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.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Bill C-32 hasn't passed the House yet and this is a prestudy on the fall economic statement, so it's disappointing that question couldn't be answered by one of the officials here.

Well, they're not here; they're online.

I'll ask this question anyway, but I suspect you'll just give the same answer.

In the fall economic statement, the Parliamentary Budget Officer identified that $52 billion in new spending was announced.

Do you think that new spending, given what the finance minister said, will exacerbate the situation in causing more inflation and possible interest rate hikes?

[Pierre Leblanc]

Mr. Chair, I would just note that we are here as officials to respond to questions on the subject matter of Bill C-32, which does have some measures from the fall economic statement, but it also has measures from budget 2022 and previous budgets, as explained by my colleagues.

We're not the ones who are well-positioned to respond to that question, given the subject of the meeting.

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

Thank you, Mr. Chair.

In Bill C‑32, there are changes with respect to foundations or charities in relation to the disbursement quota. I would like to have this explained to me with concrete cases.

How many organizations are affected?

What does Bill C‑32 change?

[Yves Poirier, Director, Economic Development, Personal Income Tax Division, Department of Finance]

Hello. Thank you for your question.

As stated earlier, we can't really answer about the government's intent or why they created this new account instead of using the HBP.

However, I can say what has changed from the first proposal. Initially, it was going to be one or the other, either the HBP or the FHSA. In Bill C‑32, both would now be allowed.

[Jack Glick, Senior Advisor, Sales Tax Division, Department of Finance]

Thank you, Lindsay.

Thank you, Mr. Chair and good afternoon.

My name is Jack Glick and I'm a senior policy adviser in the excise policy section of the Department of Finance.

Part 2 of Bill C-32 implements measures announced in budget 2022 regarding the taxation of cannabis products. In particular, amendments in the bill permit certain smaller licensees to remit excise duties on a quarterly rather than monthly basis, while other amendments are of a more technical nature. Those include permitting the transfer of packaged but unstamped cannabis products between licensees. The quarterly remittances have been administered by the CRA beginning on April 1 of this year, while the remaining amendments would come into force upon royal assent.

Part 2 also brings forward amendments to the framework for the taxation of vaping products, which was introduced in budget 2022 and already implemented via the budget implementation act, 2022, No. 1. These vaping-related measures provide for more clarity on markings and custom storage rules and on excise duty liabilities for these goods. The modifications proposed are largely technical in nature and would allow the CRA and the CBSA to ensure proper administration of the vaping product taxation regime. The proposed amendments in these respects would be retroactive to October 1, 2022, which was the coming into force date of the overall taxation framework for vaping products. We've previously consulted the public on both the cannabis and vaping-related frameworks and the specific measures noted above.

I look forward to any questions you might have, and I'll turn it over to my colleague for part 3.

[The Chair, Liberal, Peter Fonseca]

Welcome to meeting number 67 of the House of Commons Standing Committee on Finance.

Pursuant to the Standing Order 108(2) and the motion adopted by the committee on Wednesday, November 16, 2022, the committee is meeting to discuss the subject matter of Bill C-32, 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.

Today's meeting is taking place in a hybrid format. Pursuant to the House order of June 23, 2022, members are attending in person in the room and remotely using the Zoom application.

I'd like to make a few comments for the benefit of the witnesses and members. Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mike, and please mute yourself when you're not speaking.

For interpretation for those on Zoom, you have the choice at the bottom of your screen of either the floor, English or French. For those in the room, you can use the earpiece and select the desired channel.

All comments should be addressed through the chair. For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can. We appreciate your patience and understanding in this regard.

I wish to inform the committee members that all the witnesses have been tested for today's meeting. One of the witnesses is still experiencing some technical difficulties, and that is Benjamin Myers. There is one witness, Mr. Kanji, who has not been able to join us.

We're going to open it up to the departments. We have the Canadian Space Agency, the Department of Crown-Indigenous Relations and Northern Affairs, the Department of Employment and Social Development, the Department of Justice and the Department of Finance.

Each will have up to five minutes for opening remarks. The total will be 25 minutes before we get to members' questions.

We will start with the Canadian Space Agency, please.

Fall Economic Statement Implementation Act, 2022

[Claude DeBellefeuille, Bloc, Salaberry—Suroît, QC]

Madam Speaker, it is my pleasure to rise today as we debate the—what is it now?—18th or 19th time allocation motion so far.

It is hard to keep track because this habit has become so ingrained in how we operate. It is time allocation after time allocation. Maybe people will start using that expression. Time allocation used to be the exception, but now, since the pandemic, since the advent of the hybrid Parliament, it seems to have become common practice, and I think that is a shame. I think it is a shame to shut down democratic debate and take away what really matters in a Parliament: time and space to debate and air contrasting views.

