FINA Committee Meeting

Meeting No. 62

MINUTES OF PROCEEDINGS

Thursday, February 19, 1998

The Standing Committee on Finance met at 9:08 o’clock a. m. this day in Room 237-C, Centre Block, the Chair, Maurizio Bevilacqua, presiding.

Members of the Committee present: Maurizio Bevilacqua, Scott Brison, Yvan Loubier, Gary Pillitteri, Karen Redman, Nelson Riis, Gerry Ritz, Paul Szabo, Paddy Torsney and Tony Valeri.

Acting Members present: Odina Desrochers for Gilles Perron and Ian Murray for Marc Assad.

In attendance: From the Research Branch, Library of Parliament: Richard Domingue and Marion Wrobel, Research Officers.

Witnesses: From the Department of Finance: Leonard L. Farber, Director General, Tax Legislation Division; Dan MacIntosh, Legislation Coordinator, Tax Legislation Division and Peter Gusen, Director, Federal-Provincial Relations Division.

The Committee resumed consideration of Bill C-28, An Act to amend the Income Tax Act, the Income Tax Application Rules, the Bankruptcy and Insolvency Act, the Canada Pension Plan, the Children’s Special Allowances Act, the Companies’ Creditors Arrangement Act, the Cultural Property Export and Import Act, the Customs Act, the Customs Tariff, the Employment Insurance Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the Income Tax Conventions Interpretation Act, the Old Age Security Act, the Tax Court of Canada Act, the Tax Rebate Discounting Act, the Unemployment Insurance Act, the Western Grain Transition Payments Act and certain Acts related to the Income Tax Act. (See Minutes of Proceedings of Tuesday, February 10, 1998, Meeting No. 59).

The Committee proceeded to clause by clause consideration of the Bill.

By unanimous consent, it was agreed,–That where no amendments are proposed to a series of clauses, the Chair be authorized to group the clauses for debate and voting.

Pursuant to Standing Order 75(1) consideration of Clause 1 was postponed.

Clauses 2 to 7 carried on division.

On Clause 8

By unanimous consent, the following amendment was adopted,–That Clause 8 be amended by replacing lines 41 to 46 on page 5 and lines 1 to 11 on page 6 with the following:

"where the taxpayer is not deemed by subsection 118.1(13) to have made a gift of property before the end of the particular year as a consequence of a disposition of the security by the donee or as a consequence of the security ceasing to be a non-qualifying security of the taxpayer before the end of the particular year."

Clause 8, as amended, carried on division.

Clauses 9 to 16 carried on division.

On Clause 17

By unanimous consent, the following amendments were adopted,–That Clause 17 be amended by

(a) replacing line 16 on page 9 with the following:

"a gift after December 8, 1997 that is not a gift described in subsection 110.1(1) of a"

(b) replacing line 29 on page 9 with the following:

"a gift after December 8, 1997 that is not a gift described in subsection 110.1(1) of a"; and,

–That Bill C-28, in Clause 17, be amended by replacing lines 11 and 12 on page 11 with the following:

"dispositions made after December 8, 1997, other than a disposition made under a written agreement made before December 9, 1997."

Clause 17, as amended, carried on division.

Clauses 18 to 22 carried on division.

On Clause 23

By unanimous consent, the following amendment was adopted,–That Clause 23 be amended by replacing line 21 on page 26 with the following:

"23(1) The portion of the description of B in subsection 118.2(1) of the Act before paragraph (a) is replaced by the following:

B is the total of the individual’s medical expenses that are proven by filing receipts therefor with the Minister, that were not included in determining an amount under this subsection or subsection 122.51(2) for a preceding taxation year and that were paid by either the individual or the individual’s legal representative,

(1.1) The portion of paragraph"

Clause 23, as amended, carried on division.

Clauses 24 to 31 carried on division.

