Finance Committee on July 20th, 2021

[Ed Fast, Conservative, Abbotsford, BC]

So there's a gap now between June 29 and November 1, in which the government does not intend to make any retroactive changes, and in which there may be some gaps or loopholes that you've identified that may be difficult to address. Is that correct?

[Trevor McGowan]

My only hesitation is that not before November 1, so up until October 31, the government wouldn't introduce other additional conditions in excess of what's currently there now. So that's right: The law that's in place now will be there until October 31, or until November 1 at the earliest.

[Ed Fast, Conservative, Abbotsford, BC]

All right. This is my last question. The most recent press release is the July 19 one, in which the elected government did an about-face on Bill C-208. Certainly we see it as an about-face. It still suggests that some intergenerational small business transfers aren't genuine. In fact, you use the term “genuine” in that press release. I'm looking at it here.

It still suggests that small businesses are engaged in tax avoidance, in surplus stripping, in artificial tax planning and in not paying their fair share. Do you understand why many small businesses and the families who run them still feel that you and your finance department colleagues, and the government, and the Prime Minister still believe they're tax cheats? It's baked into your press release. Small businesses reading that would take from it that this government really doesn't trust small businesses and still believes they're tax cheats.

Do you understand why small businesses are concerned?

[Trevor McGowan]

Thank you for mentioning that. It brings me to something I wanted to mention earlier. I forget the question, but there was a suggestion that somehow tax planning using the law of the day could be considered bad behaviour or something like that. Of course, if there are gaps in the law, that is a problem with the law. It's not a problem with people who arrange their affairs in such a way as to reduce their tax liability.

[The Chair, Liberal, Wayne Easter]

All right.

We will go to Ms. Dzerowicz and then to Ms. Bendayan on a split—if you want to go with the split.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

Thank you, Mr. McGowan, for your patience in answering all of these questions.

Mr. Fast must have been reading my mind, because he asked a couple of my questions. I was going to ask a similar question in terms of whether, between June 29 and November 1, sales of family farms or other types of small businesses that are intergenerational are taking place. You indicated that there are plans for amendments, but is there anything you think the federal government could or should do to minimize any tax avoidance in the meantime?

[Trevor McGowan]

As I've said before, both today and certainly at the Senate agriculture and forestry committee in an earlier appearance on Bill C-208, right now the tax administrators at the Canada Revenue Agency are tasked with applying the law as it stands and not anything else. The CRA, I'm sure I can say with the utmost confidence, will apply the law as it currently exists, as is their mandate. I would never want to suggest that anybody could do anything other than apply the law as it currently stands.

[Julie Dzerowicz, Liberal, Davenport, ON]

Yes. I have a tiny follow-up, and then I'll pass this along to my colleague.

If we have been concerned, which is something you raised at our finance committee meetings while we were studying this bill, about the possibility of people taking advantage of what you see as potential tax loopholes in the way that the current law is written, why wouldn't we try to take some steps to minimize that while ensuring in the meantime...not making amendments but maybe taking some measures or considerations?

[Trevor McGowan]

As I said, the Canada Revenue Agency, or maybe the government, would apply the law as it exists. If planning develops that goes beyond what the legislation currently permits, including if it somehow crosses the level to becoming abusive tax avoidance, of course that's something the CRA would look at. Again, just to reiterate, the tax authorities are bound to apply the law as it exists.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much.

[The Chair, Liberal, Wayne Easter]

Ms. Bendayan.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you very much, Mr. Chair.

Thank you to my colleague for giving me the time.

I am outraged. I know that people who know me know that I hide my outrage quite well, but Mr. Fast feigned to speak on behalf of small business owners and entrepreneurs here in Canada, indicating or claiming that our government is accusing them of X, Y or Z. In fact, I believe entrepreneurs know and understand that our government has always believed in them, continues to believe in them, and has been supporting them, really, from day one of this pandemic but also well before and well into the future.

I believe that Mr. Dan Kelly from CFIB does represent small businesses. He tweeted his thanks earlier today to Minister Freeland. I have the tweet in front of me, in which he says that both the minister and her officials are to be thanked for the “clear message that this new law will be respected” by the Department of Finance and CRA. He says he shared with the Deputy Prime Minister that “CFIB will work closely with [the government] to protect the integrity of the tax system by closing any gaps that may be identified”. Even Mr. Kelly is looking forward to working with our government in order to implement safeguard measures and work with us to close any loopholes.

Mr. McGowan, I think you indicated earlier that you are also looking forward to working with such stakeholders as Mr. Kelly at CFIB and others. Is that correct?

[Trevor McGowan]

Yes, of course, very much so. We put out a release and we'll put out draft legislative proposals for consultation. We expect really good stakeholder engagement.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you very much.

Thank you, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

Thank you.

I understand that we are now going to Mr. Maguire rather than Mr. Kelly.

Mr. Maguire.

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

Thank you, Mr. Chair.

In regard to Ms. Bendayan's comment, I just have to add that the reason Mr. Kelly was able to put out those kind comments was that the government was forced to appear before our committee today.

I want to thank you, Mr. Chair, for calling this meeting, because without it yesterday's press release just wouldn't have happened.

[An hon. member]

[Inaudible—Editor]

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

There's no use hiding the fact that the government recused its decision from June 30 in yesterday's press release. Mr. Kelly is quite right to say that they're pleased, but as Mr. Ste-Marie said, for 527 days the government fought this bill, and fought it hard, not only on its own—

If it was such a good bill, why didn't the government members vote for it in the House?

Nineteen of your colleagues, Mr. Chair, you included, got the fact that small businesses in your constituencies, in every constituency in Canada, are the predominant private sector employers in those constituencies.

I just want to reiterate that without the attention brought to this bill.... The government fought this all the way until yesterday, when it decided, well, this isn't very popular among small business people in Canada, so we'd better change our minds on this.

I have just a couple of quick questions, Mr. Chair. I know we still have a bit of time.

Mr. McGowan, before yesterday's press release was issued that stated the obvious, that the law is the law, were you consulted on the language in the updated release?

[Trevor McGowan]

Were Department of Finance officials involved in the production of the July 19 release? Yes. We were involved in that.

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

It goes without saying, then, that if we hadn't put up this fuss, Finance wouldn't have sent out the updated press release. What specific date were you told that a new policy decision was going to be taken?

[Trevor McGowan]

I don't know about timelines.

Miodrag, do you know?

[Miodrag Jovanovic]

It's very difficult to say. It's an ongoing and iterative process that the Department of Finance has with the minister's office and the minister in terms of briefings and reacting to events, so....

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

Obviously it wasn't before June 30. Would that be obvious—yes or no?

[Miodrag Jovanovic]

Do you mean with respect to the decision to issue the July 19 news release?

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

On what specific date were you told that a new policy decision was going to be taken?