Finance Committee on June 3rd, 2024

[Kate Horton]

What many across the country don't realize is that two-thirds of Canadians live outside a city with a children's hospital. While we can often plan for elder care, nobody expects to be in the sudden and unexpected situation of having to heal a sick child. With a child being part of a family unit of support and healing, when a child falls critically ill or is injured, that whole family must essentially uproot from their home community and travel to one of 16 specialty hospitals in Canada to seek that pediatric care.

That's really where we come in as providers of temporary housing to families in a critical time. As you may know, families staying with RMHC may stay with us for many weeks, many months and, in some cases, a year or more. The impact of that on their permanent housing situation in their home community could be devastating. We've had many families tell us, for example, that, were it not for RMHC, they would have to sell their home and move permanently to the city where their child is receiving care.

We view ourselves as an upstream solution in the housing conversation and a real stopgap for families who must make emergency plans for an indefinite amount of time that may involve multiple members of their household staying together and safely supporting their child on a healing journey.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Davies.

I'm sorry; we've reached time, but we are going into our second round. Of course, this will be a quick one. We don't have much time, but there are another two and a half minutes per party.

We'll start with MP Calkins for the first two and a half minutes.

[Blaine Calkins, Conservative, Red Deer—Lacombe, AB]

Thanks. My questions will be for Ms. Kothawala.

It's generally provincial jurisdiction that governs what you have on your store shelves for your members. Is that correct?

[Anne Kothawala]

That is correct.

[Blaine Calkins, Conservative, Red Deer—Lacombe, AB]

You were, I believe, in the room when Mr. Buckley was here in the previous panel. When he was testifying, he gave very specific regulatory provisions that would allow Health Canada to do what the minister is claiming he can't do right now.

What is your assessment of Mr. Buckley's testimony? Does it seem fair and reasonable to you?

[Anne Kothawala]

Yes, we would agree. Let's use what is at the minister's disposal currently and, as we've said, treat all of these products under the Tobacco and Vaping Products Act and treat them equally.

[Blaine Calkins, Conservative, Red Deer—Lacombe, AB]

That would be a simple solution, wouldn't it? Take these products that are in question, remove them from whatever regulatory body the minister currently doesn't like in his portfolio and give them to another minister, another directorate, and regulate it accordingly.

As a matter of fact, back in 2014, Minister Rona Ambrose brought forward regulatory changes when it came to flavoured tobacco products. That gazetting process usually takes about 90 days at most, and nothing in this legislation that I can see gives the minister the power that he claims he needs in order to make these changes.

Would you agree with that assessment?

[Anne Kothawala]

Yes. Again, we think this is a huge overreach. The problem of youth access is one that we all agree with, but we have two very fundamental problems in this country: We have a huge black market, and youth can access that black market.

We will circulate a document that we've put together that shows the the number of products that young children can access without showing their ID. They can get these items delivered right to their house.

[Blaine Calkins, Conservative, Red Deer—Lacombe, AB]

You would contend, then, that the current regulated law-abiding store owners under your jurisdiction are complying with the law to the best of their ability. Nobody wants to put harmful products in the hands of children, and everybody is complying to the best of their ability with the laws and regulations, and you're not the problem; you're the scapegoat.

This is a very common theme, I think, with the current government on other fronts, but this document that I have in my hand, which I think is from your organization, says that there are over 93 active contraband websites, many of which use Canada Post to deliver these products.

Would you say that the majority—I think you said in your testimony—of this stuff is getting into the hands of kids through this vehicle? Your stores are getting blamed for this, and I don't think they're the problem.

[Anne Kothawala]

That's exactly it.

[The Chair, Liberal, Peter Fonseca]

That's the answer, and please, members, there should be no props in the room. Thank you.

We are now going to MP Baker for two and a half minutes.

[Blaine Calkins, Conservative, Red Deer—Lacombe, AB]

It's not a prop; it's a brochure.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thank you very much, Mr. Chair.

Thank you to all our witnesses for being here today.

I'd like to direct my questions to Ms. Hawara, if I may. I want to ask you about something that many of my constituents have raised with me, and it was raised earlier in this meeting, which is the issue of and decision around bare trusts.

My understanding is that certain taxpayers were informed that they would have to prepare certain filings for this tax season by a deadline, but very shortly before that deadline, they were informed by the CRA that they no longer had to do that.

The feedback I've received from folks has been critical. There are two issues here. There's a cost to compliance. A lot of them had to hire accountants and other folks to prepare the materials the CRA initially requested. I think the fact that the CRA said at the last moment that it was no longer required suggested that the initial decision to require it wasn't well thought out.

Again, I'm asking this question for the sake of my constituents in Etobicoke Centre, who have asked me this question. I'd like to provide them the best answer possible.

