Bill C-29 (Historical)

Budget Implementation Act, 2016, No. 2

A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures

Part 1 implements certain income tax measures proposed in the March 22, 2016 budget by
(a) eliminating the eligible capital property rules and introducing a new class of depreciable property;
(b) introducing rules to prevent the avoidance of the shareholder loan rules using back-to-back arrangements;
(c) excluding derivatives from the application of the inventory valuation rules;
(d) ensuring that the return on a linked note retains the same character whether it is earned at maturity or reflected in a secondary market sale;
(e) clarifying the tax treatment of emissions allowances and eliminating the double taxation of certain free emissions allowances;
(f) introducing rules so that any accrued foreign exchange gains on a foreign currency debt will be realized when the debt becomes a parked obligation;
(g) ensuring that amounts are not inappropriately received tax-free by a policyholder as a result of a disposition of an interest in a life insurance policy;
(h) preventing the misuse of an exception in the anti-avoidance rules in the Income Tax Act for cross-border surplus-stripping transactions;
(i) indexing to inflation the maximum benefit amounts and the phase-out thresholds under the Canada child benefit, beginning in the 2020–21 benefit year;
(j) amending the anti-avoidance rules in the Income Tax Act that prevent the multiplication of access to the small business deduction and the avoidance of the business limit and the taxable capital limit;
(k) ensuring that an exchange of shares of a mutual fund corporation or investment corporation that results in the investor switching between funds will be considered for tax purposes to be a disposition at fair market value;
(l) implementing the country-by-country reporting standards recommended by the Organisation for Economic Co-operation and Development;
(m) clarifying the application of anti-avoidance rules in the Income Tax Act for back-to-back loans to multiple intermediary structures and character substitution; and
(n) introducing rules to prevent the avoidance of withholding tax on rents, royalties and similar payments using back-to-back arrangements.
Part 1 implements other income tax measures confirmed in the March 22, 2016 budget by
(a) allowing greater flexibility for recognizing charitable donations made by an individual’s former graduated rate estate;
(b) clarifying what types of investment funds are excluded from the loss restriction event rules that otherwise limit a trust’s use of certain tax attributes;
(c) ensuring that income arising in certain trusts on the death of the trust’s primary beneficiary is taxed in the trust and not in the hands of that beneficiary, subject to a joint election for certain testamentary trusts to report the income in that beneficiary’s final tax return;
(d) clarifying that the Canada Revenue Agency and the courts may increase or adjust an amount included in an assessment that is under objection or appeal at any time, provided the total amount of the assessment does not increase; and
(e) implementing the common reporting standard recommended by the Organisation for Economic Co-operation and Development for the automatic exchange of financial account information between tax authorities.
Part 1 also amends the Employment Insurance Act and various regulations to replace the term “child tax benefit” with “Canada child benefit”.
Part 2 implements certain goods and services tax and harmonized sales tax (GST/HST) measures proposed or confirmed in the March 22, 2016 budget by
(a) adding certain exported call centre services to the list of GST/HST zero-rated exports;
(b) strengthening the test for determining whether two corporations, or a partnership and a corporation, can be considered closely related;
(c) ensuring that the application of the GST/HST is unaffected by income tax amendments that convert eligible capital property into a new class of depreciable property; and
(d) clarifying that the Canada Revenue Agency and the courts may increase or adjust an amount included in an assessment that is under objection or appeal at any time, provided the total amount of the assessment does not increase.
Part 3 implements an excise measure confirmed in the March 22, 2016 budget by clarifying that the Canada Revenue Agency and the courts may increase or adjust an amount included in an assessment that is under objection or appeal at any time, provided the total amount of the assessment does not increase.
Division 1 of Part 4 amends the Employment Insurance Act to specify what does not constitute suitable employment for the purposes of certain provisions of the Act.
Division 2 of Part 4 amends the Old Age Security Act to provide that, in the case of low-income couples who have to live apart for reasons not attributable to either of them, the amount of the allowance is to be based on the income of the allowance recipient only.
Division 3 of Part 4 amends the Canada Education Savings Act to replace the term “child tax benefit” with “Canada child benefit”. It also amends that Act to change the manner in which the eligibility for the Canada Learning Bond is established, including by eliminating the national child benefit supplement as an eligibility criterion and by adding an eligibility formula based on income and number of children.
Division 4 of Part 4 amends the Canada Disability Savings Act to replace the term “child tax benefit” with “Canada child benefit”. It also amends the definition “phase-out income”.
Division 5 of Part 4 amends the Royal Canadian Mint Act to enable the Royal Canadian Mint to anticipate profit with respect to the provision of goods or services, to clarify the powers of the Royal Canadian Mint, to confirm the current and legal tender status of all non-circulation $350 coins dated between 1999 and 2006 and to remove the requirement that the directors of the Royal Canadian Mint have experience in respect of metal fabrication or production, industrial relations or a related field.
Division 6 of Part 4 amends the Financial Administration Act, the Bank of Canada Act and the Canada Mortgage and Housing Corporation Act to clarify certain powers of the Minister of Finance in relation to the sound and efficient management of federal funds and the operation of Crown corporations. It amends the Financial Administration Act to provide that the Minister of Finance may lend, by way of auction, excess funds out of the Consolidated Revenue Fund and, with the authorization of the Governor in Council, may enter into contracts and agreements of a financial nature for the purpose of managing risks related to the financial position of the Government of Canada. It also amends the Bank of Canada Act to provide that the Minister of Finance may delegate to the Bank of Canada the management of the lending of money to agent corporations. Finally, it amends the Canada Mortgage and Housing Corporation Act to provide that the Bank of Canada may act as a custodian of the financial assets of the Canada Mortgage and Housing Corporation.

