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.

Opposition Motion—Carbon Tax Emergency Meeting

[Élisabeth Brière, Liberal, Parliamentary Secretary to the Minister of Families]

Madam Speaker, I will be sharing my time with my esteemed colleague, the hon. member for Saanich—Gulf Islands.

I am pleased to take part today in this debate on a subject of great importance for the future of our country.

Once again, this motion from our colleagues in the official opposition makes it clear that they do not see the urgency of taking action on climate change. It is unfortunate, since it is very clear that the consequences of climate change are very real and very costly.

This year's strange winter, with record temperatures and barely any snow, reminds us again that climate change is real, and so are its disastrous effects on Canadian communities.

Just in the last year, communities across our country had to deal with historic wildfires, ice storms and tropical storms. The list goes on, as 2023 saw a record fire season in Canada. The area burned was more than double that of the historic record, with hundreds of thousands of Canadians evacuated from their homes as a result. In fact, the total area burned exceeded 18 million hectares, which is two and a half times the previous record set in 1995 and more than six times the average over the past 10 years.

Also, the Canadian Climate Institute has concluded that climate change is already costing Canadian households billions of dollars. These costs are just the tip of the iceberg.

For example, in May 2023, oil companies in Alberta, British Columbia and Saskatchewan were forced to curtail production as a precautionary measure in certain parts of these provinces.

Thankfully, our government understands that making the right to pollute free is not going to save Canadians money, and the days of doing nothing are behind us. Not only would inaction cost Canadians a lot of money, it would put their lives and safety at risk. Moreover, it would obviously compromise the environment we all depend on.

I am pleased to be part of a government that is shouldering its responsibilities and forging ahead to combat climate change. One of the ways we are doing this is through our carbon pricing system. As we know, experts agree that our pollution pricing system is the best tool we have to fight climate change and its devastating effects.

Putting a price on carbon pollution reduces emissions and encourages innovation. It gives households and businesses the flexibility to decide when and how to make changes.

I would also like to remind my hon. colleagues that our pollution pricing system is revenue-neutral. Every three months, the government delivers hundreds of dollars back to families through the Canada carbon rebate. In provinces where the federal fuel charge applies, a family of four will receive up to $1,800 in Canada carbon rebate amounts in 2024-25.

For this fiscal year, residents of the provinces where the rebate applies will receive the first of their four payments next week. Thanks to this rebate, eight out of 10 families receive more money than they pay. We are also making sure that big polluters pay their fair share.

Our government also understands that Canadians living in rural areas face unique challenges because they travel longer distances to get to school, work and the grocery store. We are proposing legislative amendments in Bill C‑59 to double the rural top-up from 10% to 20% of the basic rebate, because we understand their energy needs are greater and they have limited access to cleaner transportation options.

We also understand that some situations call for flexibility.

That is why we took temporary and targeted action to pause the fuel charge on heating oil with the goal of getting consumers off of home heating oil and onto a cleaner and far more affordable alternative. We took action to temporarily pause the application of the federal fuel charge on heating oil, not because it is a source of home heating but because it is the most expensive form of home heating.

It costs two to four times more to heat a home. That means that these costs are taking a big chunk out of the budgets of lower income Canadians.

Heating oil is currently used by 1.1 million homes in Canada, including 267,000 in Ontario and 287,000 across Atlantic Canada. We are committed to continue moving forward with our pollution pricing system while also supporting Canadians who need support to transition to greener options.

As our fall economic statement confirmed, we want to financially help Canadians to make the transition from home heating oil to better heating systems. Heat pumps are a cleaner way to heat and, in the long run, they lead to lower energy bills.

With our oil to heat pump affordability program, we are partnering with provinces and territories to increase the amount of federal funding that eligible homeowners can receive for installing a heat pump from $10,000 to $15,000, by adding up to an additional $5,000 in grant funding to match provincial and territorial contributions via co-delivery arrangements.

This means that heating systems and installation are free for low- and middle-income households, since we keep lowering costs and making access to federal programs easier.

A heat pump is one of the best ways that homeowners can break free from heating oil, save money on their heating bills and help fight climate change. Homeowners who switch from heating oil to heat pumps save an average of up to $2,500 a year on their heating bill.

Without question, we must keep up our efforts to fight climate change. Doing nothing, as the opposition wants, would have a devastating impact on the environment, our economy, our communities and the health of Canadians. Canadians can count on us to keep implementing our actions to fight climate change and support them through this transition.

