House of Commons Hansard #124 of the 42nd Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was questions.

Topics

Electoral ReformCommittees of the HouseRoutine Proceedings

1 p.m.

Conservative

The Deputy Speaker Conservative Bruce Stanton

It is my duty to interrupt the proceedings at this time and put forthwith the question on the motion now before the House.

The vote is on the motion. Is it the pleasure of the House to adopt the motion?

Electoral ReformCommittees of the HouseRoutine Proceedings

1 p.m.

Some hon. members

Agreed.

No.

Electoral ReformCommittees of the HouseRoutine Proceedings

1 p.m.

Conservative

The Deputy Speaker Conservative Bruce Stanton

All those in favour of the motion will please say yea.

Electoral ReformCommittees of the HouseRoutine Proceedings

1 p.m.

Some hon. members

Yea.

Electoral ReformCommittees of the HouseRoutine Proceedings

1 p.m.

Conservative

The Deputy Speaker Conservative Bruce Stanton

All those opposed will please say nay.

Electoral ReformCommittees of the HouseRoutine Proceedings

1 p.m.

Some hon. members

Nay.

Electoral ReformCommittees of the HouseRoutine Proceedings

1 p.m.

Conservative

The Deputy Speaker Conservative Bruce Stanton

In my opinion the nays have it.

And five or more members having risen:

Electoral ReformCommittees of the HouseRoutine Proceedings

1 p.m.

Liberal

Andrew Leslie Liberal Orléans, ON

Mr. Speaker, I request that the vote be deferred until the expiry of the time provided for government orders on Monday, December 12, 2016.

Electoral ReformCommittees of the HouseRoutine Proceedings

1 p.m.

Conservative

The Deputy Speaker Conservative Bruce Stanton

Accordingly, the recorded division stands deferred until Monday, December 12, at the end of the time provided for government orders.

Electoral ReformCommittees of the HouseRoutine Proceedings

1:05 p.m.

Liberal

Andrew Leslie Liberal Orléans, ON

Mr. Speaker, on a point of order, there have been discussions amongst the parties, and if you seek it you will find unanimous consent for the following motion. I move:

That, notwithstanding any Standing Order or usual practice of the House, the recorded division on the motion to concur in the Second Report of the Special Committee on Electoral Reform be deferred until the expiry of the time provided for Government Orders on Tuesday December 13th 2016.

Electoral ReformCommittees of the HouseRoutine Proceedings

1:05 p.m.

Conservative

The Deputy Speaker Conservative Bruce Stanton

Does the chief government whip have the unanimous consent of the House to propose this motion?

Electoral ReformCommittees of the HouseRoutine Proceedings

1:05 p.m.

Some hon. members

Agreed.

Electoral ReformCommittees of the HouseRoutine Proceedings

1:05 p.m.

Conservative

The Deputy Speaker Conservative Bruce Stanton

The House has heard the terms of the motion. Is it is the pleasure of the House to adopt the motion?

Electoral ReformCommittees of the HouseRoutine Proceedings

1:05 p.m.

Some hon. members

Agreed.

Electoral ReformCommittees of the HouseRoutine Proceedings

1:05 p.m.

Conservative

The Deputy Speaker Conservative Bruce Stanton

(Motion agreed to)

PornographyPetitionsRoutine Proceedings

1:05 p.m.

Conservative

Arnold Viersen Conservative Peace River—Westlock, AB

Mr. Speaker, it is my pleasure to present petitions signed by people from across Canada. The petitioners are concerned about the accessibility of violent and degrading sexually explicit material online and its impacts on public health, especially the well-being of women and girls. They are calling on the House to adopt Motion No. 47.

Questions on the Order PaperRoutine Proceedings

1:05 p.m.

Montarville Québec

Liberal

Michel Picard LiberalParliamentary Secretary to the Minister of Public Safety and Emergency Preparedness

Mr. Speaker, I ask that all questions be allowed to stand.

