Bill C-59

Fall Economic Statement Implementation Act, 2023

An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023

Part 1 implements certain measures in respect of the Income Tax Act and the Income Tax Regulations by
(a) limiting the deductibility of net interest and financing expenses by certain corporations and trusts, consistent with certain Organisation for Economic Co-operation and Development and the Group of Twenty Base Erosion and Profit Shifting project recommendations;
(b) implementing hybrid mismatch rules consistent with the Organisation for Economic Co-operation and Development and the Group of Twenty Base Erosion and Profit Shifting project recommendations regarding cross-border tax avoidance structures that exploit differences in the income tax laws of two or more countries to produce “deduction/non-inclusion mismatches”;
(c) allowing expenditures incurred in the exploration and development of all lithium to qualify as Canadian exploration expenses and Canadian development expenses;
(d) ensuring that only genuine intergenerational business transfers are excluded from the anti-surplus stripping rule in section 84.1 of the Income Tax Act ;
(e) denying the dividend received deduction for dividends received by Canadian financial institutions on certain shares that are held as mark-to-market property;
(f) increasing the rate of the rural supplement for Climate Action Incentive payments (CAIP) from 10% to 20% for the 2023 and subsequent taxation years as well as referencing the 2016 census data for the purposes of the CAIP rural supplement eligibility for the 2023 and 2024 taxation years;
(g) providing a refundable investment tax credit to qualifying businesses for eligible carbon capture, utilization and storage equipment;
(h) providing a refundable investment tax credit to qualifying businesses for eligible clean technology equipment;
(i) introducing, under certain circumstances, labour requirements in relation to the new refundable investment tax credits for eligible carbon capture, utilization and storage equipment as well as eligible clean technology equipment;
(j) removing the requirement that credit unions derive no more than 10% of their revenue from sources other than certain specified sources;
(k) permitting a qualifying family member to acquire rights as successor of a holder of a Registered Disability Savings Plan following the death of that plan’s last remaining holder who was also a qualifying family member;
(l) implementing consequential changes of a technical nature to facilitate the operation of the existing rules for First Home Savings Accounts;
(m) introducing a tax of 2% on the net value of equity repurchases by certain Canadian corporations, trusts and partnerships whose equity is listed on a designated stock exchange;
(n) exempting certain fees from the refundable tax applicable to contributions under retirement compensation arrangements;
(o) introducing a technical amendment to the provision that authorizes the sharing of taxpayer information for the purposes of the Canadian Dental Care Plan;
(p) implementing a number of amendments to the general anti-avoidance rule (GAAR) as well as introducing a new penalty applicable to transactions subject to the GAAR and extending the normal reassessment period for the GAAR by three years in certain circumstances;
(q) facilitating the creation of employee ownership trusts;
(r) introducing specific anti-avoidance rules in relation to corporations referred to as substantive CCPCs; and
(s) extending the phase-out by three years, and expanding the eligible activities, in relation to the reduced tax rates for certain zero-emission technology manufacturers.
It also makes related and consequential amendments to the Excise Tax Act and the Excise Act, 2001 .
Part 2 enacts the Digital Services Tax Act and its regulations. That Act provides for the implementation of an annual tax of 3% on certain types of digital services revenue earned by businesses that meet certain revenue thresholds. It sets out rules for the purposes of establishing liability for the tax and also sets out applicable reporting and filing requirements. To promote compliance with its provisions, that Act includes modern administration and enforcement provisions generally aligned with those found in other taxation statutes. Finally, this Part also makes related and consequential amendments to other texts to ensure proper implementation of the tax and cohesive and efficient administration by the Canada Revenue Agency.
Part 3 implements certain Goods and Services Tax/Harmonized Sales Tax (GST/HST) measures by
(a) ensuring that an interest in a corporation that does not have its capital divided into shares is treated as a financial instrument for GST/HST purposes;
(b) ensuring that interest and dividend income from a closely related partnership is not included in the determination of whether a person is a de minimis financial institution for GST/HST purposes;
(c) ensuring that an election related to supplies made within a closely related group of persons that includes a financial institution may not be revoked on a retroactive basis without the permission of the Minister of National Revenue;
(d) making technical amendments to an election that allows electing members of a closely related group to treat certain supplies made between them as having been made for nil consideration;
