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

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, my hon. colleague nailed it. The reality is that this fall economic statement has virtually nothing new on climate at all.

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

Mr. Speaker, I thank my colleague for her speech.

I know that she is very concerned about climate change. I would like to know whether she shares my frustration about the battle that is not being waged and the results that are not being achieved in the House.

We know that the Conservatives to our right are not interested in the fight against climate changes. They do not have a plan. On the other side of the House, the Liberals are not interested in it either, but they pretend that they are. As members can see, they are not getting results. The government continues to invest $8.5 billion U.S. per year in fossil fuels. Greenhouse gas emissions have risen since the Liberals took office, but they give grand speeches about the fight against climate change and the importance of the green transition. We are caught between a majority of members here who are not interested in climate change.

What are the solutions? I would like to know whether my colleague has any ideas.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, I thank my respected colleague from the Bloc Québécois for his question.

He is absolutely right. However, I believe that many members here think, as individuals and human beings, that we are in an urgent situation and it is unacceptable to continue with the Liberals' fraudulent policies or the Conservatives' policies of denial.

We have to do more, urgently. The Intergovernmental Panel on Climate Change, or IPCC, says that we cannot wait another decade and we must act before 2025 if we want to limit warming to 1.5°C or 2°C. This situation is a threat to human civilization.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Mr. Speaker, my colleague's intervention was very interesting. I noticed that she is wearing a sustainable development goals pin. One of the things that I find most frustrating is that we have a government that claims to have a feminist international assistance policy. We have a government that speaks about being a feminist government that will perhaps, one day, provide a feminist foreign policy, yet we know the impacts on women and girls from climate change around the world are deeply disparate.

Can my colleague talk a little about those impacts and ways in which Canada and the Canadian government could do more to protect those who are most vulnerable, women and girls around the world?

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, even though this is not a climate impact, my thoughts are ever with the women in Afghanistan who are at risk from the Taliban, including some prominent feminists we need to help.

I will also say that obviously, in any society, when things are desperate, whether through war such as in Ukraine, or through extreme drought, or through things like hurricane Fiona, it is the women who face the impacts. They are generally less economically empowered than the men in countries around the world, and it is they who take care of their parents and their children. Women are also the majority of farmers around the world.

All those impacts from climate crises particularly affect women.

[Sylvie Bérubé, Bloc, Abitibi—Baie-James—Nunavik—Eeyou, QC]

Mr. Speaker, I am grateful for the opportunity I have been given to take part in today's debate on Bill C‑32 on the 2022 fall economic statement.

In short, Bill C‑32 is nothing but minor legislative amendments or a hodgepodge of measures announced in the spring budget that had not been incorporated into the first budget implementation bill adopted in June.

What are the concerns that we hear people talk about daily? It is the cost of living that keeps going up and a possible recession and yet there is no measure to address this new economic reality. It is very disappointing and a missed opportunity.

It is unfortunate to end up with an economic update that mentions inflation 108 times without offering any extra help to people who are vulnerable or alternative solutions when, again, a recession is on the horizon for 2023.

Bill C‑32 is a bill that fails to address the major challenges facing our society. The government identifies the problem of the rising cost of living but does nothing beyond naming it. It talks of tough days ahead this winter without making any plans to get through it.

Families, seniors, pensioners, the unemployed and workers cannot take it anymore. They are at their wits' end. The price of gas, groceries, clothing, rent and everything else is going up. People are having to cut back everywhere, do without and make choices: Do I put food on the table or do I buy winter clothes for my kids? Do I buy medicine or do I put gas in the car? These are the kinds of tough choices that most people face.

Bill C-32 includes measures to help people buy their first home. I recognize that that is a good measure, but not everyone can afford to buy a house or wants to buy a house, and those individuals need housing, especially affordable housing.

As we know, the appalling lack of housing in Nunavik can have serious, and I would even say very grave, consequences. Because of limited space, young children are sleeping in the same beds as adults, which poses a risk of death by accidental asphyxiation. Sometimes children are even crushed and die of asphyxiation in their sleep. That is unacceptable. Overcrowded housing has been identified as a recurrent risk factor.

The coroner's office has recommended that the government inject funds into housing specifically in Nunavik. The construction of social housing in Nunavik would solve the problem of the death of infants and young children, as well as other public health problems. When will the government take action? It is urgent. We are talking about saving lives.

Last week, I was in my riding, Abitibi—Baie‑James—Nunavik—Eeyou. As members know, it is a vast riding and I represent almost half of Quebec. I met with the CAO of the Vallée‑de‑l'Or RCM, who spoke to me about the housing shortage. The wheel keeps turning. Housing problems mean labour shortages and an inability to attract people to the region. We cannot stop the wheel from turning. People are tired and demoralized. They cannot manage.

