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

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

Mr. Speaker, I thank my colleague from Calgary Nose Hill for her foresight.

Speaking of artificial intelligence, one of the concerns has to do with what will happen to people. If there was one thing that justified a budget statement, it is the fact that the Liberals should have moved forward with a major EI reform because the temporary measures expired in September. No action has been taken since to strengthen our social fabric. It is important to recall that six out of 10 workers do not have access to EI even though they pay into it.

I would like to hear what my colleague has to say about the urgent need to reform EI. Why have the Liberals not done that?

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Mr. Speaker, the current form of government is like presenting an eight-track tape player to somebody who wants to play an MP4. When we are looking at resiliency for employment on issues like AI, we have to say that it is already here and ask, “How do we become resilient for employment in that?”

We should be focusing on things like training on ethics, training on how we input and use AI, how we are training it with datasets, and getting out of the way of certain types of taxes and regulations that would preclude economic growth in other areas, so that we can boost our economy in light of these disruptions. That is the only way we are going to have any sort of revenue to enable government to address these issues. At some point we have to ask how we are going to make our current social programs sustainable, given how debt-ridden we are and how little our economy is producing.

Therefore, I would say this for my colleague, whom I have a lot of respect for, and all of my colleagues here. When we are talking about these things, we have to understand that the current paradigm is broken and we are about to go through a period of sustained economic disruption and reduced growth. If we do not get our act together on spending priorities and outcomes, our country is in for some seriously dark times, and it will be on each and every one of our heads that we did not take this seriously and push our party leaders on it.

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

Mr. Speaker, one of the concerns that I have in my riding, and I am wondering if the member has the same concern, is how many seniors are becoming homeless or unhoused within my region. It is quite concerning when I see some seniors in their seventies living in their vehicle or living rough in a tent in my communities. It is very concerning.

I just wonder if the member could speak to this, and if she agrees with the NDP that we should not have the OAS increased only for those aged 75-plus, but that in fact it should be for all seniors, so we can lift them out of poverty and make sure they have a safe home to live in.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Mr. Speaker, the point I am trying to make is that every Canadian, regardless of age, gender, orientation or background, deserves stability, security and hope for the future. There is nothing in this budget, which the NDP is propping up in a supply development, that addresses long-term economic resiliency for this country. It would not audit spending. It would not look at the effectiveness of housing spending that the New Democrats have already voted for. To me, that is a big problem.

We have a fiduciary responsibility as members of Parliament to review finances on behalf of the people of this country. If we are not getting this right and we are not voting against this bill, I do not think we have done that.

[The Deputy Speaker, Chris d'Entremont]

Before continuing on debate, I just want to remind folks that a lot of people are trying to get in on asking questions, so the shorter the questions and the shorter the answers, the more people get to participate in this good debate.

[Mike Morrice, Green, Kitchener Centre, ON]

Mr. Speaker, it is an honour to have a chance to respond to Bill C-32. It pulls together a number of different items, some of which were in the governing party's fall economic statement and some of which date back to the budget introduced in the spring.

I would like to start where I usually do, which is on some of the items I appreciate in Bill C-32.

The first item was in the fall economic statement, and this is the governing party's stated intent to finally fully eliminate interest on Canada student loans. This was set to expire March 31 of this coming year, as it was temporarily waiving interest, but if Bill C-32 were to pass, this would become a permanent measure. This is critical, because the number I have for the average student debt for a student in this country is over $26,000 a year. This is at a time when young people are already dealt a pretty bad hand, whether because of the rising cost of housing while their wages do not keep up, the gig economy they are getting thrown into or the climate crisis, as they are going to have to deal with the repercussions of decisions made or not made in this place and others around the world.

This measure would not be huge, but it would be a significant amount, $410 on average per student per year. That is a step in the right direction. It is something I am happy to support and call out the importance of while encouraging the governing party to go further.

Second, there is inclusion here of a measure from budget 2022, which is the Canada recovery dividend. It was announced last April and would finally be implemented here. It would require banks and life insurance companies to pay a one-time 15% tax on profits above $1 billion over the next five years. The Parliamentary Budget Officer did a review and found that it would raise $3 billion in revenue, which on its own would be more than enough to pay for eliminating interest on student loans. It is clear that it is possible for the governing party to raise revenue and use it to address really critical needs.

The third point that encouraged me is something that was not in the fall economic statement, and that was talk of a potential further increase for another tax credit for carbon capture and storage. It is a false climate solution and it is going in the wrong direction.

In the budget, the governing party introduced this as a new fossil fuel subsidy to the tune of $8.6 billion a year. Carbon capture has been studied around the world, and 32 out of the 42 times that it has been implemented, emissions have actually gone up. I was glad that, despite all the lobbying from oil and gas companies across the country, at least in Bill C-32 and in the fall economic statement, there was not a further increase to send billions more in a new fossil fuel subsidy.