Consumer Protection

[Louis Plamondon, Bloc, Bécancour—Nicolet—Saurel, QC]

Mr. Speaker, Bill C-29 limits consumer rights in Quebec and restricts Quebec's societal choices.

No need to rehash the debate when Quebec is unanimous: the National Assembly is against this bill, consumer protection groups are against it, the Chambre des notaires du Québec is against it, the Barreau du Québec is against it, and law professors are against it.

That says it all. Only the banks and the Liberals are in favour of the bill.

Why are the 40 Liberal members from Quebec serving the interests of the banks and not the interests of Quebeckers?

[François-Philippe Champagne, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I would like to begin by applauding my colleague's work on the Standing Committee on Finance.

He is well aware that the measures in Bill C-29 are a step forward and will help consumers across the country. He is well aware of that. In its Marcotte decision, the Supreme Court asked us to clarify that, and we took this opportunity to update the rules and create more rules to protect Canadian consumers.

My colleague is well aware that his constituents, like mine, will be protected under this new regime, and we will continue to work with the Senate on this issue.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, before the Minister of Finance decided to give the banks a sweet Christmas present, everything was fine. The Supreme Court ruled that Quebec's Consumer Protection Act applied to bank customers.

The Liberals' Bill C-29 created a problem where there was not one before. By creating a conflict with Quebec law, the minister is trying to usurp power that he does not have. He cannot fix things and placate people by handing over a blank cheque and buying time. A law either passes or it does not.

Why is the minister playing constitutional politics at the expense of Quebec consumers?

[Denis Lebel, Conservative, Lac-Saint-Jean, QC]

Mr. Speaker, if a member of the Quebec National Assembly were present in the House today, he would agree with us on C-29, because it encroaches on provincial jurisdictions.

The government is meddling again in areas of provincial jurisdiction. The bill will change consumers' rights and protections.

Will the Prime Minister stop interfering in areas of provincial jurisdiction, withdraw the contentious elements of Bill C-29, and respect consumers?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Mr. Speaker, the government has finally admitted that it is embarrassing to let the banks get around Quebec law to rip off consumers. Finally! By splitting Bill C-29, the government is admitting that the part that amends the Bank Act is problematic.

Why will they not simply withdraw it?

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Mr. Speaker, I do recall that 65% of Canadians have not seen any changes to their taxes under the Liberal government. Those that benefit the most from the government's measures are people who earn between $140,000 and $200,000 a year, so I do not want to be lectured about the middle class.

I have a good memory. In 2014, the Supreme Court said that the Consumer Protection Act was under provincial jurisdiction, not federal. Unfortunately, we are headed for disaster with Bill C-29 because it has a direct impact on consumer rights. That does not make any sense. The only thing the government is going to accomplish with this bill is to give thousands of dollars to lawyers, knowing that it will lose the case.

Why is the government prepared to lose millions and even hundreds of millions of dollars on a lost cause?