People come to work in our area to make good money and then they return home. They do not buy locally, and so there is no local economy. It is an ongoing problem in Abitibi—Baie‑James—Nunavik—Eeyou. What can we do to keep our foreign workers? We must also improve the immigration process, which is very slow. It is outrageous. I feel as though the government is abandoning our regions.

The Bloc Québécois asked the government to focus on its fundamental responsibilities toward vulnerable people by increasing health transfers, providing adequate support to those aged 65 and over and urgently reforming employment insurance, which we know is the best stabilizer in times of economic difficulty.

Sadly, the government dismissed all of those good suggestions. We can therefore only denounce this as a missed opportunity to help Quebeckers deal with the tough times that they are already going through or may face in the months to come.

The government itself is making some grim economic predictions without ever considering any of the opposition's proposals as to how to prepare ourselves. Where is the logic in that?

Quebec and the other provinces are unanimously asking the government to immediately, permanently and unconditionally increase health transfers. Emergency rooms everywhere are overflowing. What is the government waiting for to transfer funds?

In addition, people between the ages of 65 and 74 continue to be denied the increase to old age security, which they need more than ever before. This is unthinkable. I have trouble understanding why the government has created two classes of seniors. It is unfair. Seniors live on fixed incomes, so they cannot deal with such a sharp rise in the cost of living in real time. They are the people most likely to have to make tough choices at the grocery store or the pharmacy.

To add to this, the government continues to penalize those who are less well-off and who would like to work more without losing their benefits. Unlike the federal government, inflation does not discriminate against seniors based on their age. Contrary to what the government says, starving seniors aged 65 to 75 will not encourage them to remain employed. That is done by no longer penalizing them when they work.

What about people who lose their jobs and have to rely on EI? For all intents and purposes, the EI system has been dismantled over the years. Currently, six out of 10 workers who lose their jobs do not qualify for EI. This is a serious problem in these tough times. The government promised reform seven years ago, and time is running out. We need EI reform. It is crucially important that we not be forced to cobble together a new CERB to offset the system's shortcomings if recession hits. As we saw during the pandemic, improvised programs are expensive and ineffective. With the looming threat of recession, there is an urgent need to rebuild the system to avoid a repeat of what we went through in 2020.

As the Bloc Québécois critic for families, children and social development, I would be remiss if I did not talk about the plight of some of our children in these tough times given the possibility of a recession. Yesterday morning, I had a chance to meet with people from the Breakfast Club, an organization that was founded in Quebec in 1994. Thanks to them, many children have access to the healthy food that is essential to their success. Thanks to them, children do not start their day on an empty stomach.

Some businesses have shut down because of the pandemic, and this has led to an increase in unemployment and poverty. Food insecurity is affecting a growing number of people. Experts believe that food insecurity could double in Canada by the end of the year. The government is making efforts and investing money, but it is still not enough. In 2020, nearly one in seven people in Canada lived in a household that had experienced food insecurity in the previous 30 days. Nearly 2.1 million households experienced food insecurity. That is a 39% increase from 2017-18 data.

One thing is clear: Things are not getting any better under this government. Our children need to have full bellies in order to reach their full potential. It is also important to note the shortage of children's medicine in our pharmacies. It is impossible to provide adequate care to our young people because the shelves are empty.

It is the same story for all of our constituents. Where will it all end?

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

Mr. Speaker, in listening to the member opposite's comments, I would like to encourage her to recognize that yes, inflation is very significant and is having an impact, but when we do a comparison around the world, Canada is doing exceptionally well in the inflation fight.

That does not mean we should not put in efforts, and we have been putting in efforts, focusing on the hardships that Canadians are having to go through on a daily basis. That is why, for example, we have a dental program. We have a rental program. We have a student program. We have the enhanced GST rebates.

All of these are there to put more money in the pockets of Canadians in all regions of the country, yet the member seemed to completely overlook that the government has been there.

Is she aware of how many of the provincial governments are contributing to putting money in the pockets of Canadians? Is there a provincial example she can cite that we can take a look at?

[Sylvie Bérubé, Bloc, Abitibi—Baie-James—Nunavik—Eeyou, QC]

Mr. Speaker, I thank my colleague for his question.

I must say that Quebec is doing more than Canada. In fact, Canada often follows the example of Quebec when it comes to dental insurance. The problem is that the federal government is not supporting people aged 65 to 74. It has forgotten about them. It has also overlooked the regions when it comes to tax credits. It has overlooked Quebec when it comes to the needs of self-employed workers and immigration.

What can people do? People need government supports. It is time for the government to take concrete action.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Mr. Speaker, I have a question for the member. I did not see any funds for health care in Bill C-32.

Is the member concerned that the government is not doing enough for health care?

[Sylvie Bérubé, Bloc, Abitibi—Baie-James—Nunavik—Eeyou, QC]

Mr. Speaker, I thank my colleague for her good question.

