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Results: 1 - 15 of 438
View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2021-05-17 11:17
Ms. O'Brien, can you clarify the definition of “large businesses”? Those are ones that have authorized credit of more than $1 million, more than 500 employees, and annual revenues of more than $50 million. Is that correct?
Erin O'Brien
View Erin O'Brien Profile
Erin O'Brien
2021-05-17 11:17
That's correct. That's the definition that currently exists in the Bank Act.
James Cohen
View James Cohen Profile
James Cohen
2021-05-06 15:58
Mr. Chairman and members of the committee, thank you for inviting me back to speak to you today. My name is James Cohen, and I am the executive director of Transparency International Canada. TI Canada is a registered charity and is the Canadian chapter of Transparency International, the world's leading anti-corruption movement.
The release of the Panama papers in 2016 was an explosive look into how the world's secrecy jurisdictions and an army of enablers hide illicit funds from crimes like tax evasion, corruption and fraud. One revelation that came out of the trove of leaked documents is that Canada was being happily marketed as a secrecy jurisdiction by Mossack Fonseca, the firm at the heart of the Panama Papers.
The Toronto Star and CBC journalists found that Mossack Fonseca was marketing Canada to clients as a desirable place to store dirty cash, based on our generally positive reputation but also, importantly, on our weak disclosure laws and enforcement. The correspondences the media published showing this advice were from 2012. TI Canada is currently re-examining this phenomenon of overseas incorporation agencies marketing Canada's opacity, and we are finding that nothing has changed. The term that came out of the Panama papers for money laundering and tax dodging in Canada, “snow washing”, is alive and well.
However, as of April 19, Canada is in a better position. TI Canada and our civil society partners enthusiastically applaud the government's proposal to establish a publicly accessible registry of beneficial ownership in the 2021 budget. Canada has been slammed by international organizations, civil society and peers for years, and now we have taken a large step out of that shadow.
Of course, the federal government cannot establish corporate beneficial ownership transparency on its own and expect the problem to be resolved. The provinces and territories must come on board with this initiative. Thankfully there is already momentum, as we see Quebec on the cusp of making corporate beneficial ownership information public via Bill 78, and the British Columbia Land Ownership Transparency Registry went online last week. We hope this will be followed by a public corporate beneficial ownership registry too.
The world is shrinking as a place for tax dodgers, kleptocrats and fraudsters to hide. In 2016 the United Kingdom was the first country to have a public beneficial ownership registry. The U.K.'s overseas territories and Crown dependencies, which include some of the best-known secrecy jurisdictions, such as the Isle of Man, have also agreed to establish publicly accessible registries of beneficial ownership. In a joint statement, the crown dependencies cited their need to co-operate by 2023 with European Union anti-money laundering directive 5, which requires all EU members to establish a public beneficial ownership registry.
From this trend we see that after years of being regarded as a laggard, Canada has the chance to move up to the head of the class on beneficial ownership transparency. While I would never say that any tool is a silver bullet for solving tax evasion and money laundering, a publicly accessible registry will be a powerful tool. It needs to be set up correctly, though. We can learn a lot from our peers in the U.K. and the EU and make sure that our registry has verified data and harsh consequences for those trying to falsify information. Canada's registrar should also have a staff that can conduct proactive investigations and a tip line for people to provide information on suspected tax evaders so proper investigations can be conducted.
This will be a big year for international forums to address beneficial ownership transparency, corruption, money laundering and tax evasion. There will be the G7 hosted by the U.K., the UN General Assembly special session on corruption, the open government partnership summit in South Korea and eventually the Summit of Democracies hosted by U.S. President Biden. This year the Financial Action Task Force, the global standard-setting body on anti-money laundering, will also review recommendations on beneficial ownership transparency, possibly making public registries a new standard. Canada now has a foot to stand on in these forums for calling for greater transparency from others to continue to close the space for tax evaders, kleptocrats and crooks to hide in.
Thank you, and I am happy to take any questions from the committee.
View Wayne Easter Profile
Lib. (PE)
Thank you very much, Mr. Cohen.
The public registry was one of the key recommendations from this committee in our study on money laundering, which was, I think, one of the best studies we've ever done, so we're glad to see that out there too.
