Finance Committee on March 5th, 2013

[The Chair, Conservative, James Rajotte]

You have 30 seconds.

[Murray Rankin, NDP, Victoria, BC]

This is for Ms. Plant.

The Auditor General did a report in 2009, which has been very helpful to the committee. Has there been ongoing dialogue with the finance department and others on the issue of transparency or on this issue in particular of the mammoth bill we have been faced with? Since then, have you had any input into the process?

[Vicki Plant]

We haven't had any particular conversations about this bill, Bill C-48, in particular. We do follow up our recommendations. We've had both the Canada Revenue Agency and the Department of Finance provide an assessment of their progress with our recommendations, and as one of the finance officials mentioned earlier this morning, the internal audit branch at the Department of Finance did a follow-up report as well on progress on our recommendations.

[The Chair, Conservative, James Rajotte]

Okay. Thank you.

Thank you, Mr. Rankin.

Ms. Glover, please.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you, Mr. Chair.

Welcome to the witnesses.

I'm going to follow up on what was just said and ask you this, Ms. Plant. What is your assessment, or what is the Auditor General's assessment, of how well Bill C-48 deals with the recommendations that were made in 2009? Have we done a good job in Bill C-48 of dealing with those recommendations?

[Vicki Plant]

Again, we haven't done a follow-up in terms of whether all the necessary technical changes have been included in Bill C-48. As I said in my opening statement, certainly it's a start. It does contain a number of the amendments.

We had recommended that packages of technical changes be distributed regularly for comment, and obviously tabling them in the House is the final step in that process.

[Shelly Glover, Conservative, Saint Boniface, MB]

I also want to ask about the comfort letters, if I could follow up on that as well. In 2009 some indicated that there were about 250 comfort letters outstanding. I'm just curious to know. Do you feel that Bill C-48 deals with all of those comfort letters?

[Vicki Plant]

Again, we haven't gone back to see if all the comfort letters have been addressed in this bill. I think the Department of Finance officials could give you a more accurate response there.

[Shelly Glover, Conservative, Saint Boniface, MB]

Okay, thank you.

Mr. Hayos, we talk a lot about those who are involved in the profession, financing, taxes, and that kind of thing, and how important this bill is to them, but how does it affect the average Canadian? Can you tell us, for those listening, the average Canadian, how does this technical tax bill benefit them?

[Gabe Hayos]

I think it's been described previously. I think the average Canadian is benefiting because the advisers who they may have to use now have greater certainty in the legislation, so the cost of complying with the legislation is that much easier.

[Shelly Glover, Conservative, Saint Boniface, MB]

I really appreciated when Ms. Plant was doing her opening statement, as she addressed costs to the government. When there are delays and administration is more complex, cost to the government increases. Would you also say that there could be some savings for the average Canadian because of the simplification made possible by Bill C-48?

[Gabe Hayos]

I think it's hard to call 1,000 pages of legislation simple. I think they've improved legislation, made it clearer where they had to; I think that's where you're getting your savings. This is a complex set of legislative changes. I think that's the real benefit we have from this technical amendment.

[Shelly Glover, Conservative, Saint Boniface, MB]

Very good.

Mr. Chapman, I'd like to give you an opportunity to address that very same question.

[Larry F. Chapman]

I think a lot of the legislation in Bill C-48 deals with more sophisticated issues and more sophisticated taxpayers. What probably impacts on the average Canadian much more directly is the annual budget bills, which Parliament has been dealing with.

There are aspects of the bill that affect the average Canadian, and Minister Menzies has talked about the split receipting rules and the charitable donation area. That would impact on a lot of Canadians. But I think if you looked at the bill as a whole, it's dealing with difficult, complex, and sophisticated issues for the more sophisticated taxpayers in our country.