The Bloc Québécois has not forgotten about health. It is important for the federal government to deliver health transfers. All the ministers met with the government to discuss this, but no action was taken. This is important because we see what is happening in hospitals everywhere, both in Quebec and elsewhere in Canada. Everyone is exhausted. It is important that the government finally take action on health transfers.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Mr. Speaker, in the last election we heard loud and clear from Canadians that they wanted us to go to Parliament and work for them and stop the partisan bickering and fighting. We see the Bloc and Conservatives continuing with that.

New Democrats pushed to get the doubling of the GST tax credit, and that is making a huge difference. We pushed for the investigation into profiteering in the grocery chains. We pushed for the national dental care program, which, despite the Bloc's claims, will cover many people in Quebec who are not covered now, and we pushed to get support for low-income housing renters. The big issue for us right now for this winter is taking the HST off home heating, because people cannot afford to heat their homes due to the high price of fuel.

We know the Bloc has opposed every measure that helps people. Does the Bloc support the New Democratic plan to take HST off home heating to help people get through this winter?

[Sylvie Bérubé, Bloc, Abitibi—Baie-James—Nunavik—Eeyou, QC]

Mr. Speaker, I thank my colleague for his multiple questions.

I will begin with dental care. In Quebec, we have a much more comprehensive program than the one Canada wants to establish. We are asking for support even though dental insurance will be offered everywhere in Canada, but it seems that it will not be proportional.

With respect to the credit, we have asked for it twice and nothing is happening with that either. We are asking the government to take action. It is like creating Christmas magic and then Santa Claus disappears. That is what the government is doing.

[Greg McLean, Conservative, Calgary Centre, AB]

Mr. Speaker, I am proud to rise today and address the fall economic statement, as delivered by Canada's Minister of Finance over a week ago, but I want to go through some things in this speech. I have to limit my comments, because there is a lot to go through here, and I think the House will appreciate that I am going to focus on only a few things.

Number one is that there is some good news here. That good news, of course, is that Canada collected $30 billion in extra tax revenue over the last year. We can call that good news, but there is a dark side to it as well. However, $30 billion more arrived in government coffers than we thought was going to be there last year, and that is really good forecasting, on behalf of the Department of Finance and the minister herself. I give her my congratulations. However, not to be outdone, of course, the minister decided to spend an additional $16 billion of that $30-billion windfall that she put onto the backs of Canadians.

Let us think about how government revenue goes up. Government revenue goes up in an inflationary environment because the price of everything goes up, and therefore its collection of revenue on everything goes up. Do people's paycheques go up? They absolutely do not. The government's revenue has gone up, in GST, in collections on excise tax, and on income tax. All of this has gone up, and corporate taxes have as well, but the one main factor here that contributed $30 billion extra to the government's coffers was an increase in resource revenues.

Revenues from the resource industry, because of a scarcity of resources around the world, went up in Canada, as they did everywhere else around the world, and Canada's resource industry provided more revenue to government, along with Canadians, who were taxed more and gave more to the government.

Inflationary taxes are one thing. Resource sector contributions are quite another, but Canadians need to realize that the government is getting more revenue because they are not doing as well. They do not have as much take-home pay. More of it is going into the government's hands, and still it forecasts a deficit of $39 billion after a resource windfall that landed in the government's pockets.

We can forget about the effect that continued spending will have on inflation, because government spending is the number one cause of inflation. Over the past two and a half years, $500 billion has caused excessive inflation in the Canadian economy. The overspending has been rampant. Our debt is double what it was before the government got into power. It is an anomaly in the world, and we need to address it.

The effect on Canadians in that respect, if we think of an average Canadian in an average house with an average mortgage, and I am speculating that the mortgage is on a variable rate basis, will be an extra $7,000 per year because of the higher interest rates caused by the inflationary environment the government has produced. That is $7,000 a year more on top of more taxes being paid by Canadians and more going to the banks. Who is doing well in this inflationary environment, and who is not doing so well? I can tell members right now that Canadian taxpayers are not doing that well.

However, the minister has to acknowledge as well, as she does in her document, and I need to point it out very clearly to her here, that there will be $24 billion this year in debt service payments and $34 billion next year in debt service payments, and the year after it will be $44 billion going from Canadians' taxes into debt service payments. It will go from $24 billion to $44 billion because of an adjustment in interest rates and continued government overspending. That $44 billion is more than the federal government gives to the provinces for health care, so this has become a major item in the government's balance sheet and income statement.

It is something we are going to have to address. I suggest we address it sooner rather than later. Perhaps that extra $16 billion the minister found under her pillow could have been used for some debt reduction, so we would not have that $44-billion bill, $20 billion higher than this year, two years from now. It is something we need to start focusing on, and she did use some words in her speech. I read those words, and I heard those words as well.

