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

[Richard Lehoux, Conservative, Beauce, QC]

Madam Speaker, I want to congratulate my colleague from Abitibi—Témiscamingue on his speech. He talked a lot about seniors who would normally retire at 65 but, given the current context, will likely retire at 75.

He talked a little bit about the labour shortage at the end of his speech. I wonder if he could elaborate a bit more on his perspective on how to help solve at least part of the labour shortage problem, perhaps by changing certain aspects of how seniors are currently taxed.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Madam Speaker, I thank my colleague for his sensitivity.

With regard to the labour shortage, seniors are clearly not the cure-all, but, according to studies, they could have a 5% impact on the labour shortage. That is rather significant. The approach to take is very simple. The answer is not extremely complex cross programs where seniors get money from one place but lose it from another. That is what is happening right now if seniors work. We first need to do something about the tax situation and ensure that income earned by seniors aged 65 and over remains in their pockets. We could set a limit of $5,000 to $10,000, but it needs to be worthwhile for a senior to work. Right now, whatever seniors earn is going in one pocket and out the other.

Here is why it is important that seniors work. All the contractors in my region tell me that if someone can come in for one, two or three days a week, it makes a big difference. These experienced workers have a lot of knowledge. They can help with training and knowledge transfer. This is absolutely priceless in an organization. It is about freeing up on-site managers and entrepreneurs so that they can concentrate on marketing and development while having trusted people in the field who will bring pride to their businesses.

We need seniors. I do not understand why we are not tapping into this group right now.

[Lori Idlout, NDP, Nunavut, NU]

Uqaqtittiji, I would like to thank the member for focusing his intervention on the needs of seniors. I think we share the same respect and admiration for seniors, and I really appreciate that.

I wonder if the member agrees that the OAS also needs to add a supplement for seniors who live in the Arctic to recognize the higher cost of living there, including for seniors in the 14 Nunavik communities in Quebec.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Madam Speaker, I would like to refer to the petition: $110 a month in old age security for all seniors 65 years of age and older. This obviously includes those in Nunavut and everywhere else. We need to think especially about those who do not have the means to increase their income. I am sensitive to those issues. At the same time, we also have to provide answers. Given the severe labour shortage in my region, Abitibi—Témiscamingue may need to be recognized as a more northern and remote region. In order for us to be able to answer these questions and move forward, we will have to be given special status.

[Chandra Arya, Liberal, Nepean, ON]

Madam Speaker, it is my pleasure to speak to Bill C-32, the fall economic statement implementation act for 2022.

The year 2022 has been very eventful. We came out of two and a half years of a pandemic. Canada faced the pandemic in a good state compared to many other countries. We listened to the opinions and recommendations of health care professionals and experts, and we came out of it better than many other countries.

The Canadian economy also came roaring back after the pandemic. We have recovered all the jobs that were lost during the pandemic. If members recall, we had lost around 8.9 million jobs. We have not just recovered all the jobs that we lost, but we have even added more. We are at about 117% of the jobs we had prepandemic.

The unemployment rate was at historic highs during the pandemic and now it is at a historic low. In fact, we have maintained that historic low unemployment rate for the last several months.

Our economic growth has been the strongest. Canadian economic growth is enviable amongst the G7 countries. We are doing better than many of our G7 partners, including the U.S., U.K., France, Japan and Italy.

We have the lowest deficit amongst the G7 countries. In fact, if members recall this year's budget, we had forecasted around a $56 billion deficit, and it is now predicted to be about 30% lower than what was projected a few months back. The budget deficit has also gone down about 3% from what was estimated. I think it is going down to about 1.3%. This is the best amongst all G7 countries.

Before the pandemic, we had the lowest debt-to-GDP ratio amongst all the G7 countries, and we continue to have the lowest debt-to-GDP ratio amongst all G7 countries. The fall economic statement also projects that we will reach a balanced budget in the foreseeable future. However, we are not making a big deal about that right now.

The problems created by the pandemic continue to exist today. The supply chain issues that we saw during the pandemic have continued during the postpandemic period too. The pandemic affected production worldwide. Now one of the biggest manufacturers of various goods in the world, China, is continuing with zero COVID policies, and that adds to the problems we are seeing in the supply chains. This has increased the price of numerous products across the board.

