Finance Committee on May 30th, 2006

[The Chair, Conservative, Brian Pallister]

Are you developing a framework for the discussion?

[Serge Nadeau]

Exactly. In fact, today I was talking with Hilary Pearson, president of Philanthropic Foundations Canada--

[The Chair, Conservative, Brian Pallister]

Then you have started the dialogue.

[Serge Nadeau]

It was not a formal dialogue, but I was talking with her about how we might proceed. We are at this time more at the stage of discussing how we are going to proceed on it, because let's remember, the budget was only three weeks ago or so.

[The Chair, Conservative, Brian Pallister]

Yes, that's quite true, but any time I hear about discussions leading to a framework for future discussions that may occur, I'm a little concerned that action is going to follow much later. Can you assure the committee that won't happen?

[Serge Nadeau]

I'm sure you agree we have to start somewhere. I'm sure that given the commitment in the budget, we will deliver, and something will come out of it.

[The Chair, Conservative, Brian Pallister]

I'm sure many Canadians would urge you to proceed post-haste on that issue.

Mr. Dykstra, you had some questions, sir.

[Rick Dykstra, Conservative, St. Catharines, ON]

Thank you, Mr. Chair.

I wanted to bring some clarification to one of the things we've talked a little bit about here that Ms. Wasylycia-Leis brought up and responded to, in terms of regression if the GST were to be increased.

The economic statement released by the previous government at the end of the year indicated a number of folks at the lower end of the income scale would be off the federal tax rolls. What was that figure? I thought you quoted it.

[Serge Nadeau]

I don't remember the figures exactly, but I can tell you that with this program--what has been proposed in the budget--200,000 more persons will fall off the tax rolls by the end of two fiscal years.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

The minister stated that this morning.

[Rick Dykstra, Conservative, St. Catharines, ON]

That comes out of the economic statement.

[Serge Nadeau]

What comes out of the economic statement.... What I'm saying is that the statistics we have show that with the tax relief plan proposed in the budget, there will be an additional 200,000 people off the tax rolls compared to the--

[Rick Dykstra, Conservative, St. Catharines, ON]

To be clear, statistics at the ministry show clearly that 200,000 more people will benefit from this strategy than would have from the former strategy.

Just getting back to the whole issue that's been touched on with respect to the excise tax for small wineries, can you give a bit of an overview of exactly how that would benefit small wineries and what it consists of?

[Carlos Achadinha]

The relief is not just for wineries in general. It's for 100% Canadian wine, so wine that is made from 100% Canadian-grown product, for example. The relief will mean that there will be no excise duty applicable on the products they produce from that particular good, so that should assist the industry and it should help them reinvest. These are presentations they've made to us.

[Rick Dykstra, Conservative, St. Catharines, ON]

Sir, are there any financial predictions you made regarding what kind of number that would look like at the end of this fiscal year, 2006-07?

[Carlos Achindha]

A lot of it would depend on production because it's a production-based number. You could run off previous years and you'd have to get a sense of how much 100% Canadian wine was made before, and it would just be a matter of looking at the volume of 100% Canadian wine and multiplying it by the tax, the duty rate, and that would be what the relief would be. That will vary from year to year.

[Rick Dykstra, Conservative, St. Catharines, ON]

Okay.

Mr. Pacetti was asking about the whole aspect of how the tax credit process would actually work its way through the system. Maybe you could just clarify how, for example, the child sports tax credit would work its way through for someone who is filing their tax returns at the end of the year.

[Gérard Lalonde]

Sure. As I indicated, in the budget some of the parameters of the child fitness tax credit are still open for discussion by an expert panel, so I can't give you an exact answer as to how it would play out. But in general terms, you would have a parent of a child pay fees for a physical activity, they'd get a receipt for those fees, and when it's time to file their taxes they can claim up to $500 per child who would be eligible for a tax credit at the lowest personal income tax rate for the year. So for 2007 and subsequent taxation years, 15.5%.

We talked a little bit earlier about e-filing, and of course there are a number of provisions in the Income Tax Act that ostensibly require receipts, and they're a little bit difficult to send through the e-filing process, so you keep your receipts in your file at home. When you file your return, you e-file it, and you are not required to truck down to the CRA with your receipts. If ever the CRA were to ask for proof of the amounts claimed, at that point you'd be required to show your receipts.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. Dykstra.

Now, Mr. McKay to conclude.

[John McKay, Liberal, Scarborough—Guildwood, ON]

I'm batting cleanup. I was originally going to ask Mr. Turner's question, and then he asked the question and I decided not to ask the question. Then he got such an unsatisfactory answer that I decided to ask the question again.

If I signed a deal in January of this year--$400,000 for a piece of real estate--closing in September, I have signed away my GST rebate. The sale is calculated on a 7% net and the remittance is based upon a 6% net. What ability does the consumer have to retrieve that obvious savings on the part of the builder?

[Pierre Mercille]

In your scenario, the Budget Implementation Act provides a transitional rebate. If your deal has been signed before budget day and ownership and possession is transferred in September in your example, the builder has to remit based on the 7%.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Excuse me, why at that point? The tax is not chargeable until the closing.

[Pierre Mercille]

Because this is the transitional rule we provided for residential complexes in the legislation. What is happening now is that the purchaser will be entitled to that special transitional rebate of 1% of the tax, and they have to file a rebate claim with the CRA. Taking into account the fact that he gets the new housing rebate, he will receive this rebate sent directly to himself. He has to file a rebate claim.

[John McKay, Liberal, Scarborough—Guildwood, ON]

You will be notifying the bar and any other real estate persons that on closings where the deal was struck prior to May 2 and the transaction closes subsequent to July 1, they will be able to apply. The builder will remit at the rate of 7% regardless, the government pockets the money, and if the consumer applies for it, they will get it back from the government. Have you worked out how that's going to happen? Are you publicizing that issue?

[Pierre Mercille]

Yes, CRA will put out a publication and the form to explain that. The tax change will be publicized in the way they usually are, mainly by CRA and by the fact that the budget bill received publicity and things like that.