Finance Committee on Nov. 1st, 2018

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you.

[Trevor McGowan]

It sets out how much each measure is expected to either raise or cost the government.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Ironically, I have the thick book of the budget, but I don't have the thin book. It's back at my office.

Thank you for pointing that out.

[Trevor McGowan]

The next measure is found in clause 25 of the bill. It relates to the reporting requirements in respect of foreign affiliates.

Currently, taxpayers have until 15 months after the end of their taxation year to file what is called a T1134 form, which provides information in respect of their foreign affiliates. The general requirement to file a tax return is six months after the end of the taxation year.

This measure would reduce the amount of time to file the T1134 reporting form in respect of foreign affiliates from 15 months after the end of the taxation year to 10 months after the end of the taxation year. This provides the Canada Revenue Agency with additional time to provide needed analysis and risk assessments in respect of these types of transactions while balancing that with the needs of businesses to have enough time to prepare these forms.

There will be a transition period in which the deadline will be 12 months. That applies to taxation years that begin in 2020. Then, starting with taxation years that begin in 2021, it will go to 10 months.

[The Chair, Liberal, Wayne Easter]

All right, next.

[Trevor McGowan]

The next measure is found in clauses 26, 28, and 29 to 33 of the bill. It relates to sharing information for certain criminal matters.

Currently, the government has obligations under its tax treaties and other international bilateral agreements to share information with its partners. What the income tax portion of this measure does is, first, to allow the provisions of the Mutual Legal Assistance in Criminal Matters Act to be used with respect to the sharing of criminal tax information under Canada's tax treaties, tax information exchange agreements, and the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

Where those would require Canada to provide tax-related criminal information to its treaty partners, the process for sharing information under the Mutual Legal Assistance in Criminal Matters Act would be used. That involves, first, the Department of Justice doing an analysis to make sure that the request for information from one of our partners is appropriate. It also involves going to court for an order to obtain the information, at which point the court would ensure that the request for information is both appropriate and also that the privacy rights, including those provided under the charter, are satisfied.

Then, after the information has been gathered, pursuant to the gathering order that would have to be obtained from the court, the Crown would have to go back to the court for a sending order so that it could be sent. At that point, the court would ensure that the terms of the gathering order had been followed, that the privacy rights had been respected and that it would be appropriate to send the information to Canada's partners. What it does is build a process using the Mutual Legal Assistance in Criminal Matters Act to provide information under these types of agreements.

The second of these measures permits the disclosure of taxpayer and other confidential tax information to Canada's bilateral mutual legal assistance partners, pursuant to administrative agreements entered into with a requesting state under the Mutual Legal Assistance in Criminal Matters Act. This is for the purposes of certain non-tax criminal investigations and prosecutions of certain serious crimes, like terrorism, organized crime, designated substances offences, and some proceeds of crime and money laundering offences relating to these designated offences. Again, it would provide an appropriate mechanism for the sharing of information with Canada's treaty partners.

[The Chair, Liberal, Wayne Easter]

Okay.

We'll have Mr. Maguire and then Mr. Julian.

[Larry Maguire]

Thanks, Chair.

How many requests for this confidential tax information for the purposes of non-tax criminal investigations does CRA get in a year?

[Trevor McGowan]

I don't have that information with me. I would have to check and get back to you on that.

[Larry Maguire]

I just wondered what kind of volume we're looking at and the seriousness of it, but thank you.

[The Chair, Liberal, Wayne Easter]

We heard something about this on our money laundering and terrorism financing act review, for sure, in terms of the need for sharing information.

Mr. Julian.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you, Mr. Chair.

I'm interested in a brief summary of how orders made under the Mutual Legal Assistance in Criminal Matters Act work currently with these changes that would be put into place. What is the current process?

[Trevor McGowan]

Currently, the Mutual Legal Assistance in Criminal Matters Act is used for other types of offences, but there is not, currently, an explicit process in place for providing this kind of information relating to criminal tax offences. This would introduce an explicit process, where one is not currently in place.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you.