I forgot to mention, Ms. Daviau, that yes, we would like you to please send that information in those reports that you mentioned to the clerk. It will be helpful to the committee.
View Sean Fraser Profile
Lib. (NS)
View Sean Fraser Profile
2021-05-06 16:12
Thank you very much, Mr. Chair.
Before I get to my questions, I want to begin by thanking Ms. Watson for being with us today. Her story is a powerful one. I believe she wanted to remind us that this is not a victimless crime.
Although there are certain individuals who are impacted very directly, I would argue that the classes of victims are almost limitless [Technical difficulty—Editor]. Anybody who doesn't have a family doctor, can't afford to pay for school or suffers from a lack of access to services is a victim of those who choose to evade paying taxes that they properly owe, and the quality of life that we all enjoy is diminished as a result.
My first question is for Mr. Cohen.
You spoke with some enthusiasm about the announcement to establish a registry for beneficial ownership. This is useful in this audience of people who study the budget, but I'm curious as to whether you can put into plain language, for Canadians who may be watching, the importance of having a publicly accessible registry so folks know who's behind some of these shell corporations or organizations that might be used to hide the beneficial owner who might be benefiting from those who evade taxes.
James Cohen
View James Cohen Profile
James Cohen
2021-05-06 16:13
As you say, it's a publicly accessible beneficial ownership registry to identify the true individuals. For anybody not familiar with beneficial ownership registry and shell companies, company ABC might be owned by company 123, which is owned by company Ontario 456, which was opened by...Bob. Who's Bob, at the end of the day, and why the level of secrecy?
Bob could be an entirely legitimate business person, but there is no precedent for anonymity behind all those layers. Bob could also be somebody who is evading taxes, denying Canadians revenue for various services that you discussed, such as health services or the environment. Bob could be a kleptocrat from overseas, stealing money from some of the most vulnerable people around the world and hiding it here in Canada. That individual could also be a criminal perpetuating the fentanyl crisis in Canada and facilitating gang activity. He could be a sanction-buster trying to move money around to allow weapons to go into countries like Syria. There's a whole host of people.
As Ms. Watson alluded to, this is not victimless. When we talk about these grand numbers that are being moved around through the shell companies, we should know that there's a precedent crime underneath them. Whether it's undermining Canadian society through sapping resources that should fund our public services, allowing criminals to continue to operate within Canada for crimes in Canada or overseas, or ruining our good name abroad while we give foreign aid money but have stolen money from those very same countries wind up back in mansions in Montreal, Toronto or Vancouver, this all has an impact, and it all should matter to everyday Canadians.
View Tamara Jansen Profile
CPC (BC)
Thank you.
Mr. Cohen, how could transparency assist in the fight against tax avoidance and money laundering in our country?
I understand there are legal loopholes that allow for some entities to accept large overseas transfers without reporting them to FINTRAC. There are lawyers who talk about lawyer-client privilege. Some say they are the worst offenders. Would the beneficial ownership registry tackle that problem in any way?
James Cohen
View James Cohen Profile
James Cohen
2021-05-06 16:55
Yes, a publicly accessible registry would do a lot to fight tax evasion and money laundering in a number of ways.
Currently, only financial institutions are required to do beneficial ownership due diligence by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. Thankfully, we are seeing the amendments come into force in June, when all designated non-financial businesses and professions will need to do the same due diligence. That will include accounting agencies, money service businesses and real estate agents. Legal professionals do have to do that due diligence. Due to the Supreme Court ruling, they do not need to file suspicious transaction reports.
It does put a lot of pressure on all the professions to conduct the due diligence and now have the data. They can't say, “Well, I've tried with a client; I don't know.”
Once we have the registry in place it's very important that this data be verified through various methods so that all the various bodies that need to report, and even people looking to invest, like Ms. Watson, have the ability to do their own due diligence as well.
In a lot of ways, this will deter those bad actors from coming in the first place. Hopefully those who still want to game the system will be caught.
View Peter Julian Profile
NDP (BC)
Thank you very much, Mr. Chair.