That is why I am pleased to share some of my thoughts on Bill C‑32.

Before the economic statement, the Bloc Québécois had great expectations. We really wanted a conversation about health transfers. We were hoping for a sign that the government wanted to give Quebec and the provinces the health transfers they have been asking for so they can fulfill their responsibilities.

In Quebec, that means addressing the aging population and the significant issues with mental health services, which are lacking in number and scope to meet the demand. Unfortunately, there is nothing in the economic update about that.

My colleague from Shefford has said this, and the Bloc Québécois has said it, and it is one of our priorities. We do not understand how the government does not consider those between the ages of 65 and 74 to be people who need to regain a certain amount of purchasing power, especially with the inflation crisis. If there was ever a segment of the population that needed a helping hand, it is them. Increasing old age security would have really been good news, a sign that the government is listening to seniors, those who built the Quebec of today.

In the economic update, we really wanted to see the government's desire and firm resolve to overhaul employment insurance. Today, I will use the minutes at my disposal to speak in greater detail about the EI program and the need to reform it.

Today, as we speak, barely 40% of workers have access to EI.

That is sad because, as we know, the EI fund is an insurance program. That means that workers pay premiums on their paycheque and employers pay premiums, and the money goes to build the EI fund, an important reservoir for workers who need it. Unfortunately, although the fund is quite healthy at the moment, it does not actually serve the people who really need it. Access is restricted.

I am very committed to this cause. The Bloc Québécois has been asking for EI reform for years, and we do not understand the government's resistance.

As I like to remind everyone, I decided to run again in 2015, the year the Liberals campaigned on a promise of comprehensive EI reform. In 2019, they promised it again, and then again in 2021. It is promise after promise, but nothing ever happens. The government had included $5 million in its budget to conduct extensive consultations across the provinces and Canada to understand and gauge the needs of workers, employers and civil society, and yet, 18 months later, we still have nothing. There has been no proposal and no plan to reform EI, even though my colleague from Thérèse‑De Blainville made it a subject to be studied by her committee. The committee heard from many witnesses who expressed the needs and shortcomings of the current system, which, as we all know, really needs to be modernized and updated to be tailored to today's labour market.

Of course, we have a number of demands. Workers who have paid premiums all their lives but find themselves in a difficult situation, like if their business is forced to shut down and they have to rely on EI, receive benefits equivalent to 55% of their income. The Bloc Québécois believes that, in the overall reform, that percentage really needs to increase to 60%. I think this is reasonable, and the rate was 60% prior to 1993. I remember very clearly when it was reduced to 55% of income. This demand remains permanent and is also being made by all the stakeholders who support the unemployed and others.

In its overhaul of EI, we would also like the government to eliminate the one-week waiting period. I do not know the reason behind the one-week period, but it is in addition to the system's bureaucratic delays for those who lose their jobs. People do not choose to go on EI. They do so because they lose their jobs as a result of the closure of a business, layoffs or any number of other reasons. Because of this long waiting period, which really should not happen, claimants only receive their first payment after six weeks. At least, that was the waiting period before the government system was paralyzed, back when it was working well and the performance and service standards were met. That was in the old days. Now, someone who loses their job in early or mid-June will not receive a cheque until late September or early October, because the system is completely paralyzed.

Our demands for the reform are important, and we were hoping to see them reflected in the economic update. We wanted people with a serious illness to be able to get 50 to 52 weeks of special EI sickness benefits in the event they are unable to return to work.

As members know, in the last Parliament, I introduced a bill that proposed that. What is more, as we speak, Bill C‑215 has been studied in committee, and the majority of the members who sit on that committee voted in favour of ensuring that people who have a serious illness can take the time they need to fight the illness and recover their health without having to worry about their financial circumstances.

As things stand now, it pains me to see people get to the end of their 15th week of special benefits when they have not finished their cancer treatments, their chemotherapy or their radiation. By the next week, they will have nothing left to pay their bills.

The minister seems to be sympathetic to the situation, but I think it is unacceptable when she promises this will arrive in the summer, then in fall, then at Christmas. She keeps pushing the date back further and further. Although she has the budget to do this, she refuses to give a specific date that would give hope to those who are starting chemotherapy or radiation today or who are taking long-term sick leave to take care of themselves, so they can regain their strength and go back to work.

We have talked a lot about Marie-Hélène Dubé, a woman who had cancer a few years ago and who decided to fight to have EI sickness benefits increased to 52 weeks, because she had to re-mortgage her house to meet her responsibilities and take care of herself.

Unfortunately, in committee two weeks ago, she said that her cancer is back and she will not have time to heal before the end of her 15 weeks. She is reliving the nightmare she went through a few years ago. To my mind, that is unacceptable.

