Evidence of meeting #87 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was chair.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Miodrag Jovanovic  Director, Personal Income Tax, Tax Policy Branch, Department of Finance
Denis Martel  Director, Patent Policy Directorate, Department of Industry
Steven Kuhn  Chief, International Finance, International Trade and Finance Branch, Department of Finance
David Charter  Senior Advisor, Strategic Policy, Department of Employment and Social Development
Kim Gowing  Senior Director, Pension Policy and Stakeholder Relations, Treasury Board Secretariat
Mark Potter  Director General, Policing Policy Directorate, Law Enforcement and Policing Branch, Department of Public Safety and Emergency Preparedness
Robert Abramowitz  Counsel, Department of Justice, Department of Public Safety and Emergency Preparedness

11:50 a.m.

Conservative

The Chair Conservative James Rajotte

I call this meeting to order. This is meeting number 87 of the Standing Committee on Finance. Orders of the day are pursuant to the order of reference of Monday, May 25, 2015. We are doing clause-by-clause of Bill C-59, an act to implement certain provisions of the budget tabled in Parliament on April 21, 2015 and other measures.

Colleagues, we will obviously go through clause by clause. We will have different officials, depending on which part of the bill we are dealing with. I want to welcome the officials here for part 1.

As you know, a motion was adopted that guides the committee on how long to speak. The three political parties on the committee have five minutes per clause, but as you know, as chair I can grant a little more time if we speak a little longer for certain items and then group other clauses together. Some parties have helpfully indicated which ones they wish to speak to as a priority. I appreciate that very much.

For clause-by-clause consideration pursuant to Standing Order 75(1), consideration of clause 1, the short title, is postponed. The chair will therefore call clause 2 dealing with part 1, amendments to the Income Tax Act and related legislation.

I do not have any amendments for clauses 2 to 28, and I understand that I can group clauses 2 to 10 together.

Mr. Brison.

11:50 a.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

Is there not going to be a vote on clause 1?

11:50 a.m.

Conservative

The Chair Conservative James Rajotte

Clause 1, the short title, is deferred. It's postponed to the end. We're on clauses 2 to 10.

Do you want to speak to one of them?

(On clause 2)

11:50 a.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

I'll begin with clause 2 on the registered retirement income funds or RRIFs. These rules apply to Canadians who are at least 71 years old. The new rules are expected to cost $670 million over the next five years, but many baby boomers won't turn 71 until 2020.

Have you examined how much this will cost once the bulk of the baby boom has turned 71 and falls under the new rules? How much will this measure cost in 10 years?

11:50 a.m.

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

We did some longer-term analysis of the fiscal implication of this measure to make sure that with baby boomers the cost would not increase significantly over the long term. There will be some slight increase in cost over the next 10 or 20 years, but then there are also some offsetting effects due to the fact that this is a deferral measure in a way; savings will end up being taxed at some point. Overall we haven't seen significant pressure on the fiscal cost over a longer period of time.

11:50 a.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

Thank you.

11:50 a.m.

Conservative

The Chair Conservative James Rajotte

Thank you.

(Clauses 2 to 10 inclusive agreed to)

I understand the NDP would like to speak to clauses 11 and 12.

Mr. Caron.

(On clauses 11 and 12)

11:50 a.m.

NDP

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

I just wanted to say that we introduced an opposition day motion in February seeking the exact measures proposed here. So we're very glad that the government has finally listened to reason and taken the necessary steps to help small businesses.

We are pleased with the direction the government has taken and proud of our efforts to get to this point.

11:50 a.m.

Conservative

The Chair Conservative James Rajotte

Thank you. That's a good way to start the meeting.

Is there further discussion on clauses 11 and 12?

11:50 a.m.

NDP

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

Mr. Chair, I'd like a recorded division please.

11:50 a.m.

Conservative

The Chair Conservative James Rajotte

Okay, we'll have a recorded vote.

(Clauses 11 and 12 agreed to: yeas 9; nays 0)

I'm told I can group clauses 13 to 18 together.

Mr. Brison.

11:50 a.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

I have a question on clause 18.

11:50 a.m.

Conservative

The Chair Conservative James Rajotte

Okay. Shall clauses 13 to 17 carry?

(Clause 13 to 17 agreed to)

(On clause 18)

On clause 18, Mr. Brison, go ahead.

11:55 a.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

What was the original policy rationale in 2012 for excluding foreign charitable foundations from being qualified donees under the Income Tax Act?

11:55 a.m.

Director, Personal Income Tax, Tax Policy Branch, Department of Finance

Miodrag Jovanovic

Prior to changes in 2012 there was already a provision that said that charitable organizations receiving a gift from Her Majesty in right of Canada could actually qualify as donees. When these changes were modified it was just natural to take that same approach.

Now this change in this budget is basically providing a bit more flexibility to recognize that when you look at a foreign organization in the context of the objective of this measure, the distinction between a charitable organization and a foreign foundation may not always be clear. You can do that easily in the Canadian context because you have all the information. In the foreign context you may easily have foreign foundations that are doing the same types of activities with respect to carrying out humanitarian aid or disaster relief and it's just to allow greater flexibility in that context.

11:55 a.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

What was an unintended consequence of the change in 2012? Were there any unintended consequences of the change in 2012?

11:55 a.m.

Director, Personal Income Tax, Tax Policy Branch, Department of Finance

Miodrag Jovanovic

In 2012 the intention was to take the rules as they were and just add some conditions and have a better process around that provision, and now it's kind of a separate decision just to add a bit more flexibility.

11:55 a.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

Could you provide the committee with an example of a foreign charitable foundation that was a qualified donee prior to 2012 but became excluded because of the 2012 rule change? Could you give us an example?

11:55 a.m.

Director, Personal Income Tax, Tax Policy Branch, Department of Finance

Miodrag Jovanovic

There are some. I think, for instance, the Aga Khan Foundation has been on the list for many years and that could be one potentially.

11:55 a.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

Are there any others, just to help illustrate?

11:55 a.m.

Director, Personal Income Tax, Tax Policy Branch, Department of Finance

Miodrag Jovanovic

There are none that I remember. I'm sorry.

11:55 a.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

What was the nature of the work that the Aga Khan Foundation was doing in Canada?

11:55 a.m.

Director, Personal Income Tax, Tax Policy Branch, Department of Finance

Miodrag Jovanovic

I don't have much information on that. They are carrying out a lot of work in Middle Eastern countries—humanitarian and education. Their activities tend to be relatively broad.

11:55 a.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

Are there any environmental organizations?

11:55 a.m.

Director, Personal Income Tax, Tax Policy Branch, Department of Finance

Miodrag Jovanovic

There are none that I'm aware of.