(e) ensuring that certain supplies between the members of a closely related group are not inadvertently taxed under the imported taxable supply rules that apply to financial institutions;
(f) raising the income threshold for the requirement to file an information return by certain financial institutions;
(g) allowing up to seven years to assess the net tax adjustments owing by certain financial institutions in respect of the imported taxable supply rules;
(h) expanding the GST/HST exemption for services rendered to individuals by certain health care practitioners to include professional services rendered by psychotherapists and counselling therapists;
(i) providing relief in relation to the GST/HST treatment of payment card clearing services;
(j) allowing the joint venture election to be made in respect of the operation of a pipeline, rail terminal or truck terminal that is used for the transportation of oil, natural gas or related products;
(k) raising the input tax credit (ITC) documentation thresholds from $30 to $100 and from $150 to $500 and allowing billing agents to be treated as intermediaries for the purposes of the ITC information rules; and
(l) extending the 100% GST rebate in respect of new purpose-built rental housing to certain cooperative housing corporations.
It also implements an excise tax measure by creating a joint election mechanism to specify who is eligible to claim a rebate of excise tax for goods purchased by provinces for their own use.
Part 4 implements certain excise measures by
(a) allowing vaping product licensees to import packaged vaping products for stamping by the licensee and entry into the Canadian duty-paid market as of January 1, 2024;
(b) permitting all cannabis licensees to elect to remit excise duties on a quarterly rather than a monthly basis, starting from the quarter that began on April 1, 2023;
(c) amending the marking requirements for vaping products to ensure that the volume of the vaping substance is marked on the package;
(d) requiring that a person importing vaping products must be at least 18 years old; and
(e) introducing administrative penalties for certain infractions related to the vaping taxation framework.
Part 5 enacts and amends several Acts in order to implement various measures.
Subdivision A of Division 1 of Part 5 amends Subdivision A of Division 16 of Part 6 of the Budget Implementation Act, 2018, No. 1 to clarify the scope of certain non-financial activities in which federal ‚financial institutions may engage and to remove certain discrepancies between the English and French versions of that Act.
Subdivision B of Division 1 of Part 5 amends the Trust and Loan Companies Act , the Bank Act and the Insurance Companies Act to, among other things, permit federal financial institutions governed by those Acts to hold certain meetings by virtual means without having to obtain a court order and to permit voting during those meetings by virtual means.
Division 2 of Part 5 amends the Canada Labour Code to, among other things, provide a leave of absence of three days in the event of a pregnancy loss and modify certain provisions related to bereavement leave.
Division 3 of Part 5 enacts the Canada Water Agency Act . That Act establishes the Canada Water Agency, whose role is to assist the Minister of the Environment in exercising or performing that Minister’s powers, duties and functions in relation to fresh water. The Division also makes consequential amendments to other Acts.
Division 4 of Part 5 amends the Tobacco and Vaping Products Act to, among other things,
(a) authorize the making of regulations respecting fees or charges to be paid by tobacco and vaping product manufacturers for the purpose of recovering the costs incurred by His Majesty in right of Canada in relation to the carrying out of the purpose of that Act;
(b) provide for related administration and enforcement measures; and
(c) require information relating to the fees or charges to be made available to the public.
Division 5 of Part 5 amends the Canadian Payments Act to, among other things, provide that additional persons are entitled to be members of the Canadian Payments Association and clarify the composition of that Association’s Stakeholder Advisory Council.
Division 6 of Part 5 amends the Competition Act to, among other things,
(a) modernize the merger review regime, including by modifying certain notification rules, clarifying that Act’s application to labour markets, allowing the Competition Tribunal to consider the effect of changes in market share and the likelihood of coordination between competitors following a merger, extending the limitation period for mergers that were not the subject of a notification to the Commissioner of Competition and placing a temporary restraint on the completion of certain mergers until the Tribunal has disposed of any application for an interim order;
(b) improve the effectiveness of the provisions that address anti-competitive conduct, including by allowing the Commissioner to review the effects of past agreements and arrangements, ensuring that an order related to a refusal to deal may address a refusal to supply a means of diagnosis or repair and ensuring that representations of a product’s benefits for protecting or restoring the environment must be supported by adequate and proper tests and that representations of a business or business activity for protecting or restoring the environment must be supported by adequate and proper substantiation;
