Finance Committee on April 25th, 2023

[The Chair, Liberal, Peter Fonseca]

I call to order meeting number 85 of the House of Commons Standing Committee on Finance.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, April 20, 2023, the committee is meeting to discuss the subject matter of Bill C-47, An Act to implement certain provisions of the budget tabled in Parliament on March 28, 2023.

Today's meeting is taking place in a hybrid format. Pursuant to the House order of June 23, 2022, members are attending in person in the room and remotely using the Zoom application.

I'd like to make a few comments for the benefit of the witnesses and the members.

Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mike, and please mute yourself when you are not speaking. For interpretation, those on Zoom, have the choice at the bottom of your screen of the floor, English or French. For those in the room, you can use the earpiece and select the desired channel.

All comments should be addressed through the chair. For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can, and we appreciate your patience and understanding in this regard.

Members and witnesses, in today's meeting, we will be focused on parts 1 to 3 of the bill.

We have a number of officials with us from the ministry of finance—I believe nine. That's what I've been told. I will list those officials who are with us, and maybe one of those officials or a number of them could just give us a brief overview of parts 1 to 3 in the questions they will be answering today from the members.

We have Gervais Coulombe, who is senior director, excise taxation and legislation, sales tax division, tax policy branch; and Andrew Donelle, senior director, deferred income plans.

We also have Lindsay Gwyer, a former colleague of MP Chambers at law school. She is the director general, legislation, tax legislation division, tax policy branch.

There will be no preferred treatment here, please, MP Chambers.

Furthermore, we have Pierre Leblanc, director general, personal income tax division, tax policy branch; Warren Light, expert adviser, sales tax division, tax policy branch; Mark Maxson, director of employment and education, personal income tax division, tax policy branch; Pierre Mercille, director general, sales tax legislation, sales tax division, tax policy branch; Amanda Riddell, director of real property and financial institutions, sales tax division, tax policy branch; and lastly, Kevin Shoom, senior director, international taxation and special projects.

We want to thank you all for being with us here today.

If somebody would like to make a few remarks with regard to parts 1, 2 and 3, we would appreciate that.

[Pierre Mercille, Director General, Sales Tax Legislation, Sales Tax Division, Tax Policy Branch, Department of Finance]

Good morning. My name is Pierre Mercille.

We were asked not to make a formal presentation. However, I am going to quickly tell you that part 1 of the bill contains measures concerning income tax; part 2 deals with measures relating to the GST and HST; and part 3 contains two measures relating to excise tax.

I won't say any more.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Mercille.

Welcome, everybody.

We are going to get right into members' questions then. In the first round, each party will have up to six minutes to ask you questions.

We are starting with the Conservatives. I have MP Morantz for those six minutes.

Thank you.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair.

Thank you all for being here. There are a lot of you, so hopefully we'll get a lot of great information.

I will start of by asking about the changes to electronic filing and certification of tax information and electronic payments for the information of Canadians who are filing their taxes. I'm wondering if you could describe, for example, why the government is making changes to how Canadians interact with the Canada Revenue Agency.

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

Sure, I'll respond to that question.

There are a number of changes in the bill. They relate to the Income Tax Act as well as to other tax statutes.

There are different purposes for different changes. A number of them are to facilitate the ability for Canadians to file their taxes and to communicate with the CRA electronically, so, for example, there are changes to requirements for hand signatures. There is elimination of certain hand signatures that were previously required. That is to facilitate the ability for people to file more easily.

There are also other changes that are intended to make the process more efficient from the perspective of the government and from the CRA's perspective. For example, tax advisers who are filing more than five returns for certain types of returns are required to do it electronically. As well, large payments above $10,000 are required to be made electronically. That is really intended to increase the efficiency of the tax system.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

If somebody doesn't want to file their tax return electronically, are they still allowed to file it the old fashioned way?

[Lindsay Gwyer]

Yes. There's nothing that would prevent an individual from filing their tax return on paper. If they do that, then the following year they'll be sent the information required to continue to file on paper and they'll get their notice of assessment on paper.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

This piece about having to pay electronically over $10,000—what if somebody doesn't want to do that or doesn't know how to do that? Why can't they pay by cheque?

[Lindsay Gwyer]

I think there are different options for how that payment could be done.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

You said earlier it has to be done electronically when it's over $10,000.

[Lindsay Gwyer]

Yes.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Does it have to be or doesn't it?

[Lindsay Gwyer]

It does have to be made electronically, yes. I'm sorry. It's whether they can do it through their bank or online. I think the CRA would provide guidance to people. I can't speak to their practices, but I assume if there were some reason why it wasn't possible for a payment to be made, they would potentially work with someone to find a solution.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Of course, right now PSAC is on strike.

Do you have any information as to what services might be impeded at CRA due to the strike?

[Lindsay Gwyer]

I don't have that information.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Does anyone want to take a stab at that? Does anyone here know anything about what's going on at CRA?

[Pierre Leblanc, Director General, Personal Income Tax Division, Tax Policy Branch, Department of Finance]

I don't think we could add anything beyond what CRA has put up on their website showing both the services that will continue to be provided and those that might be impacted in some way. I think we can only point to that.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

For the benefit of those who are watching, could you tell us what they put up?

[Pierre Leblanc]

It would be for the CRA to do that.

I don't have a comprehensive recollection of everything that's on that website.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Okay.

Perhaps you could comment on the doubling of the deduction for tradespeople's tools, which is something that I think is a good development. Could you comment on how that affects tradespeople?

[Mark Maxson, Director, Employment and Education, Personal Income Tax Division, Tax Policy Branch, Department of Finance]

Thank you.

This is an existing deduction that allows tradespeople to deduct up to $500 for tools that are required to do their jobs, over the amount of the Canada employment credit. The proposal in budget 2023 is to double that amount from $500 to $1,000, so these are employed tradespeople who are required to purchase tools in order to do their job.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

I think this is a good idea, but just out of curiosity and for the purposes of transparency, what is the tax cost of that change?

[Mark Maxson]

It's estimated at $2 million annually.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

All right.

Could you explain the rules regarding the extension of the residential property flipping rule to assignment sales?

[Pierre Leblanc]

Thank you for the question.

You'll recall that in the FES legislation, which I believe was Bill C-32, Parliament passed a rule around dispositions of residential property that were held for under one year. Basically, those would generally be taxed as business income, but there would be certain exceptions for certain life events—death, divorce, a job in a different place and things like that—that would take effect for the 2023 tax year.

What this does is extend that measure to assignment sales, basically when what you've purchased is not the property but the right to the property. Often that's for condo constructions. That's often where that happens.

It's basically the extension of an existing rule to this other type of transaction, also to take effect for property sold in 2023 or after.