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

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Madam Speaker, as the member knows, this side of the House did support the returning of tax to constituents.

However, when I opened my speech yesterday, I said that the fall economic statement presented an opportunity for the government to make hard decisions. It did not. Now consumers and Canadians have to make those hard decisions.

In the end, the more the government spends, the more things cost. It is as simple as that.

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

Madam Speaker, I thank and congratulate my colleague for his speech.

In the fall economic statement, the Minister of Finance reneges on a commitment she made in last spring's budget, which was to limit credit card fees for merchants. In the spring budget, she told us that she would introduce legislation and the issue would be dealt with this fall. However, now it has turned into a commitment to talk to the credit card companies, and if they do not self-regulate, she will introduce legislation later to force them to act.

In my hon. colleague's opinion, is that enough?

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Madam Speaker, the member points to a series of behaviours that occur in so many other issues.

There is talk. There are promises. There are announcements. So often there is not follow-through. I can think of another announcement in the spring budget, the funding for the Great Lakes Fishery Commission, which is seemingly not being honoured. There is a whole host of things that are talked about where there is not the follow-through by the government for real results for Canadians, particularly now given the cost-of-living increases that Canadians are seeing and the 1.5 million trips to the food bank. The government is not taking the opportunities it has to lower real costs for Canadians.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Madam Speaker, one of the things that has really hit Canadians across this country is the high price of gas. It has gone up almost a dollar in my part of the country.

The Conservatives seem obsessed with stopping the increase in the carbon tax that comes into effect in April, which would amount to about two cents a litre. They are ignoring the fact that oil and gas companies have had immense windfall profits, billions of dollars, record profits this year because of the high price of world oil. The U.K. has instituted a 35% windfall tax on oil and gas companies. The CEO of Shell has asked the federal government here to tax them more.

I am wondering why the Conservatives are so silent on this way of really bringing help to Canadians.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Madam Speaker, on the surface, that would seem like a plausible argument. What I did not hear was the books of our oil and gas companies being brought to the fore in the six years previous due to the policies of the Liberal government.

Record profits are not only being incurred in different parts of the country; that is how a market works.

Is there a role for the government to step in there? That is what the House is to decide.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Other countries are doing it.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Some are; some are not.

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

This is not a discussion.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Madam Speaker, the reality is that the government needs to look at the impact of all of its policies on consumers, who are facing 10%-plus food inflation and 6% to 7% on a monthly basis on all other costs of living. The impact of that on our most vulnerable is what concerns the members on this side of the House.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Madam Speaker, it is an honour, as always, to rise in this place, and especially so when it comes to important decisions around helping Canadians get through these times of inflationary pressure, with a housing crisis and a health care system in chaos. Today we are debating the implementation of items included in the fall economic statement, which the Minister of Finance produced a couple of weeks ago.

The NDP is always focused on helping Canadians. That is why we were happy to see NDP initiatives that are clearly designed to do just that, help Canadians who need the support the most, included in that fall economic statement. There are initiatives like providing dental care for kids who do not have access to a dental plan now, like doubling the GST rebate for low-income Canadians to help them deal with the rising costs of food and gas, and like providing a $500 boost for low-income renters so they can afford to keep a roof over their heads. I would like to point out that the dental care provisions in the fall statement are not in Bill C-32, which we are discussing today, but were in Bill C-31, which received royal assent yesterday, so that was a great day for Canadians.

I am also happy to find a couple of paragraphs in the statement about credit card transaction fees, an issue that the NDP has been raising for decades. Jack Layton brought this up time and again. Canadian small business owners pay some of the highest credit card transaction fees in the world, and in this world of online shopping, the fees make it even more difficult for them to compete for Canadians' shopping dollars.

As the NDP critic for small business, I have talked with executives from Visa, Mastercard, Moneris and other companies involved in these transactions. I know it is a complex issue and that these fees vary with the business volume and the credit card type, but the fact remains that small business owners pay the highest rates, and these are the highest rates in the world. These are the business owners who can least afford those high fees. Now consumers are concerned because business owners have been given the okay to pass these fees on to consumers.

