Evidence of meeting #41 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was officials.
A video is available from Parliament.
Robert Ives Senior Advisor, Sales Tax Division, Tax Policy Branch, Department of Finance
The prohibition is also contained in part 5 of the bill. Again, the officials who would be responsible for part 5 of the bill would be able to answer that, but unfortunately no one is—
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
I will go to ones that are earlier in the bill then.
Perhaps we could talk about page 56, which is under part 2. Again, that's the new housing assignment of agreement.
Could I have the official who's responsible for this?
This seems to say that, right now, if a builder goes into an agreement with an individual for, let's say establishment of a duplex, the builder would then be responsible for collecting GST or HST, depending on their province, and submitting that to the government. In effect, though, if that individual they contracted with doesn't assign a sale to someone else, they would then charge GST or HST and give that to the government. In effect, even though there is only one duplex that is made, the government is ensuring that it would receive GST twice: once on the overall duplex itself, and then once on the unit once it's separated out.
Is that the case?
Amanda Riddell Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
The GST or HST would apply to the whole amount, the assignment sale amount. For example, if the original price that the builder was charging was $400,000, GST or HST would be collected when that closes. Then, on the assignment sale, for $100,000, let's say, it would apply on that as well.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
That's not the case right now, and that's the reason this amendment is there. Is that correct?
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
It's the case for many, but not for all.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Okay.
I'm going to ask you this next question then. Thank you for your service by the way.
The government will be getting more revenue. Is that correct?
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
Yes.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Will this make housing more affordable or more expensive?
Phil King Director General, Sales Tax Division, Tax Policy Branch, Department of Finance
Perhaps I could take that one, Mr. Chair.
To maybe put this in perspective, if you look at the amount of revenue that this measure is estimated to generate—it's only an estimate—it's $10 million per year in the context of a $2-trillion plus economy. Mechanically, you're correct—
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
I was asking Ms. Riddell a simple yes-or-no question. Is this going to make housing more expensive or less expensive?
Director General, Sales Tax Division, Tax Policy Branch, Department of Finance
Mr. Chair, it may be better for me to answer, simply because I've dealt with this aspect of the measure more than Ms. Riddell has.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
I think I have the right to ask who I ask.
Director General, Sales Tax Division, Tax Policy Branch, Department of Finance
Absolutely.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Ms. Riddell, could you answer? Will this make that unit of housing more expensive or less expensive?
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
In a particular unit, it really depends on the particular thing being sold. There are other factors that come into play when you have those types of sales. There's also the new housing rebate, which in some cases can actually increase.... I think you'd have to provide a specific example with specific facts to be able to answer that question.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
I appreciate that I put you on a bit of a spot there.
What will end up happening is that, if I'm going to assign a sale to Mr. Stewart and I'm going to be collecting the GST on that, I would need to recoup that. Essentially what the government is doing is raising the price of the total cost of that housing, not only its revenue. This is a very poor way, I would say, to—
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
Not necessarily....
Conservative
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
Right now, many assignment sales are already subject to the tax, so there's a market price on those types of housing. Theoretically, a lot of the current money could be going to people making those assignment sales.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Yes, but again, for the people who are now captured by this—
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
For example, if you have two assignors, one who wasn't required to collect and the other who was required to collect and they were both charging the same amount, just because the second person is now required to collect, the prices may not change overall.
Conservative
Liberal
Liberal
Sophie Chatel Liberal Pontiac, QC
Thank you very much, Mr. Chair.
Today, I am speaking to you wearing pink. Before asking my question, I just wanted to underscore what is happening right now in terms of women's rights. I'm very worried. I will start by quoting Simone de Beauvoir: “Never forget that it only takes a political, economic or religious crisis for women's rights to be called into question. These rights can never be taken for granted. You must remain vigilant throughout your life.”
Thank you for allowing me to express my concerns here.
I would like to thank our colleagues from the Department of Finance for their excellent work in preparing the budget and indeed throughout the year. I see the supplementary estimates will bring changes to the general anti-avoidance rule, the GAAR, to eliminate one of the biggest loopholes.
We did, however, hear the testimony of Professor Brian Arnold at a previous meeting, and he spoke about many other loopholes. Actually, our committee made a prebudget recommendation that consultations on the general anti-avoidance rule be quickly held in order to update the GAAR.
I have two questions for the officials from the Department of Finance.
I see that the measures contained in the budget are not in the bill before us, i.e., Bill C‑19. Will the legislative measures be tabled this summer?
I understand that it is a complex issue and that we need to take the time to do things properly. Will we receive feedback from the consultations this summer?
Will it be possible to have a bill that contains an updated general anti-avoidance rule?
Director General, Tax Legislation Division, Tax Policy Branch, Department of Finance
Thank you for the question.
There are of course no amendments to the general anti-avoidance rule in Bill C-19. I just wanted to make that clear.
The government did announce a specific amendment to the general anti-avoidance rule in budget 2022 that would extend the definition of “tax benefit” to apply to tax attributes, which would allow the creation of tax attributes to be challenged closer to the time the initial transaction is put in place, which provides certainty earlier on in the process. That's a specific proposal and not the broader, general anti-avoidance rule consultation.
The government also announced in budget 2022 that there would be provided a timeline for the general anti-avoidance rule consultation and that consultations would run through the summer with a goal of releasing draft legislative proposals by the end of 2022. While there's no specific consultation document like the consultation paper out right now, the goal is to have a consultation through the summer, with the goal of releasing draft legislative proposals by the end of the year.
