Bill C-59 (Historical)

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.

Report Stage

[Arnold Viersen, Conservative, Peace River—Westlock, AB]

Madam Speaker, I thank my colleague for that great speech. I know that he always represents his constituents greatly in this place, and I want to thank him for all the experience that he brings, particularly from Saskatchewan.

It has been coming up more and more in this place, and I am not sure who came up with it first, but someone is proposing that we change the GST to the DST, or the debt servicing tax. Could the member make some comments around that?

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

Madam Speaker, I know that the member represents his constituents well also.

I would say it is a scary point in Canadian history when the federal government, the NDP-Liberal coalition, is spending more money on debt servicing than on health care. My friend is right. The amount of GST the government is bringing in is equivalent to what it is paying in debt. There is so much more that we could be if we had our fiscal house in order. That is something we will deliver as a common-sense Conservative government, and we will make sure we give Canadians the government they deserve.

[Monique Pauzé, Bloc, Repentigny, QC]

Madam Speaker, my colleague ended his speech by suggesting that the government put things back the way they found them.

I have a suggestion for him, and that is to put things back the way they were in the 1960s, 1970s or earlier, before we started seeing rising temperatures and the damage that was causing.

Does my colleague have any idea how much climate inaction costs?

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

Madam Speaker, a lot of people continuously talk about the inaction on climate, but that is not the point I was talking about. I was talking about all the innovations we have made in agriculture and in our energy sector to lower our emissions. We should be a guiding light for innovation and technology in those sectors. The last barrel of oil on earth should be drilled in Canada because we have environmental standards, labour standards and human rights standards that are better than those of other oil-producing countries.

Canada produces 1.5% of the world's emissions, and of Canada's 1.5% of emissions, agriculture accounts for 10%. We are leading the world. There is a great study by the Global Institute for Food Security that I wish all of my colleagues would read because, compared to all other jurisdictions that produce what we do, we have the lowest emissions per bushel on earth.

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

Madam Speaker, I love the narrative by Conservatives about the total emissions of Canada compared to globally. Now I would encourage the member to tell the House what the per capita emissions of Canadians are, because they are a lot higher than those of the vast majority of other countries in the world.

While the member is at it, perhaps he could inform the House what the Conservative plan is when it comes to addressing climate change, because we hear nothing. All we hear is the Leader of the Opposition say is that they believe in technology, but that means nothing.

What is the Conservative plan?

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

Madam Speaker, I am proud to talk about what we have contributed to the world.

What the member fails to understand is that we also produce a lot that helps feed the world. We produce the wheat, barley, peas, lentils and other crops that feed millions of people around the world, and we have to export them around the world. The fact that the member cannot comprehend that we are an exporting economy and thus that our emissions would be a little higher is, quite frankly, not surprising.

Second, we have the natural gas that could displace Russian gas for our partners so they would not continue to feed a war machine. That would also increase our emissions a bit, but it would lower global emissions. Third, if he wants to find out about our environmental plan, call an election and we will run on it.

[Some hon. members]

Oh, oh!

[The Assistant Deputy Speaker, Carol Hughes]

Order.

I would ask people who want to have conversations to go out into the antechamber so that the House can continue its work.

Resuming debate, the hon. member for Port Moody—Coquitlam.

[Bonita Zarrillo, NDP, Port Moody—Coquitlam, BC]

Madam Speaker, it is good to be a New Democrat today and every day, as we stand in the House firmly on the side of the right to choose, and to treat the illegal toxic drug crisis with compassion and facts. This is the complete opposite of the Conservatives' ideologies that are harmful and their arguments that are lacking in facts and compassion.

Tonight as we discuss the fall economic statement, I am proud to stand here as a new Democrat with a leader, the member for Burnaby South, who is willing to name corporate greed in the House of Commons while the Liberals and the Conservatives continue to protect big corporations that are gouging Canadians at the cash register. That is a major driver of inflation and hardship for Canadians.

The Conservative opposition frames itself as an alternative to the Liberals, but the corporate-controlled Conservatives are no better than the sitting Liberals. They too believe the market will fix every problem, even though it is a fact that unbridled corporate greed is driving up the cost of food, housing and gas. When it comes to housing, this market-driven ideology has resulted in record displacements and homelessness across Canada, even among seniors who should be safely retired in their home.

There is no way to solve the housing crisis with market solutions alone. The federal government, in the mid-1990s, stepped away from producing non-market housing, and it has created a crisis that is accelerating and getting worse. Simply freeing up Crown land and handing it off to developers to do what they will is not going to solve the problem.

The finance committee heard from home developers, financiers and real estate people that the market is not going to solve the problem. That is not to say that we do not need more market housing, but it is to say that we want to see the government focus specifically on non-market housing, which has been neglected for years and absolutely must return in a significant way. We must do this; the government must do this in order for us to solve the housing crisis.

It is a problem with the current government and will be a problem with any future Conservative government because the parties share the same market-driven ideology. The Liberals must address corporate greed. The leader of the NDP has given them the road map through his bill, the lower prices for Canadians act. The Liberals need to act on it immediately.

Another thing the government must do is legislate corporations that want to invest in Canada and create jobs in Canada, particularly in the natural resource sector. The natural resource sector is experiencing a rebirth, and there is an expectation by New Democrats that it is going to be creating good union jobs in that rebirth. That is why I am very proud of the labour conditions that are attached to the investment tax credits in the fall economic statement. The legislation would implement those labour conditions for companies investing in Canada. This generation of young Canadians needs good union jobs. New Democrats want investments in Canada from companies that respect their employees and are prepared to pay their workers well.

