Finance Committee on June 3rd, 2024

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

Thank you, Mr. Chair.

Greetings to all the witnesses and thank you for being here.

My questions are for the representatives of the Canada Revenue Agency.

My questions will mainly concern the matter that was just raised, that is part 2 of the bill, the Global Minimum Tax Act and Pillar Two.

First, however, I'd like to ask you some questions about the capital gains change. The date announced for the coming into force of that change is barely three weeks away. Unless I'm mistaken, we still don't have the text of the act, and those items aren't included in the notice of ways and means motion that was voted on.

Unless I'm mistaken, we still don't have the text of the act or the notice of ways and means motion three weeks before the change comes into force. Will that change anything for the CRA?

[Cathy Hawara]

Mr. Chair, with respect to the Canada Revenue Agency, we will wait to see the legislation. It is difficult for me to answer the question without having seen it. We will not be in a position to implement it until we have legislation passed and in force.

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

Thank you for your answer.

That's precisely the question I asked you. We are three weeks and a day away from the coming into force of that change, and we still don't have the text. Does that trouble you?

[Cathy Hawara]

I think this is probably a question that is best directed to my colleagues at the Department of Finance.

The Canada Revenue Agency will administer the law once it is passed and receives royal assent. I appreciate the question being asked. It's difficult for me to answer beyond this.

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

I see. Thank you very much.

I welcome the fact that the government is implementing Pillar Two. This is a major change that will bring more justice and fairness to the tax system internationally. I'm really happy the government is putting this forward.

The text is quite complicated, and I'll have some quite technical questions for the CRA representatives.

We know that the agency collects income tax everywhere in Canada except Quebec. Under an agreement, Revenu Québec collects income taxes and administers sales taxes. Furthermore, if I'm not mistaken, Alberta collects corporate taxes.

For part 2, would the CRA please confirm for us that Revenu Québec will collect the 15% tax from multinationals and that Alberta will do the same for businesses within its jurisdiction?

[Cathy Hawara]

My understanding is that this is a federal tax, and I believe my colleagues from the Department of Finance were here recently. I don't have more to add than the information they would have provided to the committee at the time.

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

The finance department official told us that, for the moment, there was no mechanism for redistributing that tax between Ottawa and the provinces, or for the provinces that collect the taxes themselves, for that matter.

My question here isn't about redistributing the federal tax that will be collected. I want to know who will be responsible for collecting it.

Consider, for example, a multinational corporation registered in Quebec that reports profits in Barbados and that pays no tax or only a more symbolic amount close to zero. Under part 2 of the bill, who will collect the 15% of profits that the multinational registered in Montreal reports in Barbados? Is it the CRA or Revenu Québec?

[Cathy Hawara]

Thank you for your question.

I can confirm that it's the CRA.

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

I see.

Currently, when a tax is charged outside Canada, is it also the CRA that collects it from businesses registered in Quebec?

[Cathy Hawara]

I don't know if my colleague can provide any details on that subject.

Stéphanie, would you be able to answer that particular question?

[Stephanie Martin, Acting Manager, Internation Tax Operations Division, Canada Revenue Agency]

I think we would have to check into that a little further and come back with a written response. I wouldn't want to speak off the cuff and perhaps be imprecise.

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

I would appreciate that. Thank you very much.

The agency has just submitted written answers to a question that was asked at a previous meeting of this committee. In particular, there was a part concerning the Panama papers.

To finish my turn, I'd like to know one thing. In the Panama papers matter, we learned that the offenders weren't criminally convicted.

Do you think all the proceedings were properly conducted? What could be improved in the judicial system to make it more robust in dealing with tax avoidance and tax evasion?

[Cathy Hawara]

Thank you for the question. I do know that our response was provided this morning.

There have been six investigations in total. Three have been discontinued and three are still under way. It is correct to say that there have not been any prosecutions to date. That work is still ongoing.

What I can say is that our criminal investigations normally can take a little bit of time, depending on the issues, whether other jurisdictions are involved and the availability of the evidence that we need. I appreciate the question. These investigations can take some time and can be complex. That is the latest information we have with respect to the Panama papers.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste‑Marie.

We now go to MP Davies for the next six minutes.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Mr. Chair.

My next question is for the Canada Revenue Agency.

Revenue Minister Bibeau recently made a statement in which she insisted that tenants do not have to withhold 25% of rent from non-resident landlords, despite a recent court decision obligating an individual to do so. David Siscoe, a Montreal gym owner, was found personally liable for the unpaid taxes of his landlord. The minister said that CRA does not expect individual tenants to withhold rent from their landlords. However, a Globe and Mail article says, “The CRA...says on its website that tenants of non-resident landlords are expected to withhold a quarter of their rent and remit it to the CRA—and that has...been the...law for decades. The site says that the 'non-resident tax' is considered a tax obligation on a rental income.”

Can you clarify, please, the apparent contradiction between Minister Bibeau's statement and the information provided on the CRA's website?

[Cathy Hawara]

Thank you for the question.

The distinction turns on whether the tenant is an individual renting their personal residence versus someone renting a property for business purposes. We are in the process of updating the website to clarify and be more in line with our internal processes, as communicated to our auditors.

While it is true that part XIII tax is jointly owed by the tenant and non-resident landlord, in the case of an individual renting their personal residence, the agency does not expect the tenant to withhold the 25% tax.

I cannot speak specifically about the court case, although I am aware of it. I would simply point to the fact that the appellant in that case was a corporation.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

To the Convenience Industry Council of Canada, may I ask if you receive any funding whatsoever from any entity associated with the tobacco industry?

[Anne Kothawala]

[Technical difficulty—Editor] are associate members of our association, just as with many other products that convenience stores sell. They are members, but they are not on the board and do not participate in our decision-making.

[Don Davies, NDP, Vancouver Kingsway, BC]

I'm sorry. I'm not clear. I'm going to ask that again.

As a council, you presumably have a budget. Do you have a budget?

[Anne Kothawala]

I have a budget, yes.

[Don Davies, NDP, Vancouver Kingsway, BC]

Is any portion of your budget in any way funded by the tobacco industry?

[Anne Kothawala]

As I said, they are associate members. We receive some money—a very small amount of our budget—from those companies.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

I have two questions for Ronald McDonald House Charities Canada.

I know you've spoken positively about the green and inclusive community buildings program. I think this budget revives that program with an additional $500 million.

Is it the case that some of that funding has been or could be used to help build additional Ronald McDonald houses across Canada?

[Kate Horton]

Thank you for the question.

Yes. To date, the GICB program has supported two Ronald McDonald House expansions—one in Ottawa that is currently under way, and a new house announced just yesterday in Halifax with 36 bedrooms, which will open later this year.

We have an ambitious goal. Our organization across Canada has been turning away four out of every five families needing our support. We are aiming to double the number of bedrooms from our current 554 in the next five to seven years. The GICB program will be a critical piece of how we are able to grow our mission to serve more families.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

I read your pre-budget submission. You used the term “temporary housing”. I was quite intrigued when I viewed the Ronald McDonald houses through that lens, not only as a contributing piece to our health care system but also as an important source of housing for families seeking it when they have sick children. They are often people from rural areas who have to travel to urban centres for extended periods of time.

I'm wondering if you could comment on the impact your organization has in terms of contributing to essential housing while we have a housing crisis in this country.