FINA Committee Meeting

The Standing Committee on Finance met at 3:50 p.m. this day, in Room 701, La Promenade Building, the Chair, Brian Pallister, presiding.

The Committee commenced its clause-by-clause study of the Bill.

The witnesses answered questions.

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

The Chair calls Clause 2.

Clause 2 carried on division.

By unanimous consent, Clauses 3 to 11 inclusive carried on division.

On Clause 12,

(a) by replacing lines 21 to 40 on page 13 with the following:

“(b) if the trust is a trust described in subsection 197(1), 10% of all distributions made by the trust from its non-portfolio earnings for a taxation year to its unit holders in respect of a taxation year of the trust that ends after 2007.”

(b) by deleting lines 1 to 21 on page 14;

(c) by replacing line 22 on page 14 with the following:

“(3) Subsection (1) is deemed to”

Debate arose thereon.

By unanimous consent, it was agreed, that the vote on the amendment would also apply to the following three amendments:

That Bill C-52 , in Clause 24, be amended by replacing lines 12 to 24 on page 30 with the following:

“(2) Every SIFT partnership or SIFT trust for which the issuer of a security in respect of that partnership or trust had applied to have the security listed as of October 31, 2006 on a public exchange in Canada or that is a successor partnership or trust of a partnership or trust that was listed on a public exchange on October 31, 2006 and that complies with prescribed growth and merger guidelines that are substantially in accordance with the guidelines issued by the Department of Finance on December 15, 2006, is liable to a tax under this Part equal to 10% of

(a) in the case of a trust, all distributions made by the trust to its unit holders in respect of a taxation year of the trust that ends after 2007; and

(b) in the case of a partnership,

(i) the amount, if any, by which

(A) the total of all amounts of a partnership’s income for the taxation year from a business carried on by it in Canada or from a non-portfolio property, other than income that is a taxable dividend received by the partnership,

exceeds

(B) the total of all amounts each of which is the partnership’s loss for the taxation year from a business carried on by it in Canada or from a non-portfilio property, and

(ii) the amount, if any, by which all taxable capital gains of the partnership from dispositions of non-portfolio properties during the taxation year exceeds the total of the allowable capital losses of the partnership for the taxation year from dispositions of non-portfolio properties during the taxation year.

(2.1) Every individual who is resident in Canada and liable to pay tax under Part I may claim a refund or credit against tax otherwise payable under that Part of an amount designated by the issuer of the security in prescribed form.

(2.2) Every beneficiary of an RRSP who is the owner of a security described in this section, and who has received distributions in the taxation years that the securities were held, may claim a refund or tax credit, in an amount equal to the aggregate of the amounts paid by the trust or partnership in respect of distributions received by the RRSP, in the taxation year or any subsequent taxation year

(a) after the RRSP has been converted to a RRIF and an annuity commences to be paid in respect of the plan; or

(b) after the RRSP has been terminated and the accumulated proceeds withdrawn by the beneficiary.”

That Bill C-52 , in Clause 24, be amended by replacing lines 1 to 18 on page 32 with the following:

“(8) Any SIFT partnership or SIFT trust that fails to comply with the provisions of this Part is liable, in addition to the 10% distribution tax under this Part, to a penalty tax equal to that distribution tax.”

That Bill C-52 , in Clause 31, be amended by replacing line 33 on page 37 with the following:

“individual is a SIFT trust that is liable to a 10% distribution tax, a reference to income”

Debate arose thereon.

The Chair ruled the following amendment inadmissible because it infringed on the financial initiative of the Crown, as provided on page 655 of House of Commons Procedure and Practice:

That Bill C-52 , in Clause 24, be amended by replacing lines 12 to 24 on page 30 with the following:

“(2) Every SIFT partnership or SIFT trust for which the issuer of a security in respect of that partnership or trust had applied to have the security listed as of October 31, 2006 on a public exchange in Canada or that is a successor partnership or trust of a partnership or trust that was listed on a public exchange on October 31, 2006 and that complies with prescribed growth and merger guidelines that are substantially in accordance with the guidelines issued by the Department of Finance on December 15, 2006, is liable to a tax under this Part equal to 10% of

(a) in the case of a trust, all distributions made by the trust to its unit holders in respect of a taxation year of the trust that ends after 2007; and

(b) in the case of a partnership,

(i) the amount, if any, by which

(A) the total of all amounts of a partnership’s income for the taxation year from a business carried on by it in Canada or from a non-portfolio property, other than income that is a taxable dividend received by the partnership,

exceeds

(B) the total of all amounts each of which is the partnership’s loss for the taxation year from a business carried on by it in Canada or from a non-portfilio property, and

(ii) the amount, if any, by which all taxable capital gains of the partnership from dispositions of non-portfolio properties during the taxation year exceeds the total of the allowable capital losses of the partnership for the taxation year from dispositions of non-portfolio properties during the taxation year.

