Finance Committee on Nov. 23rd, 2010

[Mike Wallace, Conservative, Burlington, ON]

My concept was to move clauses 2 to 199. I know it will pass on division, so that's not really an issue. There are no amendments, but if there are certain clauses people have questions on, I'm happy to continue on.

[The Chair, Conservative, James Rajotte]

I have Mr. Pacetti.

Are there any other members who have questions? Mr. Mulcair and Mr. Szabo.

Mr. Pacetti.

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

Thank you, Mr. Chair. I have just two quick questions.

I don't remember getting an answer to a previous question. When does the department expect to make the change for being allowed to appeal zero assessments?

[Gérard Lalonde]

The department, of course, wouldn't be in a position to make such a change. Parliament has to do that, so we'll prepare the legislation for the minister and it's up to the minister to include it in a bill.

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

How long would it take to prepare that type of legislation?

[Gérard Lalonde]

That type of legislation ought not to take that long to do, but within the parliamentary process and when the minister decides to introduce that bill, that's within ministerial responsibilities.

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

Can we apply retroactively?

[Gérard Lalonde]

There are some wrinkles with respect to taxpayers who have already instituted a case and had a decision from the tax board. In fact, we're aware of only one. We're looking at that. With respect to retroactivity, generally, if somebody hasn't appealed yet, then it should be okay.

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

Just a quick question in terms of the air travellers security charge. Are you making an amendment to the previous implementation act? Basically, you're adding certain crown agents to be protected from civil liability claims. Why does it take 13 clauses to do so?

[Pierre Mercille, Senior Legislative Chief, Sales Tax Division, GST Legislation, Department of Finance]

Actually, it only takes one clause. The other amendments to the air travellers security charge deal with online notices and paper burden, I assume.

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

My next question is on the charitable disbursement quota to reduce the paperwork. How is that going to work? Because of the stories we hear with non-profit or charity organizations that have been running into trouble, shouldn't we have more surveillance instead of giving them an easier time?

[Tim Wach]

The changes to the disbursement quota are not intended to affect the ability of the CRA, Canada Revenue Agency, to oversee the activities of the charitable sector. In fact, the changes in Bill C-47 introduce some stronger anti-avoidance rules that are intended to address some transactions that we had become aware of whereby charities were engaging in some activities that might be viewed as contrary to the disbursement quota rules as they stand.

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

I didn't see that part. All I saw was that you were going to reduce the paperwork or the regulatory burden on the disbursement quota.

[Tim Wach]

The elimination of the disbursement quota as a function of charitable receipts clearly will make it easier for charities because they will have a disbursement quota that they no longer have to worry about, or at least one that used to be in place. And raising the threshold of the disbursement quota that is a function of assets that are not used in charitable activities from the $25,000 to the $100,000 threshold will also eliminate, for some of the smaller charities, filing requirements. They'll still have to file with the CRA. They'll still be subject to CRA supervision. And as I mentioned, there are within Bill C-47 anti-avoidance rules that were introduced, and they were announced in the budget as well. The intention to introduce these rules--

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

Sorry, I don't mean to interrupt. Just for that question, where has that anti-avoidance gone? That's all I'm asking.

[Tim Wach]

I would have to pull out--

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

Pull it out for me sometime.

[Tim Wach]

Okay. I will do that.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Mulcair.

[Thomas Mulcair, NDP, Outremont, QC]

It is fine. It was in response to Mr. Wallace's request that we start. To help you determine how we are going to proceed, I just wanted to let you know that we are going to vote against Bill C-47 and its various clauses, and I will ask for a recorded division on each clause.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Szabo, please.

[Paul Szabo, Liberal, Mississauga South, ON]

It's a good thing question period is coming.

Gentlemen, I had the opportunity to attend the briefing that officials gave when Bill C-47 first came out. As far as I recall, there were very few questions, and that I think was a credit to the work that was done by the officials, to be there, to be prepared, and to answer whatever questions there were.

On the TFSA, the tax-free savings accounts--and you may know that I asked the minister about that--this is a very straightforward, understandable intent, to be able to set up an account in which the income from that will not be subject to taxation, subject to certain limits per year. But the number of amendments, the scope of the amendments that have been proposed in Bill C-47 with regard to over-contributions, prohibited investments, attributed income, non-qualifying investments, etc.... It's a fair bit, and it strikes me that when you see all of these things...this was a very sloppy job, in my opinion.

I would have thought that any program worth its salt would have had a rigorous review, due diligence, and a sign-off by everybody who touches this thing. Did that happen?

[Gérard Lalonde]

You're looking into some older history, and that's why Mr. Wach is not responding, but I was at the department at the time when that was being developed.

It was a difficult balance to be presented. We had some existing registered plans, for example, the RRSP, the RDSP--registered disability savings plan. We also had deferred profit savings plans and other plans of that sort. In general, there are a series of qualified investments for those measures, and there was a policy decision made to extend the same list of qualified investments to the RDSP.

Now, it became apparent after the TFSA was put in place that some fairly aggressive transactions were being proposed to try to maximize the amount of income showing up in the TFSA. As the minister indicated in the press release that introduced the measures, the government will still be taking a close look at some of these transactions under the general anti-avoidance rule. So no, I wouldn't say it was a sloppy attempt at it. I think it was surprising, the reaction that the tax community responded with in terms of trying to squeeze the most possible out of the TFSA, and the government reacted quickly when it became apparent that some Canadians were willing to do so.

[Paul Szabo, Liberal, Mississauga South, ON]

The minister said, and I think you basically repeated it, that whenever you bring out a tax law, people look for ways, they always look for ways--it always happens--to get around it or milk it for its benefit, in case the government may have forgotten something, which seems to have been the case.

I ask the question again. Was there a proper review, due diligence, and sign-off by everybody involved in this TFSA before it was introduced?

[Gérard Lalonde]

The department developed the parameters of the program in conjunction with the minister's office, and the result was what was included in the bill and approved by Parliament. Was there a proper review all the way through? Yes. It was reviewed by the department, it was reviewed in the minister's office, it was reviewed by the government writ large, and it was reviewed by Parliament.