Finance Committee on June 4th, 2015

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

I want to speak to—

[The Chair, Conservative, James Rajotte]

You can speak to them all if you wish.

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

I want to ask a question on the drafting error in previous legislation on income splitting that this bill seeks to correct. Can you describe the previous drafting error in layman's terms for the thousands of Canadians watching this at home? Can you walk us through an example of how it would impact a family financially?

[Miodrag Jovanovic]

The family tax cut is designed as notional income splitting, if you will. Both spouses have to reallocate their income then split the taxable income. Some of the credits may have been transferred between members before that calculation, like the age credit, the pension income credit, and also education credits. To do the proper calculation, these credits are taken from the return of the high-income spouse and are put back in the return of the lower-income spouse to avoid some potential double counting in the value of these credits.

When this was initially designed this drafting error happened. One of these credits, the education credit, which includes tuition, education, and textbook credits, the way these credits are transferred between spouses, the impossibility of double counting is already in the calculation. We should not have removed this specific credit in the calculation of the family tax credit. We're readjusting that correctly.

With respect to the question as to how much families could be penalized, first of all, this would apply only in a case where there's a transfer of education credits between spouses and the maximum amount would be $750, which is equivalent to 15% of $5,000, the maximum transferrable amount of credits between spouses.

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

When did the department first learn of this drafting error?

[Miodrag Jovanovic]

Sometime in April, I don't have a precise date.

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

Was the minister made aware at that time?

[Miodrag Jovanovic]

Yes.

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

Okay, thank you.

[The Chair, Conservative, James Rajotte]

Thank you.

I'm advised that I can group together clauses 29 and 30 for a vote.

[Raymond Côté, Beauport—Limoilou, NDP]

I'd like a recorded vote.

(Clauses 29 and 30 agreed to: yeas 6; nays 3)

[The Chair, Conservative, James Rajotte]

I'll move to the vote on clauses 31 to 34.

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

I'd like a recorded vote.

(Clauses 31 to 34 inclusive agreed to: yeas 5; nays 4)

[The Chair, Conservative, James Rajotte]

We'll now move to division 2.

Welcome to the officials from Finance and ESDC.

I do not have any amendments for clauses 35 to 40.

(On clauses 35 to 40)

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

As I mentioned previously, we are strongly opposed to income splitting for all of the economic reasons that have been mentioned. However, we support enhancing the universal child care benefit, even though the government regrettably chose not to be transparent about the fact that it eliminated the child tax credit to fund the bulk of the improved benefit.

We will, of course, support the enhanced universal child care benefit, even though it should be renamed given that it's for children between the ages of 6 and 17. It can hardly continue to be called a universal child care benefit when it's for children older than 6. The measure would be combined with the NDP's proposed $15-a-day national child-care program. The plan would be negotiated with the provinces, with Quebec having the right to opt out given that it already has a program in place.

For these reasons, we intend to support the enhanced universal child care benefit, provided for in clauses 35 to 40.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Caron.

Mr. Brison, please.

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

Mr. Chair, Liberals oppose this division, because we have presented a better plan for Canadian families, the Liberal Canada child benefit. The Liberal plan will actually provide Canadian families with one bigger and fairer tax-free monthly cheque to help families with the high cost of raising their children. Under the Liberal plan, a typical two-parent family with two kids, earning $90,000 per year, will get $490 tax-free every month. Under the Conservatives and Bill C-59, that same family receives only around $275 per month after tax. Compared with the Conservative plan, the Liberal plan will provide that family with an additional $2,500 more help, tax-free, every year.

Now, with the Liberal plan, a typical one-parent family with a child—

[The Chair, Conservative, James Rajotte]

Okay.

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

—earning $30,000 per year—

[Andrew Saxton, Conservative, North Vancouver, BC]

Is this a paid-for announcement?

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

I have to endure your talking points, so you may—

[The Chair, Conservative, James Rajotte]

Order.

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

I have to listen to your talking points. At least I wrote mine.

But with one child, earning $30,000 per year, they'll actually get $533 tax-free every month. Under the Conservatives and Bill C-59—

[The Chair, Conservative, James Rajotte]

Okay, Mr. Brison, to the actual clauses we're debating.....

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

—the same family receives only around $440 after tax.