Finance Committee on May 3rd, 2022

[Lesley Taylor]

Essentially, the move, as you noted, is taking this from a once-a-year delivery of this support, delivered at tax-filing time, to a quarterly payment regime. The first payment will in fact be a double-up payment to be received this summer, which will reflect the first two quarters of the benefit year. Then payments will be delivered every quarter, essentially at the start of the quarter, reflecting the charge that will flow in the remainder of the quarter.

The government thinks it would be helpful to individuals to receive this on a more regular basis through the year, better reflecting the spending patterns of Canadian families. Really, it is just an improvement in terms of the regularity of the support as it flows.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thanks so much, Ms. Taylor.

I also think that given the fact that we do have inflation, putting money into the pockets of Canadians more quickly will also help them with any additional costs. Do we have an idea about how many people in Ontario actually claimed the climate action incentive, or will we give it to all Ontarians? I'm sorry; that's not the question.

My next question is on the disability tax credit. Can you maybe talk to me about how this measure will help persons with disabilities?

[Lesley Taylor]

I guess I'm lucky this time. It's me again.

The disability tax credit is a 15% tax credit on an amount of $8,800, so it provides about $1,300 in support through the tax system each year. This credit is meant to recognize that individuals with severe and prolonged disabilities can bear costs in their day-to-day living that others may not bear. For example, the costs related to specialized transport and, perhaps, modified clothing. These things can be difficult to itemize, but can have a real bearing on the costs a person with disabilities can face and their ability to pay taxes as a result.

What the government proposed in budget 2021 is that there would be two modifications to the eligibility criteria for the disability tax credit.

The first relates to individuals with mental impairments. Based on some feedback, largely from the clinical community as well as the disability advisory committee of the Canada Revenue Agency, which is chaired by a person who happens to be the chair of the Canadian Psychological Association, it was felt that the current criteria were not reflective of modern clinical practices—modern ways of assessing individuals with mental impairments. As a result, the list is being updated to include a broader, more expanded range that should give better clarity to clinicians, as well as to individuals with mental impairments as to how they may qualify.

The second element relates to individuals who may qualify because of a need to pursue life-sustaining therapy.

[Julie Dzerowicz, Liberal, Davenport, ON]

I think I've run out of time, unfortunately, but I just want to thank you so much for your excellent responses.

[The Chair, Liberal, Peter Fonseca]

Thank you very much, and thank you, MP Dzerowicz.

Now we'll hear questions from the Bloc and MP Ste-Marie.

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

Thank you, Mr. Chair.

I would also like to welcome the officials and thank them for being available today. We are grateful.

My first questions pertain to part 4, which enacts the Select Luxury Items Tax Act.

When we spoke about the subject here yesterday, we learned that the government had not asked any departments to undertake an impact study on the consequences of the tax on sales and jobs. I remind you that the Bloc québécois is in favour of the proposed act in principle, but we need to know what the consequences will be.

My questions yesterday were mostly about the tax on select luxury items, which include aircraft, and the distinction that will be made between personal use, which would be taxed, and business use, which shouldn't be. I did receive an answer, but I think the situation is cause for worry in the industry's eyes. Indeed, it will be difficult to calculate the usage for business purposes, which is set at 90%, before or during the sale.

We also received confirmation concerning exports. The vast majority of planes that are manufactured are headed for the export market, but the tax will apply to all aircraft up until the moment they are indeed exported. This will have an impact on manufacturers' cashflow. We are talking about hundreds of millions of dollars per year.

I asked a question during the technical briefing and did not receive a clear answer from officials. I will therefore ask it again, in the hopes of getting something more definitive.

If a mining company buys an aircraft to transport its workers without charging them, will the aircraft be exempt from the tax?

[Gervais Coulombe, Senior Director, Excise Taxation and Legislation, Sales Tax Division, Tax Policy Branch, Department of Finance]

Thank you for the question.

Without knowing all the facts and subject to a final audit by the Canada Revenue Agency, here is my take on the situation you have just described.

In the case of flights organized by a mining company strictly for revenue generation purposes and for transporting people from one site to another, the clauses were written in such a way so that these flights would be eligible for an exemption. A mining company that buys an aircraft which would normally be taxed would be able to obtain an exemption certificate in order to avoid paying the tax.

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

Thank you for your answer, which was most clear.

We will be able to check with the Canada Revenue Agency to see what its interpretation of the such an act would be.

During yesterday's meeting, an official from the Department of Finance told us that they were currently working to find a solution to the cashflow problem concerning aircraft aimed at the export market. I understand that it is the government that has to provide a solution, but I have a question for the officials here with us today.

Technically speaking, will the department be able to propose a solution before we vote on Bill C‑19?

[Gervais Coulombe]

Thank you for the question.

I would not want to put words in the mouth of the Deputy Prime Minister and Minister of Finance. She has stated that she has asked officials to look at the situation and at the present time, it would be premature for me to talk to you about steps that have to be followed to correct the issue, should it arise. I think your question is a bit premature right now.

That said, however, we are aware of concerns that have been raised by some industry members, especially from the aeronautical sector. We know that because of certain rules, sales made in Canada of items that will be exported could be liable for tax and that it is possible, thanks to the refund provisions contained in section 39 of the proposed act, that the refund may not be made during the six-month period during which the sale took place. We are carefully looking at the issue.

I believe the Minister of Finance mentioned yesterday that the deadline for payment of the luxury tax during the first half of the year had been set as the end of January 2023. I'm not saying that we have years to work on the issue, but we do have time. We are not talking about something that will have an immediate impact on cashflows as soon as the tax becomes effective, which would be September 1, 2022.