I was happy to see a pledge in the fall economic statement that the government will move forward on regulating credit card transaction fees if negotiations with the industry do not bear fruit. The NDP will be watching this issue with great interest because we want to make sure this actually happens. We want to make sure that real, concrete action is taken to ease the pressure on Canadian businesses and consumers.

I want to spend the rest of my time discussing some items that were not included in the fall economic statement and therefore are not in Bill C-32. They are items that I was hoping would be there as they would have helped Canadians this winter before we get another update in the spring budget.

There was something in the fall economic statement about eliminating the interest on federal student loans, which is something again that the NDP has been calling for. However, there was nothing for one of the most blatant aspects of student underfunding in Canada. That is the scholarships given to graduate students who are working full time on their research. These federal scholarship amounts provided by the three funding councils have remained unchanged since 2003. That is almost 20 years ago, when housing costs were a fraction of what they are now. Master's students now work full time on their research for the princely annual salary of $17,500. Ph.D. students work full time for $21,000. Regular Canadians would have a very difficult time surviving on those wages, but these students have to pay thousands of dollars in tuition on top of that as well. This is below minimum wage. We are forcing our best and brightest to live in poverty.

The House of Commons Standing Committee on Science and Research recommended in a recent report that the government increase these scholarship levels to rectify the situation. I also sponsored an e-petition, e-4098, organized by scientists across the country and signed by thousands of Canadians, that asked for a 48% increase in the value of those scholarships to match inflation over the past 20 years. The petition also asked that the number of scholarships be increased by 50% to match the demand for graduate students across the country.

Once students get their Ph.D.s, they must compete to get post-doctoral fellowships. It is an essential part of the career track of young scientists. Last year, 840 master's students received scholarships, and 750 received Ph.D. scholarships, but only 150 post-doctoral fellowships were provided. The petition mentioned above asked that the number of post-doctoral fellowships be doubled so that we can keep these students in Canada.

We are forcing young researchers to leave the country to continue their education. These are students we have educated here in Canada since they were in kindergarten. The numbers tell the story: 38% of graduates leave Canada to do their postgraduate work. They go to the United States, Germany, the United Kingdom and Australia. They go to a host of other countries that know the future of their economies relies on innovation and well-educated workers.

The negative impact of this neglect of young researchers on the Canadian economy is incalculable, but even the lost cost of that training is estimated to be about $640 million every year. I was disappointed that this issue was not dealt with in the fall economic statement, but I can assure the House that I will keep up the pressure on the government to ensure that it is fixed in next year's budget.

Another issue that was not dealt with in the statement was the automatically escalating alcohol excise tax. This tax will increase by over 6% in the coming months because of the high inflation rate. Distilleries, breweries and wineries, which are already facing the rising costs of packaging and production, will have to swallow that increase in their costs to consumers. These are costs that are not faced by their foreign competition.

My riding makes the best wine in the country. My hometown is the epicentre of craft brewing in Canada, and there are more craft distilleries in my riding every year. However, these small businesses, which are an important and growing part of the economy in my riding, now face this increase of costs that was never part of their business plans.

I have talked to representatives from these distilleries, breweries and wineries, and they have practical solutions for this problem. They have no objection to paying the excise tax, but they want to make sure it is fair compared to what their international competitors pay.

The United States has a system whereby smaller producers pay a smaller rate of tax for distillers and breweries. Other wine-producing countries support their industries in ways that are trade legal. Canada came up with a similar support for our wine industry, but it is set to expire next year after only 18 months. This program needs to be extended to 2030, at least, to make sure our industry, especially the smaller producers, can continue to thrive.

Most Canadians are struggling to get by these days, but wealthy Canadians and many big corporations are making record amounts of money. Oil and gas companies are making record profits based on the windfall of world oil prices caused by international events. Big grocery stores are making record profits, even as many Canadians are forced to cut back on their food purchases.

The Liberal government could have instituted a windfall tax on these excess profits, which could have generated billions of dollars in revenue to really support the Canadians who need it most. Even the Conservative government in the United Kingdom is taxing these windfall profits. In fact, it just raised that windfall tax from 25% to 35% yesterday. The CEO of Shell Canada literally told the federal government that their company should be taxed more.