Questions on the Order PaperRoutine Proceedings

1:05 p.m.

Conservative

The Deputy Speaker Conservative Bruce Stanton

Is that agreed?

Questions on the Order PaperRoutine Proceedings

1:05 p.m.

Some hon. members

Agreed.

Employment in AlbertaRequest for Emergency Debate

1:05 p.m.

Conservative

The Deputy Speaker Conservative Bruce Stanton

The Chair has received a notice of a request for an emergency debate. The hon. member for Edmonton West.

Employment in AlbertaRequest for Emergency Debate

1:05 p.m.

Conservative

Kelly McCauley Conservative Edmonton West, AB

Mr. Speaker, pursuant to Standing Order 52(2), I wrote to you to press for an emergency debate on the jobs crisis in Alberta.

I have had the pleasure to visit schools in my riding and talk with students. I often hold mock debates with the classes, taking debate suggestions from the principal. At an elementary school I went to in my riding of Edmonton West, I asked the principal what we should debate. What she told me left me stunned. It was not Trump, or topical issues like the Oilers, or medical marijuana or pot legalization. Top of mind for the students was stress. They are in grade 7, and the main issue they are dealing with is stress. It is stress from not knowing if they will have a roof over their heads; stress from not knowing whether mom or dad will have a job, or when they will find a job; stress from not knowing why the family car was taken away, or why their parents are splitting up.

There is a jobs crisis in Alberta right now. The number of unemployed Albertans has nearly doubled since 2014, from 112,000 in January, 2015, to 206,900 in August, 2016. This is not just an oil and gas problem. Since the start of 2015, our province has lost one in five resource jobs, one in five agriculture jobs, and one in four manufacturing jobs. Over 122,000 energy workers have lost their jobs since the oil crash, and Alberta's unemployment rate now sits at a 22 year high of 9%. Food bank use is now up 60% province-wide.

According to the Canadian Federation of Independent Business, 45% of Alberta business owners are looking to cut back on staffing, while only 4% are looking to hire. This is a new record low for this indicator. Just two years ago those numbers were reversed.

The government has systematically refused to address the jobs crisis facing Alberta. Our communities are suffering, families are struggling, and a generation of young people have no career prospects.

Mr. Speaker, I draw to your attention the past emergency debates granted on job losses in the softwood lumber sector on November 1, 2001, on page 6807 of the House of Commons Debates; on fisheries industry job losses, on April 28, 2003, page 5456; and finally, on livestock industry job losses, on February 13, 2008, page 3012.

Mr. Speaker, I simply ask that you grant us, on behalf of these struggling Albertan individuals, families, and businesses, the opportunity to be heard here on the immense impact of the oil price collapse in the energy sector, and the ripple effect on Canadians from coast to coast.

Employment in AlbertaRequest for Emergency Debate

1:10 p.m.

Conservative

The Deputy Speaker Conservative Bruce Stanton

I thank the hon. member for Edmonton West for his well reasoned and well presented arguments on the matter. In this case, the request does not meet the exigencies of the requirements for an emergency debate.

I would certainly encourage the hon. member to consider other means within the Standing Orders where the issue at hand might be brought to the consideration of the House.

Tax Convention and Arrangement Implementation Act, 2016Government Orders

1:10 p.m.

Liberal

Tax Convention and Arrangement Implementation Act, 2016Government Orders

1:10 p.m.

Saint-Maurice—Champlain Québec

Liberal

François-Philippe Champagne LiberalParliamentary Secretary to the Minister of Finance

Mr. Speaker, it is an honour for me to speak today on the act to implement a convention and an arrangement for the avoidance of double taxation and the prevention of fiscal evasion, with respect to taxes on income, and to amend an act in respect of a similar agreement.

What we are going to be talking about today is implementing tax conventions that are going to be very beneficial for our country. They are going to create jobs, promote commerce, and favour the protection and the avoidance of tax evasion in our country.