(c) strengthen the enforcement framework, including by creating new remedial orders, such as administrative monetary penalties, with respect to those collaborations that harm competition, by creating a civilly enforceable procedure to address non-compliance with certain provisions of that Act and by broadening the classes of persons who may bring private cases before the Tribunal and providing for the availability of monetary payments as a remedy in those cases; and
(d) provide for new procedures, such as the certification of agreements or arrangements related to protecting the environment and a remedial process for reprisal actions.
The Division also amends the Competition Tribunal Act to prevent the Competition Tribunal from awarding costs against His Majesty in right of Canada, except in specified circumstances.
Finally, the Division makes a consequential amendment to one other Act.
Division 7 of Part 5 amends the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act to exclude from their application prescribed public post-secondary educational institutions.
Subdivision A of Division 8 of Part 5 amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to, among other things,
(a) provide that, if a person or entity referred to in section 5 of that Act has reasonable grounds to suspect possible sanctions evasion, the relevant information is reported to the Financial Transactions and Reports Analysis Centre of Canada;
(b) add reporting requirements for persons and entities providing certain services in respect of private automatic banking machines;
(c) require declarations respecting money laundering, the financing of terrorist activities and sanctions evasion to be made in relation to the importation and exportation of goods; and
(d) authorize the Financial Transactions and Reports Analysis Centre of Canada to disclose designated information to the Department of the Environment and the Department of Fisheries and Oceans, subject to certain conditions.
It also amends the Budget Implementation Act, 2023, No. 1 in relation to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and makes consequential amendments to other Acts and a regulation.
Subdivision B of Division 8 of Part 5 amends the Criminal Code to, among other things,
(a) in certain circumstances, provide that a court may infer the knowledge or belief or recklessness required in relation to the offence of laundering proceeds of crime and specify that it is not necessary for the prosecutor to prove that the accused knew, believed they knew or was reckless as to the specific nature of the designated offence;
(b) remove, in the context of the special warrants and restraint order in relation to proceeds of crime, the requirement for the Attorney General to give an undertaking, as well as permit a judge to attach conditions to a special warrant for search and seizure of property that is proceeds of crime; and
(c) modify certain provisions relating to the production order for financial data to include elements specific to accounts associated with digital assets.
It also makes consequential amendments to the Seized Property Management Act and the Forfeited Property Sharing Regulations .
Division 9 of Part 5 retroactively amends section 42 of the Federal-Provincial Fiscal Arrangements Act to specify the payments about which information must be published on a Government of Canada website, as well as the information that must be published.
Division 10 of Part 5 amends the Public Sector Pension Investment Board Act to increase the number of directors in the Public Sector Pension Investment Board, as well as to provide for consultation with the portion of the National Joint Council of the Public Service of Canada that represents employees when certain candidates are included on the list for proposed appointment as directors.
Division 11 of Part 5 enacts the Department of Housing, Infrastructure and Communities Act , which establishes the Department of Housing, Infrastructure and Communities, confers on the Minister of Infrastructure and Communities various responsibilities relating to public infrastructure and confers on the Minister of Housing various responsibilities relating to housing and the reduction and prevention of homelessness. The Division also makes consequential amendments to other Acts and repeals the Canada Strategic Infrastructure Fund Act .
Division 12 of Part 5 amends the Employment Insurance Act to, among other things, create a benefit of 15 weeks for claimants who are carrying out responsibilities related to
(a) the placement with the claimant of one or more children for the purpose of adoption; or
(b) the arrival of one or more new-born children of the claimant into the claimant’s care, in the case where the person who will be giving or gave birth to the child or children is not, or is not intended to be, a parent of the child or children.
The Division also amends the Canada Labour Code to create a leave of absence of up to 16 weeks for an employee to carry out such responsibilities.

