International Trade committee  Thank you again for the question. I think the reality is that foreign financial institutions already have a presence in Canada. They form part of the market. But the elimination of withholding tax does take away one of the impediments to foreign financial institutions lending to Canada--supplying money for Canadian borrowers.

International Trade committee  I would suggest that opening up the markets and eliminating the withholding tax would actually lead, all other things being equal, to greater rate competition. The possibility of a withholding tax can create a differential in rates where one would not otherwise exist. There are many other factors, of course, that can lead to differences in interest rates.

International Trade committee  Thank you. I'm pleased to answer this question as well. What we understood we were asked for the other day was a description—I think the term was a “clause-by-clause description”—of the bill itself, and I know reference was made to that being only one page. In fact, the clauses to the bill comprise, themselves, only a page or two, a page and three lines.

International Trade committee  There are at least a dozen current exemptions. The various things that generate an exemption are if it is long-term corporate debt--debt of more than a five-year term--or if it is paid by governments, sometimes two governments. There are those types of situations. Bank deposit interest sometimes qualifies for an exemption.

International Trade committee  Well, thank you very much for the question. I think that in this context, you might be touching upon one of two or three different aspects or features of the withholding tax changes. And if I may, I'll address all three, for the sake of comprehensiveness. First of all, the withholding tax change, for the benefit of all committee members, eliminates withholding tax on arm's-length interest.

Finance committee  Thank you for the question. The honourable member mentioned that the question had come up before and that we'd provided an answer before. I think that's the correct recollection, and therefore my answer will very much track what I said before when we were here. We don't have a breakdown of the numbers that will be deducted....

Finance committee  Yes, I think we can. Statistics Canada has some numbers that we can obtain and forward to you, which talk about the amount of dividends, if my recollection is correct I take it you're speaking of dividends paid to Canada.

Finance committee  I can't speak to the cost. It would have been a matter for the Canada Revenue Agency--additional costs. As the minister has said, when a ways and means motion is tabled the Canada Revenue Agency will generally administer the law on the basis of that motion, which would have led to changes in the forms.

Finance committee  I'm not aware of there having been such a calculation either with respect to foreign income or with respect to underlying domestic income that may not have been subject to full tax. You asked me about my discomfort level. It probably doesn't matter how comfortable or uncomfortable I am.

Finance committee  I believe we can. I'm not sure I appreciate the relevance of that information to the work the Canada Revenue Agency is doing with other countries. They're certainly doing important work to try to identify if there are transactions between countries that are leading to tax avoidance or tax arbitrage.

Finance committee  It's been noted, I think by a private tax practitioner in the press, that these rules have been in place for about 35 years. I think the emergence of double-dips didn't occur the very first day. During the 1980s, largely, is when they started to take hold, and they've probably been the subject of commentary since then.

Finance committee  I apologize, Mr. Chairman, but I'm not sure I followed Mr. McKay's question.

Finance committee  To try to be helpful, is it a discussion of the benefits of the Canada-U.S. tax treaty and the elimination of withholding tax on interest? Or is it the interest deductibility proposals, or is it some interaction of the two?

Finance committee  Well, I'm not certain if I follow that. The elimination of withholding tax under the Canada-U.S. treaty will be of benefit to both countries, and enhancing the ability to—

Finance committee  I believe, from the U.S. perspective, that they were, in fact, supportive of eliminating withholding tax on interest because of the benefits it would provide their investors, as it would, conversely, ours. An incidental effect of that is that it would actually have allowed Canadian firms to invest in the U.S. from Canada and also from some third countries.