Bill C-32

Fall Economic Statement Implementation Act, 2022

An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 3, 2022 and certain provisions of the budget tabled in Parliament on April 7, 2022

Part 1 implements certain measures in respect of the Income Tax Act by
(a) providing that any gain on the disposition of a Canadian housing unit within a one-year period of its acquisition is treated as business income;
(b) introducing a Tax-Free First Home Savings Account;
(c) phasing out flow-through shares for oil, gas and coal activities;
(d) introducing a new 30% Critical Mineral Exploration Tax Credit for specified mineral exploration expenses incurred in Canada and renounced to flow-through share investors;
(e) introducing the Canada Recovery Dividend under which banks and life insurers’ groups pay a temporary one-time 15% tax on taxable income above $1 billion over five years;
(f) increasing the corporate income tax rate of banks and life insurers’ groups by 1.5% on taxable income above $100 million;
(g) providing additional reporting requirements for trusts;
(h) providing rules applicable to mutual fund trusts listed on a designated stock exchange in Canada with respect to amounts that are allocated to redeeming unitholders;
(i) providing the Minister of National Revenue with the discretion to decline to issue a certificate under section 116 of the Income Tax Act in certain circumstances relating to the administration and enforcement of the Underused Housing Tax Act ;
(j) doubling the First-Time Homebuyers’ Tax Credit;
(k) expanding the eligibility criteria for the Medical Expense Tax Credit in respect of medical expenses incurred in Canada related to surrogate mothers and donors and fees paid in Canada to fertility clinics and donor banks;
(l) introducing the Multigenerational Home Renovation Tax Credit;
(m) allowing access to the small business tax rate on a phased-out basis up to taxable capital of $50 million;
(n) modifying the computation of income as a result of the adoption of a new international accounting standard for insurance contracts;
(o) introducing a new graduated disbursement quota rate for charities;
(p) providing that the general anti-avoidance rules can apply to transactions that affect tax attributes that have not yet been used to reduce taxes;
(q) strengthening the rules on avoidance of tax debts;
(r) modifying the calculation of the taxes applicable to registered investments that hold property that is not a qualified investment;
(s) modifying the tax treatment of certain interest coupon stripping arrangements that might otherwise be used to avoid tax on cross-border interest payments;
(t) clarifying the applicable rules with respect to audits by Canada Revenue Agency officials, including requiring taxpayers to give reasonable assistance and to answer all proper questions for tax purposes; and
(u) extending the capital cost allowance for clean energy and the tax rate reduction for zero-emission technology manufacturers to include air-source heat pumps.
It also makes related and consequential amendments to the Canada Deposit Insurance Corporation Act , the Excise Tax Act , the Air Travellers Security Charge Act , the Excise Act, 2001 , Part 1 of the Greenhouse Gas Pollution Pricing Act and the Income Tax Regulations .
Part 2 amends the Excise Act, 2001 and other related texts in order to implement changes to
(a) the federal excise duty frameworks for cannabis and other products by, among other things,
(i) permitting excise duty remittances for certain cannabis licensees to be made on a quarterly rather than a monthly basis, starting from the quarter that began on April 1, 2022, and
(ii) allowing the transfer of packaged, but unstamped, cannabis products between licensed cannabis producers; and
(b) the federal excise duty framework for vaping products in relation to the markings, customs storage and excise duty liability of these products.
Part 3 amends the Underused Housing Tax Act to make amendments of a technical or housekeeping nature. It also makes regulations under that Act in order to, among other things, implement an exemption for certain vacation properties.
Division 1 of Part 4 authorizes the Minister of Finance to acquire and hold on behalf of His Majesty in right of Canada non-voting shares of a wholly-owned subsidiary of the Canada Development Investment Corporation that is responsible for administering the Canada Growth Fund and to requisition the amounts for the acquisition of those shares out of the Consolidated Revenue Fund.
Division 2 of Part 4 amends the Bretton Woods and Related Agreements Act to increase the maximum financial assistance that may be provided in respect of foreign states.
Subdivision A of Division 3 of Part 4 enacts the Framework Agreement on First Nation Land Management Act .
Subdivision B of Division 3 of Part 4 contains transitional provisions in respect of the enactment of the Framework Agreement on First Nation Land Management Act and makes consequential amendments to other Acts. It also repeals the First Nations Land Management Act .
Division 4 of Part 4 amends the Government Employees Compensation Act in order to fulfil 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.
Division 5 of Part 4 amends the Canada Student Loans Act to eliminate the accrual of interest on guaranteed student loans beginning on April 1, 2023.
It also amends the Canada Student Financial Assistance Act to eliminate the accrual of interest on student loans beginning on April 1, 2023.
Finally, it amends the Apprentice Loans Act to eliminate the accrual of interest on apprentice loans beginning on April 1, 2023 and to clarify when the repayment of apprentice loans begins during the interest suspension period from April 1, 2021 to March 31, 2023.