Fall Economic Statement Implementation Act, 2023

[Gary Anandasangaree, Liberal, Scarborough—Rouge Park, ON]

moved that Bill C-59, An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023, be read the third time and passed.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Madam Speaker, I rise today to speak to the very important piece of legislation before us. It is what we call the fall economic statement, which was, yes, introduced in the fall. Unfortunately, because of Conservative delay tactics and their continuing to put forward amendments and having multiple people speak to it, we still have not even gotten to the place where we can pass the fall economic statement. However, I will say that a lot has happened since then, particularly with respect to inflation.

Members may recall that this particular piece of legislation came in at a time when inflation was still working its way downward but had not yet gotten into the range that the Bank of Canada dictates in its policy, which is within a range of 2% to 3%. We were seeing higher inflation. When I think back to when we were having these discussions in the fall, one of the things I think about is what Conservatives were saying about our budgetary measures at the time. They were saying that they were inflationary budgets. The Conservatives were saying to stop spending money because when the government spends money it is just adding to inflation. They said it over and over.

All the experts came out and said that actually the particular programs that the government was running in order to support Canadians were providing money to some of the most vulnerable people, the people who would be utilizing the money for basic necessities, and this was not going to contribute to impacting inflation. However, that did not matter to Conservatives because it was not feeding their narrative, so they continued on, marching along and talking about the supports that we were making for Canadians as something that was going to affect inflation and continue to drive it up.

We see today that the year-over-year inflationary rate is at 2.7%. This is the lowest it has been in three years. It has been within the range of 2% to 3% despite the fact that I know Conservatives were rooting for inflation to continue to rise because that would fit their political narrative, and they do not worry about the impact it has on Canadians. The Conservatives always just want the government to fail in any possible way it can, just so they can get a little political gain out of it, even if it means it comes at the expense of Canadians. We have seen inflation now, for four straight months in a row, within the target that the Bank of Canada sets, which is between 2% and 3%.

Conservatives were wrong. They were wrong when they said that investing in Canadians contributed to inflation, and they were wrong in predicting an outcome where those investments would actually drive inflation up. We knew that was going to be the case, because all the experts were saying it at the time, but what the Conservatives were doing is something that the member for Fredericton was talking about earlier. The Conservatives intentionally used and continue to use against Canadians the anxieties that Canadians feel. The Conservatives use those anxieties and turn them into a weapon against the very people that they are impacting, and they are doing it just for political gain. That is the only reason. It is the exact same reason that Conservatives say over and over that inflation is caused by the Prime Minister and the current government.

[An hon. member]

Yes, you got it.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Madam Speaker, in reality, we know that inflation is something that is going on throughout the entire globe.

I know that the member for Saskatoon—University just ran back in here and sat down so he could heckle me. I challenge him to ask me a question, to actually think about a question that he can ask me when it comes time to do so, because I am looking forward to hearing what he has to say about what I am saying right now. I will, of course, respond to that question. What we heard is not only Conservatives being wrong—

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

The member for Edmonton—Wetaskiwin is rising on a point of order.

[Mike Lake, Conservative, Edmonton—Wetaskiwin, AB]

Madam Speaker, the member has been here long enough, though he may not be here for much longer, and he knows that he cannot mention the presence of another member in the House, which he just did.