I firmly believe that this is the responsible thing to do. The cost of inaction would simply be way too high.

Canadians deserve a government that handles this file seriously and responsibly. That is what we will continue to do.

[Adam Chambers, Conservative, Simcoe North, ON]

In the 15 seconds I have left, I'll provide verbal notice of a motion. Out of respect for my new colleague from the NDP and the non-permanent member from the Bloc, I won't move it.

It is the following: In respect of amendments to Bill C-59 ruled in order and substantive by the Chair, that clause-by-clause for these respective clauses be paused until such time as officials present testimony on these amendments; that the Deputy Prime Minister and Minister of Finance, President of the Treasury Board or—it's “or”; I'm not being greedy here—the Minister of National Revenue appear for one hour to answer the committee's questions. However, in order to be expeditious with the bill, this does not prevent other clauses from being reviewed out of order.

If there are substantive amendments coming to this bill, we need to examine them with the proper testimony. We were shortchanged access to the CRA officials and other officials at the very beginning of this study, so this is the motion that has now been tabled in public.

Thank you, Mr. Chair.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

Mr. Smith, the title of this provision in Bill C‑59 and the way it's described or referred to is “Excessive interest and financing expenses limitation”. It seems like a pretty positive thing. I don't think any of us are in favour of excessive interest and excessive financing expenses. It seems, as a description, that we would be motivated to want to limit that.

Is that an improper description of this provision, in your view? You clearly don't want it to apply to your particular sector or industry. I'm just curious. Does your industry need excessive interest and excessive financing expenses, or is that just a misnomer, in your view?

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

Thank you, Mr. Chair.

I'd like to ask Mr. Powell or Mr. Smith from Electricity Canada a question. I'd like them to clarify certain problematic points in the new Bill C‑59 rules restricting excessive interest and financing expenses.

This new regime aims to make it more difficult to use tax havens, and to do so by attacking two schemes: the deduction of interest between subsidiaries, and hybrid arrangements. This is what the OECD, the Organization for Economic Cooperation and Development, recommended to combat tax evasion.

You, on the other hand, would like to see private companies that generate electricity excluded from these provisions, since you consider them to be public utility companies.

Can you give us examples of electricity generation projects that would be at risk if this amendment were adopted?

We're trying to get a clear picture of the consequences and of which companies would be affected. You mentioned Nova Scotia and its small modular reactors. Is it the same for the nuclear industry in Ontario? Would it also be affected?

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you.

Welcome to all of the witnesses.

Mr. Vichie, I welcome you to committee. I am so pleased with the advancements that you've been able to make in a short period of time. I certainly am pleased with the news out of Newfoundland and Labrador today about World Energy and their green light to keep moving. I think that really speaks to the work that is happening in Canada, certainly in Atlantic Canada, on global green energy, and I feel government always supports that work. Thank you for highlighting that in your opening comments.

If we could just drill down on that for a few moments, certainly as it relates to investment tax credits, could you again speak to why it is so important that we move Bill C-59 forward and why this legislation is so important?

[Trent Vichie, Chief Executive Officer, EverWind Fuels]

Mr. Chair and honourable members of the committee, thank you for the opportunity to present today.

My name is Trent Vichie. I am the chief executive officer of EverWind Fuels, Canada's most advanced green hydrogen development.

For the last two years, we have invested over $200 million in capital to pursue and push our projects forward. Last week, we were pleased to announce the completion of our front-end engineering design, which marked a major milestone in the development of the project and in the development of the technical and engineering requirements to build the project. In short, we are a significant supporter of the government's initiatives to move forward in terms of reducing carbon emissions, and we see hydrogen as a crucial part of this work.

As you will hear in our comments, the swift passage of the investment tax credits—first announced in the 2022 fall economic statement—are a crucial part of bringing these projects to life. The swift passage of ITC legislation is important for two reasons. First, it provides certainty to invest. Second, the passage of legislation also allows other parts of the government that administer the ITCs—namely, the Canada Revenue Agency and Natural Resources Canada—to roll out the administrative aspects, which are crucial to the effectiveness of the investment tax credits. Some of these areas are highly technical and need to be integrated with the engineering work. This leads to a need for speed on that.