Fall Economic Statement Implementation Act, 2022

[Peter Fragiskatos, Liberal, Parliamentary Secretary to the Minister of National Revenue]

Mr. Speaker, it is always interesting to hear the member opposite.

One thing I have noticed is that he and his colleagues continue to criticize the federal government for introducing COVID-19 emergency programs. I understand the criticism, but I do not agree with it. If they have that criticism, why did they support those programs? Why did they vote in favour of them?

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Mr. Speaker, I may have to repeat my speech for the member as he must have not heard it or he was not here.

It is not the money that was put toward the COVID relief, which we did support; it is the $200 billion in non-COVID dollars and the $100 billion in deficit spending prior to COVID. That $300 billion is more than $20,000 for a family of four. It is that money we want back in the pockets of Canadians.

[Denis Trudel, Bloc, Longueuil—Saint-Hubert, QC]

Mr. Speaker, my Conservative friends will be pleased because I am going to triple my question. This morning, I asked my Conservative colleagues the same question twice, but I did not get an answer, so I am going to ask it a third time.

The Liberal government opposite refuses to provide proper funding for the health care system, funding that is sorely needed, especially in Quebec. There is no way that my Quebec colleagues here have not seen the pictures of Quebec's emergency rooms. It is truly outrageous.

The Liberal government is saying no. If the Conservative Party were to take office tomorrow, which is not necessarily something we want to happen, would the Conservatives agree to increase health care funding from 22% to 35%, yes or no?

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Mr. Speaker, what we can all agree upon is that a strong balance sheet helps us with all of our priorities, regardless of what they are. In 2023, we are forecasted to spend $43 billion in interest payments. That is more than the health transfers to all the provinces. What we can do is get our balance sheet, just as it was underneath Stephen Harper, under control and then we have more money to spend on all our priorities, including health care.

[Lori Idlout, NDP, Nunavut, NU]

Uqaqtittiji, Food Banks Canada said that nearly 1.5 million visits were made to food banks this year. This is a 15% increase from the previous year. At the same time, the revenue of Loblaws was $12.12 billion. I say these two figures because I wonder where the food banks got their groceries. I am sure they bought them from Loblaws.

Does the member not agree that the Canada recovery dividend needs to be extended to these kinds of for-profit corporations?

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Mr. Speaker, the institution whose revenue has raised higher than Loblaws and higher than any oil and gas company is the federal Government of Canada. If anyone needs to give a refund or a dividend back, it is the Canadian government. It is called tax relief. It is called not tripling the carbon tax. It is called reducing the payroll tax and incentivizing workers entrepreneurs instead of penalizing and demonizing them.

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

Mr. Speaker, I am wondering if the member can explain to Canadians why the Conservative Party continues to vote against measures that would give breaks to Canadians in all regions. In this legislation, for example, we have interest relief. Students who go to post-secondary facilities will not have to pay interest if the legislation passes.

Why does the Conservative Party consistently vote against supporting Canadians?

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Mr. Speaker, the Liberals just do not get it. Their seven years of tax and spend have put students in a difficult position. They are having to go to food banks. They are giving up the dream of home ownership. They want more. They want a Conservative government.