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

The hon. member is quite correct. We do not reference members' absences or presences in the House, as is the practice in our Standing Orders.

The hon. member for Kingston and the Islands.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Madam Speaker, we know that Conservatives were wrong when they predicted inflation would go up as a result of the supports we were investing in for Canadians, and we know that they were also wrong when they tried to suggest that inflation was created by the current government, because inflation is something that is being seen throughout the world. It is something that was being seen in the United Kingdom, which had a much higher inflation rate than we do. It is something seen in the United States, which continues to have higher inflation than we do.

As a matter of fact, I got a real kick earlier, when we were debating the budget bill, out of how a member from the Conservatives got up and tried to make a witty joke by saying he does not know what Kraft Dinner has to do with Ukraine, as though he was trying to somehow suggest that there is no connection between the two. The rich irony is that there is something fundamentally connecting Kraft Dinner and Ukraine, which is the resources and the supplies.

The CEO of Kraft himself said that the supply constraints and probably wheat coming out of Ukraine were impacting the ability to keep food prices low, so I just find it absolutely remarkable that Conservatives believe what they are saying. I believe that they have convinced themselves to believe what they are saying, but the reality is that it is just not true. They were wrong when they suggested that investing in Canadians was going to lead to inflation, and they are wrong when they continue to try to make the point that inflation is something unique to Canada, but I think that the vast majority of Canadians understand this. I think that they understand what Conservatives are doing, how they are trying to utilize those specific anxieties against them and weaponize them.

We look at exactly what the measures are that Conservatives were objecting to, and they are the exact measures in the fall economic statement that Conservatives said would lead to inflation. It is things like strengthening the Competition Act to ensure that the Competition Bureau is empowered to hold grocers accountable and prioritize consumer interests. Just so Canadians understand, this is really important because in the United States, the largest grocery retailer owns or controls 11% of grocery sales, and that is Walmart. Do members know which is the largest one and what its percentage is in Canada?

[An hon. member]

Loblaw.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

That is right, Madam Speaker; it is Loblaw. Does my colleague know what the percentage is? He does not. It is 42%, so 42% of groceries in this country are controlled by Loblaw and their retail. With Loblaw and a couple of the other large grocery retailers, very quickly I see how we have created an oligopoly here. There is an oligopoly operating in our country when it comes to grocery sales.

It becomes very important to identify what is going on here and to put measures in place to ensure that they are properly dealt with, and that is exactly what we are doing. It is what Conservatives are against. They are very loud and have a lot to say when it comes to government spending, but they are absolutely silent when it comes to the profits that are being made by Loblaw, probably because the Leader of the Opposition's own chief campaign manager, Jenni Byrne, is an actual lobbyist for Loblaw.

The campaign manager of the very individual who is standing up trying to fight against lobbyists and saying lobbyists are useless is a lobbyist for Loblaw. She has a vested interest in ensuring that Loblaw keeps its prices high, so how can anybody actually listen to what the Leader of the Opposition, the member from Carleton, says, and actually think that he is being genuine in any regard when he suggests that he understands the impacts of the greedy corporations we are seeing, in particular the retail grocery giants and Loblaw, which I mentioned specifically?

A few of the other initiatives that are in this particular piece of legislation, the fall economic statement, include unlocking $20 billion in new financing to build 30,000 more apartments per year. Conservatives love to get up and talk about how no apartments have been built, apparently. However, I can tell members that, in my riding alone, we are now on the 13th affordable housing project that has been built in Kingston, in which the federal government has, in one way or another, been a partner.

I get a real kick out of it when I hear Conservatives go on and on about it. Meanwhile, when the Leader of the Opposition was the housing minister, he built a total of six units, not buildings, not duplexes, but six units. The number seemed so wildly low to me that I thought it was impossible, that somebody was doing something with the numbers, that there was no way that this could be real, until I realized that this information actually came forward from an Order Paper question that was tabled. That information is tabled and available for everybody to see: In the one year when the member for Carleton was the minister responsible for housing, he built a total of six units. Those six units happen to be in Quebec, if one goes and looks at the numbers. However, he built a total of six units throughout the entire country.