Today, I am here to provide our perspective on Bill C-59, which implements certain provisions of the 2023 fall economic statement. Specifically, we will focus our comments on the clean technology investment tax credit.

First off, we are pleased the federal government has introduced a robust suite of policies to ensure Canada remains a globally competitive jurisdiction when it comes to clean energy. The fulsome set of ITCs and other public policy tools gives Canada the opportunity to be an investment destination of choice and a leader in this sector. However, to truly seize this first-move advantage, we must be swift and decisive in our public policy actions. The global race to provide clean energy to the world is on and competition is fierce. We have the opportunity to make Canada a leader in this space. The U.S. Inflation Reduction Act must be met with an equal or more robust policy response, and the ITCs play a key role in this.

With this context, we want to highlight two important commitments made in the fall economic statement.

First, a timeline was laid out with regard to the enactment of certain clean investment tax credits. For EverWind, the timeline around the clean hydrogen ITC is crucial, along with the introduction of legislation for the clean technology ITC through Bill C-59.

Second, the fall economic statement proposed clarity regarding the effect of repayable loans from Crown corporations and other public authorities on the investment tax credits. EverWind closed a $125-million loan with Export Development Canada in late November 2023. This proposal provides certainty that the loan will not delay the availability of various clean investment tax credits. We look forward to seeing this measure in the forthcoming bill.

With that background, the introduction of legislation for the clean technology investment tax credit is therefore most welcome, including the mechanisms for labour conditions, which we wholeheartedly support. As a general comment, the refinements from the August draft legislation are welcome and also consistent with the original framework announced in the 2022 fall economic statement.

My message to parliamentarians is simple: We need the legislation that will activate these ITCs to be passed without delay. The clean energy ITC and clean hydrogen ITC will help ensure Canadian green energy projects can develop with greater speed and certainty and can be cost-competitive on a global stage.

As I mentioned earlier, EverWind has invested nearly $200 million in our projects to date, in order to establish North America's most advanced green energy hub in the Atlantic Canada region. We are the only project in the western hemisphere to have completed FEED engineering. This shows Canada can lead the way, but we need all the public policy tools to be fulsome and operational in order to seize this opportunity in front of us.

As we are in advanced discussions on offtake, full certainty and accessibility of the investment tax credits will enable the signing of binding offtake agreements and the financial close—project financing and final investment decisions—on our multi-billion dollar project this year, with production at the end of 2025.

As we indicated in our consultation submissions, we have full certainty in the design and functionality of these ITCs to provide greater commercial certainty and establish Canada as a global green-energy leader.

I'll conclude by saying that the global energy movement towards green energy is rapidly accelerating. It's a critical time for the federal government to determine whether Canada will be a leader or a follower in the future energy economy. That is why we need to ensure that the clean technology ITCs and others are in place as quickly as possible. There's not a moment to waste in this fierce global race.

Thank you again for your time, and I look forward to questions.

[Michael Powell, Vice-President, Government Relations, Electricity Canada]

Thank you, Chair.

Good afternoon. Electricity Canada is the national voice for the electricity sector. Our members generate, transmit and distribute electricity in every province and territory. As the chair said, joining me today is Derek Smith. He's the VP of corporate tax at Emera Inc., and he may be better suited to answer some of your more technical questions because I'm not a tax expert.

Nova Scotia will be impacted by the EIFEL provisions included in Bill C-59.

Since 2005, the electricity sector has cut emissions in half, and today Canada’s grid is over 84% non-emitting. That's among the cleanest in the world. Our sector has been responsible for the majority of emissions reductions in Canada and will be the engine that powers a net-zero economy in 2050. The task to getting there will not be easy. Estimates project that we will need to generate two or three times more electricity than we currently do today. That growth must be done without compromising the reliability of our system or the affordability of energy bills for Canadians.

Bill C-59 is an important piece of legislation that helps enable that balance. In particular, the clean technology and CCUS ITCs in Bill C-59 are essential pieces of the puzzle. To this end, federal investments enable the competitive build-out of electricity infrastructure, while reducing the burden on Canadian ratepayers.

That being said, we've identified a few adjustments to these ITCs that we think would help ensure that they have the maximum intended impact. That includes expanding eligibility to allow commercial trusts to access the clean-tech ITC and ensure the projects held by these trusts are competitive; adjusting the draft definition of SMRs in the clean-tech ITC to those that are no more than 1,200 megawatts of thermal energy per reactor core; and then extending the full 50% value of the CCUS ITC until 2035, recognizing that delays on its deployment and the final clean electricity regulations have impacted project timelines.

