Finance Committee on March 2nd, 2021

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you.

I thought you were going to give me a yes-or-no answer. You made it clear that you don't think this is going to open the door to further tax-avoidance opportunities.

I want to go back a little bit. I have been following some of the history on this. You mentioned that this is a private member's bill that you picked up but that somebody else had drafted and that you're carrying it forward. Can you tell me where the previous member went with this bill and what happened? Why didn't it get—

[Larry Maguire, Conservative, Brandon—Souris, MB]

Mr. Caron brought the bill forward. He brought it into reading in the House, and the government defeated the bill. The entire opposition voted for it at that time. There were even 10 Liberals who voted for it. But in the majority Liberal government, the bill was defeated. That's the history of it.

You're quite correct. Mr. Dubourg did bring in a bill earlier than that, as a Liberal, to deal with a similar situation for small businesses, but that never got passed because of an election interfering with that, and it was never brought forward again.

Mr. Caron did the very, I think, worthwhile exercise of doing a lot of.... That's why I asked him to come into my office to have a discussion on it and to pass the research he had already done to me so that I wouldn't have to reinvent the wheel in order to make sure that his goal of having small businesses supported in this manner and in intergenerational transfers would take place.

[The Chair, Liberal, Wayne Easter]

Does anybody else have a couple of quick questions? We have about four or five minutes left.

I would say this, Mr. McLeod and Larry. Guy Caron was on the finance committee for quite a number of years. He is an extremely strong individual on research. I've never seen him come forward with anything that he didn't know his stuff on. That's a compliment to Mr. Caron.

Does anybody have a quick question they want to ask?

Annie, go ahead.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you, Mr. Chair.

Thank you for your testimony, Mr. Maguire.

I think what we've heard this afternoon is that there definitely needs to be more discussion and a really healthy debate.

I think that certainly there is a need for the federal government to facilitate the transfer of small businesses and family farms and fishing corporations between family members; however, I know that many of my colleagues have talked about tax avoidance, and I think that by raising that issue in no way are we suggesting that small business owners or farmers or fishers are not honest. I'm just saying that we need to go forward with extreme caution so that there aren't any unforeseen consequences or considerable tax avoidance opportunities.

You mentioned in your opening remarks that several organizations have voiced support for this bill. However, I'm concerned that these consultations did not fully explore the potential consequences of this bill with regard to opportunities for tax avoidance. Have you discussed this bill with any lawyers, academics or other stakeholders who voiced concerns? If they did voice concerns, can you speak to us a bit about that? Not to reinvent the wheel—and you had a great briefing—I'm just curious to know if you have had any conversations to that effect.

[Larry Maguire, Conservative, Brandon—Souris, MB]

I have spoken with major accounting firms across the Canada, and many of them believe that this bill is very accurate and should be implemented immediately.

I also want to make the point that I know the Liberal government has said they feel this bill would be okay for agriculture, but if it's okay for agriculture and there are loopholes in it, then why wouldn't there be loopholes on the agriculture side as well?

Taking out one sector when they are all to be treated the same—whether it's small business corporations with share capital that would be allowed as opposed to just segregating out agriculture—is not fair to small businesses across the country, because there is no difference in the manner in which they would be dealt with through major legal counsel or accounting firms in this nation. A tax policy is a tax policy, and it should be set up not for just one sector or agriculture and fishers, but for the small business community.

I now live in the city of Brandon, and as I referred to earlier, I know that it doesn't matter what city we live in, there are small businesses, and many of them are family-run operations.

[The Chair, Liberal, Wayne Easter]

Okay. The last question is for you, Mr. Kelly.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Thanks.

I've listened to all the comments. Of course, none of us wants the tax system to become more complicated. I see this as an exercise in making it less complicated by treating all sales the same, but on the concern around these small businesses getting an advantage, or small business owners being able to take advantage or receive an advantage, I wanted to get on the record this point about small businesses.

When we talk about selling a small business that people have put their entire working lives into and they are retiring from, the small business owner doesn't have a pension from an employer. They didn't have employer benefits throughout their working careers. They weren't protected through their livelihood with all the protections that employees in the workforce have.

It is a tough life being self-employed. When a small business owner, whose assets in the business are not likely to be liquid.... They've accumulated—we've talked a lot about farms and fishing businesses—equipment, land, a plant and these kinds of things, all sorts of items that they want to transition to allow the business to keep going.

It's not that this bill will give an advantage to small business owners. Mr. Maguire, would you agree that this bill will simply take away a disadvantage faced by small business owners?

[Larry Maguire, Conservative, Brandon—Souris, MB]

Absolutely it will, Mr. Kelly, and I think Mr. Julian made a very good point on that when he said that we need to stop the “penalty” they're presently faced with. I think that's the culmination of the whole bill: a level playing field. It's not that it's even close right now. There is a huge penalty there, a big disincentive, to sell to your own family, and that needs to change.

[The Chair, Liberal, Wayne Easter]

Okay. We are going to have to end it there.

We do have a meeting on Thursday with the Law Clerk. I'm not exactly sure how much time he has for us, but we will leave that to the clerk of our committee.

Thank you very much, Larry.

I thank everyone for the discussion. This was a great discussion today.

With that, the meeting is adjourned.