Also this year, Russia's illegal invasion of Ukraine has created its own major problems. There are huge security problems in Europe with repercussions beyond Europe. This has created problems in energy supply, raising the prices of fuel. It has created problems in the food grain supply. Ukraine, as we know, was one of the major supplies of wheat to the world.

All these factor in supply chain issues. Russia's illegal invasion of Ukraine, resulting in higher fuel costs and the spike in food grain prices, has resulted in inflation. Canadians are feeling the pinch when they go to the grocery stores for their essential purchases or when they go to the gas station to fill up their tanks with gas.

October inflation is at 6.9%. A few months back it was higher. From that high it has come down. It was 6.9% in September. It has stayed at 6.9% in October, which is a good trend. The interesting thing is that this number is much lower than what the private sector economists were forecasting. I think they were forecasting between 7.1% and 7.4% inflation, but it has stayed at 6.9%, which is a good thing.

Again, the inflation we are seeing in Canada today is lower than that in the U.S., the U.K. or the eurozone. The inflation pain that Canada is experiencing today is not limited to Canadians. This is something that is being faced by people all across the world, in developed countries, developing countries and everybody else.

To combat this inflation, the Bank of Canada started raising its rates some time ago. I think it has raised the rates dramatically. There is no pattern to the rising interest rates in the history of the Bank of Canada, if I am not mistaken, but it has to stay to its mandate of bringing down inflation to the targeted rate of around 2%. With the increase in interest rates and higher inflation, it does not require brains to forecast that the economy is going to slow down in 2023. It is expected.

To help Canadians today, the vulnerable Canadians who are facing the problem of inflation and the forecasted economic slowdown next year, we have already taken numerous measures. While we are taking numerous measures, which have been explained in the last few months in the budget and also in this fall economic statement, we are continuing to restrain the deficit, because we do not want to add fuel to the fire of inflation.

Canada is better placed today than any other country in the developed world to face this oncoming economic slowdown. However, because of the pain faced by Canadians today, it is natural for Canadians to worry about the current status and the future. Canada's prosperity and standard of living have been quite high compared to any other country in the world. That is because of the natural resources we have, such as oil, gas, minerals, metals and forestry products, and the hard work of several generations of Canadians.

We have good prosperity and a good standard of living, but the current status and possible slowdown has Canadians worried about the future prospects for our children and grandchildren. They are naturally worried about whether we can pass on the prosperity that we enjoyed in the past to our future generation. However, in spite of the inflation that we are facing today, in spite of the pain we are seeing today, we should not forget the big picture. There are huge economic opportunities ahead of us in Canada, and I will come to that in a minute.

The globalization and global trade that we knew before the pandemic is almost on its way out among the developed countries, even with our biggest trading partner, the United States. Its Secretary of the Treasury has stated that what they call “friend-shoring” is going to be a big issue going forward. The U.S. brought in the Inflation Reduction Act, which brought in the U.S. CHIPS and Science Act, and basically that is creating a new industrial policy.

We have to see what opportunities are available for us. One of the biggest opportunities I foresee for us in Canada is the critical minerals that are required to power the next generation of vehicles and energy storage batteries. We have the critical minerals, and we have already stated in the previous budget the support for the critical mineral sector.

Recently, the federal government signed an agreement with Ontario for the Ontario regional energy and resource tables to develop the natural resources sector, specifically the clean electricity grid, critical minerals, nuclear technology, clean hydrogen and sustainable forestry. The federal government is taking a team Canada approach in working with the provinces so that we can work together to align the resources, timelines and regulatory approaches to develop the critical minerals, forestry sector, nuclear energy and clean electricity. There are a lot of opportunities ahead.

We have also set up the Canada growth fund through which we want to bring in billions of dollars in private sector investment to achieve our economic objectives.

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

Madam Speaker, I thank my colleague for his speech.

He talked about ways to fight inflation. A basic and very important way would be to significantly boost residential housing starts, which would reduce pressure on the housing market, and on social housing in particular. Social housing would remove low-income people from the current market and would reduce that pressure.

I would like my colleague to expand on that and on the Parti Québécois's proposal to allocate 1% of the annual budget to social housing going forward.

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

I would like to remind the hon. member that the Parti Québécois does not sit in the House.

The hon. member for Nepean.