It's equally important that other ITCs, including the clean electricity ITC, are moved forward to deployment as quickly as possible. We look forward to more details on that in the very near future. While these are provisions that help enable an affordable, reliable and clean electricity grid, there are provisions that serve as a barrier to these objectives. As outlined in our submitted brief, the excessive interest and financing expenses limitation, EIFEL, will inadvertently impact energy affordability for Canadians in various parts of the country and restrict the capital intended to build projects supporting net zero. The intent of these rules is to align with the OECD’s BEPS project. This is a positive step towards fostering a fair global tax framework and something that we support.

However, as some regulated gas and electric utilities are federally taxable and have some assets outside of Canada, they will be subject to the EIFEL rules while others will not, for example, those that are provincial Crown corporations. Due to this structure and the way rates are set, the utilities impacted by EIFEL will see increased costs passed to customers from interest on all existing and new debt.

We understand that broad sectoral exemptions could run counter to the spirit of the legislation, so we propose a targeted public interest exemption for regulated energy utilities and their holding companies. This approach is consistent with that of our peers, including the United States, Ireland and the United Kingdom, and is consistent with the OECD recommendation that these rules not apply to public benefit infrastructure. Such an exemption is appropriate for our sector as rate-regulated utilities are unique for several reasons.

First, as a highly regulated, capital-intensive industry, we must maintain high levels of debt to ensure that costs to consumers are spread over the life of a project. Debt levels of utilities could be 50% or 60% of their capital structure and are prescribed to the utilities by regulators. Second, regulated utilities are subject to a significant amount of scrutiny and control by provincial regulators in Canada. In this vein, every dollar a regulated utility spends or charges to a customer must go through a transparent and accountable process. Third, due to their regulatory structure, utilities must pass on certain costs to customers, including taxes paid.

Importantly, EIFEL will create a patchwork that will affect Canadians' energy bills differently across the country based on the taxable status and ownership of their local utility—and we've outlined this in a map that was included in part of our submission. You can't choose, as a customer of a gas or electric utility, to move to a different provider without moving. You have no choice about the utility you have; it's based on where you live. Creating winners and losers with EIFEL will create a patchwork of energy affordability winners and losers, and that's not something that anyone wants. We believe a targeted exemption will ensure fairness and avoid increasing energy bills for Canadians at a time when cost of living concerns are on the rise. That's why we'd encourage, in this case, a sectoral exemption on the EIFEL rules.

Thank you. We look forward to taking your questions.

[Stephanie Woo Dearden, Registered Psychotherapist, As an Individual]

Thank you, Mr. Chair.

Hello. My name is Stephanie Woo Dearden. I am a registered psychotherapist, practising from London, Ontario.

I'm here to be a witness to the parts of Bill C-59 that pertain to the Excise Tax Act and amending it to expand the GST/HST exemption to services rendered to individuals by certain health practitioners to include psychotherapists and counselling therapists.

I am grateful to be here not only because I get to speak on this issue, but I understand that this moment of this committee considering and researching this legislation means a lot to the psychotherapists, counselling therapists and allies, who have been asking the Canadian government to remove this unfair tax since 2004. I, along with my professional peers and colleagues, am heartened that the Canadian government has listened and finally taken action on this matter after this time.

Firstly, psychotherapy and counselling therapy are the same profession with a different name, based on provincial preference. I call myself a “psychotherapist” rather than a “counselling therapist”, because I reside in Ontario and am registered with the College of Registered Psychotherapists. If I were to move to Nova Scotia, the equivalent professional and regulatory body there would be the College of Counselling Therapists. It's the same profession but a different name.

Our profession has met the criteria of being regulated in at least five different provinces and territories in order to be included in the Excise Tax Act among health care professionals.

I am not an expert in tax law, so I will be commenting based on my experience as a psychotherapist and what I see in my practice.

Psychotherapy and counselling therapy can be an integral part of an individual's overall health. Our bodies don't experience physical health and mental health as separate. There have been documented links between depression and inflammation, implicating the immune system; the HPA axis, which is our body's stress response system, in tumorigenesis in cancer; and cortisol release and Crohn's disease, just to name a few.

A health care system that divides between physical health care and mental health care is what we are familiar with, but health involves supporting and nourishing both aspects within us.

