Finance Committee on July 20th, 2021

[The Chair, Liberal, Wayne Easter]

We'll call the meeting to order. Welcome to meeting number 60 of the House of Commons Standing Committee on Finance. Pursuant to Standing Order 108(2), the committee is meeting to study the coming into force of Bill C-208, an act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation).

We went through the rules for this room this morning, on the pandemic and social distancing and so on, so we don't need to go through those again.

We'll start with the witnesses.

I see, Ms. Aitken, you've been working steadily. We've had you on screen here and you've been getting a lot of work done while you've been waiting for us to come on.

We welcome Ms. Aitken, executive director and senior general counsel, finance legal services, law branch. Then we have Mr. Jovanovic, associate assistant deputy minister, tax policy branch; and Trevor McGowan, director general, tax legislation division, tax policy branch.

Trevor is no stranger to this committee. I think he has spent pretty near as many hours as some of us have. Am I right, Ed?

I don't believe there's an opening statement. If there is, raise your hand or yell. Otherwise we'll start with questions, six-minute rounds, with Mr. Fast, Ms. Dzerowicz, Mr. Ste-Marie and Ms. Mathyssen.

Mr. Fast, you're first on deck. Welcome. Go ahead.

[Ed Fast, Conservative, Abbotsford, BC]

Well, thank you, Mr. Chair. My questions will be for Mr. McGowan.

Trevor, you've been at parliamentary committees many times before, as the chair has suggested, so you know the drill. When private members' legislation comes before a committee, we generally have a robust discussion about the legislation. The government, through its MPs, has the ability to bring forward amendments that would fix loopholes or deficiencies in those bills.

Mr. McGowan, you were present at committee as a witness, as Bill C-208 was being discussed. Is that correct?

[Trevor McGowan, Director General, Tax Legislation Division, Tax Policy Branch, Department of Finance]

That is correct.

[Ed Fast, Conservative, Abbotsford, BC]

All right. Your recent press release, the finance department's press release dated July 19, highlights four specific loopholes that it feels should be fixed in Bill C-208. My question to you is, when you appeared before committee as a witness to discuss this bill, did you or any of your officials recommend amendments that would have addressed the shortcomings Bill C-208 had, and specific wording for those amendments?

[Trevor McGowan]

As was stated, my colleague Shawn Porter and I appeared before the House finance committee and the Senate committee on agriculture to discuss Bill C-208 and provide comments on the technical aspects of the bill. During that time, we provided technical commentary and analysis in respect of the bill, but our involvement was limited to that. We weren't suggesting amendments, but certainly we did raise some of the concerns that are alluded to or mentioned in the July 19 press release.

[Ed Fast, Conservative, Abbotsford, BC]

What was the purpose of your appearing before committee if there was no process by which Finance could inform the committee and provide it with the assistance and the wording for amendments that could have fixed the so-called loopholes that you've identified after the fact?

[Trevor McGowan]

As I understood it, the purpose of my appearance before the House finance committee was to provide information and analysis on the technical aspects of the bill so that members of the committee had the appropriate information to make decisions.

[Ed Fast, Conservative, Abbotsford, BC]

Okay, so after royal assent, somebody in government, maybe in Finance or maybe in the Prime Minister's Office, made the decision to announce that Bill C-208 would not be applied. In other words, it wouldn't be implemented right away. Is that correct?

[Trevor McGowan]

Just to be technical in the terminology, when Bill C-208 received royal assent, it became effective. It became part of law. It amended the Income Tax Act. On June 29, the date of royal assent, Bill C-208 amended the Income Tax Act. As of that date, the provisions it had amended were part of Canadian law. That's the date on which it came into law. That's just a fact and not something that could be changed.

[Ed Fast, Conservative, Abbotsford, BC]

Well, let me say this: I'm so glad that you're now acknowledging that Bill C-208 became the law on June 29. It's something that was not reflected in your June 30 press release.

I want to know who it was in your department, or who it was in government, who made the decision not to respect Bill C-208 and issue the press release that led to the confusion, and quite frankly the bewilderment, of the small business community in Canada.

[Trevor McGowan]

I suppose there are two things to discuss there. The first relates to the decision-making process in terms of the press release. In that, the department follows the regular approval process that we use for all of our public communications projects, in alignment with the requirements of the federal communications policy.

In terms of the substantive portion of the question, as I said, on June 29 Bill C-208 produced its effect and amended the Income Tax Act. The government's announcement on June 30 was that the government proposes to introduce legislation providing that the amendments would apply only as of January 1, 2022. It's perhaps a technical point that the June 30 amendment would amend the Income Tax Act, which had been amended by Bill C-30 ahead of time, but the government was announcing its intention to table legislation to provide a January 1, 2022, application date.

[Ed Fast, Conservative, Abbotsford, BC]

Trevor, really, that is a re-characterization of what has happened. The June 30 press release made it very clear that the government was going to withhold implementation of Bill C-208 until it had a chance to amend it. In that, it was moving in a way that effectively defied the will of Parliament. My question, which you didn't answer, is who in Finance or who in government actually made the decision that was then reflected in the press release that was issued on June 30?

[Trevor McGowan]

Well, as I said, getting back to the—

[Ed Fast, Conservative, Abbotsford, BC]

Answer the question.

[Trevor McGowan]

—approval process for the press release, it followed the normal federal communications policy, which involved a number of groups or branches within the Department of Finance working on the press release, so—

[Ed Fast, Conservative, Abbotsford, BC]

I'm not asking about process. I'm asking who made the final decision—

[The Chair, Liberal, Wayne Easter]

Mr. Fast, give Mr. McGowan the opportunity and the courtesy of time to answer the question—

[Ed Fast, Conservative, Abbotsford, BC]

With respect, Mr. Chair, you know what he's doing. He's not answering the question. I asked who, and he will not provide me with that answer.

All we want to know is this: Who's the decision-maker who made the decision to issue the press release that reflected the government's decision not to respect the will of Parliament?

[The Chair, Liberal, Wayne Easter]

You've been in government, and in these matters it isn't usually a single individual.

Mr. McGowan, answer as specifically as you can, please.

[Trevor McGowan]

Thank you.

I just want it to be clear that in terms of the press release, we're being clear on specifically what it did. In terms of who made the decision, the press release stated that the “government” proposes to introduce legislation. That is a reference to the elected Government of Canada and its intention to table a bill. That is a proposal of the Government of Canada and not—

[Ed Fast, Conservative, Abbotsford, BC]

That's right. Let me stop you right there.

[The Chair, Liberal, Wayne Easter]

You're out of time, but I will give you and others time as well. That will be the last question.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you, Mr. Chair.

Who in the elected government made the decision to issue this release, or to instruct your department to issue this release, which has led to all of this confusion?

[The Chair, Liberal, Wayne Easter]

Mr. McGowan, I believe you answered that question, but go ahead. We'll give you another snap at it.

[Ed Fast, Conservative, Abbotsford, BC]

No, he hasn't answered the question.

Who in the elected government made that decision?