Evidence of meeting #77 for Environment and Sustainable Development in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was register.
A recording is available from Parliament.
Conservative
Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
Yes. One MP also talked about Toronto's Distillery Historic District, which has been modernized.
Conservative
Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
That is a very good question to which there is no good answer.
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
We could go into greater detail in this regard, but we do not have enough time. Our speaking time is very limited, unfortunately.
In your presentation, you talked about fairness and said that a tax credit would benefit higher-income individuals. I would interpret that differently. Someone with a higher income probably does not need tax credits as much. The middle class could probably benefit more from that 20% credit. Yet, you said that this would have a more positive impact on higher-income individuals.
Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
That is not clear. I have to admit that we do not have a lot of data about that. As Mr. Aldag said, it is not simply property owners, but also workers and beneficiaries. Ultimately, we have to look at who the owners those buildings are who might incur those expenses.
Conservative
Liberal
The Chair Liberal Deb Schulte
Sorry. Yes, I know.
We were going to cut it off at this point and go into committee business, but I understand there's still real interest in keeping this going, so we're going to have one more question from this side and one more from that side. Then we'll cut off and very quickly clear the room to go in camera for committee business that we must do today.
I'll turn it over to Mr. Fisher.
Liberal
Darren Fisher Liberal Dartmouth—Cole Harbour, NS
Thank you very much, Madam Chair, and thanks, folks, for being here. We appreciate this testimony.
I guess I'll ask Mr. LeBlanc a question. It's a question that was asked of Mr. Van Loan by, I believe, Mr. Gerretsen, regarding tax credits versus grants. Mr. Van Loan said there's room for both. I don't want to paraphrase or put words in his mouth, but I believe he said that the grant process is the issue that would make a tax incentive or a tax credit better than a grant. We know that $10 million is ending this year and it's going back to the $1 million. I agree with Mr. Aldag when he says that's notoriously low, but it's a huge gap between what Mr. Van Loan suggested the uptake would be, which is somewhere around $55 million with tax credits.
Can you comment about our ability to come up with a grant process with a pool of money, maybe a ceiling of money in it, and can we ensure that the process is such that this will benefit heritage in Canada, yet still not necessarily be a tax credit?
Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
That's a really good question. In some ways, there's a middle ground because, if you look at the U.S. credit and the amount of oversight that's involved, there is certification before the work is done, certification after the work is done, the possibility of inspection, and recapture of the credit. It's partly because the credit in the U.S. is for income-producing properties, but if you sell the property within five years after getting the credit, some of it is clawed back from you.
That level of oversight isn't common. Obviously, in a self-assessment tax system, there's the need for verification and sometimes audit, but at that level, it's almost more like what you would see in a grant program. It just happens to be run through the tax system. That allows a bit more flexibility in some ways, which should have some positive impacts. In terms of the specific grant program itself, I'll turn to my colleagues.
Liberal
Darren Fisher Liberal Dartmouth—Cole Harbour, NS
I'd be interested in your thoughts on whether we could have a grant system that would have that level of oversight and that we could do instead of a tax incentive.
Vice-President, Indigenous Affairs and Cultural Heritage Directorate, Parks Canada Agency
I'm not sure what you mean by “that level of oversight”. We currently have a grant program that has a fairly high level of oversight as it is. We do certification to help protect—
Liberal
Vice-President, Indigenous Affairs and Cultural Heritage Directorate, Parks Canada Agency
No, we don't have that.
Liberal
Darren Fisher Liberal Dartmouth—Cole Harbour, NS
There are no clawbacks.
We all support this cause. I'm just curious as to why there would need to be a huge difference between a pot of money from the government or a tax credit. I guess that's my question, if any of you want to answer. Why couldn't we do one or the other? Mr. Van Loan feels that it's the grant process that causes the issue, and it might get political. It might have the government or perhaps a board or a committee set up to pick winners and losers, whereas a tax credit would solve that issue.
Are any of you interested in commenting on how we might come forward with a grant process that is certainly more significant than the $10 million going back to $1 million, but maybe covers off some of the government's concerns, or those of Finance or Parks Canada, regarding a tax credit?
Vice-President, Indigenous Affairs and Cultural Heritage Directorate, Parks Canada Agency
What Mr. Van Loan was probably referring to is just the normal administrative process of applying for a grant, and the review process, and the certification that comes with this, whereas a tax credit is automatic. If you meet the criteria, you apply and you will receive the benefits of the tax credit. With a grant program, again there's investment up front in terms of applying. When resources are limited, you may or may not be the recipient of a grant in the end. To some, it could be a disincentive to applying, and there's also a certain time frame around the administration of a grant.
Chief, Charities, Personal Income Tax Division, Tax Policy Branch, Department of Finance
I'll just chime in. We're not experts on grant programs, but in terms of our concerns on the tax side, certainly a grant program would respond to a number of concerns in terms of controlling costs. We are concerned about the costs. If you look to the experience down in the U.S., it's not at the federal level, but there are a number of state credits that actually build on top of the federal credit. In the majority of the states that have credits that complement the federal one, they have some form of cap. There has been some discussion. It's either on an aggregate basis per year or on a per-project basis. A grant program would help to control that.
Certainly we have the same concerns as Parks Canada in terms of the amount of rigour there should be around the granting of tax credits. If you set up the proper grant program, you could address a number of those concerns.
Liberal
John Aldag Liberal Cloverdale—Langley City, BC
This is for Finance.
You noted that tax policy encourages owners to make contributions to registered charities. Does Finance actually track the level of those contributions to the heritage sector?
Chief, Charities, Personal Income Tax Division, Tax Policy Branch, Department of Finance
We don't currently. It's not broken down that way. Registered charities have to file an annual information return. To the extent that they're reporting in their activities section that they're maintaining heritage property, we could possibly do a bit of work. I don't know what would come out of that, and whether or not we would get good numbers, but we could look at that and get back to the committee.
Liberal
The Chair Liberal Deb Schulte
That would be great. T
hat's perfect timing.
We have one more questioning set, beginning with Mr. Fast.
Conservative
Ed Fast Conservative Abbotsford, BC
Thank you.
My first question is for Parks Canada officials.
The tax credit and the accelerated capital cost allowance are directly linked to being registered federally, correct? Under the bill, you can only apply if you qualified by being registered on the federal register, right?
Would you agree with me that the bill, as presently drafted, would act as an incentive for owners of buildings that are not federally registered to register?