Why is the CEO of Shell more progressive than the Liberal government, to say nothing of the Conservatives?

The fall economic statement included a modest increase in the tax rate for banks and other financial institutions, but totally ignored the big corporations that made the biggest profits in this difficult time for Canadians. I hope that, by the time the spring budget rolls around, the Liberal government will have found the courage to bring in windfall taxes to make sure that companies that are making record profits on the backs of Canadians pay their fair share.

In conclusion, I will be voting in favour of this bill. It brings several supports to Canadians that will truly help those who need it most, and it takes some hesitant steps toward a more sustainable future.

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

Madam Speaker, the member recognized some valid points that the government is seriously considering, and some issues we can address. I want to also highlight and get the member's perspective on a couple of progressive measures that we have seen.

Within this legislation, we now provide support through getting rid of the interest on student loans. Prior to that, we had the children's dental program, where we are providing dental supports for children under the age of 12. Both issues are very much on the progressive side. They are going to have a wonderful impact in communities throughout the country.

Could he provide his thoughts on the importance of progressive policies, such as the two I cited?

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Madam Speaker, if the member had listened to my speech, he would have heard that I mentioned both of those items. They are things that we support as the NDP, because they were literally our ideas, especially the dental care proposal that the Liberals voted against a year ago. However, we were very happy to see that being carried forward. We look forward to next year when it will be expanded to include seniors and people with disabilities, and in the third year to all Canadians who need dental care who do not have that coverage now.

I am very much in favour of getting rid of the interest on student loans. It is something we have been calling on for a long time, because students are our future. That is why I care so much about the graduate student situation, where we are forcing our best and brightest to live in poverty. We should fix that right now.

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

Madam Speaker, I appreciate hearing from my fellow Okanagan member of Parliament. It is always good that we can talk about issues that we agree on. I really do hope he will support any future legislation that the Conservatives would bring to eliminate the excise tax on our small and medium-sized wineries, distillers and breweries.

The member mentioned student loans and the charging of interest. The government actually increased the interest rate this year and it is now only pledging to go to zero. The pledges of the government seem to go back and forth, most importantly, on credit card fees. I agree that credit card interchange fees are high in Canada, but the government has promised to change that not only in this economic statement, but also in the previous budget that was tabled in the spring and in the last budget.

Why do NDP members continue to allow the government to have an infinite amount of time and options, and not use their supply agreement with the government to force it on these issues?

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Madam Speaker, I thank the member for Central Okanagan—Similkameen—Nicola for those comments, and I agree with him right up to the very end of them.

I do not know if the member knows how supply agreements work, but we do not get everything we ask for from the government when we enter into those agreements. The Liberals agreed to bring in dental care, and that is something that will change the lives of millions of Canadians. I know that the Conservatives are against providing dental care for poor kids across this country, but the NDP is proud to bring that forward.

However, we are very suspicious of the government when it says that, yes, it is going to fix the credit card interchange fees. As the member mentioned, the government has not done it before, and this is all about talking to industry. Therefore, we are going to be watching those pieces very carefully.

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

Madam Speaker, I thank my colleague for his speech.

In his speech and during questions and comments, the student loan measure was mentioned. The Bloc Québécois supports this measure because we see that it will help students in the rest of Canada.

However, I would like to remind my colleague that Quebec is not part of that program because it already has its own loans and bursaries program that works well. An agreement with Ottawa gives Quebec the right to automatically withdraw with full compensation, which we are pleased about.

With regard to the dental insurance set out in Bill C-31, however, it is important to note that Quebec already has its own dental insurance program for children aged 10 and under. We thought that the programs would be harmonized with, for example, funding to extend coverage to children up to the age of 12, especially since Quebec's program is a real program that works well.

However, there is absolutely nothing about that or about a right to withdraw with compensation. To make matters worse, the government has imposed a super gag order to prevent the bill from being examined in committee. That means no amendments can be proposed.

What does my colleague think about that?