[Leslyn Lewis, Conservative, Haldimand—Norfolk, ON]

Mr. Speaker, it is a pleasure to rise to speak to the fall economic statement implementation act, 2022.

There is an adage that is found in the Book of Proverbs, written by one of the wisest men who ever lived. King Solomon wrote, thousands of years ago, “A good man leaves an inheritance to his children’s children.” It is a statement that reminds us that the decisions we make today impact on the future. They can impact, and do impact, on future generations to come.

How much more is this true of leaders who are in charge of our nation’s finances. This proverb teaches us that if we want to be truly good, if we want to be wise and if we want to leave an inheritance for our children's children, we must conserve. We cannot just spend. We must save and invest in our future.

As elected leaders, we have been entrusted with a profound responsibility to be stewards of our democracy and to preserve our Canadian way.

I am very concerned about the direction of Canada and about the short-sightedness of the government. Canadians want clarity about the social contract that they have engaged in with the government. They know what they are giving, but they do not know what they are getting back. Often their questions are dismissed, laughed at and mocked by the government.

Canadians want answers to simple questions like: How can we buy an electric car to save the environment, when we can barely afford food to eat? Why does the government raise taxes on home heating, fuel and groceries, only to refund us a pittance of what has taken in the first place?

Canadians just want to be able to fill up their gas tanks, to have a roof over their head, to not have to skip meals and to be able to take their children to school and to soccer practice.

Canada is almost $1.3 trillion dollars in debt. The government has spent more than all other governments combined in the history of this nation. Right now, Canadians owe $56,000. That is their share of the national debt, and it is increasing by the day. Next year, interest payments alone will be nearly as much as the Canada health transfer to all provinces combined. That is at a time when people are literally dying in emergency rooms because they cannot be seen within a reasonable time by doctors.

Just a few years ago, the Prime Minister promised to never go over $10 billion deficit. According to the Parliamentary Budget Officer, 40% of all new spending measures have had nothing to do with COVID. That is over $205 billion dollars.

The Liberal government used COVID as a cover for its non-essential, wasteful spending. The Prime Minister cannot be trusted with our finances. His government cannot be trusted. Things are falling apart.

The government spent $54 million on an unnecessary app, the ArriveCAN app, that discriminated against seniors without smart phones and accidentally sent thousands of vaccinated Canadians into quarantine. One developer replicated this $54 million project in one weekend and said that it should not have cost more than $250,000. Several contractors said that they never worked on the app and that they never received the millions of dollars the government said it paid them.

Millions of dollars are missing for which the Liberals just cannot account. The Liberals’ out-of-control has led to inflation, which has caused an increase in the cost of living.

The price of food has seen double-digit price increases, and 1.5 million Canadians visited the food bank last month, which is an increase of over 35% from last year. People are worried that they will have to choose between food and heating their homes this winter.

The cost of housing has become unaffordable. Even for people who do not have mortgages on their property, it is difficult to pay the utilities bills and the cost of heating. Young people cannot afford to move out of their parent’s homes. Seniors and those on disability do not have the ability to earn extra money to supplement their income. People on fixed incomes are living an unaffordable existence.

I met a lady named Hilary this weekend in my riding. She told me that to buy half a tank of oil it cost $1,100, of which $300 was government taxes, and this will only heat her home for one month. I receive calls from farmers, manufacturers and small businesses that are desperate for workers, yet we see massive backlogs at Immigration and Citizenship Canada. Despite this, the government still plans to triple the carbon tax on home heating, gas and food.

We are seeing billions of dollars of spending in this fall economic statement, yet the same problem of lack of transparency still exists. The Liberals have announced the Canada growth fund in the fall economic statement, which is found in part 4 of the act. The fund will largely give corporations money to undertake projects in the area of climate change with investments toward a net-zero economy. While I and most Canadians support protecting the environment, it must be done in a transparent way that yields accountability and reduces emissions.

