Finance Committee on Nov. 5th, 2014

[Alexandra MacLean]

Back-to-back loan transactions are undertaken almost exclusively in the corporate context. We're talking about a relatively small number of taxpayers in the corporate sphere, typically taxpayers with...multinational, enterprise-type taxpayers. There is not a revenue estimate prepared for the budget for the back-to-back loan measure. We would describe it as protecting the tax base or the revenue base. It can be difficult to estimate that overall target.

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

We signed 92 tax treaties, 21 tax information exchange agreements. The measure in the budget that affects that is the definition of a non-qualifying country in the foreign affiliate roles.

Do you think this move makes it easier for Canada to negotiate tax treaties and foreign exchange agreements?

[Alexandra MacLean]

It should certainly make it easier for Canada and the Canada Revenue Agency in particular to obtain relevant tax information from foreign countries, so this measure is a small aspect of that policy.

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

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Keddy.

We'll go to Mr. Brison, please.

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

I have a question on the off-shore insurance swap transactions.

Budget 2014 said that this measure will increase federal revenues by more than $1 billion between 2015 and 2018. During the briefing for parliamentarians, I had asked officials how much federal revenue connected with these insurance swaps had been identified by the government but was being disputed currently prior to this measure being introduced.

Are you able to provide me with that information?

[Alexandra MacLean]

I apologize. I do not have that information today, but I will follow up with Canada Revenue Agency officials.

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

That would be helpful, because we're not given a lot of time to deal with these things and it would be helpful to know that.

I have a question on the tax credit for interest paid on student loans.

Bill C-31, the last budget bill, introduced the apprentice loans. Why didn't Bill C-31 also include this tax credit for interest paid on apprentice loans?

[Alexandra MacLean]

Are you asking why this measure was not included in the first budget implementation act?

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

Well, Bill C-31 introduced the apprentice loans and we're wondering why it didn't also include this tax credit for interest on apprentice loans. Why wouldn't it have been done?

[Miodrag Jovanovic, Director, Personal Income Tax, Tax Policy Branch, Department of Finance]

At the time when this was introduced, legislation and regulations about the Canada apprentice loan were not out. We wanted to wait to make sure that it was similar to Canada student loans to offer the same treatment.

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

On international shipping corporations, what is the rationale for adding cable-laying to the list of shipping activities excluded from the definition of “international shipping”? Is there some concern that this change will negatively impact or could negatively impact Canadian jobs?

[Trevor McGowan, Senior Chief, International Inbound Investments, Department of Finance]

The question we were looking at in setting the limits of the definition was what ought to appropriately be considered shipping, which in very general terms was considered to be taking persons or property from point A to point B. It excludes things like laying cable, which is doing work at sea, rather than transporting a cable from one point to another internationally.

In that case, that's why that was excluded. In doing so, we also looked at exclusions contained in the legislation of other countries to inform our policy.

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

Is this consistent with protocol in terms of how other countries treat this?

[Trevor McGowan]

I believe so. I know that other countries' rules were consulted in coming up with the list, as well as the current administrative practice of the Canada Revenue Agency.

As to that specific one, I would have to go through our notes. But the general policy is, as I stated before, that it was considered to be doing work at sea, which is to say installing or laying the cable at sea, rather than transporting a good from one point to another.

[The Chair, Conservative, James Rajotte]

Can you get a specific response back to us on that?

[Trevor McGowan]

Sure.

[The Chair, Conservative, James Rajotte]

Thank you.

You have another minute, Mr. Brison.

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

I have a question on the measures in the Canadian film or video production tax credit. How do these measures differ from those in Bill C-10 and Bill C-33?

[Alexandra MacLean]

The only significant difference is that the public policy test that generated quite a lot of controversy and commentary at the time of Bill C-10 is not part of these measures.

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

Just to confirm, is there any way that these measures in Bill C-43 could be used by the Minister of Canadian Heritage to deny a tax credit for a film that the government deems offensive?

[Alexandra MacLean]

No, that's not part of these measures,

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

Thank you.

[The Chair, Conservative, James Rajotte]

You have 30 seconds, if you want to use them.

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

No, that's it.