Why did this happen, and how we ensure that this sort of thing, when it comes to bare trusts or any other form of tax compliance by Canadians, doesn't happen again?

[Cathy Hawara]

Thank you for the question.

I think it's important to start by saying that when these additional reporting requirements were announced in budget 2018, the objective was to ensure greater transparency with respect to beneficial ownership of trusts. It's important for us, as the tax administrator, to understand who ultimately benefits from particular assets that may be the subject of a trust.

The notion of a bare trust was introduced in 2022, a number of years after the original reporting requirements were announced. The agency recognized that this concept of a bare trust could be broad and difficult to understand. Working with stakeholders, we decided to take an education-first approach, which is why we announced that we would be waiving the filing penalty for bare trusts for all of 2023. Therefore, regardless of when a bare trust was filed in 2023, it would not be subject to a late filing penalty. This was done in recognition of the fact that there were a lot of questions and that we all needed a bit more time.

Unfortunately, that wasn't enough, and the agency felt it was important to continue to act. We recognize that there were unintended consequences in terms of the legislation, and we are working with our colleagues at the Department of Finance to clarify the guidance we can provide going forward so that it is clear.

Beneficial ownership information about trusts, including bare trusts, is important, but we recognize that there were unintended consequences, and we acted as a result.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, MP Baker.

We'll go now to MP Ste-Marie, please.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you.

My question is for Ms. Hawara.

Going back to your written answer concerning the Panama papers. If you compare what's done in Canada through the CRA and our laws with what's done in the United States through the IRS and what's done in Europe, my sense is that Canada really lags behind in the fight against the use of tax havens.

I'd like you to tell us about potential solutions. What should we put in place to make Canada more effective in this area so that we compare favourably with other countries?

[Cathy Hawara]

Thank you for your question.

It's true that the CRA's analysis of the Panama papers was long and complex, partly because the documents included little financial information. Consequently, it took more time for the agency to conduct the necessary analysis that has led us to where we are today.

We identified approximately 900 taxpayers in the leak. As we said, we've completed 280 audits, and others are under way.

The point about other countries is important. We work closely with our partners from other countries, and we learned a lot as other leaks were discovered. We're working with our partners, American, English, Australian and others. So we're learning with time.

It's important to note that being named in a leak doesn't necessarily mean that taxpayers failed to meet their tax obligations.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

First of all, I have a request for you. We've discussed data from March 31, 2023. When you get the March 31, 2024 data, I'd like you to forward it to the members of this committee. Thank you in advance for that.

Second, you said that a total of $77 million in tax and penalties were involved. I'd like you to provide us with a breakdown of the penalty amounts: Were they just interest on the amounts that should have been paid or penalties of another kind?

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Ste-Marie.

Now we'll go to our final questioner for this panel, MP Davies.

[Don Davies, NDP, Vancouver Kingsway, BC]

I have two questions for the CRA.

I'm new to the committee, so forgive me if this is a well-known figure. What is CRA's estimate of the amount of lost tax revenue to Canada as a result of improper use of tax havens or tax evasion?

[Cathy Hawara]

I can provide the committee with information about our tax gap report, which I think will be a helpful resource to answer the question.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

My next question is on automatic tax filing.

Increasingly, access to government benefits depends on filing a tax return. We know many marginalized Canadians have difficulty with that. I know there are certain countries, and I'm trying to remember the Baltic state. It's either Latvia or Lithuania that is already implementing automatic tax filings for people who wish it.

I'm just wondering if CRA has any pilot program or any thoughts in that regard to provide automatic tax return filing for Canadians who may desire to use it.

[Cathy Hawara]

Thank you for the question.

There is work ongoing at the moment, including in response to announcements made by the government. Given that this is an area that falls under one of my colleague's responsibilities, perhaps I can come back to the committee in writing with a response to the question.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you for that.

My final question is to Ronald McDonald House Charities Canada.

Do you have a last word on the impact of the green and inclusive community buildings program and the impact you see on community development?

[Kate Horton]

The green and inclusive community buildings program has been an incredibly impactful program for Ronald McDonald Houses across Canada, supporting families with sick children; however, it is an imprecise tool.

We are part of the GICBP and are grateful recipients of funding through that program. Recognizing that we are part of a whole host of other valuable infrastructure projects through that program, we really see our mission as being part of essential social infrastructure in supporting families across Canada. Many other organizations are also providing essential social infrastructure, not just RMHC. We don't currently have a vehicle or mechanism within government to support essential social infrastructure. Given a networked approach is alleviating some of the burdens in our health care system today, we really encourage the federal government to consider social infrastructure as part of the federal fiscal planning for 2024 and beyond.