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

[The Assistant Deputy Speaker (Mrs. Alexandra Mendès), Liberal, Alexandra Mendes]

The hon. member just referred to a Liberal government, so we will let him pursue that.

[Mike Lake, Conservative, Edmonton—Wetaskiwin, AB]

Madam Speaker, we can debate all day which Liberal government was more of an economic disaster, but right now I am talking about the former Trudeau government of the 1970s that ran deficits 14 out of 15 years, and then a generation later had to slash tens of billions of dollars, $35 billion in fact, in health care, education and social services funding. It also had the lowest level of international development spending in Canadian history.

I am wondering if the hon. member wants to tell me whether anybody on her side in the Liberal caucus ever reflects on the potential for that situation to reoccur.

[Lena Metlege Diab, Liberal, Halifax West, NS]

Madam Speaker, I believe this fall economic statement has hit the right balance between fiscal responsibility and protecting Canadians who need to be protected. That is what we stand for on this side in government.

Now, as we are talking about being fiscally responsible, I will remind the member that Canada is the third-largest AAA-rated economy in the world, only after the united States and Germany. Moody's has just reaffirmed our AAA rating, and with a deficit of 1.3% of our GDP, we have the lowest deficit among G7 countries—

[The Assistant Deputy Speaker (Mrs. Alexandra Mendès), Liberal, Alexandra Mendes]

Questions and comments, the hon. member for Drummond.

[Martin Champoux, Bloc, Drummond, QC]

Madam Speaker, I commend my colleague from Nova Scotia on her speech. Her ears must have been burning yesterday. I was having a bite to eat with a friend who rents a house in Nova Scotia every summer, and we spent about an hour raving about how wonderful Nova Scotia is. We hope that hurricane Fiona did not cause too much damage.

I know that Nova Scotia's health care system must have had a hard time coping with the additional burden placed on it as the remnants of the hurricane passed through.

I am sure my colleague is in contact with Premier Houston, who is one of the provincial premiers unanimously calling on the federal government to provide an unconditional increase in health transfers to help the health care systems of the provinces and Quebec get back on their feet and restructure in order to respond to the growing demand resulting from situations like the one that occurred in Nova Scotia.

What does she say to Premier Houston when he tells her that the provinces want unconditional health care transfers?

I would like to hear her comments on that.

[Lena Metlege Diab, Liberal, Halifax West, NS]

Madam Speaker, I thank my hon. colleague for his great question.

I am a proud Nova Scotian. I was also a parliamentarian in Nova Scotia, and I understand very well the real challenges facing health care and the issue of health transfers.

Health care systems across Canada and around the world are facing significant challenges. It is important that we work together to help Canadians, at both the provincial and federal levels—

[The Assistant Deputy Speaker (Mrs. Alexandra Mendès), Liberal, Alexandra Mendes]

Order.

The hon. member for Nunavut.

[Lori Idlout, NDP, Nunavut, NU]

Uqaqtittiji, as I have mentioned before, food bank usage is up and grocery store profits are up. It is good to see that in the bill the Liberals have created the Canada recovery dividend, but it will not do enough. I wonder if the member can explain why the government has not extended the Canada recovery dividend to big box stores that are clearly contributing to the hardship that people are facing?

[Lena Metlege Diab, Liberal, Halifax West, NS]

Madam Speaker, there is no doubt that there is always more to be done. It is a mini-budget. However, as I said in my speech, we are eliminating interest on Canada student loans, we are lowering credit card transaction fees, doubling the GST rebate for six months and providing a $500 one-time Canada top-up. There are a lot of good things in this mini-budget—

[The Assistant Deputy Speaker (Mrs. Alexandra Mendès), Liberal, Alexandra Mendes]

We have to resume debate.

The hon. member for Joliette.

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

Madam Speaker, as we know, Bill C‑32 contains 25 tax measures and about 10 non-tax measures. There are two kinds: minor legislative amendments and measures announced in the budget in the spring of 2022, last spring, that had not been included in the first implementation bill passed last June.

