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

4:50 p.m.

Senior Legislative Chief, Legislative Review, Tax Legislation Division, Tax Policy Branch, Department of Finance

Trevor McGowan

It's because it's a timing question.

4:50 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Right.

4:50 p.m.

Senior Legislative Chief, Legislative Review, Tax Legislation Division, Tax Policy Branch, Department of Finance

Trevor McGowan

It's just dealing with the deferral.

As I said—

4:50 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

I guess what I'm getting at here is that if it's just a timing question, the professionals in question are not avoiding paying tax; they are paying it a year later, at worst. That's by virtue of the fact that they're paying it in the year they actually receive their billings, as opposed to in the year they did the work. Is that right?

4:50 p.m.

Senior Legislative Chief, Legislative Review, Tax Legislation Division, Tax Policy Branch, Department of Finance

Trevor McGowan

It's a deferral of taxes, not an absolute savings.

4:50 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Right, so what problem are we trying to solve here?

4:50 p.m.

Senior Legislative Chief, Legislative Review, Tax Legislation Division, Tax Policy Branch, Department of Finance

4:50 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

It seems sort of punitive. You know, “You're paying your tax next year instead of this year. We're going to go get you, because accrual accounting says you have a receivable on your book in the year you did the work rather than the year you got paid. We believe in accrual accounting, so pay up, even if you don't have any money to pay with.”

4:50 p.m.

Senior Legislative Chief, Legislative Review, Tax Legislation Division, Tax Policy Branch, Department of Finance

Trevor McGowan

The time value in deferrals is quite valuable. A significant portion of tax planning is aimed at achieving tax deferrals rather than absolute savings, so I'm not certain that a deferral represents a “nothing”.

4:50 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

What does it represent, then? What is the monetary value of this deferral right now? Does your department have any estimate?

4:50 p.m.

Senior Legislative Chief, Legislative Review, Tax Legislation Division, Tax Policy Branch, Department of Finance

Trevor McGowan

Well, it would bring into income over the time horizon, $425 million—

4:50 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

That's not the question. That'll move tax liabilities forward. It won't increase the amount of tax paid. The $400-and-some-odd million you just listed are not additional revenues that the Government of Canada will get over time, but revenues being pulled out of future years into present years, so what is the monetary value of the deferral you're eliminating with this measure?

4:50 p.m.

Senior Legislative Chief, Legislative Review, Tax Legislation Division, Tax Policy Branch, Department of Finance

Trevor McGowan

If you're asking what the anticipated revenue increase is after the end of the phase-out period, you can see from the table included in the budget that it's nominal, less than $500,000 a year.

4:50 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Is it $25,000?

4:50 p.m.

Senior Legislative Chief, Legislative Review, Tax Legislation Division, Tax Policy Branch, Department of Finance

Trevor McGowan

It's less than $500,000.

4:50 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

It's less than $500,000 a year? That's what the government spent since you and I started this conversation.

It just seems that we're going to tax people on money they haven't actually received and might never receive. We're going to create the administrative nightmare of having to go back to CRA when their client defaults on a payment to say, “Listen, CRA: I know I paid you tax on that money I never made. I can now confirm I'm never going to make it. Can you please give me a refund on that non-existent income?”

Also, the Government of Canada can raise a half a million bucks?

4:55 p.m.

Liberal

The Chair Liberal Wayne Easter

I don't think the officials can answer that part.

4:55 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

That's all.

4:55 p.m.

Liberal

The Chair Liberal Wayne Easter

Okay.

I know there are a lot of people here from different departments. I would say that we will not get beyond part 3, and so anybody who was planning to testify after part 3—and parts 3 and 4 have the same witnesses—is released. We'll be talking to you another day.

4:55 p.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

I want to bring up division 2 of part 5, the Asian Infrastructure Investment Bank Agreement Act.

4:55 p.m.

Liberal

The Chair Liberal Wayne Easter

No, we'll have to do it another day.

4:55 p.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

Okay.

4:55 p.m.

Liberal

The Chair Liberal Wayne Easter

Gentlemen, we still need you. We still have three more questioners on part 1. I'm just saying that some officials who would have to wait might as well be released and head out, because we're going to have to call you another day, which is not unusual at this committee. I thank you for coming.

I have on my list Mr. Dusseault, Mr. Fergus, and Ms. Khera.

4:55 p.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

Thank you, Mr. Chair.

Thank you to the witnesses for being here today.

My question is about clause 30. This won't be the first time you'll hear me bring this up: retroactive measures. In this case, the retroactive period goes back to October 24, 2001. It always worries me when retroactive amendments are made to the Income Tax Act.

Would you explain the change being proposed in clause 30, in relation to trusts and foreign affiliates? I'm trying to understand the reason, or rationale, for the amendment coming into effect retroactively on October 24, 2001, in other words, 16 years ago.

4:55 p.m.

Senior Legislative Chief, Legislative Review, Tax Legislation Division, Tax Policy Branch, Department of Finance

Trevor McGowan

Sorry, is this clause 30 of the bill?