Bill C-59

Fall Economic Statement Implementation Act, 2023

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

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

Fall Economic Statement Implementation Act, 2023

[Chris Bittle, Liberal, Parliamentary Secretary to the Minister of Housing]

Madam Speaker, we have been at this for a while. I have been listening a lot, and all I have been hearing from the other side are slogans and not actual answers to things. It is getting so ridiculous that one member decided to read purported emails from his constituents and angrily brought it over to slam it on our desk, but it was edited. He was reading an edited email. He was not even reading his own constituent's writing.

I was wondering if the hon. member could speak to the ridiculousness of the sloganeering that the Conservatives are offering. They are not even offering real answers.

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

Madam Speaker, it goes to what I was saying during my speech, which is that Conservatives are taking people's anxieties, turning them into a weapon and then using it against them. They are trying to convince Canadians that inflation is completely driven by the government and that spending more money on people through budget measures is going to drive up inflation even further, but only the opposite in both of those regards has proven to be true.

Conservatives are really good with their slogans, but they are not so good when they switch from having to rhyme off three things to four things because inevitably one of them misses at least one of them, except for a few key ones that are really good. They have been practising a lot, but the rest of them keep missing one. Although they are good with their slogans, it is not doing anything for Canadians.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Madam Speaker, let us be clear that a Conservative government would axe the tax, build the homes, fix the budget and stop the crime. Let us bring it home.

I have a very specific question for the member, and I hope we will get an answer for it. He has promised an answer. Everyone has heard him say that he is going to give us an answer. In what year does he believe the budget should be balanced, if ever?

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

Madam Speaker, on the first part, I want to congratulate the member because he is one of the members who can get all four of those out perfectly. He did not lose eye contact and did not show that he may be forgetting one. It was very well done.

To answer his question, I would ask him this: In what year did Brian Mulroney balance the budget? In what year did Stephen Harper balance the budget?

[An hon. member]

Oh, oh!

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

Madam Speaker, I am answering his question.

For growing economies, we know that, as long as our growth is outpacing our deficit, we are in a fiscally responsible position, and that is the reality.

They are laughing right now, but they should talk to Stephen Harper because that is all he did, or Brian Mulroney. It is exactly what they did. They never balanced a budget. They balanced one budget in 2015, apparently, by slashing veteran services, and then they had another surplus in 2007 on the heels of Paul Martin's surplus. However, the reality is, and this is exactly what Conservatives do because they know that, as long as our economy is outgrowing our deficit, we are in a fiscally responsible place.

[Laila Goodridge, Conservative, Fort McMurray—Cold Lake, AB]

Madam Speaker, it is very simple: axe the tax, build the homes, fix the budget and stop the crime. That is the answer, and I am sorry—

[Some hon. members]

Oh, oh!

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

This is not a conversation.

The hon. member for Fort McMurray—Cold Lake.

[Laila Goodridge, Conservative, Fort McMurray—Cold Lake, AB]

Madam Speaker, I understand that the member does not like hearing the slogans, because the Conservatives are, as he said, very good at communicating with Canadians.

My question is very simple. In what year will this magical budget balance itself?

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

Madam Speaker, she was not successful, because she gave one and then she had to look down. She could learn a lot from the member for Sherwood Park—Fort Saskatchewan, because his delivery was really good.

I go back to exactly what I said before, which is that what matters the most is how the economy is performing in relation to the deficit that is projected. That is what matters the most. Conservative prime ministers have known that. Conservative premiers know that. Everybody has always operated in that manner.

If what the member is saying was true, then one would think that these fiscally responsible Conservative prime ministers all throughout Brian Mulroney's time and all throughout Stephen Harper's time would have just done exactly what the Conservatives are saying, but they did not.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Madam Speaker, I understand consent was sought and given for me to split my time. Therefore, I would ask to split my time with the hon. member from Saskatoon—Grasswood.

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

Is it agreed?

[Some hon. members]

Agreed.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Madam Speaker, while we are discussing what we renamed the SES, the summer economic statement, Canadians are experiencing the worst cost of living crisis in 40 years, due to a lack of affordable housing, the carbon tax, and record-smashing food bank use and grocery prices. Canadians have always had common sense. When Canadians look at their own expenses, they budget. They stretch dollars. They choose whether they go on vacation or whether the kids go to after-school activities. They go to a grocery store and have to budget what they are buying. They have to look at practical solutions to everyday challenges with resilience and resourcefulness.

However, common sense is like deodorant; the ones who need it the most never use it. With respect to this level of government, Canadians are shaking their heads in disbelief because of the lack of common sense on the opposite side of the aisle. This is the greatest country in the world. We have great people, innovative minds, great institutions and hard workers. We have resilience. Canadians invented peanut butter, the zipper, the Ski-Doo and the Sea-Doo, but common-sense approaches have become rare commodities.

In 2015, among the Liberal campaign promises was the promise to help the middle class and those looking to join it, as well as tax cuts for the middle class. What do we see now? We see more people who are out of the middle class. We see tax increases. The carbon tax alone went up 23% on April 1. More people are finding themselves out of the middle class, and more people are finding themselves taxed, as we have a government that lacks common sense.