(2.1) Every individual who is resident in Canada and liable to pay tax under Part I may claim a refund or credit against tax otherwise payable under that Part of an amount designated by the issuer of the security in prescribed form.

(2.2) Every beneficiary of an RRSP who is the owner of a security described in this section, and who has received distributions in the taxation years that the securities were held, may claim a refund or tax credit, in an amount equal to the aggregate of the amounts paid by the trust or partnership in respect of distributions received by the RRSP, in the taxation year or any subsequent taxation year

(a) after the RRSP has been converted to a RRIF and an annuity commences to be paid in respect of the plan; or

(b) after the RRSP has been terminated and the accumulated proceeds withdrawn by the beneficiary.”

Whereupon, John McCallum appealed the decision of the Chair.

The question: "Shall the decision of the Chair be sustained?" was put and the decision was sustained, by a show of hands: YEAS: 5; NAYS: 4.

After debate, the question was put on the amendment of John McCallum and it was negatived, by a show of hands: YEAS: 4; NAYS: 7.

Accordingly the following two amendments were also negatived:

That Bill C-52, in Clause 24, be amended by replacing lines 1 to 18 on page 32 with the following:

“(8) Any SIFT partnership or SIFT trust that fails to comply with the provisions of this Part is liable, in addition to the 10% distribution tax under this Part, to a penalty tax equal to that distribution tax.”

That Bill C-52, in Clause 31, be amended by replacing line 33 on page 37 with the following:

“individual is a SIFT trust that is liable to a 10% distribution tax, a reference to income”

Clause 12, as amended, carried on the following recorded division: YEAS: Diane Ablonczy, Paul Crête, Dean Del Mastro, Rick Dykstra, Thierry St-Cyr, Mike Wallace, Judy Wasylycia-Leis — 7; NAYS: John McCallum, John McKay, Massimo Pacetti, Robert Thibault — 4.

On Clause 13,

Debate arose thereon.

The question was put on the amendment of John McCallum and it was negatived, by a show of hands: YEAS: 4; NAYS: 7.

“from maintaining, improving, leasing or managing real or immovable properties that are capital properties of the trust or of an entity of which the trust holds a share or an interest, including real or immovable properties that the trust, or an entity of which the trust holds a share or an interest, holds together with one or more”

Debate arose thereon.

The question was put on the amendment of Diane Ablonczy and it was agreed to, by a show of hands: YEAS: 7; NAYS: 4.

“(a) 2017, and”

Debate arose thereon.

The question was put on the amendment of John McCallum and it was negatived on the following recorded division: YEAS: John McCallum, John McKay, Massimo Pacetti, Robert Thibault — 4; NAYS: Diane Ablonczy, Paul Crête, Dean Del Mastro, Rick Dykstra, Thierry St-Cyr, Mike Wallace, Judy Wasylycia-Leis — 7.

“determined by reference to prescribed growth and merger guidelines that are substantially in accordance with the normal growth guidelines issued by the Department of Finance on December 15, 2006, unless that excess arose as”

Debate arose thereon.

The question was put on the amendment of John McCallum and it was negatived, by a show of hands: YEAS: 4; NAYS: 7.

Clause 13, as amended, carried on division.

By unanimous consent, Clauses 14 to 18 inclusive carried on division.

On Clause 19,

(a) replacing lines 43 and 44 on page 25 with the following:

“(other than for the purposes of subsection 146.3(5.1) of the Act, regulations made under subsection 153(1) of the Act and the definition “periodic pension payment” in section 5 of the Income Tax Conventions Interpretation Act),”

(b) replacing lines 12 and 13 on page 26 with the following:

“(other than for the purposes of subsection 146.3(5.1) of the Act, regulations made under subsection 153(1) of the Act and the definition “periodic pension payment” in section 5 of the Income Tax Conventions Interpretation Act),”

(c) adding after line 27 on page 26 the following:

