Finance Committee on May 6th, 2014

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

Thank you.

Our government respects the brave men and women who put their lives at risk to help their communities, and in recognition of their invaluable contribution, our budget this year introduces the search and rescue volunteers tax credit. This measure allows an eligible ground, air, and marine search and rescue volunteer to claim a 15% tax credit and provides up to $450 in tax savings. The individual has to perform at least 200 hours of volunteer search and rescue services in a taxation year in any one of the eligible search and rescue organizations.

This tax credit acknowledges the service of brave Canadians like Tim Jones of British Columbia, who died in January of this year after 26 years of dedicated service with the North Shore Rescue team. Today there are three key national search and rescue associates that help to support and guide Canada's volunteer search and rescue community; and together they represent some 18,000 volunteers right across the country. So we're honoured to recognize their valuable contributions with our new bill.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Minister, my understanding is that as part of the plan, they'll actually be able to merge hours, for example, if they worked so many hours as a volunteer firefighter and so many hours as a search and rescue volunteer. Is that correct?

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

Yes, that's right.

The new tax credit builds on our record of tax relief and the introduction of the volunteer firefighters' tax credit in 2011. Since taking office, we've cut taxes in every way the government collects them, bringing the overall tax burden to its lowest level in 50 years. We believe in leaving more money where it belongs, and that's in the pockets of hardworking Canadians. Our strong record of tax relief has meant savings of nearly $3,400, as you pointed out, for a typical family of four in 2014.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you for that.

My next question is on tax non-compliance, in particular money laundering and terrorist financing. Those are issues that governments have struggled with for many years. By the very fact that these activities are hidden and occur, not only under the table but also away from the regulatory bodies, makes it very difficult to combat. However, Minister, can you explain what we've done to address non-compliance in the tax system, and especially to combat money laundering and terrorist financing?

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

A well-functioning tax system is essential to keep Canada positioned as an attractive place to work, to invest, and to do business. Since 2006, we've introduced measures, including in this bill—over 85 measures—to improve the integrity of Canada's tax system. They include actions to address aggressive international tax avoidance by multinational enterprises. Also, they include amendments to prevent input tax credit claims that exceed taxes actually paid. In total, these measures to address international tax avoidance, improve integrity, strengthen compliance, and enhance the fairness, now provide savings of $44 million in 2014-2015, rising to $450 million in 2018-2019, for a total of $1.8 billion, this year and in the following five years.

In respect to money laundering and terrorist financing, our government is committed to a strong and comprehensive regime that is at the forefront of the global fight against money laundering and terrorist financing. We're taking concrete steps to ensure the integrity of our financial system, and the safety and security of Canadians. To strengthen this regime, the bill will improve monitoring compliance and enforcement, it'll close the gaps of the regime—such as online casinos, persons and entities that deal in virtual securities, currencies, and foreign money services—and it'll strengthen information sharing, such as allowing FINTRAC to disclose to federal partners issues related to threats to national security.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you, Minister. I know—

[The Chair, Conservative, James Rajotte]

You have 30 seconds.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Okay, I'll try to be quick.

On the Foreign Account Tax Compliance Act, or FATCA, we know that Americans have always had to pay income taxes in the United States, even when they've lived abroad. The U.S. has been much more aggressive in tracking down such compliance with the FATCA program, but there's a lot of misinformation out there that somehow this applies to Canadian citizens. Can you explain who is actually targeted by the FATCA legislation?

[The Chair, Conservative, James Rajotte]

Minister, a brief response, please. I assume we'll come back to it later.

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

The brief response is that it only applies to U.S. citizens.

[The Chair, Conservative, James Rajotte]

Okay. Thank you very much, Mr. Keddy.

We'll go to Mr. Brison, please.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you.

Welcome, Minister.

Budget 2014 reported that Canada's job vacancy rate is 4%. We've learned that this was based on Kijiji data, which poses errors and duplications. When you drop this data, the real rate is 1.5%, not 4%. Your government ramped up the temporary foreign worker program in Canada based on this high job vacancy rate that was cited in the recent budget. Today, the Auditor General reports that Statistics Canada doesn't know where the job vacancies are. The Auditor General's report said, for example, that reported job vacancies in Alberta could be in Fort McMurray, Grande Prairie, Medicine Hat, or any other community in the province. It was not high-quality data.

Will you provide Statistics Canada with the resources it needs to calculate reliable job vacancy rates at the community level?

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

As I said earlier, it is clear that these broad statistics don't paint the entire picture for job occupancy in the entire country.

[Scott Brison, Liberal, Kings—Hants, NS]

Will you provide Statistics Canada with the resources to get the more granular information you need?

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

We are looking at how this information can be better provided. We know the number is somewhere in the middle of the two numbers that you cited. We know, as a matter of fact, that there are sectoral and regional differences.

We are going to be looking at that in the Department of Finance to better target where the vacancies exist.

[Scott Brison, Liberal, Kings—Hants, NS]

Minister, yesterday you told the House that when it comes to U.S. taxes owed by Canadians under FATCA, the CRA will not assist the IRS in collecting U.S. taxes.

If this is the case, why does your budget bill include penalties against dual Canada-U.S. citizens who fail to provide their U.S. tax identification number to the Canadian government? Why does Canada need the U.S. tax identification number if we're not helping the U.S. collect taxes?

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

I can give you a broad answer, but I'll let my official be more specific.

[Brian Ernewein, General Director, Tax Policy Branch, Department of Finance]

I think the answer is that it doesn't assist in the direct collection of taxes; it assists in the collection of information. The intergovernmental agreement that we were discussing at the last committee hearing on the budget implementation act reviewed that.

It's not about collecting taxes, per se. Indeed, there's not an ability under the Canada-U.S. treaty for Canada to assist in the collection of taxes in relation to a Canadian citizen.

[Scott Brison, Liberal, Kings—Hants, NS]

Minister, yesterday you told the House that we obtained a number of concessions, including exempting certain accounts such as RRSPs, RDSPs, and TFSAs from FATCA reporting.

Now, this is only half the story. These exemptions apply to Canadian banks and their obligations, not individuals.

Can you clarify the record here at committee, that under FATCA, is there still a requirement for Canada-U.S. dual citizens living in Canada to report their registered Canadian accounts to the IRS?

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

As I said—

[Scott Brison, Liberal, Kings—Hants, NS]

What you said in the House yesterday implied there wasn't.

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

As I said, this legislation does not apply to non-U.S. citizens, but if someone is a dual citizen, they are a U.S. citizen as well.

Canadian financial institutions will have to report accounts held by U.S. persons, which include most bank accounts, mutual funds, brokerage accounts, and so on. An account is not reportable if it falls within an exempt category, and I talked about registered savings plans, pooled registered pension plans, and so on.

[Scott Brison, Liberal, Kings—Hants, NS]

But, to be clear, dual Canada-U.S. citizens are still obligated to report those earnings to the IRS.

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

Yes, a dual citizen is because they are a U.S. citizen.

[Scott Brison, Liberal, Kings—Hants, NS]

Canadian taxpayer-funded investments in those matching grants to those programs will be considered taxable income by the IRS.

Do you think it's appropriate that Canadian tax dollars are going to be going to the U.S. treasury when they're intended to help disabled Canadians and to help people get an education?