Finance Committee on May 16th, 2012

[The Chair, Conservative, James Rajotte]

I call to order this 59th meeting of the Standing Committee on Finance. We are being televised.

Pursuant to the order of reference of Monday, May 14, 2012, we're studying Bill C-38, an act to implement certain provisions of the budget tabled in Parliament on March 29, 2012, and other measures.

We have a number of officials here today. I want to thank them for being with us.

Colleagues, as you know, we were discussing part 1 of the bill, and I had a speaking order I was following. Actually, Mr. Jean has two minutes left in his round, if he wants. Then I have Mr. Marston next.

Mr. Jean, you have two and a half minutes.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you, Mr. Chair.

Actually, I'm looking for my glasses, Mr. Chair. Without them, I seem to be at a bit of a disadvantage, the older I get.

Indeed, we had just finished off relating to the filing of the tax returns, the electronic preparation of those and the savings to taxpayers. I wanted to talk a little bit about something the witness had mentioned relating to charitable donation tax shelters. There was something mentioned in relation to “not-registered”. That was one of my questions.

I'm not sure if you can remember what your comment was in relation to that—I can't imagine that you would. I should have taken better notes, and I apologize for that.

One thing also mentioned in relation to item J, under “Eligible Foreign Organizations and the Reporting Requirements of Registered Charities”, was “a gift from the Government of Canada”. It was referred to two or three times--“a gift from the Government of Canada”. When you were speaking about those charities and about a gift from the Government of Canada, were you talking about the tax deductibility or the tax consequences of receiving those gifts, that money?

[Ted Cook, Senior Legislative Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance]

We were referring to an actual gift from the Government of Canada, which is separate from the taxability or the ability to get a charitable donation receipt.

Currently, under the Income Tax Act, once a foreign charitable organization has received an actual gift from the Government of Canada--for example, a monetary gift, even if it's a nominal amount--once it has received that gift it is then eligible to be registered with the Canada Revenue Agency. That gift from the Government of Canada acts as a sort of trigger that allows the foreign organization into the system.

The proposed amendment is maintaining the requirement for a gift from the Government of Canada, but it also requires the Minister of National Revenue, in consultation with the Minister of Finance, to register that foreign organization as a qualified donee.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Perfect. That makes a lot more sense than what I understood the first time you went through it.

My final question is in relation to the national interest of Canada, specifically to item J as well and the eligible foreign organizations. Is that determined by case law over historic perspective precedents, or is that determined by definition? How would that be considered as part of that change?

[Ted Cook]

The term “national interest” is not defined in the Income Tax Act. Certainly CRA, at least in the initial instance, in conjunction with the Department of Finance, will develop administrative guidelines as to what it is—

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

That was my question. Is it a definition that's going to be determined in the future, through...?

[Ted Cook]

There is no present intention to put a specific definition of “national interest” in the Income Tax Act.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Because that seems to be fairly objective and wide-scoped.

[Ted Cook]

It is potentially wide-scoped and--

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Who, ultimately, will define it? Will it be the Federal Court?

[Ted Cook]

Ultimately, yes, it will be defined by the courts.

Our expectation right now is that “national interest” will denote a connection to Canada in some way.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Jean.

Mr. Marston, please.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Thank you, Mr. Chair.

Welcome, again. It's good to see you all here.

I have a couple of quick questions. Going back a little bit to the mineral exploration tax credit, I'm curious as to why the extension of the tax credit was limited to one year, rather than a longer period.

[Ted Cook]

The mineral exploration tax credit that was alluded to yesterday has a long history. It was initially introduced in 2000 as a temporary measure. I think back in 2003 or 2004 it was extended on an annual basis. It lapsed for a short period in 2006 and has been extended annually each year since then.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

It kind of gives you the feeling that people can't make up their minds on it.

Going back to the Governor General and the changes happening there, part of what people were looking for yesterday was the full package of what the changes will be. Will they increase his pension, or will it remain at the same dollar figure?

[Sean Keenan, Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance]

There was a question, and the responses are being prepared. The Governor General's pension will not be changed. The calculation of the pension—

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

I understand that the calculation formula hasn't changed, but will that deliver more cash at the end of the day?

[Sean Keenan]

The amount of the pension will not be changed at all by—

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

So it will stay what it is today.

[Sean Keenan]

Yes.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

That's fine. It's not that we have any particular concerns about the Governor General, but we've been asked that question. Pensions are kind of a hot topic around here these days, as you know.

On the eligibility of foreign organizations and reporting requirements that we were talking about before, the United Way was brought up. I was on the board of the United Way on and off for 27 years as secretary. One of the things that charities and non-profits find to be a problem is the delivery of reports. Will this increase the burden on them as far as the number of reports or the frequency?

[Ted Cook]

The measures contained in part 1 of this bill will make no changes to the reporting requirements. That's because the reporting requirements are set by the CRA, in terms of what has to be included in the annual information return.

Perhaps my CRA colleague can make a few comments.

[Brian McCauley, Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency]

That's true for foreign organizations wishing to make donations. But it is contemplated that to improve transparency there are some additional reporting requirements related to an organization that may be undertaking political activities. On our intent there, they are going to be very similar to the requirements that were in place four or five years ago and phased out.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

So they'll be included in one report.