[Chandra Arya, Liberal, Nepean, ON]

Madam Speaker, housing is a real issue. We have problems with affordable housing and housing affordability. Every dollar we invest in affordable housing saves multiple dollars in other social costs, so it makes a business case for investment in affordable housing.

I am proud to be part of a government that has committed a huge amount of money toward housing. Through the national housing strategy, we have committed $55 billion. Every single day, we are announcing new housing projects wherever possible. In fact, recently, the Minister of Housing announced the new stream of the rapid housing initiative and other things.

When people talk about affordable housing I ask them to bring in a proposal. Money is not the constraint. The constraint is getting the proposal, which we can fund.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Madam Speaker, will the hon. member be able to tell us what the interest payment will be on just the $38-billion deficit we are carrying this year?

[Chandra Arya, Liberal, Nepean, ON]

Madam Speaker, that is an important question, because interest payments are a significant amount for most deficits throughout the history of Canada. However, the member may remember when the pandemic started and the long-term interest rates were close to 0%, we changed the composition of the Canadian federal debt from about 12%, if I am not wrong. We took the long-term debt close to 0% to about 46% of the debt.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Madam Speaker, I respect my colleague a lot, but in the fall economic update, we have this incredibly irresponsible approach by the Liberal government. As members know, $30 billion every year goes to overseas tax havens and tax evasion. Large corporations, some of the ones that have profited the most from greedflation, and the ultrarich benefit enormously. What the Liberals did in the fall economic statement was close, of that $30 billion, a scant 2%. They are continuing to allow 98% of it to go offshore and to go to tax evasion.

I want a comment from my colleague, whom I have a lot of respect for. How can he tolerate, as a Liberal member of Parliament, the Liberals giving 98% freedom to take money overseas through tax loopholes and overseas tax havens?

[Chandra Arya, Liberal, Nepean, ON]

Madam Speaker, tax evasion is bad. Tax avoidance, under the rules, is okay, but tax evasion is bad. We have invested an enormous amount, I think close to $400 million, in the CRA to target the tax evasion tactics of various corporations. For every dollar invested in this, I think the return is more than five dollars in normal circumstances, but it can go as high as $20 for every dollar invested to control tax evasion.

[Michael Coteau, Liberal, Don Valley East, ON]

Madam Speaker, I want to take this opportunity to thank the people of Don Valley East for providing me with the privilege of speaking in the House.

My riding is a remarkable community. It is very diverse culturally, in education and in professions. There are so many differences in my community, but despite all of these differences, we have the same set of values. We believe in values that unite us, like that hard work pays off; that education is and should be a top priority; that if people are sick, we come together and pool our resources to make sure they get the help they need; and making sure that our country remains clean and our environment is protected. The most important value I have picked up over the years is that, when we stick together, we are stronger and better for it. These are the values that make Canada and my community work.

I have the opportunity, due to my community's support, to come into this chamber through the democratic process and reflect those values in the House. We put those values into action by making decisions. Each of us has a choice we can make every single day. It is about choice. When we really cut away everything else, at the end of the day we are sent here to make decisions and choices for our communities. The word “choice” is important when it comes to democracy. It is an important word in the House, and every day those actions we take and choices we make eventually set a tone and become government policy and law.

We are here to make decisions and choices, and when our choice is not aligned with our communities, we know what happens. Communities eventually boot us out of office. We have an opportunity here to align with our communities. I can tell members that when it comes to the fall economic statement, I am very aligned with where my community is, and my community is aligned with the position I am taking in the House.

I am proud to support Bill C-32. I grew up in a community where, despite all of the big differences, people worked together and stuck together. It is a community that has many different types of housing: low-rent and subsidized housing, Toronto Community Housing and low-cost condominiums. There is an array of different styles of homes, and we all live together.

Some people are struggling in my community. I grew up in a neighbourhood where young people went to school without lunches. Growing up, I saw young people not getting the support I did at my house. I saw and picked up on these things. I come from a neighbourhood where many of the young men I grew up with did not graduate high school. By the time I was 21, I must have known at least a dozen young men who were murdered in my community due to street violence. I picked up on these things and took note. It was for these reasons I originally ran to be a school board trustee when I was almost 30 years old. I saw inequity in society and I wanted to take the values that were instilled in my community and look for ways to bring them into forums like this.