This means that this bill does not contain any measures to address the new economic reality of a high cost of living and a possible recession. As with the economic statement presented two weeks ago, there is nothing new, it is a rehash. The government thinks its measures are like shepherd's pie, better served as leftovers.

This is a bill with no point or certainty. It does not deserve to be applauded, but contains nothing to justify opposing it. Given current inflation and the risk of recession, the Bloc Québécois had asked the government to focus on its fundamental responsibilities toward vulnerable individuals, namely to increase health transfers, adequately support those aged 65 and over, and urgently reform employment insurance. Since the government chose to reject those proposals, we denounce this missed opportunity to help Quebeckers deal with the difficult times they are already experiencing or that are expected in the coming months.

The Bloc Québécois had asked the government to agree to the unanimous request by Quebec and the other provinces to immediately, sustainably, and unconditionally increase health transfers. The health care system is stretched thin.

While emergency physicians warn us that our hospitals have reached their breaking point, the federal government is failing to act. The government clearly prefers its strategy of prolonging the health funding crisis in the hope of breaking the consensus among the provinces to convince them to agree to dilute their funding requests. That is exactly what the Liberal health minister said in the Quebec National Assembly: It is called predatory federalism.

We know too well that the fixed incomes of seniors do not allow them to cope with what are currently such pronounced increases in the cost of living. Seniors are those who are most likely to have to make difficult choices, such as groceries, medication or housing.

Madam Speaker, I am told that I must share my time with me esteemed colleague from Abitibi—Témiscamingue.

[The Assistant Deputy Speaker (Mrs. Alexandra Mendès), Liberal, Alexandra Mendes]

The member does not have to share his time. Members get 10 minutes for speeches.

The hon. member for Joliette may continue.

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

Madam Speaker, as I was saying, seniors are the ones most likely to have to make tough choices at the grocery store or the pharmacy, not to mention housing, yet this government is deliberately choosing not to give people aged 65 to 74 the old age security increase even though they need it now more than ever.

That is not an inconsequential choice. Hypocritically, the government is trying to raise the retirement age. It has sneakily decided to force the less fortunate to work until they turn 75. The Liberals are well aware that inflation makes it impossible for people to make do with what the state provides. What we are witnessing is the creation of a two-tier retirement system. Got money? Enjoy retirement at 65. No private pension plan? Work until age 75. The government is choosing to increase inequality, and it is targeting women first and foremost. This is Liberal-style feminism. The Sheriff of Nottingham could not have done better himself.

While there is a serious risk of a recession in 2023, the Government of Canada is abandoning the comprehensive EI reform it promised last summer. There will be no EI reform. We know that the system has been essentially dismantled over the years and six out of 10 workers who lose their jobs are currently not eligible for EI. That is the situation seven years after the government promised reform. Time is of the essence. Clearly, Liberal promises are only binding on those who choose to believe in them.

On a more serious note, we must absolutely avoid being forced to improvise a new CERB to offset the system's shortcomings if a recession hits. As was saw during the pandemic, improvised programs cost more and are not as effective. Employment insurance is an excellent economic stabilizer in the event of a recession. However, the government's financial forecasts show that it does not anticipate many more claims, and that is a problem. In fact, the government predicts a surplus of $25 billion in the EI fund by 2028, and that amount will be paid into the consolidated fund rather than being used to improve the plan's coverage. That is unacceptable.

As for the 26 weeks of EI sickness benefits, that is a measure that was already in a bill passed a year and a half ago, even before the last election. All that is missing is a decree by the government to implement it, but the sick are still waiting. The House had even ordered the government to extend sickness leave to 52 weeks, and they are not even implementing the 26 weeks.

