Evidence of meeting #6 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was account.
A video is available from Parliament.
Conservative
The Chair Conservative James Rajotte
Colleagues, I don't have any more government members.
How many more questions do you have, Ms. Nash, a couple more?
Conservative
Conservative
The Chair Conservative James Rajotte
I don't have a government round so we'll start another NDP round.
NDP
Peggy Nash NDP Parkdale—High Park, ON
For some communities the tax hike on these not-for-profit businesses is quite significant and will withdraw significant funds from the community. It really was a big surprise. There was no advance notice. I would argue that while there would be no verification given ahead of time, often there is consultation.
I have one quick question. Where did the request for the change originate? Second, because an error was made in the last Budget Implementation Act that would have, in fact, seen credit union taxes go from 11% to 28%, and thanks to KPMG for catching that and this BIA would fix that change, it does speak to the haste with which these changes are made in budget implementation acts which are of a large omnibus nature. We're glad about the correction but we disagree with the original change from 11% to 15% tax hike.
Could you answer that last short question?
General Director (Analysis), Tax Policy Branch, Department of Finance
Sure. We certainly do our utmost to ensure the accuracy of our legislation. This was an unfortunate error that did occur. Perhaps it's a complex provision to work through. We do apologize for that error. I would note that this bill will correct it, so there should not be any difficulty for the credit unions in that respect.
The measure does have a five-year phase-in mitigating to some extent the impact you were talking about. Absolutely the tax burden on credit unions is projected to increase, but there will be that five-year transition period leading in.
General Director (Analysis), Tax Policy Branch, Department of Finance
Every year the department examines a number of options for changes to tax policy. I couldn't pinpoint where this one would come from, in particular, but it certainly falls within the theme of greater neutrality in the tax system.
Conservative
NDP
Murray Rankin NDP Victoria, BC
Yes, very briefly, thank you.
Thank you, witnesses, for being here.
My question is about restricted farm losses, which is in part 1. I'm not sure who will tackle that.
The new law purports to respond to last year's Supreme Court of Canada decision in the Craig matter. We have received a lot of concern from the Canadian Federation of Agriculture.
A headline from the The Western Producer on October 31 noted, “Tax law changes discourage farmers, Income Tax Act New limits on writing off farm losses 'troubling'”
Apparently the federation is concerned that the changes to the restricted farm losses are going to hurt small farmers and new farmers. As you know, many family farms and new small farmers rely on sources of income outside the farm to make ends meet. This bill apparently, and I'm asking for clarification, proposes to eliminate the deductibility of farm losses if people on the farm have another source of income, even if they're transitioning to running a farm full-time.
Did the department consult with the Canadian Federation of Agriculture about this change, or consult with young farmers about how it's going to have an impact on the viability of starting new farms?
As well, just how much money is the government going to save with these proposed changes?
Conservative
The Chair Conservative James Rajotte
On the question of consultation and the question of revenue, Mr. Cook, go ahead.
Senior Legislative Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance
In terms of the revenue from this measure....
Senior Legislative Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance
It is just $5 million in terms of the revenue—
Senior Legislative Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance
That's correct.
Senior Legislative Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance
I can't speak directly to the consultation. I can talk about the response to the Supreme Court decision.
NDP
Murray Rankin NDP Victoria, BC
I was not concerned about that. There is so much concern about young farmers and people trying to get into this business. The letters are quite poignant. I wonder who you talked to—