Too often in Canada, the governments, both Conservative and Liberal, have accepted a situation where they are happy to have companies come in and compete on the cost of labour, have a competition about who can pay the least to do a job. I am very proud to say that with the legislation in the fall economic statement, we would be implementing for the first time ever, because of the NDP, conditions on an investment tax break that centres workers in the middle of it and has an apprenticeship requirement. In the long term, employers with foresight see the value of passing on training and knowledge and of creating a workforce they can avail themselves of, but we know there are employers that do not have that strategy, and that is why we need legislation.

I want to come back to housing because it is an important topic. In the fall economic statement, the recapitalization that was much touted by the government as its action on the urgent housing crisis was back-loaded, meaning it will not be coming for another two years. This is particularly shameful when we consider that the territory of Nunavut alone has been asking on an urgent basis for $250 million to address the housing crisis.

Since the economic statement was first tabled, the AFN has estimated that the infrastructure gap for the first nations, Métis and Inuit communities has reached over $400 billion. Alongside that, it was rumoured before the recent budget was tabled that the government was contemplating deep cuts at Indigenous Services Canada. New Democrats fought hard to prevent that, but investments by the government continue to fail indigenous peoples.

I want to come back to the question of the role large corporations are playing in driving up the cost of living in Canada. A report from the Parliamentary Budget Officer as recently as December 2021 said that 1% of Canada's population owns and controls 25% of all the wealth in this country, and the bottom 40% of income earners in Canada share just 1% of all of the wealth that is produced in Canada. This is not fair.

What has happened since the year 2000 is that the proportion of wealth controlled by the top 1% has increased exponentially. That needs to change. The big hole in government revenue comes from the people in the top 1%, who are walking away with much more of Canada's overall wealth than they used to because they pay significantly less tax than they used to. Their tax rates are unrealistically low. Successive Liberal and Conservative governments have let the people at the top off the hook from having to pay their fair share. That inequity needs to be fixed.

I will close by saying Canadians are working hard, playing by the rules and doing everything right, but life is getting harder. It does not have to be this way. New Democrats are working for the people. In the bill, there are stricter competition rules that would lower food prices, investment tax credits that would drive higher-paying jobs and measures that would lower rents, with a $16 billion investment in affordable housing funds and apartment construction loans.

It is not as strong as the investment the NDP would make, but so much much better than what the Liberals would have done on their own, and the Conservatives have shown over and over again that they side with their wealthy donors and give them the tax breaks they lobby for.

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

Madam Speaker, I really appreciate the way the member started off her speech today, by talking about the right of a woman to choose what to do with her body.

Unfortunately the House has been under assault over the last few days, with the member for Peace River—Westlock talking about preborn children. He and the member for Yorkton—Melville today spoke on the front lawn to an anti-abortion rally, where the member for Yorkton—Melville said, “The truth is not being told in the general media, or in our House of Commons, about what abortion really does to your heart and mind and your soul and your body, let alone to that life that is lost.” She went on to say, “We in the House [of Commons], as Conservatives, stand for equality between women and men from the instant of conception.”

I am wondering whether my NDP colleague has had an opportunity to reflect on what has happened over the last week, from the Leader of the Opposition's comments about using the notwithstanding clause to the member for Peace River—Westlock's comment and to now what is being said on the front lawn of Parliament.

[Bonita Zarrillo, NDP, Port Moody—Coquitlam, BC]

Madam Speaker, I just want to echo the comment that was made by my colleague from Winnipeg Centre today: “Keep your hands off our uterus.”

Just before my speech in the House today, a Conservative stood up and asked us to roll back the clock. I am very concerned about how far back the Conservatives are willing to roll back that clock.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Madam Speaker, a little while ago, the member put up on social media an idea that in order to fight climate change, all the indoor hockey rinks in Canada should be shut down. Not only is that extremely un-Canadian, but it also is a radical proposal that would just destroy the heart of what it means to be Canadian. What other radical and extreme ideas does she have for fighting climate change that would be extremely un-Canadian and would destroy the way of life of people?

[Bonita Zarrillo, NDP, Port Moody—Coquitlam, BC]

Madam Speaker, I am so glad this question came up because the Conservatives have a really hard time with facts, and what the member said is unequivocally untrue. I have never said anything about hockey.

I think what is important is how much time Conservatives spend on social media, making ridiculous memes and lowering the tone in this House. We are talking about the fact that they want to roll back rights for people who have a uterus. That will happen if the Conservatives ever become government in this country.

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

Madam Speaker, I have been paying keen attention to gas prices in my riding. From February to March of this year, the price jumped by 30¢ a litre, from $1.59 to $1.89. When the British Columbia carbon tax came into effect on April 1, it jumped up by only three cents. Only a week later, it jumped up a further 10¢.

I wonder if my colleague could talk about the extreme disconnect the Conservatives have over their obsession with the carbon tax and completely ignoring their political masters, the oil and gas lobby. They will not say a single word on behalf of their constituents to confront their real masters in this place.

[Bonita Zarrillo, NDP, Port Moody—Coquitlam, BC]

Madam Speaker, the oil and gas corporations and their CEOs are double-dipping. Not only are they taking subsidies from taxpayers, but they are gouging them at the pumps, and the Conservatives are letting it happen.