Finance committee  Yes.

Finance committee  That is part of the logic behind it. But you're correct in your comment that there is no distinction made among taxpayers. It would be a little difficult for the Canada Revenue Agency to try to do that.

Finance committee  Correct.

Finance committee  That's correct, although I suspect in those circumstances the taxpayer can control where the debt or where the unpaid tax is.

Finance committee  Yes.

Finance committee  Yes, some would argue that the risk profile of the two debtors is different.

Finance committee  The Americans are already in that kind of a position, and most of our treaty partners are in that sort of a position, so what we're really doing is catching up with many other countries.

Finance committee  Certainly. Historically, “taxable Canadian property” has included items such as real property located in Canada, timber limits, and resource properties in Canada. It has also included things like shares of private companies, so shares of a privately owned corporation would be considered to be taxable Canadian property.

Finance committee  Let's say, for example, that a U.S. multinational has a Canadian subsidiary and seeks to sell that subsidiary to a purchaser. Prior to this change those shares would have been taxable Canadian property. The U.S. multinational likely would not have been taxable on that sale because it would have been protected from Canadian tax under the treaty with the U.S., but it still would have been required to go to Revenue Canada to get a clearance certificate in advance of the sale of those shares.

Finance committee  Likely not. Historically, shares of publicly traded companies were not taxable Canadian property. The exception was a circumstance whereby the non-resident held 25% or more of the shares of a class of that company. But typically for the retail-level investor, for most investors in publicly listed shares, they were not taxable Canadian property even before these changes.

Finance committee  Real estate is taxable Canadian property and will continue to be.

Finance committee  It'll be relevant for most small businesses because for the vast majority the shares of those companies would be taxable Canadian property under the current rules and will not be under the new rules. The exception is where the company derives its value principally from real property or has done so within the previous 60 months.

Finance committee  There is a differential on the rates, yes. There has been a differential in the past. That differential will now be greater. It was 2% prior to this change; it will be 4% difference now.

Finance committee  As I say, different arguments can be made. The argument has been made that the risk profile is different between different debtors, between the government and.... If, for example, the corporation were to go out and borrow in the public markets, it would pay a higher rate than would the government.

Finance committee  Then there would be a 2% difference.