Public Accounts Committee on Nov. 17th, 2020

[The Chair, Conservative, Kelly Block]

Just before I move into our two-and-half-minute round, I would respectfully remind our members to keep their focus on the performance reports rather than policy, as is the mandate of our committee.

I will move now to Mr. Blanchette-Joncas, for two and half minutes.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you, Madam Chair.

My question is for Mr. Rochon, the deputy minister of finance.

According to the Office of the Auditor General, the federal government lost $169 million in GST revenue on foreign digital products and services sold in Canada in 2017. The report also indicates that you calculated the lost sales tax revenue but didn't report it publicly.

Can you tell us what Finance Canada’s loss estimate was?

[Paul Rochon]

I'm going to ask my colleague Mr. Marsland to answer that question.

[Andrew Marsland, Senior Assistant Deputy Minister, Tax Policy Branch, Department of Finance]

Thank you.

Like any estimate, it depends somewhat on the definition of what you're dealing with. The Auditor General did mention a figure in her opening remarks. My sense is that this is roughly about the GST at play in relation to the digital services that we're discussing today.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Did you estimate the losses that might have caused?

[Andrew Marsland]

I would have to get back to the committee with a specific figure.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you.

My question is for Mr. Rochon.

Notwithstanding the government in power, from a strictly legislative or administrative standpoint, do you, as a senior official and expert, think the existing legislation should be revised in light of the tax regime or even corrected to align more with the present situation?

[Paul Rochon]

As you know, my role is not to comment on government policies but rather to explain them and provide advice to government. Consequently, I must limit myself to my specific role and not venture too far into policy issues, which are within your purview not mine.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

All right.

My final question is for Ms. Hogan.

We sense that the government may have a political incentive to take no action. Questions also arise in our minds, including the following one, which I believe is legitimate.

To be clear in our own minds, should we examine the matter that is before this committee, and which could be described as explosive, at greater length than we can in a two-hour meeting?

[Karen Hogan]

It's really up to the committee to determine how how long it wishes to examine a matter. I agree with Mr. Rochon. My role is to provide you with high-quality information so you can make decisions. The question whether a legislative change is necessary is really for Parliament to decide.

I would emphasize that the Department of Finance Canada has actually conducted a good, rigorous analysis.

[The Chair, Conservative, Kelly Block]

Thank you very much, Ms. Hogan.

We will now move to Mr. Green for two and a half minutes.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you very much, Madam Chair.

Paragraph 3.50, in reference to the accommodation sharing, states:

We found that, although the Canada Revenue Agency identified the sharing economy as a risk in its annual corporate risk profiles, it had no planned compliance activities targeted specifically at the accommodation sharing sector. Statistics Canada reported that this sector generated revenues of $2.8 billion in Canada in 2018, yet we found that the Canada Revenue Agency audited only four property management companies.

This question is for the CRA. If accommodation sharing has exploded as an industry over the past several years, how is it that you've only conducted audits on four property management companies, when you had identified this sector in your risk profile?

[Bob Hamilton]

Thank you, Chair. I'll take that question.

You're right. The accommodation-sharing area, which has exploded, is an example of a place where we are learning as we go. We have undertaken efforts to try to better understand what tax is being collected, what should be collected and how aware people are of their obligations.

For example, if I'm renting out my house in a sharing arrangement, do I know what the obligations are, whether I'm a small supplier, under $30,000, or what have you?

We are learning in that space. We did test audits here. It was a—

[Matthew Green, NDP, Hamilton Centre, ON]

However, you didn't track the information. It says:

The Agency told us that it may have completed other audits in the accommodation sharing sector, but it did not track this information.

How can you not know if you've completed other audits on accommodation sharing, and what good is conducting audits if you don't use the information?

[Bob Hamilton]

The Auditor General pointed out that we aren't doing a good job of tracking and monitoring. That's one of the elements of our action plan that we're almost ready to implement. We were treating audits generally as part of our overall compliance activities, and we're now doing a better job to try to disentangle those and track and monitor specific cases better, and learn.

Where we do audits in a newish area, we learn from those audits about where the—

[Matthew Green, NDP, Hamilton Centre, ON]

Wouldn't there be a best practice vis-à-vis other sectors? I'm not understanding how, from an auditing perspective, this is new information.

[Bob Hamilton]

It's new information in the sense that the risks grow and we pay more attention to it as people evolve. If you went back 10 or 15 years, you wouldn't see nearly the level of activity—

[Matthew Green, NDP, Hamilton Centre, ON]

No, that's fair, but in terms of—

[The Chair, Conservative, Kelly Block]

Thank you.

Thank you very much, Mr. Green. I'm sorry, but your time is up.

We will now move to our five-minute round, starting with Mr. Berthold.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Thank you very much, Madam Chair.

My question is for Mr. Hamilton.

Where in the various revenue statutes is it stated that certain sales, particularly e-commerce sales, are exempt from sales tax, in this instance the GST and QST?

[Bob Hamilton]

What kind of sales are you talking about?

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

I'm talking about all sales. Where in the act is the distinction made, for all Canadians, between e-commerce sales and retail sales?

[Bob Hamilton]

The act designates certain goods and services that are not subject to tax. On this point, we discussed services provided by a person who is outside the country. There are rules pertaining to that, but I don't know in what specific section they're stated. I could find out and give you an answer.

[Len Webber, Conservative, Calgary Confederation, AB]

On a point of order, Madam Chair, the interpretation is as loud as the witness. Can we fix that at all?

[The Chair, Conservative, Kelly Block]

Yes. Thank you very much, Mr. Webber.

I've come to understand that perhaps the speaker needs to choose the language of his choice at the bottom of the screen.