Under the growth fund, we see a reference to ESG, “Environmental, Social, and Governance”, stated on page 30 of the fall economic statement. While the government has embraced this vague term, the average Canadian does not know what it means, but we have seen these types of pet projects before, like the growth fund, that have resulted in outrageous waste. The $35-billion Canada Infrastructure Bank has not finished one project that the Liberals announced in 2016, six years ago.

The whole approach has been a failure. It was supposed to attract private sector investments, but has repeatedly failed to do so. Instead, the Liberals are spending millions on bureaucracy, overhead, operations and executive termination packages that yield no financial benefit to the taxpayer. Now we are expected to trust the government with billions of dollars in this Canada growth fund, a taxpayer-funded investment fund that, just like the Canada Infrastructure Bank, will subsidize experimental corporate private business projects.

Despite the failure of the Infrastructure Bank in getting a single project completed, the Liberal government wants to invest $15 billion under the promise of a net-zero economy in a similar scheme, but Canadians have questions about the Canada growth fund and about ESG. Here are some of the questions that came to my office.

Since we know that businesses will have to register their products and services and that all transactions will be digitally recorded and tracked under ESG, environmental, social and governance, does that mean that the spending of Canadians will also be tracked?

How will this accounting for the entire emissions life cycle of a project affect small and medium-sized business owners? Will small and medium-sized business owners endure more red tape, and thereby have to spend thousands of dollars on lawyers, accountants and environmental, social and governance consultants in order to comply with this ESG requirement?

Since the goal is to reduce the carbon footprint and reach net zero, will there be limits on what Canadians can buy, where they can go and how much fuel and products they can consume? These are natural questions that Canadians are asking.

There is so much that is broken in our system, and we are not going to fix it with more Liberal policies and continued spending that lacks transparency and accountability. We cannot move forward when questions that Canadians are asking about policies, like environmental, social and governance and how this will affect their lives are left unanswered and mocked by the Liberal government.

This is not about politics. This is about the future of Canada. This is about making sure that we leave a good inheritance for our children's children. That is why, in good conscience, I cannot vote in favour of this reckless, inflationary bill that lacks transparency.

[Han Dong, Liberal, Don Valley North, ON]

Mr. Speaker, for the past couple of days, during the debate of this bill, all I have been hearing from the Conservatives' side are highly partisan campaign-style slogans.

The hon. member opened up her debate by talking about the future. Today, we know that the world population has surpassed eight billion. There is no bigger issue for the world right now other than climate change.

That is why the government came up with the carbon pricing system, where the provinces can come up with their own systems or they can adopt the federal system. With that, we offer rebates, growing from $300 plus to $700 in the province of Ontario. I think it is working to reduce emissions and combat climate change.

Does the hon. member have any substantial, real suggestions or possible amendments to this bill that would help us fight climate change?

[Leslyn Lewis, Conservative, Haldimand—Norfolk, ON]

Mr. Speaker, I remind the hon. member that I have a master's in environmental studies. I do not focus on slogans. The environment is something that I do not believe is a partisan issue. It is a very important issue that we should not be using to advance our political agenda.

What I see from the Liberals is that they are making life more unaffordable by tripling the taxes on home heating, gas and fuel. The Liberals are not serious about protecting their environment. They have not even met their targets under the Paris accord. They are not serious. It is a slogan for them and they know the meaning of a slogan.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Mr. Speaker, I do not necessarily agree with the environmental strategy that the Conservatives have, but it is very spectacular that the government is number 58 out of 64 and bragging about its environmental record. I think we can agree on that.

Coming back to the motion that we are talking about right now, three hospitals in my riding have had their emergency rooms shut down repeatedly. In fact, in October, in Port Hardy, for 28 days of the month there were no emergency services offered for the whole evening and night.

I am wondering if the member shares my concern about the reality that we are seeing no investment from the federal government to support provinces in being better able to deliver these services.

[Leslyn Lewis, Conservative, Haldimand—Norfolk, ON]

Mr. Speaker, indeed, Conservatives do share that concern about our failing health care system. One of the reasons the health care system is failing is that the government has spent more than all other previous governments in the history of this country combined.

