Evidence of meeting #85 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cra.
A video is available from Parliament.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
I don't have anything specific that I would like to raise, but if you have any other questions, I'm certainly happy to answer them.
Bloc
Gabriel Ste-Marie Bloc Joliette, QC
Okay. Thank you.
I'm going to change the subject and talk about the excise tax on alcohol.
In the previous budget implementation bill, last spring, we added a tax on wines in response to Australia's complaint to the World Trade Organization. We had asked that cider, other fruit or vegetable beverages and alcoholic beverages made from maple syrup, among others, be exempted from the tax, since the judgment did not cover those types of beverages. We had been caught a bit off guard, but the government succeed in exempting cider and mead, but not the other small fruit beverages.
For example, if a cider producer includes a small percentage of pear, it must pay the entire tax on alcohol, and might not claim compensation for that, thinking that it was excluded. We were expecting the budget implementation bill to provide corrective measures for this, but it hasn't happened.
Is the department currently working on finding a solution? We are getting a lot of requests about this.
Have you met with berry liquor or mead producers to discuss the problem?
Senior Director, Excise Taxation and Legislation, Sales Tax Division, Tax Policy Branch, Department of Finance
Thank you for that question, Mr. Ste‑Marie.
When the officials appearing as representatives were preparing to testify before the committee concerning Bill C‑47, they studied the content of the bill. The amendments that were proposed and adopted by the committee last year, in the previous budget bill, Bill C‑19, were not part of our preparation for...
Bloc
Gabriel Ste-Marie Bloc Joliette, QC
If I may interrupt you, Mr. Coulombe. Thank you for the answer. It's very clear.
If possible, I would like you to provide the committee with an answer in writing to the questions I have asked, that is, whether you are working on solutions internally, in the department, and whether you have met with producers for that purpose.
Thank you.
Liberal
The Chair Liberal Peter Fonseca
Merci, MP Ste-Marie.
If you could do that for us, Monsieur Coulombe, that would be appreciated.
Now we'll go over to the NDP and MP Blaikie for two and a half minutes.
NDP
Daniel Blaikie NDP Elmwood—Transcona, MB
Thank you very much, Mr. Chair.
Ms. Riddell, I have a follow-up question for you in response to your previous answer.
What I heard, at least with respect to the second bucket, where you have an anonymous collective that's mining for resources, such as they are—“virtual resources”, “pretend resources” or whatever you want to call them—is that it's a bit of a black box. It's not that it wouldn't make sense if you could get the level of detail that you needed about the membership of that collective to charge GST when it's appropriate, but that we don't have that information.
I can appreciate from an administrative point of view why, without that information, it makes sense to have a tax applied that you can't administer, but I'm wondering if there are concerns about money laundering or other kinds of activities that can arise when you don't have that kind of information.
Is it a concern of the department that the lack of information about who is undertaking this kind of activity could also mean there are other activities that are not legal and not desirable that are being masked by that structure?
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
Thank you very much for the question.
I can only speak to the tax changes. I can't speak to the general risks that this new industry could potentially pose. I know that issue is being taken up by different parts of our department.
NDP
Daniel Blaikie NDP Elmwood—Transcona, MB
It is on the radar, so to speak, of the department that the structure may be a problem and that it's worth pursuing.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
I can't say for sure what they're looking at, because I'm not in that part of the department. However, I know some colleagues elsewhere in the department are looking at it from a more holistic, systemic point of view, as opposed to just the narrow tax question, which is what I'm dealing with.
NDP
Daniel Blaikie NDP Elmwood—Transcona, MB
This certainly seems like an interim solution with respect to the GST. We have something that we don't know. We don't have the information we would need in order to administer the tax, and there are choices being made not to administer the tax.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
I think that's one way it could be put. We're faced with a difficulty, because there is no recipient, and GST relies on there being an identifiable recipient. The fact that there's not makes it impossible to charge GST.
Is it appropriate to have no tax applied to the industry as a whole?
There are different ways that can be done. The choice the government has made in this particular case is to bring it outside the scope of the GST to ensure that at the end of the day, some tax sticks. There is some consumption of crypto services in Canada. We can't apply the tax in the normal way, so the services are effectively being input taxed.
Again, I would go back to the fact that there is this large exception for people when there is an identifiable recipient. I would argue that in most cases, particularly now the rules are out, people will ensure that their affairs are arranged to take advantage of that exception.
We're not being punitive in any way. It's really just a structural concern with the Excise Tax Act and the fact that the rules were not designed in a way that could easily accommodate this new industry.
Liberal
The Chair Liberal Peter Fonseca
Thank you, Ms. Riddell.
Thank you, MP Blaikie.
Now we're going to the Conservatives and MP Chambers.
Conservative
Adam Chambers Conservative Simcoe North, ON
Thank you, Mr. Chair.
This is more of a point of interest for those watching at home, because it's so riveting. You're supposed to self-assess GST as a taxpayer. Isn't that correct?
If you owe GST and it wasn't collected, you're supposed to self-assess and remit. Isn't that correct?
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
There are self-assessment rules throughout the act in all different sorts of situations. I would say that self-assessment is not our preferred approach in general, as a rule, just because the compliance rate is not as high—not surprisingly, as you might expect.
Conservative
Adam Chambers Conservative Simcoe North, ON
We'll give an example. How many Canadians self-assessed GST on Netflix services or digital streaming services prior to a couple of years ago? It was very few, I think.
Is that right?
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
I think that's fair.
Conservative
Adam Chambers Conservative Simcoe North, ON
I want to thank all of you for the very thorough answers to some technical questions and also some questions that probably didn't apply to the matters at hand.
I don't know how to ask this, Mr. Chair, but given the dense nature of the bill, if there's agreement from my colleagues.... I don't want to do a motion on this, but if there's agreement from officials or colleagues.... I think in the past there's been some understanding that, only for technical questions that pertain specifically to the bill, questions posed in writing could be followed up on at a future date while the study is still going on. I don't want to inundate people with questions, but we just got this last week, so there could be a technical question about a particular section that comes up three days from now while we're still doing the prestudy and officials are no longer going to be coming to appear. If we could get an agreement.... Is that okay with folks? Is that something we agree with: that we can pose written questions to officials throughout the study?
Liberal
The Chair Liberal Peter Fonseca
Yes, MP Chambers, that's a practice I think you've used numerous times, and we will continue with that.
Conservative
Adam Chambers Conservative Simcoe North, ON
That's wonderful. Thank you.
You've been very helpful. You just wake up at night sometimes, and there's a question that comes, so you want to....
Liberal
Conservative
Adam Chambers Conservative Simcoe North, ON
Yes, well, sometimes they're not always available when I have the question.
Not to take away from the great discussion, I would like to maybe expeditiously deal with the motion that was tabled last week on extending the tax filing deadline. I read it into the record last week, but I would like to move that now.
Conservative