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.

The House resumed consideration of 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, as reported (with amendments) from the committee, and of Motion No. 1.

Fall Economic Statement Implementation Act, 2023

[Lori Idlout, NDP, Nunavut, NU]

Uqaqtittiji, I do appreciate some of the member's stories that he shared with the health issues in his family. Unfortunately, with the debate on this issue lately, there has been one huge gaping gap when we are talking about health.

I wonder if the member can describe for us what the challenges are with the fall economic statement and what was announced in the budget, and what is happening to ensure that indigenous health issues are addressed. They did not seem to be present in the budget.

[Chandra Arya, Liberal, Nepean, ON]

Mr. Speaker, we have been focusing on indigenous people's health, their economic security and their requirements since we came to power and over the last nine years. We have taken so many measures that we cannot explain it all, but in this recent budget we have brought in one particular program that I am really proud of, the indigenous loan guarantee program.

The economic empowerment of indigenous people leads not just to their economic prosperity but also the additional benefits of having good health and a good society.

[Greg McLean, Conservative, Calgary Centre, AB]

Mr. Speaker, I appreciate the speech from my colleague over there, but can he tell me how his government is getting control of the agenda? In the same week, we are addressing the fall economic statement, something that was delivered in the House six months ago, and we are also debating the budget implementation act for a budget that was delivered three weeks ago.

Canadians are a little confused about the legislation being put forward by the government. It suggests what it is going to do, and then it has been taking a long time to put it into actual legislation. This budget implementation act, which was tabled this week, had a whole bunch of legislation from the fall economic statement. This is all very opaque.

Can the member tell us when the government is going to get control of the agenda and actually start moving at a pace that Canadians can understand?

[Chandra Arya, Liberal, Nepean, ON]

Mr. Speaker, the legislative agenda sometimes moves at its own pace, but the key thing is that the measures we have taken since the last fall economic statement and the budget that we announced have already started yielding results. Today, Statistics Canada came out with a report that shows a gain of 60,000 jobs against an expected gain of just 20,000 jobs. The unemployment rate has actually remained steady at 6.1%.

As I have been saying for the last 11 to 12 months, the interest rate will start getting reversed about the middle of this year. The Bank of Canada has already indicated that inflation is coming down. I think it is around 2.9%. It is within the Bank of Canada's range.

With the economy showing progress, we have achieved a soft landing, which many predicted would not happen. Rather, many had predicted that we would go into a recession, which has not happened. It does not matter when it is getting implemented. The effects of our measures have already started yielding results.

[Lori Idlout, NDP, Nunavut, NU]

Uqaqtittiji, by the time the fall economic statement was presented in November, it was already well known that there was a major first nations, Inuit and Métis infrastructure gap. For first nations only, that gap was reported at $350 billion.

It is so unfortunate that the government continues to ignore the plight of indigenous peoples. I wonder if the member can share with the House how he will make sure that indigenous peoples' needs are being met through important announcements like the fall economic statement and the budgets that are later presented.

[Chandra Arya, Liberal, Nepean, ON]

Mr. Speaker, we have made tremendous investments in infrastructure compared to any other government that was in power before we were elected. Obviously, the infrastructure requirements of first nations are important and they, too, are being addressed.

[Jamil Jivani, Conservative, Durham, ON]

Mr. Speaker, I rise in the House today in opposition to the Liberal budget. I am confounded by the fact that it has been called “building a strong economy that works for everyone” when the economy is neither strong nor working for everyone. That should be quite obvious to anyone paying attention.

In the spirit of my former colleague at the National Post, Rex Murphy, I would like to take some time to speak to the concerns of everyday hard-working Canadians to try to help make sense of how a government can call a budget, at this time and in this economy, strong and working for everyone.

I have been in Ottawa now for just over a month. I was sworn in as a member of the House in April. One of my key observations is that we have a Liberal government that is living in an alternate reality from the one I lived in before I was in politics and the one I cling desperately to every time I am here. It seems as though, in this economy, we have Liberal elites experiencing one thing and everybody else experiencing something else.

