Finance committee  I'll have to give you a little more than a yes or no—sorry—because we talk about growing credit unions and large credit unions. Eligibility for the additional deduction is not linked to the size of a credit union. The income that is eligible for the additional deduction for any credit union in a year is equal to the difference between 6.7% of its members' deposits and shares and its cumulative income over time.

Finance committee  It would change from year to year, as the tax situation and parameters change for any given credit union or co-op. Among large credit unions, it's fair to say that most do not hit their limit in any given year. The credit unions that would be more likely to hit their limit may be the small credit unions that are not growing, but they would have access to the small business deduction, so the additional deduction is not relevant to them.

Finance committee  Oh, looking at the five-year total. Sorry. The fully phased-in cost in the final year is $75 million, Again, as noted, given that the primary benefit of the additional deduction falls to large and growing credit unions, the flip side is that money would come from those credit unions with the removal of the additional deduction.

Finance committee  Without commenting on the particular tax situation of any given amalgamation of credit unions, again, as credit unions consolidate, merge, and become larger, they're able to realize economies of scale as they pass those thresholds for taxable income and taxable capital. Yes, they would be affected, but if they remain small, again, there's absolutely no change.

Finance committee  I think I may have mentioned this earlier, but in fact the vast majority of credit unions that are located in the rural communities, the smaller credit unions, would have access to the small business deduction serving that smaller market. It would be a relatively smaller credit union or caisse populaire.

Finance committee  No, to be clear, a credit union that has currently less than $500,000 in income and taxable capital less than $15 million would not be making use of the additional deduction. They would be paying tax at the small business rate, and that would continue unchanged.

Finance committee  Yes, certainly it was. It's also important to remember that, again, the additional deduction only benefits credit unions and caisses populaires. There are other business forms. A mutual insurance company, which may also be based on similar social objectives, would not have extended access to the small business deduction, nor would other forms of cooperatives.

Finance committee  Well, a mutual insurance company may have particular objectives, but when we speak of very small credit unions in small communities, they are very unlikely to be affected by this change.

Finance committee  I'm not sure where the $255 million comes from.

Finance committee  It's certainly fair to say that the vast majority of the costs associated with the additional deduction would accrue as a result of the largest credit unions. That's correct.

Finance committee  Essentially, credit unions have the ability, like any other business, to access the small business deduction on the first $500,000 of income, and with a taxable capital limit of up to $15 million. That will not change. A small credit union will, in the vast majority of cases, not have any change in its tax bill at the end of the year.

Finance committee  Certainly, there is a broad range of credit unions across Canada. The Desjardins Group is probably the most well known—the caisse populaire—and is the largest organization. Without speaking for them, I will say that they have an asset base that is quite significant and would be similar to that of a bank such as the Laurentian Bank of Canada.

Finance committee  No. That's absolutely correct. The additional deduction is unique in providing this tax advantage to the credit union and caisse populaire section. There are no other equivalent provisions to provide extended access to the small business deduction for other businesses or corporations in Canada.

Finance committee  Absolutely. Across Canada, provinces may or may not offer an equivalent form of the additional deduction. Quebec, in particular, eliminated it in 2003. Alberta does not offer a special deduction for credit unions, nor do New Brunswick, Newfoundland, or Nova Scotia.

Finance committee  What they're doing in most cases in those provinces is providing an additional deduction for income that would be beyond the small business limit.