicability, it is in committee that negotiations should take place with a view to amending and improving it. This is why work on bills is done in different stages in the House of Commons.

It would be nice if Mr. Leblanc could clarify in writing to this committee what major problems the Department of Finance sees with the technical aspects and applicability of this bill, as well as provide definitions that could be added. Then, between meetings, all parties could consult on whether or not Mr. Lewis and colleagues think it is worthwhile to adopt such clarifying amendments. That would make for a better bill and quicker passage.

Also, Mr. Leblanc and other colleagues have raised the issue of double deductions. Of course, when Mr. Lewis introduced his bill in the House, the budget implementation legislation had not yet been introduced. Obviously, work could have been done in parallel. It is a collateral effect if you end up with two competing pieces of legislation where the deductions can add up. I am sure that is not the purpose of this bill, given that it was tabled in the House before the budget implementation legislation was introduced.

In that regard, it would help us if Mr. Leblanc and his team could formulate an amendment for us that we could introduce to ensure that, if Bill C‑241 comes into force, there will be no possible double-dipping, given the measure contained in the budget implementation legislation.

I know that I have made many comments and that my statement also contained many requests, but I now have a technical question, which is not easy to answer.

I imagine that this is not the first time in the House of Commons that two similar bills have been passed in a reasonably short time that open the door to a double deduction, when that was not the intention in the first place. To your knowledge, has this ever happened in the past? If so, what solutions have been provided by the House or its committees to remedy it?

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you.

As policy-makers we try to have every safeguard possible for the individuals we're talking about, and those are the construction workers. At the end of the day, we talk about our labour market, and we even talked a little bit about education, the lack thereof in K to 12 and the trades' being incorporated into the education system. Your answer obviously puts a flag up to ask how we can eliminate those possibilities, and there are many other cases with this bill. I think it's great that we brought this forth and we're moving in this direction, but no cap on the amount of expenses is a very interesting thing. If you travel on Prince Edward Island, the 120 kilometres pretty nearly takes you from one end of the island to the other.

Are there any additional safeguards with Bill C-19's labour mobility deduction that aren't included in Bill C-241, and could you elaborate on those? Could you give us a list of those items that you're aware of that could present challenges?

[Mark Maxson]

Maybe I can take this question.

As my colleague was indicating, there is a general rule in the tax system in Canada that limits deductions for employees to a greater extent than for self-employed workers. Part of the rationale behind that is that there is an expectation that employers are generally going to provide employees the tools necessary to do their jobs and are going to take on some of those costs on behalf of their employees in many cases. Certainly in this context, we've understood from stakeholders that these are often workers who are not employed by a specific employer, but who are rather perhaps moving from a region where they normally work with one or more employers and then taking on a job with a new employer in a different region. In that circumstance, that new employer may not necessarily be providing reimbursements of travel expenses. They may or may not, depending on what they feel they need to do in order to attract the workforce necessary.

The bill doesn't specifically place any constraints on whether employers do or do not provide that assistance, but both Bill C-241 and the deductions that are currently in law do prevent someone from receiving an allowance for travel and also claiming the deduction. The existing deduction passed through Bill C-19 also includes a restriction that there can't be any reimbursement that is, in law, different from an allowance. Bill C-241 doesn't include that language, but it would be a question of interpretation for Canada Revenue Agency to work through what would happen in that type of situation.

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you, Chair.

This is a very interesting discussion and an interesting bill to hear about. Coming from a small island, I know that travel for work is really important. I think it's important for all parties, as it was put in the BIA, which is extremely important. I was very glad to see that.

I want to continue on somewhat with what Mr. Lawrence said with regard to the larger corporations or the employers. Maybe I'll go to Mr. Leblanc.

In your opening remarks, you spoke about the differences between Bill C-241 and the existing labour mobility deduction that was implemented through Bill C-19. One area that I'm particularly concerned about is the lack of protections that would prevent possible double-dipping by those corporations, by receiving compensation through an employer and via the tax credit. I guess my concern—in line with Mr. Lawrence's on the opposite side—in particular is that employers may choose to cut back on their compensation pre-emptively on the assumption that workers will access this benefit as well.

Am I understanding the legislation correctly? If so, could you elaborate?