Finance Committee on May 27th, 2021

[Trevor McGowan]

Clause 46 relates to the qualified Canadian journalism organization rules. It provides a specific set of rules for acquiring and losing designation as a qualified Canadian journalism organization. It is relevant to the labour tax credit, digital tax credit and qualified donee status supports for journalism.

[The Chair, Liberal, Wayne Easter]

Shall clause 46 carry on division?

(Clause 46 agreed to on division)

(On clause 47)

[Trevor McGowan]

Clause 47 is a consequential amendment relating to the measure that requires registered charities to lose their charitable status once they become listed terrorist entities. It provides a year-end on revocation.

It also provides another consequential amendment in respect of that charity measure. This amendment provides that a charity can lose its registration status if it makes false statements in order to maintain its registration. Currently an organization can lose its charitable registration status when it makes false statements in order to obtain registration as a qualified donee. This measure would extend it so you can also lose your status if you make false statements to maintain itl.

[The Chair, Liberal, Wayne Easter]

Shall clause 47 carry on division?

(Clause 47 agreed to on division)

(On clause 48)

[Trevor McGowan]

Clause 48 relates to the advanced life deferred annuities and provides the bulk of the rules in respect of those, which I have noted are a new type of investment vehicle that can provide additional flexibility in saving for retirement.

[Ed Fast, Conservative, Abbotsford, BC]

Mr. Chair, I am looking at clause 48, and it relates to the notice of suspension of authority to issue receipts. Are we on the same clause?

[Trevor McGowan]

I apologize. That was my mistake. I described clause 48 along with clause 47. Clause 47 is just the notice of revocation for becoming a listed terrorist entity. Clause 48 deals with making a false statement in order to maintain charitable registration status.

I'm sorry. I combined the two.

[Ed Fast, Conservative, Abbotsford, BC]

No problem. You're doing your best.

[The Chair, Liberal, Wayne Easter]

Thank you for that, Trevor.

Shall clause 48 carry on division?

(Clause 48 agreed to on division)

(On clause 49)

[Trevor McGowan]

Clause 49 provides the rules for advanced life deferred annuities, which provide additional flexibility for savings in retirement.

[The Chair, Liberal, Wayne Easter]

Shall clause 49 carry on division?

(Clause 49 agreed to on division)

(On clause 50)

[Trevor McGowan]

Clause 50 provides rules relating to the transition from the old health and welfare trust regime for providing benefits to employees to the new legislated employee life and health trust rules.

[The Chair, Liberal, Wayne Easter]

Shall clause 50 carry on division?

(Clause 50 agreed to on division)

(On clause 51)

[Trevor McGowan]

Clause 51 relates to the repayment of certain COVID-19 benefits.

If a benefit is received, it's generally included in your income. If you have to repay it, the general rule is you get a deduction for the repayment in the year that the repayment is made. This measure would allow for a deduction in the year when the COVID-19 benefit is received rather than in the year in which it's repaid. That can help offset the income with the deduction. It's for cash flow benefit purposes. It can also help in later circumstances, when in later years the individual who received the amounts doesn't have any taxable income to utilize the deduction.

[The Chair, Liberal, Wayne Easter]

Go ahead, Mr. Fast.

[Ed Fast, Conservative, Abbotsford, BC]

I'm just wondering who would qualify for this beneficial tax treatment. Could you give us a scenario?

[Trevor McGowan]

For example, I receive one of the listed COVID-19 benefits, like the CERB. I applied for it, but I wasn't entitled to receive it, so I have to pay back some portion of it. If it's an income-tested benefit, maybe my income was a bit higher and I had to pay back a portion of it.

I receive an amount in, say, 2020 and I repay it in 2021. Both the income inclusion and the deductions would be in 2020, so it becomes a wash.

[Ed Fast, Conservative, Abbotsford, BC]

When you say “I”, though, this measure is related to flow-through shares, so we're talking about a corporate entity. Is that correct?

[Trevor McGowan]

Is that for clause 51?

[Ed Fast, Conservative, Abbotsford, BC]

It's tax on flow-through shares.

Am I on the wrong clause here, Mr. Chair? We're on clause 51, correct?

[The Chair, Liberal, Wayne Easter]

We are on clause 51 on page 72, I believe.

[Ed Fast, Conservative, Abbotsford, BC]

My information says this has to do with COVID-19 tax on flow-through shares.

[The Chair, Liberal, Wayne Easter]

I have “COVID-19 - expenses deemed incurred earlier”. Go down on that page a little bit.

[Trevor McGowan]

I apologize. I confused it with a different measure. You're absolutely correct.

Flow-through shares allow resource companies to raise money more effectively by effectively transferring some of their qualifying expenses, such as Canadian exploration expenses and development expenses, to their investors, who can use the deductions.

When you enter into a flow-through share agreement, the corporation is required to incur those expenses within a fixed period of time. These rules provide essentially an extra year for the company to incur those expenses. That's in response to the COVID-19 pandemic, which prevented a lot of companies from engaging in their normal exploration activities.

[The Chair, Liberal, Wayne Easter]

Shall clause 51 carry on division?

(Clause 51 agreed to on division)

(On clause 52)

Is this the one you previously explained, Trevor?