“(6) For the purpose of applying clause 60(l)(v)(B.2) of the Act for the 2007 and 2008 taxation years, an eligible amount of a taxpayer for a taxation year in respect of a registered retirement income fund (within the meaning assigned by subsection 146.3(6.11) of the Act) is deemed to include

(a) if the taxation year is 2007, the taxpayer was the annuitant under the fund on January 1, 2007 and the taxpayer attained 69 or 70 years of age in 2006, the lesser of

(i) the total amounts included because of subsection 146.3(5) of the Act in computing the income of the taxpayer for the taxation year in respect of amounts received out of or under the fund (other than an amount paid by direct transfer from the fund to another fund or a registered retirement savings plan), and

(ii) the amount that would, but for paragraph (4)(a), be the minimum amount under the fund for 2007; and

(b) if the taxation year is 2008, the taxpayer was the annuitant under the fund on January 1, 2008 and the taxpayer attained 70 years of age in 2007, the lesser of

(i) the total amounts included because of subsection 146.3(5) of the Act in computing the income of the taxpayer for the taxation year in respect of amounts received out of or under the fund (other than an amount paid by direct transfer from the fund to another fund or a registered retirement savings plan), and

(ii) the amount that would, but for paragraph (4)(b), be the minimum amount under the fund for 2008.”

After debate, the question was put on the amendment of Diane Ablonczy and it was agreed to on division.

Clause 19, as amended, carried on division.

By unanimous consent, Clauses 20 to 23 inclusive carried on division.

After debate, Clause 24 carried on division.

By unanimous consent, Clauses 25 to 43 inclusive carried on division.

On Clause 44,

“consumer before October 2007.”

After debate, the question was put on the amendment of Diane Ablonczy and it was agreed to on division.

Clause 44, as amended, carried on the following recorded division: YEAS: Diane Ablonczy, Paul Crête, Dean Del Mastro, Rick Dykstra, John McCallum, John McKay, Thierry St-Cyr, Mike Wallace — 8; NAYS: Massimo Pacetti, Robert Thibault, Judy Wasylycia-Leis — 3.

By unanimous consent, Clauses 45 to 48 inclusive carried on division.

On new Clause 48.1,

“48.1 Within 60 days after the expiration of one year after the amendments made by section 48 come into force, the Secretary of State responsible for tourism shall, after consulting with representatives of the tourism industry throughout Canada, publish a report on the effect of these amendments on the tourism industry in that year. In particular, the report shall contain an analysis of the impact, if any, that these amendments have had on Canada’s ability to compete with other nations in respect of inbound tourism. The Secretary of State shall submit the report to the Speaker of the House of Commons for tabling in that House on any of the first 10 days on which that House is sitting after the publication of the report.”

Debate arose thereon.

The question was put on the amendment of Judy Wasylycia-Leis and it was negatived, by a show of hands: YEAS: 1; NAYS: 10.

By unanimous consent, Clauses 49 to 60 inclusive carried on division.

Clause 61 carried on division.

On Clause 62,

“An Act to dedicate to municipal infrastructure funding”

By unanimous consent, it was agreed, that the vote on the amendment would also apply to the following amendment:

That Bill C-52, in Clause 62, be amended by replacing lines 13 and 14 on page 64 with the following:

“reductions of federal debt to municipal infrastructure funding.”

Debate arose thereon.

The Chair ruled the proposed amendments inadmissible because they were beyond the scope of the Bill, as provided on page 654 of House of Commons Procedure and Practice.

Clause 62 carried on division.

By unanimous consent, Clauses 63 to 126 inclusive carried on division.

On Clause 127

“Clean Air and Climate Change Trust Fund”

Debate arose thereon.

The question was put on the amendment of Diane Ablonczy and it was agreed to, by a show of hands: YEAS: 6; NAYS: 3.

Clause 127, as amended, carried on division.

By unanimous consent, Clauses 128 to 156 inclusive carried on division.

The Short Title carried on division.

The Title carried.

The Bill, as amended, carried on the following recorded division: YEAS: Diane Ablonczy, Paul Crête, Dean Del Mastro, Rick Dykstra, Thierry St-Cyr, Mike Wallace — 6; NAYS: John McCallum, John McKay, Massimo Pacetti, Robert Thibault, Judy Wasylycia-Leis — 5.

ORDERED, — That the Chair report the Bill, as amended, to the House.

ORDERED, — That Bill C-52, as amended, be reprinted for the use of the House at report stage.

At 5:01 p.m., the Committee adjourned to the call of the Chair.