Evidence of meeting #56 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site.) The winning word was measure.
A video is available from Parliament.
4 p.m.
Senior Chief, International Inbound Investments, Department of Finance
Yes, that's where I was leading.
As a general rule, they would be exempt from Canadian tax, unless they had some Canadian connection, for example, carrying on business in Canada. In that case, where you're not in a country that has exemption from Canadian tax such that you'd be exempt under section 81, I think you'd still be taxable in Canada.
4 p.m.
NDP
Murray Rankin NDP Victoria, BC
Income earned in Canada by one of these international shipping corporations, as defined, would not be taxed. I'm still having trouble understanding the policy justification for that conclusion.
4 p.m.
Senior Chief, International Inbound Investments, Department of Finance
For it to be carved out under these rules and these specific amendments, you would have it deemed to be a non-resident under section 261, I think. Then the other component of the rules is under section 81, where there is reciprocity, where the other country in which they are resident provides the same thing to Canadian shipping companies as well. I think that is really underlying the rule as it being—
4 p.m.
NDP
Murray Rankin NDP Victoria, BC
Reciprocity even with countries such as the one you've mentioned that has zero or low taxation, that's just fine.
4 p.m.
Senior Chief, International Inbound Investments, Department of Finance
If you had a country that doesn't have this kind of reciprocal treatment, then you wouldn't see any exclusion in section 81 that prevents them from being subject to Canadian tax. Then, if under the general Canadian tax rules they're taxable in Canada, they would be taxable in Canada.
4 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you, Mr. Rankin.
Mr. Saxton, you said you had a brief question.
4 p.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
I do. Thank you, Chair.
My question is on part 1, and it's along the same lines. It's regarding the shipping corporations.
I'm interested to know how international shipping corporations benefit from these technical amendments and ensure they continue to consider Canada as a optimal place for their headquarters.
4 p.m.
Senior Chief, International Inbound Investments, Department of Finance
The international shipping rules have been around for quite some time, and the purpose is to modernize them. It provides a definition of “international shipping”, and what qualifies—we discussed that earlier—which provides certainty to taxpayers.
A lot of the amendments are designed to modernize and provide more flexibility and to reflect modern multinational corporations and their business structures. For example, the rules have been extended to apply not just to corporations as they previously were, but also to trusts and partnerships, which are used more and more in the multinational context, and also to provide a little more flexibility in the ownership requirements, so that modern multinational businesses can be accommodated and these rules aren't providing impediments and pitfalls for these companies with their mind and management in Canada to operate internationally.
4 p.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
I have one quick follow-up regarding part 1(l). That is with regard to the Canada apprentice loan to provide apprentices registered in Red Seal trades access to interest-free loans to help with their costs. It totals over $100 million each year. This is the new Canada apprentice loan program.
Can you elaborate on this tax fairness change and how it will help young Canadian apprentices?
4 p.m.
Director, Personal Income Tax, Tax Policy Branch, Department of Finance
Essentially, we are proposing to treat these loans similarly to loans provided under the Canada Student Loans Act. When students start paying down interest on these debts, the amount of interest paid becomes a non-refundable tax credit at the 15% rate. Given the similarity in the programs, we propose to extend that treatment to the Canada apprentice loan.
4:05 p.m.
Conservative
4:05 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you, Mr. Saxton.
I have a note from Mr. Van Kesteren. Did you want to get in on this round?
November 5th, 2014 / 4:05 p.m.
Conservative
4:05 p.m.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
That should be all right.
I wonder if somebody could answer this question for me. Chatham-Kent—Essex is my riding and is also a farming community. It's also an area that has a lot of wind turbines. There is a measure to help farmers who end up having to sell their livestock due to catastrophic events. Can somebody tell us about that?
If we have time, I'll go into the clean energy provisions as well.
4:05 p.m.
Director, Tax Legislation, Tax Policy Branch, Department of Finance
I'm sorry, but I seem to be having a little bit of trouble with the acoustics in this room. Did you ask for clarification on the—
4:05 p.m.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
There's a tax deferral for farmers in case they have to sell livestock caused by a catastrophic event. Maybe you could elaborate on that.
4:05 p.m.
Director, Tax Legislation, Tax Policy Branch, Department of Finance
Sure. There is an existing tax rule to assist farmers in situations where they're facing drought, flood or excess moisture conditions which force them to sell livestock, essentially because they can't feed the animals as a result of those conditions. The existing rule allows farmers in those circumstances to defer the income from the forced sale of the livestock until a subsequent taxation year when the expectation would be they would normally be replenishing the herd at that point and they'd have a match between their income from the sale and their expense in acquiring new animals.
This measure from budget 2014 proposes to extend the types of livestock that qualify for this measure to include bees and all types of horses over 12 months of age that are kept for breeding.
4:05 p.m.
Conservative
4:05 p.m.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
Maybe I'll catch it on the next round, if there is a next round.
4:05 p.m.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
Very quickly then, on clean energy generation.... You're shaking your head. You know what I'm talking about, the capital cost allowance. How will that be beneficial in my area?
4:05 p.m.
Director, Tax Legislation, Tax Policy Branch, Department of Finance
The existing policy is to provide accelerated capital cost allowance, which is faster tax write-offs for renewable energy equipment and clean energy equipment. Budget 2014 expands the list of equipment that qualifies for that tax incentive to include certain other types of....
Kevin, sorry.