On Clause 32

By unanimous consent, the following amendment was adopted,–That in Clause 32 be amended by replacing lines 15 to 19 on page 35 with the following:

"(b) 25/17 of the total of all amounts each of which is the amount determined by the formula in subsection 118.2(1) for the purpose of computing the individual’s tax payable under this Part for a taxation year that ends in the calendar year; and"

Clause 32, as amended, carried on division.

Clauses 33 to 117 carried on division.

On Clause 118

By unanimous consent, the following amendments were adopted,–That in Clause 118 be amended by replacing in the English version line 10 on page 185 with the following:

"a subsidiary wholly-owned corporation of the par-" and,

That Bill C-28, in Clause 118, be amended by replacing line 17 on page 188 with the following:

"(18) Paragraph 88(l)(c.7) of the Act, as"

Clause 118, as amended, carried, on division.

Clauses 119 to 151 carried on division.

On Clause 152

By unanimous consent, the following amendment was adopted,–That Clause 152 be amended by replacing line 42 on page 259 with the following:

"118.5, 118.6, 118.8 or 118.9,"

Clause 152, as amended, carried on division.

Clauses 153 to 166 carried on division.

On Clause 167

By unanimous consent, the following amendment was adopted,–That Clause 167 be amended by

(a) Replacing lines 39 to 42 on page 277 and lines 1 and 2 on page 278 with the following:

"the Minister in writing before July 1998 or within 90 days after the day on which a notice of assessment of tax payable under this Part for the year, notification that no tax is payable under this Part for the year or notification that an election made by the taxpayer under this subsection is deemed by subsection (9) or (10) not to have been made is mailed to the taxpayer,"

(b) replacing, in the English version, line 30 on page 278 with the following:

"in respect of the property;"

and

(c) replacing line 13 on page 279 with the following:

"respect of the property; and

(c) notwithstanding subsections 152(4) to (5), such assessment of the taxpayer’s tax payable under this Act for the taxpayer’s last taxation year that ended before February 23, 1994 shall be made as is necessary to take the election into account."

Clause 167, as amended, carried on division.

Clauses 168 to 177 carried on division.

On Clause 178

By unanimous consent, the following amendment was adopted,–That Clause 178 be amended by

(a) replacing in the English version line 29 on page 315 with the following:

"this paragraph or any of paragraphs (d)"

(b) adding after line 40 on page 315 the following:

(d.6) subject to subsections (1.2) and (1.3), a particular corporation all the shares (except directors’ qualifying shares) or of the capital of which was owned by a corporation, commission or association to which paragraph (d.5) or this paragraph applies for the period if the income for the period of the particular corporation from activities carried on outside

(i) if paragraph (d.5) applies to the other corporation, commission or association, the geographical boundaries of the municipalities referred to in that paragraph in its application to that other corporation, commission or association, or

(ii) if this paragraph applies to the other corporation, commission or association, the geographical boundaries of the municipalities referred to in subparagraph (I) in its application to that other corporation, commission or association, does not exceed 10% of its income for the period;"

(c) replacing line 22 on page 316 with the following:

"(1.1) Paragraphs (1)(d) to (d.6) do not apply"

(d) replacing lines 32 to 38 on page 316 with the following:

"(1.2) For the purposes of paragraphs (1)(d.5) and (d.6), income of a corporation, commission or association from activities carried on outside the geographical boundaries of a municipality does not include income from"

(e) replacing line 4 on page 317 with the following:

"(1)(d) to (d.6) applies and that is controlled"

(f) replacing line 33 on page 318 with the following:

"after 1998."

Clause 178, as amended, carried on division.

On Clause 179

By unanimous consent, the following amendment was adopted,–That Clause 179 be amended by replacing line 17 on page 319 with the following:

(3) Subparagraphs 149.1(2)(b)(i) and (ii) of the Act are replaced by the following:

(i) the amount that would be the value of A for the year, and

(ii) the amount that would be the value of A. 1 for the year,

(4) Subparagraph 149.1(21)(c)(i) and (ii) of the Act are replaced by the following:

(i) the amount that would be the value of A for the year, and

(ii) the amount that would be the value of A.1 for the year,

"(5) Subsections (1) to (4) apply to"

Clause 179, as amended, carried on division.

