Finance Committee on July 20th, 2021

[Miodrag Jovanovic]

I don't have much to add to Mr. McGowan's statement. I think that's it. As long as it's internal work, we could focus on analyzing submissions that we may continue to get during that period. The question would be after that. If there was a need to reach out, we would need to be mindful of the caretaker convention.

[The Chair, Liberal, Wayne Easter]

Thank you.

We'll go now to Mr. Maguire, followed by Ms. Bendayan.

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

Thank you, Mr. Chair.

Just for clarity, Mr. McGowan, I want to go back to a question that one of my Liberal colleagues asked you earlier in this area. You said that the current plan and the message to the small business owners is that Bill C-208 will be in effect, unaltered, until November 1. Can you confirm that any small business transfers to family members that take place between today, or even June 30, and November 1 will not be subject to retroactive application of any further amendments?

[Trevor McGowan]

Yes. That was the government's announcement, that whatever conditions would be introduced in a later bill, which again would have to go through Parliament, those restrictions or conditions would not apply before November 1. From now until October 31, at a minimum, the law as enacted by Bill C-208 would apply.

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

I guess my question was to do with any amendments, but a new bill coming forward.... We don't have one now, because it's law, but could a new bill coming forward by the government be retroactive?

[Trevor McGowan]

As we've discussed, these amendments to the Income Tax Act that were made by Bill C-208 are part of Canadian law and could only be changed through a subsequent bill tabled in Parliament that receives royal assent.

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

[Inaudible—Editor] be made retroactive and in a new bill.

[Trevor McGowan]

The government has announced that it would not apply before November 1, 2021. As a general rule, income tax amendments often apply as of the date of their announcement.

For example, Bill C-30 received royal assent on the same day as Bill C-208. It was the first budget bill for 2021. That had a number of measures that had application dates based on March 18, 2019, the day of the 2019 federal budget related to, for example, the foreign affiliate dumping rules, some mutual fund trust measures using an allocation redeeming methodology, and individual pension plans. Several amendments had their application dates based upon—

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

The government was supposed to be, as the press release said yesterday, clarifying. That was the title put on it, that the government “clarifies taxation for intergenerational transfers of small business shares”, yet we have this confusion. There's a contradiction. Obviously, a correction was tried, because the government thought on June 30 that it could go retroactive and make amendments to do it. Now it's saying it can't—or won't. I think there's a big difference between “can't” and “won't”.

If you bring in a new bill, obviously it could go back retroactively, even if the press release is.... Press releases aren't law. I guess all I'm asking you is whether we can get clarification on that.

[Trevor McGowan]

Jenifer, did you want to comment on the ability of Parliament to pass retroactive tax bills?

[Rachel Bendayan, Liberal, Outremont, QC]

On a point of order, Mr. Chair, is this a hypothetical question? We are asking officials to speak on behalf of what the government intention is with respect to the press release of yesterday indicating that we would introduce safeguard measures and amendments to the legislation.

I clarified this morning that it is not the government's intention to bring any legislation retroactively. I'm not sure why we're asking officials for something that they do not control.

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

I'd like to speak to the point of order.

[The Chair, Liberal, Wayne Easter]

I'll go to Mr. Maguire first on the point of order.

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

I think therein lies the point of order. She said it's not their “intention”, not that they won't. I mean, it's still ambiguous.

[The Chair, Liberal, Wayne Easter]

Mr. Kelly.

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

I think this is really the same line of questioning, in a way, that Ms. Dzerowicz introduced earlier in her testimony, so I presume it's relevant.

[The Chair, Liberal, Wayne Easter]

I will let Ms. Aitken answer, but I think we need to come back to the minister's press release at some point and say what the intention of the government is by someone who can speak for the government. The minister was very clear, in my view, in terms of her press release.

Ms. Aitken, do you want to answer that question?

[Jenifer Aitken]

Thank you, Mr. Chair.

I would go back to the question of whether it's a hypothetical question or a general question about what type of legislation the government can introduce. It is possible, and I think I heard the law clerk say it this morning, for legislation to be introduced that operates retroactively. That has to be made very clear.

On the question of what the government's intentions are, I don't have any knowledge beyond what's in the press release, but I think that expresses it clearly.

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

Thank you. I'm not sure that clarified it.

Mr. Chair, I'd like to ask if the people in the Department of Finance know whether the Justice officials were consulted on the illegality of delaying the implementation of Bill C-208. I'm talking about consultation, not advice, because we went through that this morning.

[The Chair, Liberal, Wayne Easter]

Can anybody answer that question? I imagine it's a confidence of government, but go ahead, whoever wants to take it.

[Jenifer Aitken]

From the point of view of whether or not there were consultations with Justice, that is a matter of solicitor-client privilege. It's not something we're at liberty to talk about. We can talk about the press releases that are in front of everybody. We can answer questions on those.

[The Chair, Liberal, Wayne Easter]

Thank you.

This is your last question, Larry. You're a little over time, but I took some of it.

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

I guess I'm wondering, Mr. Chair, why it took almost 20 days for Finance to provide an updated release here. Was it because you so graciously called this committee meeting today? Was it, as was referred to earlier, a decision made by executive council or cabinet if not, as Mr. McGowan has already answered, that the minister was in charge and made that decision? Was it in fact the minister, or was it in fact executive council or cabinet?

[The Chair, Liberal, Wayne Easter]

Can anybody take a stab at that? It's not going to be me. I tried once and got in trouble.

[Voices]

Oh, oh!