There are some things I would like to share with the Canadian people that I have observed since April when I was sworn in. For the last two weeks, I have heard the Liberal member of Parliament for Whitby defend high grocery bills and make excuses for the fact that it is very expensive for families to purchase the food they need, never mind the healthy food they need. Earlier today, he went on and on about that.

Last week, he said, “Mr. Speaker, I know that the member opposite feels that grocery prices are too high, and they have been, certainly. However, the CPI index has shown that food prices are stabilizing in our economy, which is good news for Canadians.” I would like to point out the obvious. Canadians listening to me right now might be asking if it is good that high grocery costs are stabilizing and if the objective of the government should not be to bring down the costs since they are so high. This is a good window into the kind of thinking going on. This is what I mean when I say we have an economy for Liberal elites and one for everybody else. Let us continue exploring this.

The day before the Liberal MP for Whitby made the comment that grocery prices are stabilizing, despite being obscenely high, a new food bank opened in Whitby. In his riding, the day before he said in Ottawa that things are going great and he has good news for Canadians, a new food bank opened up down the street from his constituency office. This is an alternate reality. The Liberals are creating some kind of bizarre picture of what is going on in this country, and people deserve to know that. They are saying how dare the Liberals produce a budget and call it “building a strong economy that works for everyone”.

Let me share some more observations from what I have seen since coming to Ottawa last month. Yesterday, across the street at the housing committee, Trudeau's housing minister, the member for Central Nova, said something that I had to ask him to repeat just so I could confirm it was even true because I was shocked. I thought I must have misheard him, but no, I heard him correctly. He said that the Liberal government's national housing strategy has exceeded its objectives. How is that possible? How is it possible that in this economy, they are running around Ottawa saying they have exceeded their objectives?

[Sherry Romanado, Liberal, Longueuil—Charles-LeMoyne, QC]

Mr. Speaker, I rise on a point of order. I know the member opposite is new, but I would remind him that he is not allowed to use the names of members in the chamber.

[The Acting Speaker, Gabriel Ste-Marie]

The hon. member knows that members' names cannot be used. Rather, they must be referred to by their riding name or title.

The hon. member has a little over five minutes to finish his speech.

[Jamil Jivani, Conservative, Durham, ON]

Mr. Speaker, I understand the Liberal government is very sensitive when people draw attention to its numerous failings.

The Prime Minister's housing minister, across the street, said that his national housing strategy has exceeded its objectives. Maybe the Liberal member opposite is confused as to how he could have said such a thing, but he did. It was on video. He said it to put a positive spin on policies that are obviously failing the people of Canada.

While the housing minister is sitting in Ottawa saying that his national housing strategy has exceeded its objectives, in my home community of Durham, the Clarington Municipal Council voted unanimously, calling for urgent action from the federal government and homelessness. In my home community of Durham, just like in many others across this country, there is a growing crisis of people without homes. Consequently, we have a growing crisis of homeless encampments being established so people have somewhere to sleep at night.

We are concerned in Clarington about this problem, but we are also concerned because we have seen in our neighbouring community of Oshawa a similar challenge. While the Prime Minister's housing minister is sitting in Ottawa trying to put a positive spin on the government's failed national housing strategy, there was a homeless encampment in Oshawa on fire. Smoke could be seen all across Durham region. In fact, one could see that smoke from Whitby. Maybe some of the Liberal members should be talking to each other about what is going on.

Why do we have a growing homelessness problem in Durham? Why are there a growing number of our brothers, sisters, friends and neighbours having a hard time finding an affordable place to live? It is obviously a complicated problem, but one of the contributing factors is that the cost of housing in Toronto, just to the west of us, is skyrocketing to an outrageous degree.

I know my friends in Toronto have had a hard time the last couple of weeks. We had to see the Leafs lose. We had to see Drake get trounced by Kendrick Lamar. Now we can go on to see ad listings for housing in Toronto. At the end April, I saw a bunk bed in Toronto for $600 a month. It is not even a full bed. One has somebody sleeping above them, for $600 a month. The listing said that eight or 10 people maximum could fit in that studio apartment in Toronto, and for $600 a month, one does not get hot water, heating, air conditioning, a smoke alarm or a carbon monoxide detector.