To summarize, this government is pointing to the problem of a rising cost of living, but is happy just talking about it. It is warning of difficult times ahead this winter without providing a way to get through them. It makes some grim economic predictions without ever considering any of the opposition's proposals as to how to prepare ourselves. They repeat what has already been done in the past, what they already announced in last April's budget, but do nothing else.

Let us consider the supply chains, whose vulnerabilities became apparent during the pandemic. Last spring's budget mentioned the problem 114 times. The statement two weeks ago mentioned it 45 more times, but neither provided any measures to resolve the problem. There is nothing in Bill C‑32, either.

As we know, all too often, the government buries harmful measures in its mammoth budget implementation bills, hoping that they will go unnoticed. This time, the bill contains no surprises, unless they are well hidden and have not been found yet.

Bill C‑32 even contains a number of interesting measures that were announced in the last budget. For instance, there is an anti-flipping tax on residential properties to limit real estate speculation, and a multi-generational home renovation tax credit for those who renovate their homes to accommodate an aging or disabled parent. The Bloc has been calling for such a measure since 2015. We welcome it.

There is also a first-time homebuyer tax credit to cover a portion of the closing costs involved in buying a home, such as notary fees and the transfer tax. There is also a temporary surtax and a permanent increase to the tax rate for banks and financial institutions, as well as the elimination of interest on student loans outside Quebec. Quebec has its own system, so it will receive its share.

In addition, a tax measure that supports oil extraction has been eliminated. No more flow-through shares. It is just one drop in the ocean of subsidies, but it is a start. There is a tax measure to promote mining development for the critical minerals that are essential to the energy transition, as well as an amendment to the excise tax to prevent cannabis producers from having to pay it on their unsold stock, which is causing them major cash flow problems.

As we know, the government gave licences to its friends. Now that they are having problems, the government is proposing a solution.

Other than that, Bill C-31 consists of minor legislative amendments. For instance, there is an adjustment to the Income Tax Act to reflect the new accounting standards for financial institutions. There are a lot of very technical pages about that.

There is also an amendment to the Income Tax Act to plug some of the loopholes that financial planners were trying to use to help their clients avoid taxes. We welcome that clarification. There are always people who try their luck. Obviously, the government must do much more to combat fraud, tax evasion and tax avoidance.

Finally, I am certain that my next point will be of great interest to the Parliamentary Secretary to the Leader of the Government in the House of Commons (Senate), who is currently standing in the House chatting with another colleague and not listening to a word I say. I salute him. It is the implementation of a Canada-United States agreement on the salaries of government employees who go to the moon, like Tintin in Destination Moon.

To sum up, Bill C‑32 sidesteps the big challenges facing our society, but there is nothing bad in it. It proposes a few good measures and does some legislative housekeeping.

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

Madam Speaker, the member was quite eloquent, covering the moon and back. He spoke on a wide spectrum of issues. The one I want to pick up on is the issue of employment insurance. The current Minister of Employment has been very clear. As we went through the pandemic, there were all kinds of modifications. She has recognized that there is a need to modernize the EI system and has put in place some actions to ensure we will see some changes.

The member somewhat gives the impression that the government is not looking at EI reforms, when we know quite factually that the Minister of Employment is very much dedicated to modernizing EI.

I wonder if he can provide his thoughts or other specific things he would like to see in that modernization.

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

Madam Speaker, for seven years now, since 2015, the government has been saying it is looking into what it can do to reform EI.

The hon. parliamentary secretary tells us that the minister just said that she will take care of it and is still looking into it. Last year, she told us that she would present her reform this summer. Two seasons later, we are still waiting.

The government says that we are in an inflation crisis and that we may be heading into a recession. The Bloc is saying that the government needs to hurry up and ensure that EI is reformed before a potential recession hits, so that we have an automatic stabilizer and a social safety net in place. We do not want to end up with another CERB.

The Liberal minister promised us she would amend EI, but a Liberal promise is only worth something to those who want to believe the Liberals. We no longer believe them.