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Evidence of meeting #59 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was change.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Ted Cook  Senior Legislative Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance
Sean Keenan  Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
Brian McCauley  Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
Pierre Mercille  Senior Legislative Chief, Sales Tax Division, GST Legislation, Tax Policy Branch, Department of Finance
Lucia Di Primio  Chief, Excise Policy, Sales Tax Division, Excise Act, Tax Policy Branch, Department of Finance
Gordon Boissonneault  Senior Advisor, Economic Analysis and Forecasting Division, Demand and Labour Analysis, Economic and Fiscal Policy Branch, Department of Finance
Jane Pearse  Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
Annie Hardy  Chief, Financial Institutions Division, Structural Issues, Financial Sector Policy Branch, Department of Finance
Ling Wang  Chief, Financial Institutions Division, Housing Finance Review, Financial Sector Policy Branch, Department of Finance

3:45 p.m.

Conservative

Mark Adler Conservative York Centre, ON

Thank you, Chair.

I'm going to pass on my time. I read the budget quite thoroughly and went to the technical briefings, so I have no questions at this time.

3:45 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you.

Ms. Glover.

3:45 p.m.

Conservative

Shelly Glover Conservative Saint Boniface, MB

I'm fine as well.

3:45 p.m.

Conservative

The Chair Conservative James Rajotte

Who is next? I have an NDP slot.

Mr. Mai.

May 16th, 2012 / 3:45 p.m.

NDP

Hoang Mai NDP Brossard—La Prairie, QC

Thank you for more time.

Let us speak about charitable organizations. We asked questions about certain donations during the technical briefing. The definition of a charitable organization has changed. Donations to support political activities will be considered political activities. During the technical briefing, we were told that, when a donation is made and the donor says that the money is not for political purposes, then that is sufficient to prove that the donor did not engage in political activities. I would like your response to be on the record. Is that correct?

3:45 p.m.

Senior Legislative Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance

Ted Cook

In terms of the way this measure works, just to clarify, this measure is with respect to gifts given by a registered charity or an RCAAA to a qualified donee. It doesn't apply in the context of a donation made by an individual or a corporation to a charity in the first instance.

With respect to the purpose, as I believe I indicated to the committee yesterday, it's whether it can reasonably be considered that a purpose of the gift is to support the political activities of the recipient of the gift. So where the charity or RCAAA is genuinely making a gift and genuinely providing a direction that it is not to be used for political activities, then that would largely be sufficient.

There is an objective analysis.... The only reason I hesitate is to preclude someone using it as a shield.

3:50 p.m.

Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency

Brian McCauley

I was just going to say that would be very helpful. It would have to be consistent with the facts as well, so the statement would have to be consistent with the facts of what's actually occurring.

3:50 p.m.

NDP

Hoang Mai NDP Brossard—La Prairie, QC

One thing troubles me about this bill and that is the reasonable test. I spoke about it before. Can you tell me who is going to decide what is reasonable? Who is going to make that decision?

3:50 p.m.

Senior Legislative Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance

Ted Cook

I'll let my CRA colleague make some comments.

The consideration of what's reasonable in the circumstances is a test that we often use in the Income Tax Act. Basically, it requires an objective analysis. As I indicated with respect to what is a purpose of the gift itself, the CRA, as administrator of the Income Tax Act, has ultimate responsibility, at least in the first instance, to make a determination based on the facts of the situation as to whether they feel it can reasonably be considered a purpose or not. Where the charitable organization disagrees with that, there is a procedure where ultimately a determination, if it goes that far, could be made by the courts.

3:50 p.m.

NDP

Hoang Mai NDP Brossard—La Prairie, QC

If memory serves me correctly, I also heard a public servant say that information on political activities will be sent to charitable organizations. Is that correct?

3:50 p.m.

Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency

Brian McCauley

Yes, I think that's an excellent point. There is information there, but charities shouldn't have to guess about what's reasonable or not reasonable. In fact, we have meetings even this week with the sector, starting to talk to them about what would be the most helpful way to minimize any confusion or uncertainty. That would include examples, other things they might suggest. So yes, it's for our best interests as well as the interests of charities that we make all reasonable efforts to define what “reasonable” means with the sector.

3:50 p.m.

NDP

Hoang Mai NDP Brossard—La Prairie, QC

If I understand correctly, the Minister of National Revenue can decide to revoke an organization's charity number if she feels that the organization has exceeded its political jurisdiction or limits.

3:50 p.m.

Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency

Brian McCauley

Yes, but as we mentioned at the Senate hearings, the minister does not make those decisions. Those decisions are delegated into the CRA, so those decisions have to be made on the basis of objective criteria and our analysis. We do not go to the minister to request her authorization to revoke charities. We do that within the CRA.

3:50 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you, Monsieur Mai.

We'll go to Mr. Jean, please.

3:50 p.m.

Conservative

Brian Jean Conservative Fort McMurray—Athabasca, AB

Actually, Mr. Chair, I've had an opportunity to go through most of the materials up to part 1, and I don't really have any more questions in relation to it.

3:50 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you.

Mr. Brison.

3:50 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

Thank you, Mr. Chair.

To return to Ms. Nash's question, you went through the costs of two of the tax measures, the mining tax credit and the RRDPs, in this part. What about the other measures? Can you take us through all of the tax reductions—all of these measures in part 1—and tell us what the expected annual cost will be to the treasury? You've done that with two of them, but not with the others.

When the impact is, you're saying, too small to provide an estimate.... Could you inform us what that means: too small to provide an estimate? It seems hard to comprehend that any measure could not be quantified in some way. Is it less than $100 million a year, or is it $10 million a year? At least provide us with a range.

And have you calculated the total tax expenditures of these measures in part 1?

3:55 p.m.

Senior Legislative Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance

Ted Cook

In the information provided in the budget there's an indication of the cost on a year-by-year basis over five years for each of the tax measures indicated. Where there is no estimate, the indicator we use is less than $1 million per year, or a measure that is designed to protect the income tax base, as opposed to raise or spend revenue.

3:55 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

Just to understand, you say that when an impact is too small to provide an estimate, the threshold is $1 million per year of revenue lost to the government. Is that the threshold you apply consistently?

3:55 p.m.

Senior Legislative Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance

Ted Cook

That is the threshold in terms of the particular estimates that are provided with the supplementary information for the tax measures.

I'm not an expert in revenue forecasting. I believe that's in the context of the fiscal framework. We have a kind of ongoing model with respect to revenues.

3:55 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

So what you're saying is that the expected impact of some of these tax measures, the ones for which you have not provided an actual specific or granular estimate, will be less than $1 million a year.

3:55 p.m.

Senior Legislative Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance

Ted Cook

That is correct.

3:55 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

That seems like a fairly insignificant tax measure. You have to ask the question—I guess it's more political than bureaucratic—why it would even be.... If its impact is expected to be only $1 million per year, it seems like a very insignificant measure.

3:55 p.m.

Conservative

The Chair Conservative James Rajotte

Mr. McCauley, do you want to answer that?

3:55 p.m.

Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency

Brian McCauley

I was going to say that there are measures, for example, that provide for penalty provisions, and others that are meant to protect the integrity of the tax system; they're measures that help prevent people from taking advantage of the tax system and that are useful for us but that don't have an active impact on the fiscal framework. They're there to protect the integrity of the system.

There are some measures, for example, that we would administer at no cost, because we build the cost into the system, but they're to protect the framework rather than adjust the fiscal outcomes.