Evidence of meeting #9 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was mclean.
A video is available from Parliament.
8:25 p.m.
Bloc
Gabriel Ste-Marie Bloc Joliette, QC
If I understand correctly, we have to pass Mr. McLean's subamendment first, and then we can ask Mr. McGowan technical questions about that proposal. Then we will have answers to our questions.
If that's the procedure, let's just go ahead and ask our questions in a few minutes.
8:25 p.m.
Conservative
Greg McLean Conservative Calgary Centre, AB
In NDP-3, proposed subsection 125.7(2.01) would read, “Despite subsection (2), no overpayment on account of a qualifying entity's liability under this Part for the taxation year in which the qualifying period ends is deemed to have arisen with respect to a qualifying entity that is a publicly traded company or a subsidiary of such a company if, in the qualifying period, it paid taxable dividends on common equity.”
8:25 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
I think that solves the problem. Mr. McLean has just clarified that the proposal covers dividends paid to common shareholders, but not dividends paid to preferred shareholders. That should solve the problem that Mr. McGowan raised earlier.
It means that we apply the rule to companies that pay dividends to shareholders, but not to companies that pay dividends to their own owners.
Now that the problem is solved, I imagine there will be unanimous support for the subamendment. The Liberals say they agree in principle that companies that pay dividends should not receive this subsidy. We are all in agreement and we should proceed to a vote.
8:25 p.m.
Liberal
8:25 p.m.
NDP
Daniel Blaikie NDP Elmwood—Transcona, MB
Thank you.
As I said, I'm in favour of making some progress rather than no progress. I appreciate the efforts of colleagues around the table to try to come to some kind of solution in the time that we have and given their own personal expertise. It is the holiday season, and if by some Christmas miracle the government had actually been doing work on this and, say, had an amendment drafted that they would find acceptable and that would accomplish these things, wouldn't this be a great time for them to bring it to the table? If by some miracle that document happened to exist, then we could consider that amendment.
As I say, at Christmas time anything is possible. I didn't hang a stocking in front of my spot at the committee table here, but if I had, maybe such a document would appear here, and if it did, then we might be able to accomplish what everyone says they want to accomplish in a way that would satisfy government officials. If not, I think this is an excellent next option.
8:30 p.m.
Liberal
Sophie Chatel Liberal Pontiac, QC
The Income Tax Act is highly complex. I'll just give you an example. Try to find the definition of “common equity” in the Income Tax Act. It's not there.
8:30 p.m.
NDP
Daniel Blaikie NDP Elmwood—Transcona, MB
We do have serious time constraints, Mr. Chair. I don't know if we have time to undertake that kind of research.
8:30 p.m.
Liberal
Sophie Chatel Liberal Pontiac, QC
That's exactly my point. We don't have time. Who is a tax lawyer? Who is drafting tax legislation? It's not about redrafting on the fly like this. That's dangerous. It's really dangerous. It could harm our businesses, and it could harm our taxpayers. We don't want to do that. We want to give service to Canadians, service to businesses. We don't want to create problems for them. Drafting on the fly is very dangerous, and doing that could hurt real people. Think about it.
8:30 p.m.
Liberal
8:30 p.m.
Liberal
Yvan Baker Liberal Etobicoke Centre, ON
Thanks, Chair.
I very much respect the intention of my colleagues who are trying to solve a major problem. I don't think there's much disagreement about the problem we are trying to solve. The disagreement is more about the solution to the problem.
While Mr. McLean's intentions are good, I am concerned about the potential implications of this subamendment. We don't know what those implications are, and we won't be able to figure them out this evening before we vote on this subamendment. By trying to solve a big problem, we could create a much bigger problem for the companies we want to help.
I remind my colleagues that we are talking here about companies whose revenues have dropped by 40% or 50%. Companies that qualify for these programs are already suffering and are already doing everything they can to retain their employees. Despite our good intentions, this change could create additional problems for those companies. If we unwittingly create a problem tonight, companies may no longer be eligible for these programs under Bill C‑2. Unfortunately, if we make such a mistake, we will only realize it in the coming months.
I am not saying there is a problem, but rather that we do not know whether there is a problem. Despite the intelligence and experience of everyone around this table, no one here can say with certainty that we won't cause a problem for the companies we are trying to help. While the underlying intent is good, it is very risky to pass amendments that would change the wording of the bill.
That is all I wanted to say.
8:30 p.m.
Liberal
The Chair Liberal Peter Fonseca
Mr. Baker, just before we go to Mr. Chambers, I just spoke to Philippe, our legislative clerk. Ms. D'Souza is on pause, just waiting to see if we want her to look at this and start doing any work.
8:30 p.m.
Liberal
Julie Dzerowicz Liberal Davenport, ON
Can I just suggest again that we allow this amendment to be worked on until 9:30 and we continue with the rest of the amendments to this bill and the rest of the clause-by-clause? It would allow Madame D'Souza to work on this until 9:30 and it would give us enough time, if that is amenable to my colleagues—if we're truly looking at trying to find a solution and truly looking to get through the clause-by-clause.
8:35 p.m.
Liberal
The Chair Liberal Peter Fonseca
I have Mr. Chambers, and then Mr. Blaikie.
Ms. Dzerowicz, about tabling this and allowing Ms. D'Souza to work on it, Ms. D'Souza needs the signal that she can start doing that work, with the time constraints.
8:35 p.m.
Conservative
Greg McLean Conservative Calgary Centre, AB
Mr. Chair, can she take that forward before Mr. McGowan says whether it is technically feasible? That's the question we've been asking.
8:35 p.m.
Liberal
8:35 p.m.
Conservative
Greg McLean Conservative Calgary Centre, AB
Mr. McGowan should be giving us, as he did the first time, some good input on whether this motion as adjusted holds water in the tax system right now, or whether we're creating a problem—as my friend Mr. Baker has said—for companies that might be able to access this funding and yet are still paying dividends.
I would like that clarity from Mr. McGowan before we instruct Ms. D'Souza to start drafting it.
8:35 p.m.
Liberal
The Chair Liberal Peter Fonseca
Thank you, Mr. McLean.
I'm not going to speak for Mr. McGowan, but Mr. McGowan is here for technical matters.
I don't know if you have something to say, Mr. McGowan.
8:35 p.m.
Director General, Tax Legislation Division, Tax Policy Branch, Department of Finance
Thank you, Chair.
I'm of course here to provide technical analysis. I'm happy to help out within the scope of what is appropriate, and I will defer to the chair's judgment on the scope of that. If it would be appropriate for me to answer the question, I could provide some insight or some thoughts, but again, as Mrs. Chatel noted, this is a process that often has a number of tax lawyers around the table providing input.
8:35 p.m.
Liberal
The Chair Liberal Peter Fonseca
From our legislative clerk.... Mr. McLean, what are you looking for Ms. D'Souza to work on?
8:35 p.m.
Conservative
Greg McLean Conservative Calgary Centre, AB
The amendment is there, except for a few words at the end. It's already been pretty clear. The words are “it paid taxable dividends on common equity”. Could Ms. D'Souza work on that, because obviously we're not going to get any more technical input on it this evening?
Of course, that's subject to.... It's a friendly amendment that I'm proposing to Mr. Blaikie's motion.
8:35 p.m.
Liberal
The Chair Liberal Peter Fonseca
Thank you.
There's a question from the legislative clerk, just for clarity.
8:35 p.m.
Legislative Clerk
Thank you, Mr. Chair.
What I'm being told is that, rather than working on the words that were added, it would be easier to redraft the whole amendment so it fits together in a better way. That's what they are doing right now. Is that what the wish of the committee is?