I would like to turn now to some areas where I would encourage the governing party to consider going further, if not in Bill C-32 then in budget 2023.

I will start with climate, because we have heard it very clearly. Here is a line from the co-chair for the Intergovernmental Panel on Climate Change, working group three, from back in April. His name is Jim Skea. He said, “It's now or never, if we want to limit global warming to 1.5°C. Without immediate and deep emissions reductions across all sectors, it will be impossible.” This is at a time when profits from the oil and gas industry are just off the charts.

Imperial Oil, for example, reported profits of $6.2 billion in the first nine months of this year compared to the same period last year of $1.7 billion, which is an almost four times increase in profits. How is it doing this? It is gouging Canadians at the pumps. Wholesale margins, in other words, profits per litre, are up 18¢ a litre.

No doubt, one solution is the same Canada recovery dividend I mentioned earlier that is being applied to banks and life insurance companies. Why not apply that to oil and gas? In fact, thanks to colleagues of ours here, the MPs for Elmwood—Transcona and Churchill—Keewatinook Aski, we know how much this would have raised.

It would have raised $4.4 billion a year that could be used to invest in proven climate solutions on top of the tens of billions dollars we could be eliminating in other subsidies currently continuing to go to the very sector most responsible for the crisis. Of course we cannot expect the arsonist to put out the fire.

I will also point out that eliminating these subsidies is part of the confidence and supply agreement signed between the governing party and the NDP, one line of which mentions a commitment to develop “a plan to phase-out public financing of the fossil fuel sector, including from Crown corporations, including early moves in 2022.” I would love to have seen one of those early moves in Bill C-32. We have about two weeks left to see one of those early moves.

If they were to make those moves, they could invest in renovations across the country, as called for by the Green Budget Coalition, calling for a $10-billion investment in deep energy retrofits so that homeowners can invest in reducing their emissions. As they do so, every dollar they spend would contribute two to five dollars of tax revenue that could be reinvested in climate solutions or invested in ground transportation, for example, which we also would not see in Bill C-32.

The second gap that is really important for the governing party to pay attention to is following through on its promise to address mental health. Mental health is health. Whether we listen to students across the country, housing providers or health care professionals, of course we need to be investing in mental health, yet we have not seen that in either last year's budget or this fall economic statement. A $4.5-billion commitment was made in the Liberal Party's platform. It is incumbent on all of us here as parliamentarians to continue to put pressure on having that commitment realized, recognizing that not one cent of it was committed in last year's budget, nor do we see anything in the fall economic statement.

The third piece that is really important for us to be calling out and encouraging the governing party to go further on is to follow through on addressing the disproportionate rates of poverty experienced by those with disabilities across the country. Over 40% of those living with a disability are living in poverty today. While we are slowly making progress on Bill C-22 that would bring about a guaranteed income for folks with disabilities, I am looking forward to seeing amendments passed at committee to improve Bill C-22. In the meantime, nothing changes for a person with as disability living in poverty.

We know it is possible for parliamentarians to provide emergency supports, because they did it in the midst of the pandemic. I join disability advocates from across the country calling for a disability emergency response benefit to address the gap and provide support today until we move toward a more permanent solution, ideally a holistic one, when Bill C-22 gets passed with improvements.

Last, I will briefly comment on housing. We have heard already this afternoon some speakers mention that, while money is being spent, the results are not there. In my community, homelessness has tripled in the last three years, from just over 300 people living unsheltered to over 1,000. It is obvious more needs to be done. There are some initial measures in Bill C-32, including a tax on those flipping homes in less than a year. If we were to recognize and really be honest about homes needing to be places for people to live and not commodities for investors to trade, there is far more that can and should be done to tilt the market back toward homes for people to live in.

In closing, it is important to be clear that there are some important and timely measures in Bill C-32 and I would strongly encourage the governing party to go further on some of the areas I mentioned.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Mr. Speaker, I would ask the member to give us an estimate of the fall in demand for gas and diesel once we hit 2035 and thereafter, when all new passenger vehicles and light-duty trucks are required to be electric, both here and in the United States, or at least in many states in the U.S. We keep hearing that there is going to be demand for fossil fuels for a long time to come. Maybe so, but maybe not at the levels that we have experienced so far.

[Mike Morrice, Green, Kitchener Centre, ON]

Mr. Speaker, that is an important question because it calls out that supply and demand are forces experienced within policy decisions that are made here. These are decisions that would incentivize electric vehicles, as well as decisions that would invest in meaningful ground transportation across the country, for example in rail. Investments in rail are what will help us reduce demand for diesel and other fuels, recognizing that the science does not compromise.

For Canada to do its fair share, we need to leave 83% of proven fossil fuel reserves under the ground. We cannot combust those fossil fuels if we want to do our part to hold onto the possibility of no more than a 1.5°C rise in global average temperatures.