I appreciate the opportunity to speak today on the second reading of Bill S-4.

Bill S-4 would implement a double taxation convention and a double taxation arrangement recently concluded and publicly announced with the State of Israel and with respect to the jurisdiction of Taiwan.

Bill S-4 would also amend the legislation that implemented the Canada-Hong Kong double taxation agreement, to add an interpretation provision for greater certainty.

The double taxation convention with the state of Israel replaces the current tax convention with that country which was signed in 1975. The revised double taxation convention brings us up to date with the current tax treaty policies of Canada and Israel.

There is currently no double taxation arrangement between Canada and Taiwan. Taiwan is one of the few remaining large world economies not covered by Canada's network of 92 tax treaties currently in force and, thus, the conclusion of a double taxation arrangement with Taiwan has been an important objective for Canada.

Taiwan is a significant trading partner for Canada, ranking as Canada's fifth-largest trading partner in the Asia-Pacific region and ranking 12th worldwide, in 2015. In 2015, Canadian exports to Taiwan were valued at $1.46 billion, while imports stood at $5.46 billion, for a total of more than $6.91 billion in trade between our two jurisdictions.

Taiwan currently has double taxation arrangements in force with 30 other countries, including Australia, Austria, Belgium, Denmark, France, Germany, the Netherlands, New Zealand, Sweden, Switzerland, and the United Kingdom.

In keeping with Canada's “one China” policy, a double taxation arrangement with Taiwan has been concluded as an arrangement between the Canadian trade office in Taipei and the Taipei economic and cultural office in Canada, as opposed to an agreement between sovereign countries.

This double taxation arrangement with Taiwan is consistent with other existing Canada-Taiwan instruments in a wide range of areas, from air transport, agricultural market access, visa exemptions, and postal services, to science and technology research, financial supervision, and youth mobility, among many others.

Once implemented in Canada, through this bill, the double taxation arrangement with the jurisdiction of Taiwan would constitute a functional equivalent to a tax treaty.

The convention and arrangement to avoid double taxation contained in Bill S-4 will facilitate trade and bilateral investment with the state of Israel and the territory of Taiwan, by eliminating or relieving double taxation on transborder transactions, which will mean that taxpayers will pay tax only once on a given income. This will also help to prevent income tax evasion, which is undermining the tax base and our taxation system.

Bill S-4 relates to the ongoing efforts being made by Canada to update and modernize its network of tax conventions with other territories. As was mentioned earlier, Canada relies on one of the most extensive tax convention networks in the world, with 92 tax treaties currently in force.

I want to make it clear that Bill S-4 does not represent any new or significant change in policy. In fact, the double taxation convention and arrangement covered by the bill, like its predecessors, is patterned on the model tax convention of the Organisation for Economic Co-operation and Development, OECD, which is accepted by most jurisdictions around the world.

The provisions in the particular double taxation convention and arrangement comply with the international norms that apply to such double tax conventions and arrangements.

As Canada’s economy is increasingly integrated with the global economy, the elimination of fiscal barriers to trade and international investment has become more important. Double taxation conventions and arrangements such as those we are discussing today are specifically designed to facilitate cross-border trade, investment, and other activities between Canada and each of the signatory jurisdictions.

The expression “tax convention” primarily designates income tax conventions and arrangements that establish the extent to which a jurisdiction can apply personal and corporate income tax to a resident of another jurisdiction.

For Canada, our tax treaty gives us assurances of how Canadians and Canadian businesses will be taxed abroad. Conversely, for our tax treaty partners, Canada's tax treaties give them the assurance of how their residents will be treated in Canada. Our tax treaties are all designed with two general objectives in mind. The first objective is to remove barriers to cross-border trade and investment, most notably the double taxation of income. I am sure that is something that every member in the House would agree with.