I beg to correct you. The beneficial ownership registry was supported by the other two parties. The NDP pushed for a publicly accessible beneficial ownership registry, and as we can see from the report on snow washing, it was declined by the other parties, so I'm very glad to see that the idea of a publicly accessible beneficial ownership registry has now come back.
I want to come back to Ms. Iacovelli.
There are two directors for Parrhesia. Nigel Glazier Scott and Paul Joseph Valentine Dougherty were directors of Parrhesia, which was incorporated by KPMG and, as I mentioned, was summarily dissolved 43 days ago. They are the same directors for the “sword” companies.
Could you tell us if there's a connection between these two individuals, Nigel Glazier Scott and Paul Joseph Valentine Dougherty, and KPMG?
Patrick Sullivan
View Patrick Sullivan Profile
Patrick Sullivan
2021-04-15 17:09
Thank you very much, Mr. Chair, and thank you very much to the committee.
Good evening. I apologize in advance; I have a cold. It's just a cold. I've been COVID tested a number of times. I apologize if I cough during my presentation.
I've decided to make my presentation rather short tonight, so I don't believe I will take anywhere close to five minutes. I just want to make a very firm point.
My name is Patrick Sullivan. I'm the president and CEO of the Halifax Chamber of Commerce, which is a best-practice business advocacy organization that continuously strives to make Halifax an even more attractive city in which to live, work and play. Together with approximately 1,700 member businesses that represent over 65,000 employees, the chamber acts as a single powerful voice to promote local business interests.
I want to thank the federal government for its prompt and meaningful support for our business communities throughout the pandemic. Programs like the Canadian emergency business account, the Canadian emergency wage subsidy—which we utilized to retain our full-time staff—and the Canadian emergency rent subsidy were all crucial to the survival of many businesses, both large and small.
It's apparent, though, that while vaccines are rolling out throughout the country, many of our hardest-hit sectors, like tourism and hospitality, will once again feel the impacts of COVID-19 throughout the balance of 2021.
Businesses need predictability. They need a view of what that business can look like or will look like in order to plan for the coming months. We ask that the Canadian emergency wage subsidy and the Canadian emergency rent subsidy be extended until December 2021 so that those highly affected sectors can remain viable and return to full capacity in 2022. With over $1 billion lost in revenues in Nova Scotia during the 2020 tourism and hospitality high seasons, we must keep these sectors and businesses afloat, not only for the employment of many Canadians but also for our continued economic growth and recovery from COVID-19.
Thank you very much. I'd be happy to answer any questions you may have.
Trevin Stratton
View Trevin Stratton Profile
Trevin Stratton
2021-04-13 17:29
Thank you, Mr. Chair and members of the committee. It's a pleasure to be here today.
The Government of Canada and, indeed, all members of Parliament must be recognized for the work that they have done in providing support to businesses and Canadians during this unprecedented and very uncertain time.
The emergency supports that have been provided have spared many Canadian businesses from economic disaster and will help many Canadians through another challenging year. These pandemic-related fiscal supports have also come at an enormous price, and their cost will continue to mount for the coming months and beyond. Focusing government spending on the programs and policies that will encourage growth, create jobs and help businesses recover will provide the greatest return on investment for all Canadians. Doing so will allow us to produce the revenue needed to offset the extraordinary amount of public spending we have incurred and will help Canada achieve an economic recovery that is fiscally sound.
All of us understand the need for emergency spending to support people and businesses through the crisis, but we must avoid creating structural deficits that will mortgage the future of the next generation of Canadians. Despite the recent third wave of the pandemic, our strong GDP growth this year gives Canadians a taste of the economic rebound to come once vaccines are widely available.
Robust government stimulus spending to jump-start growth in the short term will likely be unnecessary, since pent-up demand is ready to be released once the pandemic subsides. That doesn’t mean the government needs to turn off the taps or start cutting critical programs, but this is not a typical recession that is a result of problems with economic fundamentals; therefore, it will not require traditional stimulus injections to help spur growth.
Instead, our economic recovery plan, including next week’s federal budget, should focus on addressing Canada’s competitiveness, such as our issues with productivity, business investment, and interprovincial trade and regulatory barriers. Addressing these issues will be the key to transforming our high growth rates from this year’s initial rebound into longer-term prosperity, job creation and an inclusive economic recovery.