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

Even so, when you're talking about half a billion dollars within an 8-month period, that can be cause for worry.

Thank you for those very clear answers.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste‑Marie.

Now we'll hear from the NDP and MP Blaikie for six minutes.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

I know there was already a little bit of discussion on the disability tax credit, but I want to come back to those changes. I think there was some initial hope or excitement at the fact that there were some changes to the disability tax credit included in the legislation, particularly by folks who have been frustrated by the 14-hour requirement under the life-sustaining therapy category and who have been hoping that provision would be removed entirely.

My understanding is that the legislation doesn't do that. I wonder if we can get some comment from the officials on what changes are being made and why that 14-hour requirement is not being eliminated under the BIA.

[Lesley Taylor]

Thank you for the question.

Just to back up to what is changing, there is a requirement in the act that therapy be undertaken at least three times a week, and there's a further requirement that it be undertaken for, on average, 14 hours a week. The reason for these minimal thresholds, in terms of the degree to which the individual is pursuing the therapy, is really about fairness for other individuals who apply and have to be assessed under other criteria.

For others who are qualifying because they have a severe limitation in one of the basic activities of daily living, and these are things like walking, feeding oneself or dressing, the requirement is that they have to face these limitations all or substantially all of the time. That means 100% of the time or upwards of 90% of the time in terms of the CRA's interpretation, for example, someone would need to face a limitation in walking in order to qualify.

If there weren't similarly lower bounds in terms of the impact of a therapy an individual is pursuing on their daily living, you would end up with situations in which individuals who have very minimal impacts in terms of a therapy—one could picture someone taking a drug regime—would actually qualify for the credit. That, clearly, would create an inequity and a lack of parity with the requirements that are faced by others with other types of disabilities.

For that reason, the government has decided to maintain the 14-hour threshold in this legislation to ensure that fairness in parity, but it is proposing to reduce the frequency from three times to two times. That will better bring into line the legislation for the federal measure with that in the Quebec system, which requires that therapies be performed only two times a week. That should alleviate some of the burden on individuals in terms of that discrepancy for those who live in Quebec.

One thing I will say is that the other modifications that are being proposed, in terms of what can be counted towards that 14 hours, do take into account substantial feedback from individuals with type 1 diabetes and the organization that represents them, in terms of taking a fair account of what activities and what time should be counted towards those 14 hours. You see some substantial improvements there in terms of recognizing those activities in a fairer way. That should lead to having the time individuals take when, for example, they have to take account of their dietary intake or exercise in order to determine their dosage of insulin, as proposed, now be allowed to count towards the 14 hours. These proposals do respond to people and should help them better meet that 14-hour requirement in a fairer way.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

We hear often from folks like the Juvenile Diabetes Research Foundation that the 14-hour requirement has been a significant barrier for parents who have kids with type 1 diabetes and who are trying to access the tax credit. Is it the position of the government that the disability tax credit should not be available to families with children experiencing juvenile diabetes because it just doesn't meet the threshold of the program?

Is that why there are criteria that make it very hard for families in that situation to access the DTC?

[Lesley Taylor]

I would say the position of the government is that there has to be some type of accounting for parity between individuals with different types of disabilities in order to ensure fairness. The 14-hour requirement tries to ensure that therapy has a meaningful impact on the day-to-day activities and living of the individual pursuing the therapy. Where that threshold can be met, there's at least some guarantee that there's parity with those who have to meet all or substantially all tests in terms of the effects of their disability for typical developmental functions like walking.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

But if that test, then, structurally excludes children with diabetes, then the government is satisfied its policy objective is being met.

[Lesley Taylor]

I don't believe that's accurate. The test is a 14-hour test. Those who have to pursue that therapy...and that could include things like the time spent by parents in assisting with dosing the medication. In these proposals there will be more activities that could be counted in that 14 hours, so that should allow for more individuals who face those limitations in activities to be brought in. The 14 hours is there to maintain that parity across different disabilities.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

I thank you for providing a clear answer.

I know there are some provisions in the budget implementation act that the government has characterized as first steps toward a public, beneficial ownership registry. I'm wondering if someone could give us just a quick summary of what's in this bill, but also a preview of what the government sees as being next steps for establishing a proper registry.

[The Chair, Liberal, Peter Fonseca]

We need the answer very quickly, please.

[Lindsay Gwyer, Director General, Legislation, Tax Legislation Division, Tax Policy Branch, Department of Finance]

Hi. It's Lindsay Gwyer from the tax legislation division.

I believe that is in part 5 of the bill. There's no one here today to talk about those measures. I think there will be people here, I assume, on Thursday who could answer that question.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Pardon me for jumping ahead in my excitement. I'll hold off until Thursday.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Blaikie. That is the time.

Members, we are moving into our second round.

I've been informed by the clerk that we have resources until 1:30. I know we started a little late with the vote, so we have resources until 1:30.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Mr. Chair, most of us have set up our schedule for the day, so I don't think we'll have unanimous consent for you to continue after one o'clock.

Don't shoot the messenger.

[The Chair, Liberal, Peter Fonseca]

Okay.

MP Albas, you have five minutes.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you, Mr. Chair.

Thank you to all the officials who are here today.

I'd like to talk about division 12, the enactment of the prohibition on the purchase of residential property by non-Canadians act.

The first question is for the officials.

On the coming into force, it basically says that it is by an order in council; that is, the Governor in Council will proclaim when clause 235, which enables this measure, will come into force. It's going to be at the discretion of the Government of Canada when this act comes into force and when it applies.

Technically, they could choose to do it after this has received royal assent, the day after, or they could choose to never bring it into force. Is that correct?