Evidence of meeting #121 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was year.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Trevor McGowan  Senior Legislative Chief, Legislative Review, Tax Legislation Division, Tax Policy Branch, Department of Finance
Pierre Leblanc  Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
Randy Freda  Senior Tax Policy Officer, Business Income Tax Division, Tax Policy Branch, Department of Finance
Pierre Mercille  Senior Legislative Chief, Sales Tax Division, Tax Policy Branch, Department of Finance
Carlos Achadinha  Legislative Chief, Sales Tax Division, Tax Policy Branch, Department of Finance

5:25 p.m.

Senior Legislative Chief, Sales Tax Division, Tax Policy Branch, Department of Finance

Pierre Mercille

We consulted twice on the amendments.

5:25 p.m.

Liberal

Greg Fergus Liberal Hull—Aylmer, QC

Very good.

5:25 p.m.

Senior Legislative Chief, Sales Tax Division, Tax Policy Branch, Department of Finance

Pierre Mercille

After the first consultation, we met with transit authority officials. After the second consultation, no one proposed any changes.

5:25 p.m.

Liberal

Greg Fergus Liberal Hull—Aylmer, QC

Thank you.

5:25 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Albas is next, and then Ms. O'Connell.

5:25 p.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

In introducing clarifications and technical improvements to the GST/HST rules applicable to certain pension plans and financial institutions, what is the net cost to the treasury of that measure?

5:25 p.m.

Senior Legislative Chief, Sales Tax Division, Tax Policy Branch, Department of Finance

Pierre Mercille

These are fairly technical. I don't think we have an estimate for that, because certain measures may close potential loopholes while other measures provide further relief. Overall, they likely balance each other.

5:25 p.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

Could you get back to the committee with some sort of estimate?

5:25 p.m.

Senior Legislative Chief, Sales Tax Division, Tax Policy Branch, Department of Finance

Pierre Mercille

It's very difficult to make estimates for those kinds of measures, because we don't have data to make the estimates. These are very technical measures. It's not as if we were relieving a new good or service, where basically we could go to StatsCan and evaluate, based on a survey, the value of something.

5:30 p.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

Paragraph (d) in the summary of part 2 of the bill reads:

clarifying the application of the GST/HST to supplies of municipal transit services to accommodate the modern ways in which those services are provided and paid for; and

Are you aware of what Innisfil is doing with Uber? The municipality has entered into a contract with Uber to offer certain services. Last year, this government, in their BIA, decided to add Uber. Under measure (d), what is the status of Uber if they are operating as a part of a municipal transit service?

5:30 p.m.

Senior Legislative Chief, Sales Tax Division, Tax Policy Branch, Department of Finance

Pierre Mercille

First of all, Uber is for profit.

5:30 p.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

Yes, but it's a municipal transit service. For example, the City of Penticton has a private operator for their municipal transit service.

November 2nd, 2017 / 5:30 p.m.

Carlos Achadinha Legislative Chief, Sales Tax Division, Tax Policy Branch, Department of Finance

“Municipal transit service” is a defined term. Generally, you need to be offering a transit service that is dedicated specifically to providing municipal transit. If you are just a contracted entity, you may not actually be the entity that is doing municipal transit; you may just be the person who is contracted to provide that service.

5:30 p.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

Are you saying that there are certain types of municipal transit services? To me, if a municipality decides to engage with a private contractor to carry out certain functions that are publicly available to all and subsidized by the taxpayers of said area, that would be a public system delivered through a private mechanism.

Perhaps you may want to look into that, because again, last year this government put Uber into a category that meant they had to pay HST.

5:30 p.m.

Senior Legislative Chief, Sales Tax Division, Tax Policy Branch, Department of Finance

Pierre Mercille

I don't know the structure of the city you referred to, but if all of the municipal transit is paid by the municipality—if they pay Uber, including tax, and they pay tax on these things—then the municipality is entitled to a 100% rebate of the GST/HST that it pays.

5:30 p.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

I will let the people of Innisfil know, through their great representative, what you have said today.

5:30 p.m.

Liberal

The Chair Liberal Wayne Easter

Do you mean the federal representative?

5:30 p.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

Yes, I mean their great federal representative.

5:30 p.m.

Liberal

The Chair Liberal Wayne Easter

Okay. I wanted to be clear on that point.

We have one more question left.

Go ahead, Ms. O'Connell, and then we will adjourn.

5:30 p.m.

Liberal

Jennifer O'Connell Liberal Pickering—Uxbridge, ON

Thank you.

I'm following up on the municipal transit as well, but to Mr. Albas' point, in Durham Region Transit we contract out to taxicabs to provide our accessibility transit in some areas of the community where it is not feasible to send an accessible transit bus. We have a long-standing contract, and it's on the books under Durham Region Transit for an offset limit of taxis. That is the transit service.

5:30 p.m.

Legislative Chief, Sales Tax Division, Tax Policy Branch, Department of Finance

Carlos Achadinha

In your particular case, as my colleague mentioned, municipalities are entitled to 100% rebate of the GST they pay. If they pay for a service and they pay GST, they are allowed to get 100% of it back. How a municipality chooses to structure its fares.... The relief has been put in place for municipal transit services, so it's generally characterized by what a municipal transit service is. For example, if you personally were to call a taxicab because you didn't have the availability of municipal transit, that wouldn't be treated as municipal transit.

There are various categories of what is considered municipal transit. It would be for the CRA to make the characterization of what an eligible municipal transit service is.

5:30 p.m.

Liberal

Jennifer O'Connell Liberal Pickering—Uxbridge, ON

Right, but it's not the individual who calls the taxi; it's the dispatch, the transit.

5:30 p.m.

Legislative Chief, Sales Tax Division, Tax Policy Branch, Department of Finance

Carlos Achadinha

Again, if they paid tax on that service, they'd be entitled to recover it through their GST/PST municipal rebate.

5:30 p.m.

Liberal

Jennifer O'Connell Liberal Pickering—Uxbridge, ON

My question really is around the wording of this measure. I'm confused in terms of what the measure is clarifying. Can the exemption apply regardless of whether the supply of municipal transit is made as a supply of a service or the supply of a right to use municipal transit—for example, through the sale of a pass? Is the exemption on the cost of administering the pass? The individual purchases the pass.

I'm confused by the wording. Can you elaborate?

5:35 p.m.

Senior Legislative Chief, Sales Tax Division, Tax Policy Branch, Department of Finance

Pierre Mercille

The way the exemption worked before was that it was an exemption for a service. If you look at it in a traditional way, you would have a transit service. You would walk onto the bus and you would put change in the machine. It was a direct service.

The way it's mostly done now is through tickets, passes, Presto cards, and those kinds of things. When those cards and tickets are sold to you, the best legal characterization of that is that it is the supply of a right, not the supply of a service. It's a legal nuance. It's not taxpayers who raised it for us; it was CRA. They asked us to be more precise in terms of the way the policy should be interpreted, to say whether it is the supply of a right or of a service.