By next year, we will be paying more on our interest payments on our loans than we are paying in the health care transfer. This is the reason we have a failing health care system. We need to get our finances in order and stop wasteful spending.

The House resumed from November 15 consideration of the motion that Bill C-32, an act to implement certain provisions of the fall economic statement tabled in Parliament on November 3, 2022 and certain provisions of the budget tabled in Parliament on April 7, 2022, be read the second time and referred to a committee, and of the amendment.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Mr. Speaker, it is always a pleasure and a privilege to rise on behalf of the residents of Vaughan—Woodbridge and the city of Vaughan, who in my view are the most entrepreneurial and generous in the country. I may be biased, but I think it is true.

I rise today to speak to the government’s fall economic statement and Bill C-32, the fall economic statement implementation act, 2022, at a critical juncture for Canada and, frankly, the world. Broadly speaking, I wish to highlight three themes in the fall economic statement.

The first theme is that the fall economic statement is a fiscally responsible and balanced document that would ensure that Canada’s strong financial position and fiscal framework anchors are maintained. In economist speak, it means our AAA credit rating is left intact, as noted by Moody’s, which recently affirmed our AAA rating, reflecting high economic strength, a very strong institutional and governance framework and, in addition, fiscal policy effectiveness. That is check mark number one.

The second theme is that we, as a country and as a government, undertake the necessary investments in our people to help make life more affordable and to assist the Canadians most impacted by inflation, with measures such as doubling the GST rebate, increasing old age security by 10% for three million seniors, which we did in the summertime, and enhancing the Canada workers benefit for low-income workers, which will provide an additional $4 billion in payments over the next six years for people who qualified for the benefit in the previous year, through advance payments.

The Canada workers benefit is something that we have adjusted, strengthened and improved three times now. It helps millions of Canadians and Canadian families from coast to coast to coast; it is lifting people out of poverty, and it is a really effective tool to help Canadians impacted by inflation. I was very glad to see it in the fall economic statement as an enhanced measure. We are providing $500 lump-sum payments to approximately 1.8 million Canadians. The GST rebate, as I mentioned, will assist over 11 million Canadian households. The first step in the Canada dental benefit is $1,300 for individuals who do not have private insurance coverage for their kids. All Canadian kids should be able to go to the dentist.

The third theme in the fall economic statement, in my view, is a focus on wealth creation by responding to the environment we, as a nation, find ourselves in. Let me explain. In today’s world, relationships between countries are being and are now reshaped; economies are being repositioned due to the realignment in the global economy; there are associated competitive challenges and even threats and security challenges, and the world’s quest for security and affordability of energy and food have never been more prominent.

The war in Ukraine, the ongoing ascendancy of China economically and militarily in many parts of the world, the climate change crisis and a renewed and reawakened United States post the Trump presidency require an unequivocal, firm policy response from our government, and the fall economic statement lays a path for that response.

Specifically, we need to respond to the competitive challenges laid out by the Biden administration. The measures quite deftly passed by the Biden administration, I believe, put the economic leadership of the United States front and centre and, frankly, change the world economic game. The Biden administration’s passing of the infrastructure bill and the Inflation Reduction Act, by some estimates, will put investment at nearly $2 trillion in clean technology and clean energy measures over the next 10 years. The CHIPS and Science Act, which is reshaping science and technology in the United States, specifically on the chip manufacturing front, and a majority of the fiscal policy in the prior administration, which was left intact, required a response by our government.

The decision we make as legislators today will put in place a direction for our economy and for our country’s future and will have a profound impact on the living standards of Canadian citizens for years to come. Today, more than ever, responsible and focused leadership is demanded. That is what our government is committed to doing, and that is what is contained in the fall economic statement.

The fall economic statement responded with measures to ensure Canadian businesses and workers have the tools to not only compete but also succeed in the global economy and, yes, to benefit from the ongoing transition to a net-zero economy, which is happening at an accelerating pace not only here in Canada but throughout the world.