Look at what the government could do if it looked at the basics. Let us say a dozen people went into the woods to try to start a community. What would be the first things they would do? They would build shelter. They would hunt and find food. The community would make sure it had a place to look after the children and one another, that everyone would be well looked after.

After nine years under the government, more Canadians than ever before are finding that rent has doubled, mortgage payments have doubled and the amount needed for a down payment has doubled. They are finding that grocery prices are $700 more this year alone. Groceries have gone up 24% over the last four years. Look at the cost of heating one's home. All prices for farmers growing their crops have gone up. The government's common sense has just disappeared. Let us look at some examples of its lack of common sense.

The government borrowed $400 billion back in the day when the Prime Minister said that interest rates were at historic lows. When we borrowed $400 billion, the government borrowed it over the short term. The government did not look ahead 20 or 25 years as a family would when looking at a mortgage. The government looked at the short term.

Now the debt is coming up for renewal. Do members know how much the renewal is going to cost us just in 2025? It is going to cost $12 billion, because the government did not have the common sense to look at long-term loans to look after Canadians' money. I wonder how many water bombers we could have bought and had fully crewed to be operating in B.C. right now to look after forest fighters.

Look at NATO and NORAD. They are our trusted allies. NATO and NORAD have asked us for years to contribute our 2%. We even passed a resolution in the House to do so, but we have not contributed. Because of that, we do not have a seat at the table. What happens to international security if we are not at the table? We will also not be at the table when it comes to international trade because our trading partners will work only with partners who work with them for security.

What is happening up north right now? The fact is that we do not have a base. We cannot even land an F-35 fighter in the north right now in Canada? We have jets being purchased, but it has taken 10 years. Remember when we said that the F-35 was too much? The Prime Minister said we were not going to buy it, and nine years later, of course, we are buying it for how many billions more? However, we cannot even land the thing in the north. Finland is buying half as many F-35s as we are, and it has already built a runway to land in the north to defend the northern border.

We talk about icebreakers in the north. We have one barely functioning icebreaker. Do members know how many icebreakers Russia has in the north right now? It has sixteen. Do members know how many China has? It has forty. We did not have the common sense to put any money toward our security or the north, which we really need in order to play our part in NORAD and NATO, on behalf of our allies in the U.S. and, of course, just for our security.

We have talked about drugs in hospitals. We are saying that smoking crack at a hospital or bringing in a weapon should be outlawed. More importantly, I visited Millhaven maximum security prison in Kingston only two weeks ago; three inmates there were high on drugs.

After nine years, we have mergers and more mergers under the government. We talk about competition. Part of the bill is about competition. However, under the government's watch, the merger of HSBC and RBC was approved. Because of that, mortgage rates have gone up. HSBC used to have a mortgage rate that was 1% lower than RBC's offering. Right now, that is costing the average taxpayer, who has a $500,000 mortgage, $300 more a month because that merger was approved.

We had WestJet buy Sunwing. Only a couple of months later, it was announced that Sunwing was going to shut down. There is only one competitor in the west. Sometimes it is Air Canada; most of the time it is WestJet. We had Rogers buy Shaw. What happened two months ago? It was announced that cellphone prices were to go up nine dollars a month. When we look for competition, it is not there.

The bill would bring in some aspects of competition. Thanks to the Competition Bureau, and dare I say, some amendments by the NDP, we are going to look at ensuring that we have no mergers approved that have a market share of over 30%. At the end of the day, the government has approved more mergers.

Open banking is probably the closest thing we can have to actual competition coming to one of our oligopolies right now. Open banking in Canada would open up the doors for Canadians to bring them financial freedom. One example is this: If Canadians have a Wealthsimple account, they have to screen scrape and find different ways to get through it. The government makes it really difficult for people to try to use a new banking app. This app right now pays Canadians 5% on their cash balance daily. What is the average bank interest rate right now? It is 0.2%. I think if someone had $10,000, over 10 years, they could make $100. Competition is freedom for Canadians. Open banking was not in the fall economic statement or in the new budget, to make that a reality for Canadians.

We are talking about no common sense. The government has hired 100,000 employees, a 40% increase since 2015. However, it takes 58 days to get an email back from CRA, compared with 43 days in 2015. Someone should try getting a passport. There has been no efficiency. There is more government and less efficiency.

On housing, the $4.4-billion housing accelerator has not built one home. We have a lack of skilled trades. Here is my favourite stat from last year, as we are talking about no common sense. We brought 1.3 million immigrants to Canada, new Canadians, permanent residents and TR. Do members know many home builders we brought last year? It was 4,300, and we wonder why we have a housing shortage.

We need immigration. Our birth rates are extremely low. We need people to come in, but when we are looking at immigration, let us make sure we are also looking at building homes first, so we have a place for people to go and house prices do not go sky-high. We even had the member for Winnipeg North say that MAID has saved lives. That was a statement used. There is no common sense.

Another one of my favourite examples is that the government has cut the budget to the Information Commissioner at a time when access to information is at an all-time low. The Ethics Commissioner had their salary cut when the workload has never been higher. Common sense is not common. Canadians have common sense, but the government does not.

It will only be in electing a common-sense Conservative government that we once again restore common sense to Canada and to Canadians. Of course, we will axe the tax, build the homes, fix the budget and stop the crime. We are also going to create competition for a change, for my home, for everyone's home, for our home. Let us bring common sense home.