The second objective, and I am sure members would also agree, is to prevent tax evasion by encouraging co-operation between Canada's tax authorities and the tax authorities of the other signatory jurisdictions.

Those are two objectives that I am sure will get unanimous consent from all the members in the House.

Allow me to take a few minutes to expand on each of these very important objectives for our country. Let us talk first about removing barriers to trade and investment.

First of all, removing barriers to trade and investment is essential in today’s global economic context. Without question, investors, traders, merchants, and other stakeholders doing business on an international scale want to be certain of the tax repercussions of their activities in Canada and abroad.

Similarly, Canadians doing business or investing overseas want to be sure that they will be treated fairly and consistently with respect to the income tax they pay.

In other words, they want to know the rules of the game and they want to know the rules will not change in the middle of the game. That is one of the objectives of Bill S-4, to remove uncertainty about the tax implications associated with doing business, working, or investing abroad. Tax treaties establish a mutual understanding of how the tax regime of one jurisdiction will interface with that of another. This can only promote certainty and stability and help produce a better business climate especially with respect to eliminating double taxation.

Let me turn to double taxation.

No one wants to have their income taxed twice, something that should never happen in any case. However, in the absence of a convention or arrangement to avoid double taxation, such as those contained in Bill S-4, that is exactly what could happen. For example, in cross-border transactions, the two jurisdictions might apply their income tax without granting taxpayers relief with respect to the income tax paid to the other jurisdiction.

To reduce the possibility of double taxation, tax conventions apply either of two general methods, depending on the particular situation.

In some cases, the exclusive right to tax a particular income is granted to the jurisdiction where the taxpayer resides.

In other cases, that right is shared.

For example, if a Canadian resident employed by a Canadian company is sent on a short-term assignment, say for three months, to any one of the two signatory jurisdictions in this bill, Canada has the exclusive right to tax that person's employment income. If, on the other hand, that same person is employed abroad for a longer period of time, say for one year, then the jurisdiction where that person works can also tax the employment income. However, in this case, under the terms of the double taxation convention and arrangement in Bill S-4, Canada must credit the tax paid in that other country against the Canadian tax otherwise payable on that income. This is one example of how the allocation of taxing rights between jurisdictions under tax treaties ensures that individuals and businesses are taxed fairly.

Let me move to withholding tax.

One way to reduce the potential of double taxation is to reduce withholding taxes. These taxes are a common feature in international taxation. It is imposed by an authority on certain items of income earned within its jurisdiction and paid to the residents of another jurisdiction. Types of income usually subject to withholding taxes include, for example, interest, dividends, and royalties.

Withholding taxes are levied on the gross amount paid to non-residents and represent their final obligation with respect to income tax payable to Canada.

Without a tax treaty in place, Canada usually taxes this income at a rate of 25%, which is the rate set out under our own domestic tax legislation, the Income Tax Act. The double taxation convention and arrangement in Bill S-4, however, would provide for a maximum withholding tax rate on portfolio dividends paid to non-residents of 15% in the case of the State of Israel and the jurisdiction of Taiwan. For dividends paid by subsidiaries to their parent companies, the maximum withholding tax rate is reduced to 5% in the case of the State of Israel, and 10% in the case of the jurisdiction of Taiwan. Withholding rate reductions also apply to royalties, interest, and pension payments. The double taxation convention and arrangement in this bill would cap the maximum withholding tax rate on interest and royalties at 10%, and on periodic pension payments at 15%. The double taxation convention and arrangement also would provide that no tax may be withheld on cross-border payments of interest in specific situations, such as interest paid on loans made, guaranteed, or insured by Export Development Canada; or a similar institution in Israel or Taiwan.

withholding tax rates provided for in the convention and arrangement covered in Bill S-4 are consistent with current Canadian policies on double taxation.

Let me move now to encouraging co-operation.

I mentioned that tax treaties have two main objectives. I talked about the first objective, which is to remove barriers to cross-border trade and investment by eliminating double taxation.

