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.
Conservative
Conservative
Liberal
Conservative
Adam Chambers Conservative Simcoe North, ON
Charlie, the chatbot, I'm sure is great. Maybe at some point we can replace the work of some members with artificial intelligence based on some of the.... I'm sure it could do a better job than I do sometimes.
I'll yield the rest of my time, Mr. Chair.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
On that point of order, Mr. Chair, I want to suggest to the analysts that we call Charlie the chatbot as a witness in the event that the Minister of National Revenue is not available.
Liberal
Liberal
Sophie Chatel Liberal Pontiac, QC
I'm waiting for Charlie to replace me.
I will ask a question. In the budget we had two very important international developments. We've had some discussion amongst committee members already, and I want to have more information to prepare this committee on what's coming—it's welcome—very, very soon, which is the global minimum tax.
I know there has been a lot of progress and there's been some legislation that will lead to that, but on a higher level, would you be able to explain to this committee what exactly the main features of this global minimum tax are and how it will apply?
I know MP Morantz, who just left, had some questions about that.
Senior Director, International Taxation and Special Projects, Department of Finance
Thank you for the question.
The global minimum tax is being negotiated at the OECD's inclusive framework, which is a group that involves over 140 nations. The intention is to address remaining risks from base erosion and profit shifting, even after other recent initiatives from the OECD and others.
It's also to put a floor on tax competition and do away with the tax competition that is available currently when countries can have corporate tax rates down as low as 0%.
The general framework that is being negotiated involves looking at a multinational of a certain size. The threshold that's being used is 750 million euros in revenues. That multinational would need to calculate the effective tax rate on its operations in each jurisdiction in which it operates, and a top-up tax to get to 15% would be levied whenever the effective tax rate in that jurisdiction is less than 15%. This calculation would be based on the modified version of the accounting profits of the multinational in each jurisdiction.
The next question would be who gets to collect that top-up tax. The hierarchy or the order effectively provides the first right to tax—to collect that top-up tax to get to 15%—to the jurisdiction in which there is the low-taxed income. If that jurisdiction doesn't tax up to 15%, then the top-up tax could be collected by the jurisdiction in which the multinational is headquartered.
If that jurisdiction does not implement the global minimum tax, there's effectively a backup rule to ensure that multinationals, no matter where they're headquartered, are subject to the minimum tax. This backup rule would take the aggregate amount of low-taxed income across the multinational that has not been taxed up to 15% and then allocate it out to the countries where the MNE operates that have implemented the minimum tax using a formula based on where its employees and its tangible assets are located.
Liberal
Sophie Chatel Liberal Pontiac, QC
Thank you for the mechanics.
May I confirm—and we had discussions with the Conservatives on this—that this is a global minimum tax that will ensure that MNEs, multinational enterprises, wherever they are located, will globally be subject to a minimum tax of 15%?
Senior Director, International Taxation and Special Projects, Department of Finance
That is correct. It's a minimum tax of 15% in each jurisdiction in which they operate.
Liberal
The Chair Liberal Peter Fonseca
We're out of time, MP Chatel, but thank you.
Thank you, Mr. Shoom.
We are now at MP Ste-Marie for two and half minutes, please.
Bloc
Gabriel Ste-Marie Bloc Joliette, QC
Thank you, Mr. Chair.
I'm eager to see this important international 15% minimum income tax measure implemented, so I thank Ms. Chatel for raising this issue.
Obviously, I also thank the Biden administration for proposing it to the international bodies.
Regarding Bill C‑47, the implementation bill, do the rules governing the transfer of family businesses appear in the first three parts or in the fourth?
Director General, Legislation, Tax Legislation Division, Tax Policy Branch, Department of Finance
You're referring to the rules related to Bill C-208?
Those rules do not appear in Bill C‑47. In the budget, we published the preliminary legislative provisions that the public can consult. It will be up to the government to make a decision, but it is possible that those rules will be in the bill in the fall.
Bloc
Gabriel Ste-Marie Bloc Joliette, QC
Thank you.
Since Bill C‑208 was introduced, we have been getting calls every week from owners of farming businesses and family farms who are postponing transferring their businesses to their children so as not to be penalized from a tax perspective.
I now understand that the rules concerning these transfers do not appear in the current implementation bill, but that could be the case in the fall.
Thank you for your answer, even if it doesn't make me happy.
I am going to come back to a subject addressed earlier, the duplication of the GST credit adopted in Bill C‑46, also called the “grocery rebate”, which is better from a marketing perspective.
Assuming that Bill C‑47 is adopted by the end of the parliamentary session, how would Bill C‑46 speed up payment of this GST cheque?
Director General, Personal Income Tax Division, Tax Policy Branch, Department of Finance
Thank you for the question.
In fact, two conditions are necessary. First, we have to get royal assent for the enabling bill. Second, the Agency has to be in a position to make the payment. So it depends on those two conditions.
Liberal
The Chair Liberal Peter Fonseca
Excuse me, MP Ste-Marie, but that is the time. You can submit a question, and I'm sure you'll get an answer to it.
Thank you, Mr. Leblanc.
Now we will go to MP Blaikie for two and a half minutes, please.
NDP
Daniel Blaikie NDP Elmwood—Transcona, MB
Thank you very much.
My question goes back to the OECD reporting requirements for online platforms.
Another debate that's outside of tax policy is around the classification of employees in the gig economy. I think California is an example of a jurisdiction that has tried to have some law about so-called “gig workers” or independent contractors who, effectively, work for the same company for a regular amount of hours, performing similar work, and are effectively employees.
I'm curious if you could break down some of the reporting categories for us within the OECD framework. I don't expect you to be able to say yes or no, but I'm curious what they are and to see whether some of that reporting data might be useful if the government chooses to pursue employee classification legislation.
I'm curious to see if they're reporting out on the number of hours worked or the type of work, if it's a more limited set of data that has to do with tax collection, or if there's be a broader subset of data that might be used for other purposes, like employee classification.
Senior Director, International Taxation and Special Projects, Department of Finance
The reporting regime would not cover employees. Your question is on point for that. If there were a reclassification of some of the gig economy workers to be employees, then they would be direct reporting by the employers' tax administration and they would fall out of this reporting regime.
The types of information that would be reported would be identifying information about the individual. It would also provide information on their jurisdiction of tax residence, how much consideration they received for each quarter of the year, the number of relevant activities they had undertaken, any fees or commissions that have been withheld or charged by the platform in their dealings with the platform seller. Additional information would be provided with respect to people renting properties, but I don't think that's relevant to your question.
There would be information about aggregate employment or aggregate income received, which could potentially be helpful in that respect, although not necessarily definitive.