One of these measures that I would like to touch upon in the remainder of my time is an investment tax credit for clean technologies: a refundable tax credit equal to 30% of the capital cost investments in electricity generation systems, stationary electricity storage systems, low-carbon heat equipment, and industrial zero-emission vehicles and related equipment.

Another is an investment tax credit for clean hydrogen production, as we know that Canada can be the premium supplier of energy in a net-zero world, and clean hydrogen is a part of the solution.

A third is accelerating the transition to a low-carbon economy with the launch of the Canada growth fund. We know there are literally hundreds of billions of dollars of private capital that will be put to use in the transition to a net-zero economy, not only today but going into the future. These private investment dollars will create the good jobs and the prosperity for Canadian workers here in Canada that a net-zero economy will bring.

Canada is an open economy. We succeed when we trade, when we attract investment, when we compete and yes, when we win. That is most certainly what we are doing these days. The aim is simple. We need to ensure an environment that harnesses private sector capital, works well with the public sector, creates good middle class jobs and assists those wanting to join the middle class. We want to ensure that economic growth, which we have seen a lot of, is inclusive economic growth, so that all Canadians benefit from strong economic growth in our country. We are uniquely positioned in the world.

The Canada growth fund would utilize public funding to attract private capital and create jobs with a mandate to reduce emissions and achieve Canada's climate targets; accelerate the deployment of key technologies, such as low-carbon hydrogen and carbon capture and utilization; scale up companies that would create jobs and drive productivity in the clean economy; and, most importantly, capitalize on Canada's abundance of natural resources and strengthen its supply chains.

The growth fund will be launched by the end of 2022 and begin immediately to make the critical investments needed to meet Canada’s climate and economic goals.

Another pillar of growing Canada’s economy is investing in Canada’s advanced manufacturing competitiveness, with consultations currently taking place and measures to be laid out in budget 2023.

I also wish to speak to Canada as a place in the world for electric vehicles. I am the chair of the Liberal auto caucus. I meet regularly with the Global Automakers of Canada, or the GAC, and the Canadian Vehicle Manufacturers' Association. I meet with the parts suppliers and all stakeholders, including the Mining Association of Canada, and infrastructure participants that include charging stations and the key technologies that will transition what I would call the auto caucus and what in the future will be the electric vehicle caucus.

That is where the world is going. That is where Canada is going. We are uniquely positioned, with our human capital, our people, our know-how, our entrepreneurial spirit and the natural resources the country is blessed to have.

With that, it was great to see yesterday, in the business meetings that were a prelude to the G20, that in Bloomberg's annual ranking of the battery supply chain, the crucial components going into electric vehicles, Canada had moved up the rankings to number two, in front of the United States, in front of Finland and slightly behind China.

Our government is making progress. We have collaborated with industry. We have collaborated with stakeholders. We are uniquely positioned. We are using our comparative advantage, and I love the words “comparative advantage” as an economist, to make sure Canadian workers and Canadian industry are positioned for electric vehicles and the production thereof. Quoting Bloomberg:

“Canada’s recent investment in its upstream clean energy supply and increasing demand in the US-Mexico-Canada Agreement (USMCA) region increase the country’s competitiveness,” wrote BNEF in a release accompanying the new report.

Published at the BNEF Summit Bali, the ranking sees Canada rise to the second spot this year, which reflects its large raw material resources and mining activity, as well as its good positioning in environmental, social and governance factors (ESG) and infrastructure, innovation, and industry.

Those are all words I love to repeat.

We have work to do. Another thing I wish to touch upon is our government's work with organized labour through UTIP, the union training and innovation program. Not to be slightly partisan, but we know the members on the opposite side love to attack Canadian workers and love to attack Canadian unions.

We repealed the anti-union legislation in 2015, and we will continue to stand up for union workers across this country, including those receiving their training in my riding at the Carpenters and Allied Workers Local 27 or LiUNA Local 183 Headquarters in my riding, which is moving its training facility. We will be there. We are investing in the union training and innovation program, and we will continue to do so. We are targeting 20,000 more apprenticeships. The UTIP program is transformational. I have been at the training facilities, where youth are receiving their training to build the communities we all live in.