Finance Committee on May 6th, 2014

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Do I understand correctly that, as of February 11, 2014, those who applied to the federal immigrant investor program will not receive a letter inviting them to finalize their investment?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

I do not have a detailed answer about that.

[The Chair, Conservative, James Rajotte]

Okay.

We're bumping up against time, so could we have a brief response, please?

[Maia Welbourne, Senior Director, Policy Integration and Innovation, Department of Citizenship and Immigration]

To repeat the question, is it that individuals will have their applications terminated if they have not received an invitation to apply prior to February 11?

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

After February 11, actually.

Was there no other invitation letter sent to immigrant investors after February 11 to complete their file?

[Maia Welbourne]

Right.

The important thing to note is that we've had a pause on new intake of applications for the immigrant investor program since July 2012. There are no new applications entering the system. What we're doing is terminating applications where a selection decision had not yet been made as of February 11. That is where individuals have been determined to have passed the selection criteria. Where a final decision has not yet been made, they will proceed. In any other case, they will be terminated.

[The Chair, Conservative, James Rajotte]

Thank you. Merci.

Ms. Gallant, there's time for a very brief round. I apologize for the short time.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you, Mr. Chairman.

Through you to our minister, in your introductory remarks, Minister, you mentioned how important it is to get back to a balanced budget. Would you please explain to the committee how you plan on doing this through economic action plan 2014?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Thank you.

Bill C-31 legislates key aspects of the budget, which is a prudent responsible plan to control spending and will help lead to the balanced budget in 2015. Our responsible fiscal position is key to economic growth and job creation for the long term.

We have reduced direct program spending for the third year in a row, something that no other government has done in decades. We've eliminated waste to decrease the cost of government, without cutting programs that Canadians depend on. The deficit has been reduced by almost two-thirds since 2009-10 and is projected to fall to $2.9 billion this year. A surplus of $6.4 billion is expected next year, after taking into account a $3-billion contingency fund.

There are significant advantages to a balanced budget. It further positions Canada as an attractive place to invest and expand business. It instills confidence in consumers and investors by helping to keep interest costs low. It means tax dollars are used for important social services, not for interest payments. It strengthens the country's ability to respond to longer-term challenges, such as population aging and global economic shocks. It allows for further tax cuts, fostering economic growth.

Nevertheless, balanced budgets are not an end to themselves; they're a means to an end, and that end is a better, more prosperous future for all Canadians.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

How is Canada's economic action plan going to help small business owners create more jobs?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

This is an important issue because small businesses are the prime generators of employment in Canada. We recognize the vital role they play in the economy, and that's why we're committed to helping them grow and succeed. Since 2006 our record of supporting small businesses includes a number of things, such as reducing the small business tax rate from 12% to 11%, lowering the federal corporate tax rate to 15% to help create jobs and economic growth for families and communities, increasing the small business limit to $500,000, and eliminating the corporate surtax for all companies in 2008.

While the economy is improving and our government returns to a balanced budget, there's nevertheless uncertainty in the global economy. I saw that in my visit to Washington where I attended the G-7, G-20, IMF, and World Bank meetings, and where we heard how growth in the eurozone was slow, inflation was troublingly low, there is volatility in emerging markets, and a new geopolitical risk of course in Europe.

We've heard about some of these concerns from economists, but also from small business owners. So we've introduced new measures to help small businesses succeed, including cutting the red tape burden by eliminating over $800,000 payroll reduction remittances to CRA that are made every year by over 50,000 small businesses, and synchronizing cross-border regulatory regimes to better and more rapidly align Canadian and U.S. regulations and boost North American trade and competitiveness.

[The Chair, Conservative, James Rajotte]

Thank you.

I apologize for cutting you off, Ms. Gallant, and Minister, but our time is up this afternoon. I want to thank you, colleagues, and thank you, Minister, for being with us here today, responding to our questions.

Colleagues, we will take a two-minute break and we'll come back with the officials and do parts 5 and 6 of the bill.

Thank you.

