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MINUTES OF PROCEEDINGS
 
Meeting No. 33
 
Tuesday, June 2, 2009
 

The Standing Committee on Finance met at 11:06 a.m. this day, in Room 237-C, Centre Block, the Chair, James Rajotte, presiding.

 

Members of the Committee present: Robert Carrier, Daryl Kramp, Jean-Yves Laforest, Hon. John McCallum, Hon. John McKay, Ted Menzies, Thomas J. Mulcair, Massimo Pacetti, James Rajotte and Mike Wallace.

 

Acting Members present: Peter Braid for Bob Dechert and Bruce Stanton for Hon. Maxime Bernier.

 

Other Members present: Glenn Thibeault.

 

In attendance: Library of Parliament: Philippe Bergevin, Analyst; Mark Mahabir, Analyst.

 
The Committee proceeded to the consideration of matters related to Committee business.
 

Thomas J. Mulcair moved, — That the federal government urgently address the undue financial hardship of employees who have acquired stock from their employer through either a stock option plan (ESO) or a stock purchase plan (ESPP), have been assessed a tax benefit based on unrealized gain at the time of acquisition where that tax liability greatly exceeds any eventual realized gain, their means to pay and, in some cases, their personal net worth, by:

• studying the financial impact on Canadian taxpayers of the 2001 technology collapse in specific regard to employees assessed taxable benefits on unrealized gains at the time of acquisition when these assessed benefits far exceed the eventual actual gains;

• reporting to the Minister and Parliament the number of taxpayers placed in undue hardship through the treatment of the unrealized gain at time of acquisition as an employment benefit while the losses on the eventual disposition as a capital loss, not offsetting the employment benefit;

• changing to the provisions of the Income Tax Act to address the situation by:

- allowing, on an elective basis, the use of current or future capital loss balances to reduce the calculated taxable benefit, as determined in Section 7 and without regard for Section 110, in the year of inclusion of the benefit, such application to be limited to the lesser of the taxable benefit or the capital loss attributable to the sale of the stock from which the taxable benefit has arisen, and any reduction in tax calculated therein is refundable; and

- making provision to annul any penalty or interest assessed on the amount of excess tax payable before the application of the above provision in the year of inclusion of the benefit, or in any subsequent years, and where such interest and penalty have been remitted to make such amounts refundable”.

 

Massimo Pacetti moved, — That the motion be amended by replacing the words “Changing to the provisions of the Income Tax Act to address the situation by:” with the words “That the Committee request that the Department of Finance immediately study the effectiveness of the following amendments to the Income Tax Act and report those findings to the Committee by August 31, 2009”.

 

The question was put on the amendment of Massimo Pacetti and it was agreed to, by a show of hands: YEAS: 7; NAYS: 0.

 

After debate, the question was put on the motion and it was agreed to, by a show of hands: YEAS: 7; NAYS: 0.

 

The motion, as amended, read as follows:

That the federal government urgently address the undue financial hardship of employees who have acquired stock from their employer through either a stock option plan (ESO) or a stock purchase plan (ESPP), have been assessed a tax benefit based on unrealized gain at the time of acquisition where that tax liability greatly exceeds any eventual realized gain, their means to pay and, in some cases, their personal net worth, by:

• studying the financial impact on Canadian taxpayers of the 2001 technology collapse in specific regard to employees assessed taxable benefits on unrealized gains at the time of acquisition when these assessed benefits far exceed the eventual actual gains

• reporting to the Minister and Parliament the number of taxpayers placed in undue hardship through the treatment of the unrealized gain at time of acquisition as an employment benefit while the losses on the eventual disposition as a capital loss, not offsetting the employment benefit; and

That the Committee request that the Department of Finance immediately study the effectiveness of the following amendments to the Income Tax Act and report those findings to the Committee by August 31, 2009.

- allowing, on an elective basis, the use of current or future capital loss balances to reduce the calculated taxable benefit, as determined in Section 7 and without regard for Section 110, in the year of inclusion of the benefit. This application is limited to the lesser of the taxable benefit or the capital loss attributable to the sale of the stock from which the taxable benefit has arisen. Any reduction in tax calculated therein is refundable; and

- making provision to annul any penalty or interest assessed on the amount of excess tax payable before the application of the above provision in the year of inclusion of the benefit, or in any subsequent years, and where such interest and penalty have been remitted to make such amounts refundable”.

 

Thomas J. Mulcair moved, — That the committee hold a meeting with representatives from terminated employees of Nortel Networks and retired employees of Nortel Networks regarding the company’s practices toward severance packages and pension payments.

 

After debate, by unanimous consent, the motion was withdrawn.

 

At 11:45 a.m., the sitting was suspended.

At 11:47 a.m., the sitting resumed in camera.

 

It was agreed, — That the proposed budget in the amount of $ 43 500, for the study on pre-budget consultations 2009 be adopted and that the Chair present the said budget to the Budget Subcommittee of the Liaison Committee.

 

It was agreed, — That the proposed budget in the amount of $ 65 277, for the Committee’s travel to St. John's, Newfoundland; Summerside, Prince Edward Island; and Québec, Québec for the study on the pre-budget consultations 2009, be adopted and that the Chair present the said budget to the Budget Subcommittee of the Liaison Committee.

 

It was agreed, — That the proposed budget in the amount of $ 73 761, for the Committee’s travel to YellowKnife, Northwest Territories; Vancouver, British Columbia; and Edmonton, Alberta for the study on the pre-budget consultations 2009, be adopted and that the Chair present the said budget to the Budget Subcommittee of the Liaison Committee.

 

It was agreed, — That the proposed budget in the amount of $ 60 464, for the Committee’s travel to Regina, Saskatchewan; Winnipeg, Mnitoba; and Toronto Ontario for the study on pre-budget consultations 2009, be adopted and that the Chair present the said budget to the Budget Subcommittee of the Liaison Committee.

 

It was agreed, — That the Committee defray the hospitality expenses related to working meals to be held during its travel to Washington D.C. from June 3 to 5, 2009.

 

At 12:00 p.m., the Committee adjourned to the call of the Chair.

 



Jean-François Pagé
Clerk of the Committee

 
 
2009/06/03 2:19 p.m.