The Bloc Québécois will vote in favour of Bill C‑32, because it does contain some good measures, but I implore the government to take a step in the right direction by quickly agreeing to reform EI and to implement the special benefits program for sick workers as soon as possible.

The House resumed consideration of the motion that Bill C-32, 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, be read the second time and referred to a committee, and of the amendment.

Second Reading

[Mario Beaulieu, Bloc, La Pointe-de-l'Île, QC]

Madam Speaker, I would like to hear from my colleague.

Bill C-32 is notable for what it does not contain. Old age security was increased for people 75 years and older. This created a two-tiered system for old age security, because those between 65 and 75 got nothing.

In my colleague's opinion, should there be just one benefit? Should the benefit not be increased for all seniors, not just those 75 and over?

The House resumed from November 18 consideration of the motion that Bill C-32, 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, be read the second time and referred to a committee, and of the amendment.

Bill C-32—Time Allocation Motion

[Randy Boissonnault, Liberal, Edmonton Centre, AB]

Madam Speaker, I respect my hon. colleague and his comments on making sure we use time efficiently in the House. I will take his comment under advisement and discuss it with the government House leader.

Today is about making sure we can get Bill C-32 to committee so we can get back here for third reading, and then we would be able to get housing supports to people, get student loan interest removed for apprentices and students, reduce taxes on small businesses and do all the other good things for growing the economy that are included in the fall economic statement.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Madam Speaker, by my count, I think that the vast majority of last week was spent debating Bill C-32. Unfortunately, the House cannot debate two bills at any one time. As a consequence of last week, Bill C-20, the important oversight legislation for both the CBSA and the RCMP, has been bumped to tomorrow.

People have been waiting for years for an effective oversight mechanism for both of these agencies. The CBSA has never had this kind of oversight. There are other interests in play. I know that the Conservatives would like to keep on debating Bill C-32, but indigenous people in Canada, racialized people and so many people who have been at the wrong receiving end of both the RCMP and the CBSA have been waiting years for this important accountability and oversight legislation.

I hope that, after we get through Bill C-32 and it is sent to committee, I have a commitment from the government that Bill C-20 will get the priority it deserves.

We waited in the 42nd Parliament for Bill C-98 when that member was here. We waited in the last Parliament for Bill C-3 and we now, finally, have Bill C-20. I want to see a commitment that this bill will get the time it deserves.

[Mario Beaulieu, Bloc, La Pointe-de-l'Île, QC]

Madam Speaker, I detest the way the Liberals keep invoking closure. They did it for the official languages bill and they are doing it today for Bill C‑32. The shocking thing is what is missing from Bill C‑32. All provinces are asking for an increase in health transfers. Health care systems across the country are vulnerable. There is nothing in the bill to help with that, nor is there anything about increasing old age benefits for seniors between the ages of 65 and 74.

What does my colleague have to say about that? Why not increase the health transfer?

[Randy Boissonnault, Liberal, Edmonton Centre, AB]

Madam Speaker, I thank the hon. colleague for her support of Bill C-32. I was not on the opposition benches at time to which she is referring. As a member and as a minister, I can say that I talked to Brad in my riding this week, who thanked us for making sure we got Bill C-30 and Bill C-31 done so quickly, because he wanted and needs the $500 housing support in that legislation. On the weekend, I talked to Mike and Laurie, who thanked us for our child care supports. They said to me at the All is Bright festival, “It's making a real difference, and we're able to make it through this inflationary cycle.”

There are millions of other Canadians waiting for us to get to work, to get to committee and to get Bill C-32 passed so that the people who need the help the most can get those supports when they need them the most.

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

Madam Speaker, rising yet again on a time allocation debate, I am reminded of when, in previous Parliaments, the Conservatives under Stephen Harper used time allocation again and again and again. I sat in that corner with the Liberals when they were the third party. Consistently, every time, they said that if we allow this to happen, eventually Parliament and democracy will be diminished and time allocations will become so routine that they are used over and over again in future Parliaments. I think I am the last standing member of the opposition to Stephen Harper's use of time allocations for almost every bill. It has, as we worried, become routine. I will never vote for a time allocation on a bill. Even when, as is the case here, I support Bill C-32, I object to the truncation of time. It diminishes Parliament's work.

I do, though, sympathise with the governing party in that because we have ignored our rules for so long, nobody remembers that it is against Westminister parliamentary rules to give a written speech. I maintain that House leaders, when meeting together, should give an honest assessment to each other of how many members they really have who can speak to a bill without a written speech, without notes, and contribute to a thoughtful debate. I lament where we are right now, and this can be regarded as more a comment than a question, because the Liberals have completely forgotten all the reasons they used to warn that the use of time allocation for almost every bill was anti-democratic.