She talked about prudent fiscal management, but this is anything but prudent, and she talked about keeping powder dry. I do not know how running a $39-billion deficit in a supposedly inflationary economy is keeping powder dry. It is burning their powder so they will not have any powder going forward.

Just to say thanks to the main source of the windfall gains, the resource sector, the minister acquiesced to some shrill voices of public opinion from her bench and the benches of some of the other parties in the House. She said she is going to have a 2% tax on the share buybacks that these industries are incurring in Canada. I do not know where she has been for the last seven years, but I can say that the companies that are doing share buybacks now are the companies that issued shares at far lower prices over the last seven years. Therefore, they are reconfiguring their balance sheets back to where they were when they had a normal business environment and they did not have to incur hundreds of billions of dollars in losses, as an industry, over seven years.

At that point in time, of course, there were some on the benches who were saying that this was a sunset industry and of course it was going to lose millions of dollars. All of a sudden, one year it makes some money for its investors, and the government comes back to say it needs to tax that back now because it does not want them buying back their shares from investors. Instead, it wants them to reinvest that money in the Canadian economy.

How do they do both? How do they say that there is an impetus to actually reinvest in the Canadian economy and not buy back shares after they have invested so much and taken so much money into their balance sheet, which they had to do in tough times in order to survive?

Let us think about a 2% tax on share buybacks as far as it affects everything in the world. It is the flavour of the day in so many respects. We think about the 1% share buyback mechanism in the States, and we are not to be outdone here. We doubled it in Canada because the resource industry is much less important in Canada than it is in the United States. I say that sarcastically, and I hope that is reflected.

However, profits increased for a reason. Profits increased because an industry is actually cyclical. All our resource industries in the world are cyclical. These things go up, and these things go down. They cannot take with one hand and not give back with the other if they are going to have a sustained industry here going forward.

Here is the issue on investment in Canadian oil and gas. Oil and gas investment in Canada follows international oil and gas pricing, but not anymore. Oil prices and gas prices are going up, but the investment is not happening in the Canadian economy anymore. That is because there is no longer an environment to invest in and there is no longer transparency for Canadian companies to invest in their own industry, which is an industry that we prosper at and that we perform in a more environmentally friendly manner than any other industry in the world. This is something we should be proud of, and this is something we need to make sure we do more of. The result, of course, is fewer tax-paying jobs for Canadians. The minister could get out of the way and actually get more money into her coffers if she just allowed this to happen.

There are fewer jobs, less investment in Canada, less green technology development in Canada, fewer future taxes to be paid and a lower Canadian dollar because of the government's actions. A lower Canadian dollar affects all Canadians because we get so many of our goods from other markets. That means we are paying more Canadian dollars to get the same goods that cost the same in U.S. dollars, British pounds, euros, yuan, or yen, or whatever the currency of where we are importing from at that point in time. We have devalued ourselves because of that.

There is a lack of transparency in what the government wants to accomplish. Any industry that wants to build something in Canada is now subject to an Impact Assessment Act, which has complete lack of transparency. That means that the stakeholders in the critical minerals industry the government vaunts are wondering how they can do this, and they cannot do this. Looking at the examples shown in our natural resources industry of the building of a pipeline for liquid natural gas exports, we are slow in Canada.

With respect to who has prospered over the last decade, the U.S. has prospered mightily. Australia and Qatar have prospered, as has Mozambique, that beacon of investment in the world, while Canada has not. They all have opportunities that are inferior to Canada's, except for one thing, which is that Canada has an inferior regulatory regime. These investments are not coming back, and the minister's numbers show that. To do better, we need a better fall economic statement.

[Irek Kusmierczyk, Liberal, Parliamentary Secretary to the Minister of Employment]

Madam Speaker, in Windsor—Tecumseh, we have referred to the fall economic statement as a workers' budget. One of the items in there is the first-ever labour provision in the clean tech tax credit. We would be providing breaks for companies that invest in communities, such as Windsor, if they pay their workers better and if they hire apprentices. I would love to ask the hon. member what he thinks about the workers' fall economic statement and about the labour provisions in the clean tech tax credit.

[Greg McLean, Conservative, Calgary Centre, AB]

Madam Speaker, I am glad my colleague asked me that question because one thing I did not get to in my speech is the trillions of dollars the minister speaks about that is available for investment in Canada and these clean jobs that are just going to come because she is designing the Canada growth fund.

Is this on top of the Canada Infrastructure Bank at $31 billion, the strategic investment fund at $7 billion spent so far, the clean fuels fund, and the zero-emission vehicle infrastructure program? These are all billions of dollars going into artificial jobs. None of these jobs are of net benefit to the Canadian taxpayer because we are throwing more money into acquiring them than they are going to pay in taxes at the end of the day.

Great, jobs are coming. Could we get some jobs that are economically sustainable?