Finance committee  As I said, this is simply consequential and something the CRA for some time has asked us to do. I do believe the CRA has some summary figures on the levels of transfer pricing assessments they've done in recent years. I'd be quite happy to try to get that for the committee.

Finance committee  Certainly this measure tries to curtail the ability of multinational groups to engage in what's commonly referred to as foreign affiliate dumping. As I was indicating in the discussion about transfer pricing, that involves amounts paid out of Canada to a non-resident shareholder of a Canadian corporation.

Finance committee  Certainly. This measure relates to existing provisions in the Income Tax Act relating to transfer pricing. Transfer pricing describes the prices at which related parties transact over international borders. These would be corporations that are part of the same group. It can be used as part of international corporate tax planning to shift profits from a high-tax jurisdiction to a low-tax jurisdiction.

Finance committee  Certainly. To give a brief overview of the four elements of the changes to the scientific research and experimental development credit, it's an investment tax credit available in respect of scientific research and experimental development. It's currently available at a general rate of 25% and an enhanced rate of 35% for Canadian-controlled private corporations on expenditures up to $3 million.

Finance committee  Sorry, I'm just checking my notes. I believe it's $4 million.

Finance committee  This measure would phase out the corporate tax credit for pre-production mining expenditures. The way the phase-out works is that it is divided into two types of expenditures. One is the pre-production exploration expenditures, which we can think of as the grassroots, actual exploration-type expenditures.

Finance committee  I'm just going to confirm here.... I believe you're absolutely correct. Our definition is actually of “specified employee”, and so this applies to specified employees. Specified employees have a particular relationship, usually a significant interest—more than a 10% interest—in their employer.

Finance committee  Yes, it doesn't apply to all employees; it just applies to specified employees, cases in which there is a particular relationship between the employee and the employer. I would note, though, that the 20% threshold is based on what we've observed. It's generally significantly higher than what is observed in arm's-length situations, such as in large corporations in Canada.

Finance committee  Yes.

Finance committee  Well, I think this is just in recognition that however a particular person earns their employment income, it should be their employment income.

Finance committee  There are a few things going on with the employee profit-sharing plan. It was set up as a specific mechanism with respect to the relationship to a particular business. I think the observation is that it hasn't been used with respect to its intended policy purpose.

Finance committee  This measure is just in respect of employee profit-sharing plans. It doesn't impact upon the taxation of stock options.

Finance committee  This measure contains a few components. When waste-fueled thermal energy equipment is included in class 43.2, there is currently a requirement that this equipment must be used in an industrial process or a greenhouse. The requirement that it's used for those purposes is taken out by this measure in order to expand the ability to use waste-fueled thermal energy equipment.

Finance committee  Employee profit-sharing is a slightly different variety of tax planning that has been uncovered. As I'm sure everyone is probably aware, employee profit-sharing plans are used largely to align the interests of employees with those of their employers by giving them in some ways a stake in the business.

Finance committee  I think what you're referring to is that the tax is an amalgam of the highest personal federal rate plus the highest rate for the province in which the person is a resident, and at zero in the case of Quebec. That's because Quebec is a non-agreeing province with respect to the personal income tax; they levy their own tax through a separate system.