[Shelly Glover, Conservative, Saint Boniface, MB]

I do want to thank you for bringing up and making it clear that there have been nine other attempts, which is what you said in your statement, to bring these technical tax amendments forward in Parliament. And I do appreciate each of you taking the time to encourage members of this committee to move this forward in any way possible. I do hope you will be in constant contact with any parties that may appear to be delaying. I would hate to think that's actually going on, but we know that in Parliament that does in fact play a part in being opposition. But we do want to see this pass in a timely manner, so I appreciate your comments in that respect.

Thanks.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Glover.

Mr. McCallum, please.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you, Mr. Chair.

Before asking questions, I would just like to clarify points raised by two of my government colleagues at the last session. It is true that the then Liberal-dominated Senate delayed this bill once, but it's important, I think, to understand why. The primary reason is they discovered a feature of the previous bill, which is not in the current bill, which allowed the minister to arbitrarily deny tax credits to certain films, and I seem to recall Mr. Charles McVety talking about films that were not sufficiently Christian that should be denied such funding. So I commend my Senate colleagues for discovering this feature and blocking it.

The other point I would make to Ms. Glover is that I think the reason for delay of this bill in the House right now has to do with overall politics among the House leaders. I would suggest to her that she might talk to Peter Van Loan, her House leader, because I think the resolution of this matter is largely in his hands, depending on his overall behaviour. I think such a conversation would be useful.

Now if I may, I'll ask a question to Ms. Plant. In terms of the time it takes for CRA, their objective is 60 days, but, as you know, it's going in the wrong direction to 101 days, and most recently 106. I wonder if you could describe to us what you think are the main reasons for going in the wrong direction and what actions could perhaps be taken to make the delay go in the right direction, i.e. down.

[Vicki Plant]

You're talking about income tax rulings and the length of time to issue an advance income tax ruling.

[John McCallum, Liberal, Markham—Unionville, ON]

Yes.

[Vicki Plant]

As we showed in our chapter, it has gone from an average of 60 days to an average of 101 days. One of the reasons given is that the transactions were becoming more complex, so by their very nature they're taking longer to handle the ruling request. Another reason, I believe, is that, as we have said, 61% of the current staff were new. They hadn't worked there since 2004, so there had been a fairly high turnover, and I think part of it was getting staff up to speed. I would imagine that more experienced staff certainly helps the problem.

[Gabe Hayos]

Could I comment on that? I would tell this committee that I've been dealing with the director general, Mickey Sarazin, on this issue. He's come to the joint committee on taxation to actually look for our suggestions on improving the timeliness of these rulings.

First, I know that they have hired a number of new rulings officers, and, second, they've looked to suggestions from the CBA-CICA joint committee. You have to understand that the ruling process is a little like going to an emergency hospital room where people might use it for the wrong purpose. We made suggestions on how they can deal with it, so that they limit the number of people who aren't using the rulings for the right purpose and so that they can focus on the right questions being asked. I think they've taken some very good positive steps, and more are to come.

[Larry F. Chapman]

Mr. McCallum, I would agree with that too. I think some of the problems have been that the taxpayers have found it convenient to call the agency when they have questions. They've had a line where they've spent a lot of resources answering those questions. They've changed their approach, and I think that's probably a good thing in the long run. From my experience, I can echo Mr. Hayos when he says they're working on this. They're very alert to the issue and are trying to improve.

[John McCallum, Liberal, Markham—Unionville, ON]

That sounds reasonably positive. Do you think within, say, the next year we can expect to see concrete improvements in that time?

[Gabe Hayos]

I'm not in a position to tell you specific timelines. I can tell you that these suggestions, of which the joint committee has given 10 specific ones, have been taken to the most senior levels of the CRA, and certainly with some exceptions they're generally supportive of it and the process is going through. So I can't say it's a year, but I can say that some things we'll see sooner and some things may take a little longer, because there are complex aspects to them.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you.

I'm told I have a very brief amount of time left.

I hear two of you at least were opposed to the idea of a sunset clause. Do you think it would be a good idea if Finance made some undertaking that this kind of bill would occur on an annual basis?