Examples from my practice involve working with individuals living with conditions such as endometriosis, adenomyosis, cancer, Crohn's disease and thyroid disease. I have seen, in sessions, the way psychological and socio-emotional pain contribute to physical symptoms that aggravate my client's experience of these conditions. Addressing this pain in a therapeutic, safe and compassionate way can lead to tension release, the ability to regulate emotions, to step out of isolation, to connect with community, to ask for help and to advocate for oneself in the health care system. It's by no means a cure, but it allows my clients to live with a better quality of life.

Removing this tax on counselling therapy and psychotherapy signals that the Canadian government understands that the health of Canadians encompasses physical health care and mental health care, and that this understanding is written in policy.

From a business and consumer perspective, amending the Excise Tax Act to include psychotherapists and counselling therapists allows choice and fairness for Canadians seeking psychotherapy. Currently, social workers, occupational therapists and nurses are among the practitioners who can provide psychotherapy services and refer to themselves as “psychotherapists”. They are exempt from charging GST or HST. It is ironic that counselling therapists and psychotherapists, who have specifically trained to practise psychotherapy, have to charge tax on their services.

If a Canadian is living in a rural setting, where a psychotherapist or a counselling therapist is their main option for accessing mental health care, they would have to pay HST. This puts them in an unfair situation compared with an urban counterpart, who may have their pick among professionals registered to different professional regulatory bodies and can choose one charging a lower fee and who doesn't charge tax.

This person—in an urban setting in our example—gets to keep an extra $10 to $20 in their pocket per session, compared to someone who's living in this rural setting and seeing a counselling therapist or psychotherapist. If both these individuals see a therapist biweekly, that would be an extra $240 to $480 saved over a year for our urban resident. There are many things they can do with that money—getting more sessions if they need it—so in my view this exemption is also about fairness for Canadians seeking mental health services across the country.

There is more I can say on this, but I am sensitive to my time. MPs from multiple major political parties have written op-eds and made statements declaring this tax to be unfair, so I think that it is straightforward, going forward, that amending the Excise Tax Act to include psychotherapists and counselling therapists is one step the Canadian government can take to make mental health care more accessible to Canadians.

[Lindsey Thomson, Registered Psychotherapist and Director, Public Affairs, Canadian Counselling and Psychotherapy Association]

Thank you, Mr. Davies. I appreciate that. It's good to see you as well.

That is part of the issue, absolutely. For our piece—the current private member's bill, Bill C-323, which is leading into Bill C-59—what we're looking at is a tax exemption for counselling and psychotherapy services. I could chat your ear off for an hour about a more systemic look at ensuring that the two different professions are seen as one and the same and not dealt with separately. For example, the CRA recently released proposed amendments. It had one document for counselling therapy and a separate document for psychotherapy, which indicates to us that there's still some work for us to do in terms of bridging that gap of knowledge across all levels of the public and the government as well.

[Don Davies, NDP, Vancouver Kingsway, BC]

Well, maybe you don't, but lots of people do. It may not be the experience.... I come from Vancouver, which is very different and a far cry from Cobourg. I tell you, there's a big lack of affordable housing in Vancouver and we do need federal support there.

I'll turn my attention now to the psychotherapy association. It's good to see you again.

In your May 2022 written submission to the Standing Committee on Health, the Canadian Counselling and Psychotherapy Association wrote the following:

The profession of counselling therapy/psychotherapy meets the threshold for tax exemption in the Excise Tax Act because it is regulated in five provinces. However, because the profession does not regulate the same title in all five provinces, the Department of Finance does not accept that counselling therapists and psychotherapists are the same profession and meet the minimum threshold of regulation in five provinces.

I'm trying to understand what we're doing in Bill C-59. Am I correct that this bill would correct that problem and then eliminate the GST/HST in all provinces, whether they're regulated the same way or not? Do I have that correct?

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

Thank you. That is very clear and very useful.

Mr. Castiblanco, this afternoon we will be hearing from representatives of Electricity Canada. They are going to talk to us about tax deductions for interest expenses. Obviously, it is important to do more to combat the use of tax havens and tax avoidance, and those deductions are one of the methods used. We welcome what Bill C‑59 provides in that regard.

That said, I would like to understand better why the electricity sector should be excluded from that. What would Bill C-59 prevent by wanting to more effectively combat the use of tax havens?