Clause 180 carried on division.

On Clause 181

By unanimous consent, the following amendment was adopted,–That Clause 181 be amended by replacing, in the French version, line 20 on page 325 with the following:

"une personne non résidente avec laquelle il avait un"

Clause 181, as amended, carried on division.

Clauses 182 to 223 carried on division.

On Clause 224

By unanimous consent, the following amendment was adopted,–That Clause 224 be amended by replacing line 24 on page 378 with the following:

"(2) Subsections 223(5) to (11) of the Act are replaced by the following:

(5) A document issued by the Federal Court evidencing a certificate in respect of a debtor registered under subsection (3), a writ of that Court issued pursuant to the certificate or any notification of the document or writ (such document, writ or notification in this section referred to as a "memorial") may be filed, registered or otherwise recorded for the purpose of creating a charge, lien or priority on, or a binding interest in, property in a province, or any interest in such property, held by the debtor in the same manner as a document evidencing

(a) a judgement of the superior court of the province against a person for a debt owing by the person, or

(b) an amount payable or required to be remitted by a person in the province in respect of a debt owing to Her Majesty in right of the province

may be filed, registered or otherwise recorded in accordance with or pursuant to the law of the province to create a charge, lien or priority on, or a binding interest in, the property or interest.

(6) If a memorial has been filed, registered or otherwise recorded under subsection (5),

(a) a charge, lien or priority is created on, or a binding interest is created in, property in the province, or any interest in such property, held by the debtor, or

(b) such property or interest in the property is otherwise bound,

in the same manner and to the same extent as if the memorial were a document evidencing a judgement referred to in paragraph (5)(a) or an amount referred to in paragraph (5)(b), and the charge, lien, priority or binding interest created shall be subordinate to any charge, lien, priority or binding interest in respect of which all steps necessary to make it effective against other creditors were taken before the time the memorial was filed, registered or otherwise recorded.

(7) If a memorial is filed, registered or otherwise recorded in a province under subsection (5), proceedings may be taken in the province in respect of the memorial, including proceedings

(a) to enforce payment of the amount evidenced by the memorial, interest on the amount and all costs and charges paid or incurred in respect of

(i) the filing, registration or other recording of the memorial, and

(ii) proceedings taken to collect the amount,

(b) to renew or otherwise prolong the effectiveness of the filing, registration or other recording of the memorial,

(c) to cancel or withdraw the memorial wholly or in respect of any of the property or interests affected by the memorial, or

(d) to postpone the effectiveness of the filing, registration or other recording of the memorial in favour of any right, charge, lien or priority that has been or is intended to be filed, registered or otherwise recorded in respect of any property or interest affected by the memorial,

in the same manner and to the same extent as if the memorial were a document evidencing a judgement referred to in paragraph (5)(a) or an amount referred to in paragraph (5)(b), except that if in any such proceeding or as a condition precedent to any such proceeding any order, consent or ruling is required under the law of the province to be made or given by the superior court of the province or a judge or official of the court, a like order, consent or ruling may be made or given by the Federal Court or a judge or official of the Federal Court and, when so made or given, has the same effect for the purposes of the proceeding as if it were made or given by the superior court of the province or a judge or official of the court.

(8) If

(a) a memorial is presented for filing, registration or other recording under subsection (5) or a document relating to the memorial is presented for filing, registration or other recording for the purpose of any proceeding described in subsection (7) to any official in the land, personal property or other registry system of a province, it shall be accepted for filing, registration or other recording, or

(b) access is sought to any person, place or thing in a province to make the filing, registration or other recording, the access shall be granted

in the same manner and to the same extent as if the memorial or document relating to the memorial were a document evidencing a judgement referred to in paragraph (5)(a) or an amount referred to in paragraph (5)(b) for the purpose of a like proceeding, as the case may be, except that, if the memorial or document is issued by the Federal Court or signed or certified by a judge or official of the Court, any affidavit, declaration or other evidence required under the law of the province to be provided with or to accompany the memorial or document in the proceedings is deemed to have been provided with or to have accompanied the memorial or document as so required.