[The Chair, Conservative, James Rajotte]

I call this meeting back to order, meeting 32 of the Standing Committee on Finance, for the second part of this session today.

Colleagues, we are continuing with parts 5 and 6 of Bill C-31. I'll just encourage you, because there's a fair amount to cover today in an hour. When the bells ring at 5:15, I'm going to ask for a consent at that time that we continue until 5:30. They're half-hour bells, so it will enable us to get to the votes.

We are going to start again with part 5.

Mr. Ernewein, Mr. Shoom, Mr. Cook, welcome back to the committee.

We'll start with Mr. Cullen, please.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

I would like to return us for a moment to the agreement that implements FATCA.

Mr. Ernewein, we just had the minister before us and he said on several occasions that this intergovernmental agreement did not affect Canadians. I have a great deal of concern, like my colleagues across the way, about misinformation. Is a dual citizen who is both a citizen of Canada and the United States not a Canadian?

[Brian Ernewein]

My understanding of what the minister said and of how the rules apply is that FATCA is applicable potentially to U.S. taxpayers, including U.S. residents--according to our concept of the term—as well as U.S. citizens. So a dual citizen could be subject to the application of the intergovernmental agreement, but it requires them to be a U.S. citizen.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Are those dual citizens not also Canadians?

[Brian Ernewein]

Yes. I believe that's what the minister said as well.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

To be clear, the minister on several points said that this agreement does not affect Canadians. If we're going to talk about misinformation and allowing Canadians to understand who might be exposed, we also asked the question--and I wonder if you can clarify this, since the minister was unable to do so—whether Canadians who are dual citizens would be notified if their information were released through the CRA to the IRS. Is that the case? Will they be made aware of the information being passed on?

[Brian Ernewein]

There's not an explicit requirement to that effect. It is the case today in regard to non-residents who receive Canadian-sourced income that the entities making those payments are generally required to submit information returns to the Canada Revenue Agency, and the Canada Revenue Agency shares that information with our treaty partners where provisions to that effect exist. For example, an American resident—again, using our definition of the term—investing through a Canadian bank might receive income and be subject to reporting.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Sure. Again, the simple question was, will a dual citizen, someone who's swept up in this, be notified by their financial institution or the federal government that their information has been passed on to the IRS?

[Brian Ernewein]

I'm sorry, I was seeking to answer that in the second part of my response.

A U.S. citizen is not currently subject to any reporting requirement, because citizenship isn't relevant, as residence is, for Canadian tax purposes. Where a person shows a marker of having a U.S. indicator, perhaps citizenship, then the bank or the other financial institution in question will generally, one would think, be asking for follow-up to verify whether or not that person is actually a U.S. taxpayer. By virtue of that inquiry, they practically or often have the knowledge, but there's not a separate requirement to that effect.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

That's in the hands of the financial institution. I'm asking if in the agreement it's explicit that the bank must notify the person subject to this.

I want to clarify this: who defines who is subject to potential taxation in the U.S.? Is it the Canadian government, or the American government?

[Brian Ernewein]

Well, it's the legislation that's proposed to be before Parliament that imposes that requirement. But my answer remains that, practically, the U.S. person will be contacted to find out whether there's further information to provide, but there's not an explicit requirement for notification.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Thank you.

I wonder if Mr. Rankin wants to take the remainder of my time.

[Murray Rankin, NDP, Victoria, BC]

Thank you.

To be clear, you're talking about U.S. persons as defined in.... You know who's affected, whether they're dual citizens or otherwise.

Would you agree that the FATCA and IGA would impact all Canadians who have money in banks and credit unions, because as you referenced yesterday when we talked about the amount of money—although you didn't have an estimate—the literally hundreds of millions of dollars that are forecast to have to be spent will be absorbed by those of us who use banks and credit unions? And, as Canadian taxpayers, you mentioned several million dollars that the CRA would have to pay to implement this agreement. Wouldn't you agree, in those two contexts, that it would apply to all Canadians who use banks and credit unions and are taxpayers?