[Sara Eve Levac]

In our opening remarks, we talked about the right to repair. We explained that in reality, it can be difficult to repair a lot of products, because you need specialized tools and the parts are difficult to obtain. Our fear is therefore that the provision requiring that a means of diagnosis and repair can be readily supplied might mean that a lot of products are exempted from this new obligation.

Consumers also have trouble getting their property repaired because repairs are very expensive. Sometimes it is better to buy a new product because the cost of repairing is very high and obtaining the parts needed can take several months. The bill does not address those problems for consumers. It might therefore be desirable to consider a provision that the time for obtaining parts and the cost of repairs must be reasonable.

We also talked about applications brought by private parties. Bill C‑59 will expand the possibility of bringing private applications for violations of the Competition Act. We believe that is a positive improvement. The bill will also allow monetary awards to be requested for certain violations of the act, but not for deceptive marketing practices. We therefore recommend that this be made possible.

On the subject of greenwashing, the bill will prohibit false or misleading representations about a product. However, that proposed prohibition would not apply to general representations about the environmental impact of a business. For example, if a business says it is carbon neutral, that is not a representation about a product. We are therefore asking that the prohibition be extended to general representations made by businesses. That exists in the European Union, which has adopted a new greenwashing directive that specifically applies to general representations by a business.

If I may, I would like to talk about one last thing. The bill proposes a new system for the certification of agreements or arrangements related to protecting the environment. We have questions about that provision, however, primarily about the grounds provided by the bill for rescinding certificates. At present, the grounds for rescinding a certificate do not include circumstances in which an agreement no longer serves a purpose. For example, if two businesses agreed to change a chemical component of a product because it would be less harmful to the environment, and scientific discoveries subsequently proved that the component had negative effects, that would not be a circumstance that could justify a request to rescind the certificate, according to the terms currently provided in the bill.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

It's a sad story.

I'll finish up with the Canada water agency, which was announced in Bill C-59.

Cobourg Beach is an absolutely beautiful treasure. I think it is one of the prettiest places in all of Ontario, but the pier is in need of some repair. Perhaps you could talk a little bit about that.

[Lucas Claveland]

As a business owner, one of our biggest problems is retaining staff, because there are no available rentals in our community. A one-bedroom apartment in Cobourg currently rents for about $1,950, and for two bedrooms, you're at $2,500-plus. At present, our community has to bring in between five and eight school buses of workers, because we have such a booming industrial complex within our community. We have zero square feet of industrial space. Our entire downtown is full of businesses like it hasn't been in 45 years, yet we don't have anywhere for workers to live in our community.

I notice in Bill C-59 that there are a lot of initiatives being put forth. We know at the county level as a service provider that the way we work with the different levels of government matters. I have a variety of recommendations that I will submit to this committee afterwards regarding how we can implement some of these changes in a more meaningful way that will help those service providers, but, Mr. Lawrence, the reality is that when the mayor of the community he lives in, who owns a business, can't afford to live in that community, that's just the tip of an iceberg that clearly is a problem we need to start addressing.

[Sara Eve Levac, Lawyer, Option consommateurs]

Thank you.

Bill C‑59 proposes a number of amendments to the Competition Act.

One of the amendments proposes to provide a form of entitlement to a remedy by allowing the Competition Tribunal to require that a business supply a means of diagnosis or repair for a product, if the means can be readily supplied.

Option consommateurs is doubtful that these amendments will be sufficiently robust to enable consumers to repair their defective devices.

Some devices require specialized tools or have components that are difficult to access. The effect of the design of the devices might therefore be to exempt the businesses from these new obligations because of the difficulty of supplying a means of diagnosis or repair. We believe that the requirement that the means of diagnosis or repair "can be readily supplied" should be removed.

The cost of repairs can also be very high. This prohibitive cost sometimes makes purchasing a new device more attractive than repairing it. The proposed amendments do not allow for counteracting this situation.

In our brief, we also propose certain additional measures. In particular, the Competition Tribunal should be able to make monetary awards in private applications dealing with deceptive marketing practices. The current amendments preclude that possibility, although they would allow it for private applications based on other violations of the act.

As well, the greenwashing provisions should be amended to cover general representations by a business relating to its environmental impact. The bill only prohibits representations relating to a product.

It will be our pleasure to answer your questions.

Thank you for your attention.