Evidence of meeting #130 for Finance in the 44th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was certain.
A recording is available from Parliament.
NDP
Daniel Blaikie NDP Elmwood—Transcona, MB
Thank you very much, Mr. Chair. I appreciate that.
I want to follow up on some of the questions about the changes to the EIFEL rules.
I know we've also heard from some pension funds that are concerned about what this may mean for certain items in their existing portfolio.
I want to ask whether the department considered grandfathering the existing projects so there's no retroactive application to investments that have already been made.
February 29th, 2024 / 12:15 p.m.
Director General, Legislation, Tax Legislation Division, Tax Policy Branch, Department of Finance
Yes, we certainly considered that and consulted extensively with stakeholders. There is no grandfathering in the legislation. That's a policy decision. The rules were announced first in budget 2021, so people have had a significant amount of time to plan and react to the rules.
There are also a number of exceptions built into the rules, including exceptions for medium and large Canadian businesses that don't have material, non-resident assets available or shareholders. There are various exceptions built in to try to accommodate different situations, but we don't include grandfathering. It would be quite complicated, for one thing, and it would create a lot of other issues.
NDP
Daniel Blaikie NDP Elmwood—Transcona, MB
One of the issues that has come up in relation to the clean technology investment tax credit is that where companies are partnering with indigenous communities to have an equity component, I'm hearing that there are some projects that, because of the marginal cost advantage once the clean technology investment tax credit is in place, would favour not having an indigenous equity partner because they can't apply the ITC to their own component of the project. Implementing one without implementing the clean electricity investment tax credit alongside it actually disincentivizes partnerships with indigenous governments where there's an equity component.
Has the government given consideration to that and is it something that will be addressed in very short order with legislation for the clean electricity tax credit?
Director General, Business Income Tax Division, Department of Finance
I think you're absolutely right in how you're posing the question because the clean technology investment tax credit is for businesses, and tax-exempt entities are not eligible. It's a tax program.
Now what the government has decided to do, and this is fairly unique, is to create a different credit for tax-exempts, which include indigenous communities.
NDP
Daniel Blaikie NDP Elmwood—Transcona, MB
As part of developing that legislation is the government considering requests to ensure that indigenous-owned non-taxable entities would be able to realize a full 30% discount as part of the investment tax credit so that projects with indigenous partnerships aren't put at a competitive disadvantage to purely private sector projects when it comes to building clean electricity?
Director General, Business Income Tax Division, Department of Finance
As this point it is 15% for the non-taxable entity. Again, in the nature of non-taxable entities, the type we are talking about, you also have Crown corporations in there as well. In that respect, ultimately the decision was to have a lower credit rate.
To get to the mechanics very quickly, the private partner, the business, can claim on their share the 30%, and then the tax-exempt entity on their share can claim the 15%.
NDP
Daniel Blaikie NDP Elmwood—Transcona, MB
I think it's important for the department and the government to know there is certainly support in Parliament for seeing indigenous governments being able to realize the full 30% in order not to disincentivize partnership with indigenous governments on clean electricity projects.
I only have so much time, in more ways than one, Mr. Chair—
NDP
Daniel Blaikie NDP Elmwood—Transcona, MB
—which is why I'm afraid I'm going to have to move the motion I gave notice of at the last committee meeting, which is:
Given that the Canadian grocery sector made more than $6 billion in profit in 2023 and that millions of Canadians have reported food insecurity in the last year, the Standing Committee on Finance call on the government to immediately take action by implementing an excess profit tax on large grocery companies that would put money back in the people's pocket with a GST rebate and establish a National School Food Program, and that this motion be reported to the House.
We know we've been—
Liberal
The Chair Liberal Peter Fonseca
I'm going to have to interrupt you there because the bells are going.
Liberal
The Chair Liberal Peter Fonseca
Yes.
Yes, Mr. Blaikie has moved that motion.
Are members okay to continue with UC?
Liberal
The Chair Liberal Peter Fonseca
No? Members are not okay to continue?
The Conservatives cannot continue.
With the bells going—those are 30-minute bells—on that, members, I see the time and we're not going to have any more time.
We are adjourned.