Finance Committee on Nov. 7th, 2012

[The Chair, Conservative, James Rajotte]

Thank you.

All right. I'm going to take a round as the chair.

I did want to address the issue of labour trusts. In our last hearing on the bill we had two witnesses who said the labour trusts, while they're included in this legislation, in this specific bill, are not included in U.S. legislation.

Mr. Mortimer, I think you addressed it during your opening statement today. I was going to ask you and perhaps Mr. Hunter if you could address the issue of whether labour trusts are included in the U.S. legislation, and if so, whether there are any differences between what's proposed in this bill and what is in the U.S. legislation.

Could we hear from Mr. Mortimer first on that, please?

[John Mortimer]

They are included. There are fewer today, since President Obama used his executive power to shield some trusts. If you wish, we can get more information from American experts as to the trusts that are covered versus the ones that are not in the wake of President Obama's changes.

[The Chair, Conservative, James Rajotte]

Some trusts are covered, but some—

[John Mortimer]

Some trusts still report in the U.S. One of the issues we're going to face if we do this has to do with what has transpired in the U.S. Money begins to flow into these trusts and flows out into all of these activities that will not qualify under the Income Tax Act, and we won't be able to catch them and protect the taxpayers.

[The Chair, Conservative, James Rajotte]

Mr. Hunter, can you address that for me, please?

[Cameron Hunter]

It's my understanding that labour trusts are not subject to this type of reporting in the U.S. Further, it's my understanding that this was debated at some length and that it was deemed not appropriate to subject them to this measure.

[The Chair, Conservative, James Rajotte]

Your understanding is that they are not included whatsoever in U.S. legislation.

[Cameron Hunter]

That's correct.

[The Chair, Conservative, James Rajotte]

Okay.

Let's go back to Mr. Mortimer.

[John Mortimer]

I was speaking to the former deputy Secretary of Labour, who ran disclosure for eight years in the United States, and he says some still are. He's the one who talks about how President Obama has made these changes since 2008.

[The Chair, Conservative, James Rajotte]

Can you amplify on that? Which some are included and which are not? Can you present that?

[John Mortimer]

Sorry, Mr. Chair, I do not have that expertise, but I'm certainly willing to undertake to get a letter and some information for the committee that details this. It is not as extensive in the U.S. as it would be if this aspect of the legislation went unamended.

[The Chair, Conservative, James Rajotte]

Okay. I'll go back to Mr. Hunter, please.

[Cameron Hunter]

I would just like to point out that the definition of “labour trusts” under Bill C-377 is very broad. It encompasses a lot of entities that, in our view, I'm not sure were intended. For example, we talk about a health and welfare trust; that's one family, but there are types of benefit plans that are not included in that, such as member assistance plans, for example, or addiction help organizations. In Ontario, we have a couple, like De Novo and Renaissance. These types of organizations would be captured.

One of the fundamental problems that MEBCO has with this proposed legislation is the types of entities that would be captured under this definition.

[The Chair, Conservative, James Rajotte]

Mr. Hiebert has indicated he's open to an amendment on the labour trust issue. I hope I'm speaking correctly there.

In your view, and in your organization's view, is there a way to amend that to satisfy your concerns?

[Cameron Hunter]

In our view, the best way to amend it is to simply remove it from the definition. Our view is that it will, as I say, engulf a number of entities. As I mentioned in my opening remarks, it's quite possible that some charities may get covered by this because of the ability, say, of a union to appoint a member to the board of the charity. Is that an intended consequence of this legislation? I'm not that sure that it is.

[The Chair, Conservative, James Rajotte]

I'm going to get Mr. Mortimer to state his view on whether we should amend it.

Can you provide the committee with the information that leads to your understanding that labour trusts are not included in U.S. legislation?

As well, Mr. Mortimer, if this legislation were amended to remove labour trusts, would that concern you, and if so, why?

[John Mortimer]

It would concern me, based on some of the stories I've heard about the inappropriate activities that go on through some of these trusts.

Maybe a compromise solution is that these trusts report to the CRA so that the information is provided. That type of transparency may also limit the types of things that are going on, because there will be greater risks of being caught.

[The Chair, Conservative, James Rajotte]

Okay.

[John Mortimer]

It's not to do it publicly, but to make sure that the CRA has it.

[The Chair, Conservative, James Rajotte]

Okay. I would appreciate any further information before we go to clause-by-clause consideration, so that we are best able to make a very informed decision on that aspect.

I want to thank all of our witnesses for being here, for presenting, and for responding to our questions.

Colleagues, we have two notices of two motions. I understand we will be dealing with those motions.

I will thank the witnesses, and they can certainly excuse themselves.

I will ask our audience to keep very quiet while members deal with the motions.

I'll recognize Mr. Cuzner first, please.

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

Thank you very much, Mr. Chair.

In an attempt to bring some light to the cost of the implementation of this bill to the taxpayers of Canada, I'd like to move two motions.

[The Chair, Conservative, James Rajotte]

Yes, please do.

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

I move that the committee request officials from CRA to appear to answer questions on resources required to implement and administer Bill C-377.

[The Chair, Conservative, James Rajotte]

Thank you very much.

Ms. McLeod wishes to speak to this.