Another thing we have done, through the fall economic statement, is to launch the new tax-free first home savings account. This has helped over half a million Canadians start saving for their first home. We have supported seniors through the Canada pension plan, the guaranteed income supplement and old age security, all of which are indexed to inflation.

Canadians are not going to forget very easily how the Leader of the Opposition, when he was in government previously, raised old age security, the OAS, to 67 years old. If there is anybody out there who is in their early 60s and planning for their retirement, they should seriously give some thought to whom they want to elect as their next government and whether it is a former member of a government that has a track record of actually increasing old age security requirements from 65 years old to 67. In all likelihood, it is going to happen again.

Earlier tonight, when we heard Conservatives talking about how they “balanced” the budget in 2015, I guess that, from an accounting perspective, they did. However, let us look at what they did to get there. They increased old age security to 67. They closed veterans' offices, doing this all on the backs of veterans. They did a number of initiatives to “balance” the budget. They did it in that one year in 2015, if one actually accepts the fact that one would consider that a balanced budget.

People have to understand that, when Conservatives talk about balancing the budget, they are really talking about cuts. Out of every Conservative budget that was introduced between 1990 and present day, only two of them ran surpluses. There is that made-up surplus I just talked about from 2015. There was also another one that Stephen Harper had at the beginning of his term as prime minister, and that was because it was coming off the heels of Paul Martin's surplus that he had. This is factual. Those are the only two budgets that ran surpluses. The reason governments will run deficits is that, as long as one's economy is growing at a faster pace than one is taking on that debt, one is still in a very healthy position. It is why we continue to get AAA credit rating reports from independent third parties for the manner in which the government is spending and taxing.

It is why we continue to see, year over year, more investments made in Canadians. It really just comes down to whether one thinks that there is a role for government to play in ensuring that people have equal opportunities.

That is exactly what we see as a government, which is that at least people have to have a shot at being able to strive and get what they want and hope to get out of their career and their life.

There are a number of other issues in here. The other one I wanted to touch on was $10-a-day child care, which was another issue that was updated in the fall economic statement. This was a very important piece of legislation that brought in an opportunity to empower more people to get out into the workforce. We have already seen it. We did not have to go far in order to study it. All we had to do was look at what was happening in Quebec and how more people, more spouses and, in particular, more women were in the workforce as a result of $10-a-day child care. This is another advancement our government is continuing to push forward in the spirit of fairness, equality and opportunity for everybody.

I look forward to the question from the member for Saskatoon—University at this point. I am sure it will be great.

[Corey Tochor, Conservative, Saskatoon—University, SK]

Madam Speaker, it is very telling that we have a Prime Minister who does not think about monetary policy. We have members of the government who obviously do not think about the long-term financial help of Canada. We have seen this over nine years. There is almost no one in Canada who thinks they are better off than they were in 2015.

Right now it is approaching midnight here in Ottawa, and this is a financial bill. Why is the finance minister not here? Instead, we have a backbencher leading the debate. How does he feel toward a finance minister that has indebted our—

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

Before I let the hon. member finish, we have a point of order from the hon. member for Fredericton.

[Jenica Atwin, Liberal, Fredericton, NB]

Madam Speaker, the member for Saskatoon—University signalled the presence or non-presence of a member in the House, and he is not allowed to do that.

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

I apologize for my distraction.

Order, please. I make the same comment I made to the hon. member for Kingston and the Islands, and I remind the hon. member for Saskatoon—University of that.

[Corey Tochor, Conservative, Saskatoon—University, SK]

Madam Speaker, I am not saying that the finance minister is here or not here. What I am asking is why this member is leading the debate for the government versus the actual finance minister. This is very telling in terms of why we are in so much trouble.