I saw many young people with limited opportunities. We are able, in assemblies like this, to create opportunities for people by the decisions and choices we make. I was pretty lucky. I had my mother and father, aunts and uncles, cousins and lots of friends. My lunch was packed for me when I went to school and when I went home, there was a warm meal. I was a lucky person. I did not have to think about the next meal or being safe at night. I did not have to think about those things, so I was able to look for opportunity.

It was because of government programs like student assistance that I got to go to university. I was the first person in my family to go. On whole my street, there were two guys who went to university, and I was one of them. I was lucky to have that opportunity, and it was because of government programming. Once, when I was growing up, my family was threatened with being thrown out on the street by the landlord. We went to the legal aid clinic, and because of the government programs, my family was safe.

One of the first jobs I ever had was subsidized by the government, like the student summer jobs program. I could go and get some experience and take that experience and grow. It is because of those programs that I was able to go off to university and serve my community as an MPP and then as a member of Parliament here in the House of Commons.

At the end of the day, we are opportunity-makers. What we do in this House is create opportunities for people. We create opportunities to make life better for people, and we make opportunities more abundant to them. We have choices. Eventually, with the decisions we make here and the tone we set, there is a tipping point at which it becomes government policy, so I am proud to stand in the House of Commons and support Bill C-32, because I know it is going to create more opportunities for the people who need them.

We just came out of a pretty rough financial situation and COVID. The financial sector on this planet was shocked. COVID changed the entire trajectory of how we do many things. Economically, it has been very challenging for Canadians and for the Canadian government.

Back in 2009, when we went through an economic challenge here in Canada, the Conservatives were in power, and Stephen Harper had choices to make. They decided to take a different route from the one we are taking today. The route they took was to cut programs. They sent out a blanket statement to the ministries, telling them to cut 10% to 15%, or whatever they could, from the departments. They cut literacy programs that were aimed at adult learners, and they did something that shocked Canadians during that time period, changing the rules of eligibility for seniors to receive their pension and moving the age from 65 to 67.

Here we are today in the House of Commons, and a bill is being put forward by this government and the finance minister to look at ways to strengthen people by providing more opportunity. The Conservatives have a choice. They have a choice to support people. I would say without question that the greatest resource we have as Canadians are the people who make up this great country, yet we see the Conservatives voting against things like dental care. Members can imagine having a $1,200 per family dental care program for the kinds of kids I grew up with. I would have been eligible for that program when I was a kid. The way the Conservatives have been talking, I can only presume they are going to vote against Bill C-32.

There is a $500 subsidy for some of the people who rent apartments and need help. The Conservatives are going to vote against that.

We talk about programs like child care, which can save families $10,000 a year. The Conservatives will vote against that.

In this bill is the elimination of interest on student loans. I had a student loan. The only way I could get to Carleton University was to take out a loan, which ended up costing me $57,000. I paid it back, and I was proud to pay it back, because it provided me with an opportunity to eventually be in a place like this with my fellow colleagues, representing my community. We all have choices.

When I was a very young man, I got to hear Nelson Mandela speak in the House of Commons. Yesterday I was learning a bit more about choice and politics in general, and I came across this great quote by him: “May your choices reflect your hopes, not your fears.”

The Conservatives need to stand up and align themselves by choice with their communities, stop using fear as the motivator to separate people and use hope, as I think Bill C-32 does, to bring people together. We should create opportunity and hope, so the next generation of young Canadians, and Canadians today, have the opportunity to build a better country.

[Eric Melillo, Conservative, Kenora, ON]

Mr. Speaker, when it comes to the government's economic policies, one thing I find very troubling is the fact that the government always spends and spends, but the results are not there for Canadians. That is very true when it comes to indigenous services. The government has increased spending by over 100% for Indigenous Services Canada since it took office, but reports from the Parliamentary Budget Officer show that this spending has not led to a commensurate increase in positive results for indigenous people.

I wonder if the member can expand on what has gone wrong in the indigenous services department and maybe provide some suggestions on how the government can ensure that the dollars it is spending are getting to the programs they are destined for.

[Michael Coteau, Liberal, Don Valley East, ON]

Mr. Speaker, I am proud to be part of a government that is prepared to invest in indigenous communities and to work as partners to build a better country. In fact, I would suggest that we should probably spend more money supporting indigenous communities, rather than looking at ways to make cuts like the Conservatives have done in the past.