These ads show the desperate situation in Toronto that many young people are in. This is the disconnect. It is why I say that, in this economy, there are Liberal elites and everybody else. What the Liberals have produced is an obscene situation, where they can come here to Ottawa, put their high-deficit and high-tax budgets forward and claim to be doing good things for people, and meanwhile, every time we go home, we see the consequences of what they are doing here.

The last and probably most egregious example is one my buddy Rex Murphy, may he rest in peace, used to write about quite a bit. He used to write extensively about the carbon tax and how it is an exemplary policy of Liberal elitism and bizarre ideology in action.

I sit in this chair every day, and I hear Liberals telling us that the carbon tax is helping people, that people are getting more money back and that it is good for our economy, yet I go home to Durham and I hear and see the complete opposite. I knocked on many doors in the by-election campaign before I came here, and one of the recurring themes was the carbon tax.

I would go to a family farm and they would produce a tax bill, just like the one that I have in my hand right now, and I would see that family farms are paying thousands and thousands of dollars in carbon taxes and then being charged a tax on top of what they are paying for the carbon tax. That would then increase the cost of food for us in Oshawa, Curtis and Bowmanville. We could see within our own local community how the carbon tax is making it harder and harder for people to pay their bills.

When the Liberal government comes here to say that this carbon tax is good for us and good for our economy, that we should continue to pay more taxes and the cost of everything goes up to fill their coffers, it is just the latest example of Liberal elites and everybody else.

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

Mr. Speaker, on the issue of the carbon tax, I would like to hear what the member's thoughts are specifically as they relate to the over 400 Canadian economists who have signed an open letter stating that more people get back more than they pay, confirming what the Parliamentary Budget Officer said. They state that it is good environmental policy and, most importantly, good economic policy, which one would think the party that purports itself to be the champion of running an economy would agree with.

Is the member then suggesting that those 400 Canadian economists are just Liberal elites? Maybe he is, and that is fine, but can he confirm that?

[Jamil Jivani, Conservative, Durham, ON]

Mr. Speaker, this is what I mean when I say Liberal elites and everybody else.

These guys want me to stand here and listen to them quote their buddies from the universities instead of listening to what people on the ground across this country, everyday hard-working families, are experiencing under their rulership. This is exactly what I am talking about. They disregard the evidence from everyday people, who are struggling today, and they want to say, “Well, my friend with a Ph.D. said everything's all right.” Well, I am not here to represent their buddies with a Ph.D. I am here to represent people who are lined up in grocery stores, people who are concerned about making mortgage payments and rental payments after these guys have doubled them.

It is also interesting that, earlier today in the debate, their friend, the Liberal MP from Whitby, was quoting Warren Buffett, as though he is an authority on whether we are having a good experience or not. I might need to go back and ask Warren what he thinks.

[Monique Pauzé, Bloc, Repentigny, QC]

Mr. Speaker, the commissioner of the environment appeared before the Standing Committee on Environment and Sustainable Development yesterday. He has a different perspective with respect to homes and mortgages. Here is an excerpt from his presentation:

...a major lender recently announced that it would no longer accept new mortgages for homes in high-risk flood zones. The consequences of such decisions on the value of residential housing, which for many households is the main asset, could prove quite dire.

Although the Conservative Party is always focused on the carbon tax or on what is happening with the environment, it never comes up with any solutions for people who are dealing with floods, droughts and deteriorating health.

[Jamil Jivani, Conservative, Durham, ON]

Mr. Speaker, unfortunately, I think our colleague has conflated a couple of things. The carbon tax is not an environmental plan. The carbon tax is a tax plan. We have advocated for, and I am very proud to say this because the riding I represent, Durham, is home to a fantastic nuclear energy facility, is technology and not taxes to respond to environmental concerns across this country.

The idea that the carbon tax is somehow going to address the hon. member's concerns seems completely misguided to me, and the idea that middle-class families have to pay more for groceries at the grocery store to respond to these environmental concerns seems like a completely backwards connection between the decisions made in Ottawa and the consequences at home.