(9) Notwithstanding any law of Canada or of a province, a sheriff or other person shall not, without the written consent of the Minister, sell or otherwise dispose of any property, or publish any notice or otherwise advertise in respect of any sale or other disposition of any property pursuant to any process issued or charge, lien, priority or binding interest created in any proceeding to collect an amount certified in a certificate made under subsection (2), interest on the amount and costs, but if that consent is subsequently given, any property that would have been affected by such a process, charge, lien, priority or binding interest if the Minister’s consent had been given at the time the process was issued or the charge, lien, priority or binding interest was created, as the case may be, shall be bound, seized, attached, charged or otherwise affected as it would be if that consent had been given at the time the process was issued or the charge, lien, priority or binding interest was created, as the case may be.

(10) If information required to be set out by any sheriff or other person in a minute, notice or document required to be completed for any purpose cannot, by reason of subsection (9), be so set out, the sheriff or other person shall complete the minute, notice or document to the extent possible without that information and, when the consent of the Minister is given under that subsection, a further minute, notice or document setting out all the information shall be completed for the same purpose, and the sheriff or other person having complied with this subsection is deemed to have complied with the Act, regulation or rule requiring the information to be set out in the minute, notice or document.

(11) A sheriff or other person who is unable, by reason of subsection (9) or (10), to comply with any law or rule of court is bound by any order made by a judge of the Federal Court, on an ex parte application by the Minister, for the purpose of giving effect to the proceeding, charge, lien, priority or binding interest.

(11.1) When a charge, lien, priority or binding interest created under subsection (6) by filing, registering or otherwise recording a memorial under subsection (5) is registered in accordance with subsection 87(1) of the Bankruptcy and Insolvency Act, it is deemed

(a) to be a claim that is secured by a security and that, subject to subsection 87(2) of that Act, ranks as a security claim under that Act; and

(b) to also be a claim referred to in paragraph 86(2)(a) of that Act.

"(3) Subsection (1) is deemed to have come"

Clause 224, as amended, carried on division.

Clauses 225 to 238 carried on division.

On Clause 239

By unanimous consent, the following amendments were adopted,–That Clause 239 be amended by

(a) replacing line 5 on page 412 with the following:

"subsection (1), and subsection (4) apply to"

and

(b) replacing line 9 on page 412 with the following:

"and subsection (4) shall not result in a";

and,

That Clause 239 be amended by replacing lines 22 and 23 on page 413 with the following:

"(17) Subsection (7) applies after 1997."

Clause 239, as amended, carried on division.

Clauses 240 to 308 carried on division.

Clause 1 carried on division.

The Title carried.

The Bill, as amended, carried on division.

Ordered,–That Bill C-28, An Act to amend the Income Tax Act, the Income Tax Application Rules, the Bankruptcy and Insolvency Act, the Canada Pension Plan, the Children’s Special Allowances Act, the Companies’ Creditors Arrangement Act, the Cultural Property Export and Import Act, the Customs Act, the Customs Tariff, the Employment Insurance Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the Income Tax Conventions Interpretation Act, the Old Age Security Act, the Tax Court of Canada Act, the Tax Rebate Discounting Act, the Unemployment Insurance Act, the Western Grain Transition Payments Act and certain Acts related to the Income Tax Act, as amended, be reprinted as a working copy for the use of the House of Commons at the report stage.

Ordered,–That the Chair report Bill C-28, as amended, to the House.

At 9:14 o’clock a. m., the Committee adjourned to the call of the Chair.

Carol Chafe