I would be happy to work with him and other members to put in place policies that would support Canadians to reduce demand on oil.

[Warren Steinley, Conservative, Regina—Lewvan, SK]

Mr. Speaker, at the beginning of his speech, my colleague talked about carbon capture and sequestration. That is something very close to my heart. In Saskatchewan we have one of the largest scale working facilities in the world. It has taken the equivalent of millions of cars off the road over the years it has been functioning. It was a large investment by the Government of Saskatchewan and has done a lot to clean up the environment in Saskatchewan. The Petroleum Technology Research Centre said Saskatchewan has had the highest reduction in emissions in the country, and a lot of that is because of the carbon capture and sequestration technology.

In my colleague's earlier comments he said that was not true. I am wondering, in the spirit of not sharing misinformation, if he could come to the realization, as my NDP colleague should as well, that carbon capture and sequestration is a good way to keep our environment clean and still produce much-needed fertilizer and fuel that we need to feed the world.

[Mike Morrice, Green, Kitchener Centre, ON]

Mr. Speaker, I am happy to restate what I said earlier, which is that globally, 32 out of 40 times that carbon capture has been implemented, emissions have gone up. The fact is that this is an extremely inefficient technology. It is a huge risk and the government should be investing in proven climate solutions. They are right in front of us. Helping Canadians retrofit their homes and insulate their attics are the most efficient ways to reduce emissions.

If those in the oil and gas industry think carbon capture is such a lovely idea, I would encourage them to invest their own funds but not to use taxpayer money for it.

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

Mr. Speaker, my colleague from Kitchener Centre and I agree that this bill is unsatisfactory, but that there is nothing particularly harmful in it. Therefore, there is no real need for it. This could have waited until the budget.

There is a minority government in power. Perhaps an election will be called as a result of that budget and, who knows, perhaps the Green Party will be in power. We know that the Canadian economy is based on oil. If the member were to take power in the next election, what concrete measures would he propose for decarbonizing the Canadian economy? The Liberal government has no concrete measures to suggest.

[Mike Morrice, Green, Kitchener Centre, ON]

Mr. Speaker, I have no illusions that the Greens are going to form government in the next election, but I think what is important is for all members to show up here and focus on what experts are telling us is required. I would point the governing party toward the Green Budget Coalition's recent report that walks through the budget line by line, whether with respect to investing in home energy retrofits, ground transportation or electrifying the grid. In fact, Quebec currently sells its hydro, clean electricity, to the U.S. at five cents a kilowatt hour. Of course Ontario should be purchasing that. These are the kinds of investments being recommended by the Green Budget Coalition that we would be supporting in full force.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Mr. Speaker, once upon a time there was a bill that would go down in history and really support all of the vulnerable people in Quebec and Canada, and it is not Bill C-32.

Studying any bill, let alone one as lengthy as Bill C-32, is a serious responsibility for all parliamentarians, not just opposition members. It is in the interest of the population. Everything we do, every decision we make has repercussions. If a bill is not studied properly, we might miss details that will impact the people we represent.

The purpose of the debate at second reading is to point out the aspects of a bill that need to be changed and improved. Those changes are made in committee. Unfortunately, the report on Bill C-32, which is over 100 pages long, was adopted on division in just 20 minutes. It was therefore impossible for any parliamentarian, from the government or the opposition, to propose amendments and improvements and have them adopted in the interest of the population.

A bill often contains good things, more worrisome things and sometimes even legislative gaps, regardless of which political party introduced it. That is the case with Bill C-32.

One of the good things about Bill C-32 is that it phases out flow-through shares for oil, gas and coal activities. It is important to know what a flow-through share is to understand why this is a generally a decent measure. It does not go far enough and it is weak, but it is a start.

Flow-through shares are shares issued to new investors. They give companies the funding they need to for exploration activities, while giving investors an equity stake in the company and tax deductions for new money spent on exploration and development. That simply means that there are fewer opportunities for companies to find new funding for exploration. Without money for exploration, it is impossible to look for, find and develop resources.

The problem is that flow-through shares are generally used by small companies that have very little money. This measure does not affect big companies, especially since the government continues, time after time, to allow these big companies to conduct exploration activities in very fragile areas that are supposed to be protected.

A second good thing about this bill is the anti-flipping tax on housing. If someone buys a house and wants to sell it within a year, whether it has been renovated or not, they will have to pay more tax. This is good because it will help reduce inflation and the artificial increase in house prices. We cannot complain about that.

