Mr. Speaker, I have the honour to present the seventh report of the Standing Committee on Public Accounts.
This report deals with tax revenue and the resource companies allowance, following a dispute between the Department of National Revenue and Gulf with respect to the interpretation of certain tax deductions for the 1974 and 1975 taxation years. The Department of National Revenue issued a reassessment, which Gulf appealed. The court ruled in favour of Gulf. The government appealed the decision and lost in 1992. The government then sought leave to appeal, which the Supreme Court of Canada refused, and has continued to refuse since 1992.
Following the court decisions, 40 other companies in the resource sector sought a refund based on their tax returns since 1974. Negotiations are continuing between the government and these companies. The final amount of the refund, including accumulated interest, could reach two billion dollars. In order to offset this substantial risk of erosion of the tax base, the Standing Committee on Public Accounts is recommending a series of measures designed to avoid a repetition of the Gulf affair and to make possible a judicious assessment and management of the risks to the federal government.
Pursuant to Standing Order 109, the committee requests that the government table a comprehensive response to this report.