The treaties' second objective, and I am sure everyone here will agree with me, is to encourage cooperation between tax authorities in Canada and in treaty countries. Bill S-4, for instance, has to do with a convention and an arrangement to avoid double taxation through cooperation with tax authorities specifically in the State of Israel and the jurisdiction of Taiwan.

For example, tax treaties include a mechanism for settling disputes or enforcement issues that arise after a treaty on double taxation comes into force.

In such cases, designated tax authorities of the two jurisdictions, known as the competent authorities, are to consult with a view to reaching a satisfactory solution, under which the taxpayer's income is allocated between the two taxing jurisdictions on a consistent basis, thereby preventing the double taxation that might otherwise result.

The Canadian competent authority under Canada's tax treaties is the Minister of National Revenue or the minister's authorized representative, who would normally be an official at the Canada Revenue Agency.

Furthermore, one of the most important benefits of increased co-operation between Canada and other jurisdictions is preventing tax evasion. Indeed, tax treaties are an important tool in protecting Canada's tax base in that they allow consultation with and information to be exchanged between our revenue authorities and their counterparts in jurisdictions with which we have a double taxation convention.

In that regard, the convention and arrangement to avoid double taxation listed in Bill S-4 implement the internationally agreed standard for the sharing of tax information on request created by the Organisation for Economic Co-operation and Development, or OECD, which gives Canadian tax authorities access to information needed for the administration and enforcement of Canadian tax laws, while also helping them prevent international tax evasion.

Thus, the convention and arrangement to avoid double taxation listed in Bill S-4 will help ensure that Canada's tax regime is fair by making sure that taxes owed are actually paid. Conversely, as I have already mentioned, these treaties also help ensure that taxpayers do not have to pay more than their fare share.

Let me move to timing and consideration.

Once this bill has been enacted, Canada will be in a position to send its notice of ratification of the convention and arrangement on double taxation contained in the bill. Taiwan has already sent its notice of ratification to Canada, and Israel has promised to do so and to make every effort to send its notice by the end of the year.

Under the terms provided in the double taxation convention and arrangement, it will take effect the first day of January in the year following that in which the latter of these notices of ratification have been exchanged. Thus, it is important that this legislation be enacted before the end of this year so that Canada can send its notices of ratification regarding the convention and arrangement in order for the double taxation convention and arrangement to have effect commencing January 1, 2017. Otherwise, the next opportunity for the coming into effect of the convention and arrangement would be January 1, 2018.

The benefits of Bill S-4 are clear. The double taxation convention and arrangement covered in Bill S-4 would promote certainty, stability, and a better business climate for taxpayers and businesses in Canada and in the partner jurisdictions.

Furthermore, the convention and arrangement to avoid double taxation will serve to further consolidate Canada’s position in the increasingly competitive circles of international trade and investment. They are in line with the OECD’s international standards, and they will help strengthen the taxation system to the benefit of Canadians and to achieve our tax fairness objective for all Canadians.

These actions are consistent with the basic principles of economic efficiency and responsible fiscal management.

For these reasons, I invite members of the House to support the bill. It will support trade. It will support tax integrity. I am sure that every member will support the bill, because it is not just the smart thing to do for Canada, it is the right thing to do.

Tax Convention and Arrangement Implementation Act, 2016Government Orders

1:30 p.m.

Conservative

Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB

Mr. Speaker, obviously, the Conservatives support this legislation. We are pleased with the implications it would have for our relations with some important countries and for commercial opportunities.

I wonder if the member could speak specifically about deepening our relationship with Taiwan at the current juncture. Taiwan is a place that is democratic and is a beacon of democratic values in an immediate area that certainly benefits from that positive example. Canada can help strengthen Taiwan, especially in that context.

I wonder if the member would have some further comments about the Canada-Taiwan relationship specifically and what it means for that region.