Another good thing about this bill is the multi-generational home renovation tax credit. Today, people have a choice. They can put their parents in a seniors' residence, bring them into their home or build them a small apartment. I do not know about my colleagues' parents, but knowing mine, they would not want to live under the same roof as me. It is not that I am a bad person. We all have our habits. That is normal, and most people do. Having the money to convert a single-family home into a multi-generational home is ideal. The Bloc Québécois has been asking for this since 2015. Everyone gets to live in their own home, while the homeowners take care of their parents and look after their health. It is the best of both worlds. That is expensive, so the tax credit is welcome for those who want to reconfigure their homes.

Bill C-32 makes minor amendments to the Income Tax Act, which is 3,355 pages long. It is a massive piece of legislation. It would be nice to see a thorough review of this legislation in order to simplify it and give it more teeth. I salute the accountants and tax experts who have to review the 3,355 pages of this legislation. They have my respect.

I will now turn to the areas that are a little more worrisome. The economic situation is very troubling right now, with inflation and a possible recession on the horizon.

Inflation is worrisome for students, low-income workers, seniors and others who are on a fixed income. It is worrisome because, thanks to inflation, these people do not have a penny to spare. They are having a harder time buying the essentials. I am not talking about a three-week trip to Cancun. I am talking about putting bread and butter on the table, getting new shoes when the old ones get holes in them, buying a coat and mittens. I am talking about the basics. With inflation, people on a fixed income are unable to afford all that. They have practically been abandoned except for a $650 benefit for their teeth. They have no more money. Prices are going up. This puts more pressure on non-profit organizations, including those working to improve food security.

The recession is also worrisome because it means job losses. Some might say that is not a problem since there is a labour shortage and those who lose their jobs will find another one. That is true in cities, but in more remote regions with less economic diversity, this may cause a problem. We cannot ask people in the regions who lose their jobs to move to the city. That is not better. That is not a solution. They have been overlooked.

There is nothing in this bill about supply chains. As everyone knows, Quebec and Canada are suppliers of natural resources. We extract our natural resources, send them away for processing and then buy them back at a hefty price. We should consolidate our supply chains. That would be a visionary undertaking. During the pandemic, people talked about the importance of doing that, but this bill offers nothing in that department.

I want to talk about legislative gaps. In 1999, when my daughter was born, I collected $72 a week in EI benefits. I was lucky. That was before the Harper reform. I was among those entitled to EI benefits. Now, only 40% of claimants actually collect benefits. Had that been the case in 1999, I would have gotten nothing. Even back in 1999, $72 towards diapers was not much. Luckily, I got help from my mother. This bill offers nothing in the way of support and no changes to EI despite the government's promises. This is a legislative gap, one that must be closed quickly. This is urgent, especially given the combined effects of inflation and a potential recession, which will be seriously painful.

Active workers are not the only ones getting a raw deal because of a legislative gap. Seniors are also affected, especially senior women. Bill C-32 does nothing to enhance their pensions. Yes, it is true that seniors who worked for 30 or 35 years are now living longer, and their retirement funds must now last 30 or 40 years. I understand the 75-and-up policy, but it is not acceptable anymore. Seniors 65 to 74 years of age are also living longer. Senior women 65 to 74 years of age are the most affected by the government's refusal to increase their pensions. They have no savings, as they earned very little when they were working. The refusal to increase the pensions of those 65 to 74 years of age is not only discriminatory, I would go so far as to say that it is misogynistic. I am certain that no government in this place wants to be called that. The government needs to rethink this.

To sum up, the bill to implement certain provisions of the fall economic statement contains a few good things. Once upon a time, there was a bill that did not change much. Let us not forget that parliamentarians were muzzled. They were not allowed to make amendments that would benefit the public, especially those most at risk of suffering the damaging effects of inflation and the recession. For the sake of current and future generations, we need to think about taking action to prevent the worst from happening. Let us not forget that our role is to stand up for the dignity of the most vulnerable, not to erase them through inaction and a lack of vision.

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

Mr. Speaker, the bill is not designed to make a better world per se, but to be a benefit to Canadians.

We recognize that Canadians are having a difficult time. It is a time when there is inflation, even though inflation rates around the world are much higher, on average, than they are here in Canada. Whether one looks at the U.S., England, other European countries or the G20, Canada is doing relatively well, but we are still hurting. That is why there are a number of initiatives within the legislation to provide support for Canadians.

I want to very quickly make reference to the multi-generational home renovation program, because I agree with the member on that. We both agree that it is a wonderful program. It will enable people to keep a parent in their home with the construction of a suite. It will also help our communities by keeping seniors in our communities, as opposed to going to care facilities.

I am wondering if the member could provide her thoughts in regard to how this is a win-win situation for seniors, the community and, in fact, the taxpayer.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Mr. Speaker, we agree. Yes, the tax credit for multi-generational homes is good for communities and families. It is hard to be against that.

Nevertheless, there are times when parents need to be placed in specialized homes. There also needs to be support for that, and the Quebec government and the provincial governments need health transfers, which are absent once again, as they have been for the past 30 years.