Finance Committee on June 10th, 2021

[Ted Gallivan]

I do want to sincerely answer your question. I feel, at some level, it's the combination of the tools. If you put pressure in one direction, that's not enough, but it's the cumulative pressure of all of those things.... I also think—and again this is tough to measure—people start to get the message. There's a message that “enough is enough”.

I think that attention from this committee and media commentary, even though its often critical of the CRA, are also putting pressure on taxpayers. It's transparency measures like we have with the wage subsidy now that are out there. I faced questions at committee about some of the payments we authorized. I think that increased transparency is happening.

I'm a little disappointed—

[Ed Fast, Conservative, Abbotsford, BC]

I was looking for maybe highlights, a couple of tools that pop out in your mind as being very effective in being able to go after these folks.

[Ted Gallivan]

I would say any automatic data exchange where CRA is getting data from a third party—we're getting it automatically and across the board, and people know we have the data—kind of has a chilling effect.

[Ed Fast, Conservative, Abbotsford, BC]

I have a question for Mr. McGowan.

Earlier my colleague Mr. Falk asked you a question on when the declaration of a personal residence was included on tax forms.

Do you know the year that was added?

[Trevor McGowan]

I apologize; I don't recall the first year that it appeared on the tax forms.

[Ed Fast, Conservative, Abbotsford, BC]

You were also asked who would have directed Finance to include it, and you couldn't answer.

Is that correct?

[Trevor McGowan]

I didn't know the answer to where that specific proposal came from.

[Ed Fast, Conservative, Abbotsford, BC]

Could you provide this committee with that once you've checked into it?

[Trevor McGowan]

I can look into it. I don't know where the information might lie, but I can look into it.

[Ed Fast, Conservative, Abbotsford, BC]

Obviously it would lie in probably the year in which it was first included on the tax return, and it would be helpful for the committee.

[The Chair, Liberal, Wayne Easter]

Ed, it might have even have come from the previous government.

[Ed Fast, Conservative, Abbotsford, BC]

It might be the case. That's what I want to know.

Has the Department of Finance either participated in or contributed to CMHC's study on intergenerational tax inequity and the housing market?

[Trevor McGowan]

I would need to take that away and ask some of my economist colleagues. I'm not sure, on the legislative side, if that's been done. I would need to check with my colleagues to see if Department of Finance officials have participated in that study.

[Ed Fast, Conservative, Abbotsford, BC]

Okay.

Can I ask you again about the rationale? Could you explain to me why that declaration is even included on our tax returns?

[Trevor McGowan]

For when there has been a sale of a principal residence?

[Ed Fast, Conservative, Abbotsford, BC]

Yes.

[Trevor McGowan]

A sale of a principal residence exemption essentially provides that any capital gains on the sale of the principal are tax-free. That, for many Canadians, can be one of the biggest investments that they have. It is also a significant tax expenditure. It is something that hadn't been previously reported, and so in order to ensure the government had information on who was claiming these exemptions and to help ensure compliance, it was added.

[Ed Fast, Conservative, Abbotsford, BC]

Between you and Mr. Gallivan, could one of you tell me how much tax has been recovered from people who have abused the home residence exemption?

[The Chair, Liberal, Wayne Easter]

That will be the last question, Ed.

[Ted Gallivan]

As a quick answer, we have a real estate program, which is probably broader than just abuse. That program has yielded $1 billion over the last four or five years, mainly focused on the Lower Mainland of B.C. and the GTA. However, that would be a lot of things, including sales tax and other matters all mixed in.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

We'll go to Mr. Fraser, I believe, and then I'll take three or four single questions.

If people want to raise their hand, I see Mr. Julian, Mr. Ste-Marie, and I know Ms. Jansen has one.

[Sean Fraser, Liberal, Central Nova, NS]

How much time do I have, Chair?

[The Chair, Liberal, Wayne Easter]

You can have five minutes, if you want it.

[Sean Fraser, Liberal, Central Nova, NS]

I may not need it, and I apologize in advance if I ask a question that's already been asked, as I did not participate in the first few segments of the meeting.

I will put a question to our officials.

The Finance Minister, as part of conversations with her G7 counterparts, has recently made news over the issue of a proposed agreement to establish a global minimum corporate tax rate at 15%, which is Canada's federal rate of corporate tax today.

I'm curious whether you can shed some light on the impact that kind of multilateral agreement will have on business practices, where multinationals are trying to shift the income from one jurisdiction to another, without shifting the work, in order to avoid tax that otherwise would properly be paid in a country like Canada.

[The Chair, Liberal, Wayne Easter]

Who wants to take it?