[Trevor McGowan]

The last measure in part 1 of the bill can be found in clauses 34 and 40. It relates to the tax treatment of Quebec pension plan contributions. As is the case for contributions under the enhanced Canada pension plan, a deduction would be made available for the enhanced portion of contributions under the new Quebec pension plan.

[The Chair, Liberal, Wayne Easter]

Okay. That goes through all the sections in your area. Is there anything to add, going back over the whole lot?

We have Mr. Sorbara, and then Mr. Julian.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Mr. Chair.

in the summary, part 1(h), it says “ensuring that social assistance payments under certain programs do not preclude individuals from receiving the Canada Child Benefit”.

I take it that because the Canada child benefit is so transformational, in my humble view, and is making such a big difference in the lives of the families in my riding, this measure would just mean that if individuals are receiving payments from a different program, or another program from a different level of government—say, the provincial government—they would not be precluded from receiving the CCB.

[Pierre Leblanc]

Yes. Under the Canada child benefit, there is a definition of what is a child. A child has to be wholly dependent on their parent or the person eligible to receive the Canada child benefit.

In relation to Mr. Fergus's question, you have, as an example, the P.E.I. grandparents and care providers program. When those people are stepping in and helping to care for a child who needs a secure home, they're receiving some financial assistance from the government. That raises the question of whether that child is wholly dependent on the caregiver in that case, because that's how the current legislation reads. This is just to ensure, in those cases, that the grandparent or other carer is eligible to receive the Canada child benefit with respect to that child.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

It improves the flexibility of the overall program.

Thank you, Chair.

[The Chair, Liberal, Wayne Easter]

Mr. Julian.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you. I have two questions to wrap up, although I think we'll all keep open, Mr. Chair, the possibility of going back to these sections as we work through each one of them. Sometimes they are interrelated.

The first comes back to the working tax benefit and the ability that is granted to CRA to assess and grant the benefit. My understanding is that it is not an obligation. It would still be up to the CRA to choose to assess. It gives them a possibility, but there is no obligation for them to do that in the case of somebody who qualifies for the working tax benefit. Can you clarify that and perhaps direct us to the exact clause? We went over that section slowly, but I would appreciate being directed directly to it.

The other question is the one I asked on Tuesday night, which is about the total number of clauses and subclauses in the bill. I don't know if you've had time to look into that, but that would be appreciated as well.

Thank you, Mr. Chair.

[Pierre Leblanc]

I can answer the first question.

On the working income tax benefit, which will become the Canada workers benefit, the CRA will calculate it. If someone is eligible and CRA has determined they are eligible, and that individual has not claimed what will be the Canada workers benefit as of 2019 by filling out schedule 6, the Canada Revenue Agency will calculate the amount and will pay out the entitlement.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Can you direct us to that clause?

I apologize, I should have asked this when you went over it.

[The Chair, Liberal, Wayne Easter]

That's fine, Peter, no problem.

[Trevor McGowan]

If you look at subclause 12(4), the provision that creates a deemed overpayment of tax, you see that the Canada workers benefit is a refundable tax credit. The mechanism for providing refundable tax credits is that you have a deemed overpayment of tax. You're deemed to have paid too much tax. Once you've paid too much tax, the Canada Revenue Agency gives you a cheque, or pays you the amount of excess tax you're deemed to have paid. That's the mechanism for how these refundable credits work.

It provides that an eligible individual who files a return of income—so you have to have filed an eligible return of income and be otherwise eligible—is deemed to have paid at the end of the taxation year an amount equal to the total of...and then it's the amount for determining the amount of Canada workers benefit you get.

If you qualify, if you're an eligible individual and you filed your tax return, then you're deemed to have paid this extra tax and you just get the credit. There's no discretion built into it there. If you meet the conditions to apply, you're deemed to have overpaid tax and you're entitled to the credit.