Intergovernmental Relations

[Mario Beaulieu, Bloc, La Pointe-de-l'Île, QC]

Mr. Speaker, the Prime Minister is gathering his provincial counterparts today to talk about the environment, even though he just imposed a pipeline on British Columbia and he is thinking about doing the same to Quebec.

He should also be talking about health care, since Quebec does not accept either his cuts or his conditions. He should also be talking about softwood lumber, since Quebec refuses to be included in another provincialist agreement that only benefits western Canada.

He should be talking about Bombardier, which is still being treated with contempt by this government, when the Ontario automotive industry is going to collect hundreds of millions of dollars more. He should be talking about Bill C-29, which makes it possible for Toronto banks to circumvent Quebec's consumer protection laws and cheat consumers.

Simply put, today's theme is federalism at Quebec's expense, federalism that benefits Canada while preventing Quebeckers from making social choices that reflect who they are. That will be the theme of these meetings for Quebec, until those meetings are called “international relations”.

Consumer Protection

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Nevertheless, Mr. Speaker, the Liberals knowingly voted against our amendments to Bill C-29, which would have solved this problem. They had the letter. The Liberals chose to protect the banks by attacking all of Quebec.

How many $1,500 tickets did it take for the Liberals to sell Quebec's consumer protection to the banks?

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Mr. Speaker, the minister is forgetting something. In 2014, the Supreme Court was clear: the Consumer Protection Act falls under provincial jurisdiction. However, the Liberal government is moving forward anyway.

At the National Assembly of Quebec, the Premier of Quebec said he was seriously considering challenging Bill C-29. The Liberal government is moving forward anyway. We are heading toward a constitutional battle. Lawyers will fare quite well, but the government is moving forward anyway.

Will the minister do what needs to be done and get rid of the flawed clauses in Bill C-29?

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Mr. Speaker, Bill C-29 is a bad bill that implements bad measures from a bad Liberal budget. That is a fact.

However, it gets even worse. This bill contains a constitutional virus, since it attacks the Quebec Consumer Protection Act, which falls under provincial jurisdiction. The Supreme Court said so in 2014, and yet the government is bulldozing ahead anyway. We are heading for a big constitutional fight. Canada needs this like it needs a hole in the head.

Why is the Liberal government interfering yet again in provincial jurisdictions?

[Thomas Mulcair, NDP, Outremont, QC]

It is not his democracy, it is our democracy, Mr. Speaker.

Bill C-29 does two things: it attacks Quebec's jurisdiction and eliminates consumer protections for Canada's bank customers. Stephen Harper tried to do the same thing when he was in office, but the courts stopped him.

Why is the Prime Minister trying to protect banks rather than the most vulnerable? Will he remove these odious provisions that attack Quebec consumers?

[Thomas Mulcair, NDP, Outremont, QC]

Mr. Speaker, it sounds like he is running for House leader.

With Bill C-29, the Prime Minister is trying to take away the protections that the Quebec law offers families who are already among the most indebted in the G20. The Prime Minister is attacking the Quebec Consumer Protection Act.

Why? Is he trying to help the banks?

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Mr. Speaker, when the 40 Liberal MPs from Quebec voted in favour of Bill C-29, they took off their masks.

Quebec consumers could not rely on them for protection. The National Assembly of Quebec could not rely on them to defend the Consumer Protection Act. Quebec could not rely on them when the minister of high finance decided to attack the way we protect our people.

Canadian banks are very pleased with the 40 Liberal lackeys from Quebec for being so co-operative and compliant, but nobody else is. Such dishonourable behaviour is unacceptable from members who have the privilege of representing Quebec ridings in Ottawa.

Those 40 Liberal members took off their masks. Ottawa is the only place that matters. If I were them, I would put a bag over my head. They could have stood up for Quebec, but they chose not to. We know what we have to do now.

[Bill Morneau, Liberal, Minister of Finance]

Mr. Speaker, we have made things better for consumers across the country. It is important to protect Canadian consumers, and that is exactly what we aim to do with Bill C-29.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Mr. Speaker, Bill C-29 is a major step backward when it comes to protecting consumers in Quebec.

Yesterday, the Parliamentary Secretary to the Minister of Finance played the “little guy from Shawinigan” card. That is exactly what we are telling him. The people of Shawinigan are just like other Quebeckers. They want their elected representatives to defend them, not banks. I am also talking to all of his Quebec colleagues. The National Assembly unanimously asked them to stand up for their fellow citizens.

Will they do that for once, or are they just here to take advantage of the ministerial limousine service?