Evidence of meeting #183 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was back.
A video is available from Parliament.
Director General, Personal Income Tax Division, Tax Policy Branch, Department of Finance
Under the existing provision, there's a requirement deleted under the amendment that the individual has to claim the amount. By virtue of that being removed, in combination with what Trevor just described, the CRA can pay it out.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
Thank you.
On the other question of clauses and subclauses, how many are there? Do we know?
Director General, Tax Legislation Division, Tax Policy Branch, Department of Finance
There are 40 clauses in part 1 of the bill.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
Sorry, I was talking about the overall. I did raise it on Tuesday night.
If not, that's okay. I'll keep asking.
Thank you.
Liberal
The Chair Liberal Wayne Easter
It was raised in the House yesterday as well. Somebody might eventually have to come up with the answer to that question, Peter.
I think that completes that section. Thank you very much, gentlemen, for your presentation and your answers.
We will ask people to come up on part 2 and part 3. They might as well come up together. I understand some of them are on both. We'll have Mr. Ives, Mr. Mercille, Mr. Coulombe, and Mr. Mercille again.
Just while they are coming up, Mr. Ives is the Senior Adviser, Sales Tax Division. Mr. Mercille is the Director General, Sales Tax Division. Mr. Coulombe is Director, Sales Tax Division. That's them all.
Just before we go to the section, for our agenda on next Tuesday, November 6, we had the Minister of Finance scheduled on this bill from 4:30 p.m. to 5:30 p.m. He would be appreciative if we could deal with him from 3:30 p.m. to 4:30 p.m. on the budget implementation act, and then from 4:30 p.m. to 5:00 p.m. on estimates, because we're running out of time on the estimates. Is that okay?
The officials would be here for their hour in addition as well. At 3:30 p.m. to 4:30 p.m., on next Tuesday, November 6, it would be the minister on Bill C-86 and from 4:30 p.m. to 5 p.m. on the estimates, because we're running out of time on that. Then 5 p.m. to 6 p.m. would be officials from the department on the bill and the estimates on the bill.
Is everybody okay with that?
Brandon—Souris, CPC
It's an hour for the bill, which is basically normal discussions anyway.
Liberal
The Chair Liberal Wayne Easter
Yes.
This changes it a little bit. We didn't have him in here on the estimates, and we really should take the opportunity to question the minister on the estimates. That's part of the problem. If we don't do it soon, we're not going to be able to do it. It will be automatically accepted under the rules.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
This actually extends his testimony from one hour to an hour and a half.
Liberal
Liberal
The Chair Liberal Wayne Easter
There usually is.
Okay. It's agreed then.
Welcome, folks. You're doing part 2 and part 3.
We'll start with you, Mr. Mercille. Go ahead.
Pierre Mercille Director General, GST Legislation, Sales Tax Division, Tax Policy Branch, Department of Finance
Good morning.
Part 2 of the bill would amend part IX of the Excise Tax Act to implement measures related to the goods and services tax and to the harmonized sales tax. The amendments begin in clause 41 and end at clause 60. The amendments under part 2 of the bill are essentially technical in nature. Generally speaking, they make minor improvements to the GST/HST rules to bring them into line with tax policy.
I'm going to describe the measures in the order in which they appear in the summary. However, the first measure, the purpose of which is to determine who is responsible for the tax payable on carbon emissions, has been referred to another committee. I'm going to name the clauses, but I won't outline the measures in detail. They are clauses 41, 44, 45, 48 and 53.
The first measure I'm going to describe is purely a timing rule, and it's found in clause 60.
The measure extends the assessment period for 60—
Liberal
The Chair Liberal Wayne Easter
Hold on one second. Are we all clear on where we are?
Yes. Go ahead, sorry.
Director General, GST Legislation, Sales Tax Division, Tax Policy Branch, Department of Finance
The measure extends the assessment period for group registered educational savings plan trusts that have made a particular relieving and retroactive election under proposed regulations under the Excise Tax Act.
Since the retroactive election would apply to the period from July 1, 2010, to July 22, 2016, the amendments ensure that the CRA is not statute-barred from assessing the past returns of the group RESP trusts that make the retroactive and relieving election. The amendments allow the CRA four years from when these amendments are made law to assess the GST/HST of these group RESP trusts, but only in respect of the tax consequences of the election.
The next measure deals with investment limited partnerships. I'm going to give you the clause numbers. They are clauses 41 to 43, 46, 49, and 54 to 59.
The measure ensures that the GST/HST treatment—
NDP
Director General, GST Legislation, Sales Tax Division, Tax Policy Branch, Department of Finance
They are 41 to 43, 46, 49, and 54 to 59.
The measure ensures that the GST/HST treatment of investment limited partnerships is consistent with other collective investment vehicles by extending the special HST rules currently applicable to investment plans to investment limited partnerships.
Investment limited partnerships generally include limited partnerships established to carry on investment activities on behalf of a group of investors. There are essentially three amendments in that respect. The first amendment ensures that investment limited partnerships that have investors in one HST province and in at least one other province determine their HST liability based on where the investors are located, as is currently the case for investment plans.
These amendments also confirm the long-standing tax policy that management and administrative services are subject to GST/HST when these services are provided to an investment limited partnership by its general partner. Finally, these amendments generally provide a GST/HST relief to investment limited partnerships in respect of which 95% or more of the partnership interest is held by non-resident investors.
The next measure deals with the federal rebate for printed books and it's found at clause 47.
Under the GST, educational and literacy institutions are eligible for a rebate of the GST or the federal component of the HST paid on printed books acquired for their own use in helping people learn to read and improve literacy skills. In accordance with the policy intent, the amendment clarifies that the rebate does not apply to printed books that are acquired by these institutions to be sold on their own or sold as part of another property or service.
Liberal
Greg Fergus Liberal Hull—Aylmer, QC
This is perhaps a silly question, but what happens if a group devoted to literacy sells their textbooks or their books that are used to promote literacy to their clients?
Director General, GST Legislation, Sales Tax Division, Tax Policy Branch, Department of Finance
If they sell the books for consideration, as opposed to giving them away, those sales are taxable and they're not supposed to claim the rebate in retrospect.
When an entity buys and supplies books, normally the process that applies is that they purchase the book, they pax the tax to their vendor and they claim the tax credits. They then sell the books to an individual, collect the tax from that individual and remit the tax to the CRA.
Liberal
Greg Fergus Liberal Hull—Aylmer, QC
If students learning how to read pay a certain amount to an organization to teach them, and the fees they pay to be instructed how to read include the purchase of these books, then the organization would be able to claim the HST, or perhaps the GST and HST.
Director General, GST Legislation, Sales Tax Division, Tax Policy Branch, Department of Finance
I'm going to clarify something on your last point. Both rebates that I'm talking about here are purely for the GST, or the federal component of the HST.
In the case you describe, the entity would not be allowed to claim the book rebate. Usually, when there's a supply of a course and a supply of a book, the books are supplied separately from the course. The intention from the policy side, since the inception of this rebate, was always that if the books are to be sold for consideration, the book rebate is basically not applicable.
Liberal
Greg Fergus Liberal Hull—Aylmer, QC
I got that. I guess I'm asking what happens if the cost of the book is covered in the fees somebody pays for the course.
Director General, GST Legislation, Sales Tax Division, Tax Policy Branch, Department of Finance
Yes, and I am telling you that the entity providing that course will not be able to claim the rebate in respect of those books.