At the same time, we cannot lose sight of the fact that more than one year into the pandemic, businesses, especially small businesses and those in the hardest-hit sectors, continue to struggle. These sectors will require continued support to ensure they can help propel job creation going forward.
I am joined today by my colleague, Alla Drigola, director of parliamentary affairs and SME policy, who will speak to the types of targeted support that will help businesses that need it most.
Alla Drigola
View Alla Drigola Profile
Alla Drigola
2021-04-13 17:32
Thank you, Trevin.
Good afternoon.
If the Canadian Chamber can leave committee members with just one message today to help businesses that are still struggling, it’s this: COVID-19 business support programs must remain in place for as long as businesses, particularly those in the hardest-hit sectors, are not allowed to operate without restrictions.
The wage subsidy, the rent subsidy, the liquidity programs, BCAP and HASCAP, and the partially forgivable small business loan, CEBA, are all excellent programs that are necessary for the survival of business and that are working well for the most part.
The government’s initial focus was rightfully on creating business support programs that would be as widely accessible as possible; however, it is time to start taking a more focused approach to COVID-19 support programs and spending, and that requires a plan.
For all of the subsidy and spending that Canada has seen and will continue to see, the only path to real, sustainable growth is job creation and business investment. In the upcoming budget, which will be released just six days from now, the Canadian Chamber expects to see a clear plan from the government. This plan will need to be twofold.
On the one hand, we need to see continued support for the hardest-hit sectors. Sectors that depend on face-to-face interactions such as tourism, travel, hospitality and events are experiencing immense difficulties and are widely expected to be among the last to recover. They will need targeted policies to assist their longer recovery period.
CEWS and CERS need to continue to be available beyond their current June expiry date, with a few improvements, such as increasing the CERS multi-entity cap to ensure that struggling medium-sized businesses are treated fairly.
Relying on the growth of only a few sectors will not get us to recovery. We need a plan that lifts everyone up and that grows all businesses, large and small, from coast to coast to coast.
Thank you for the opportunity to meet with you this afternoon. We look forward to our discussion.
Charles Milliard
View Charles Milliard Profile
Charles Milliard
2021-03-17 14:38
I'll do my best.
Happy St. Patrick's Day to everyone.
My name is Charles Milliard.
I am the CEO of the Fédération des chambres de commerce du Québec. The FCCQ is an organization that includes both 130 chambers of commerce from across Quebec and 1,100 member companies. We are the largest group of business people in Quebec and we represent all sectors of activity in Quebec.
Thank you for inviting us to testify before you today on Bill C-14, which is a follow-up to the economic statement that was introduced on November 30.
The FCCQ welcomed many of the measures that were presented in this budget update. These include the increase in the wage subsidy rate and its extension to March 13, and June 5 thereafter, as well as significant investments in infrastructure, particularly at major airports. This is noteworthy. However, today we want to focus our comments on the Canada emergency rent subsidy and add some editorial comments on the tourism and pharmaceutical industries.
The Government of Canada has a number of excellent programs in place that are having a major impact on the ability of individuals and businesses to weather the current crisis. These include the Canada emergency commercial rent assistance, CECRA, a program that was put in place quickly and addressed a real and very concrete problem, the difficulty for commercial tenants to pay their rent due to health-related restrictions.
However, problems arose very quickly, and we heard a lot about this at the federation, because it was the building owners who had to apply directly. This proved to be ill-suited to the crisis environment, which complicated the relationship between many tenants and landlords and therefore limited the appeal of the program.
For example, according to a survey conducted by Restaurants Canada, 20% of restaurant owners, or one in five, were not allowed by their landlords to defer rent during the first wave of COVID-19, a criterion that was required to qualify for the CECRA. This made it imperative to change the program. Fortunately, the new Canada emergency rent subsidy, or CERS, addresses this challenge by now providing financial assistance directly to the tenant company, up to and including a 90% subsidy rate. This is major and it was very much appreciated.
On the other hand, it seems unacceptable to us, at this time, to penalize businesses that have not been able to benefit from the CECRA because of its particular mechanics, even though they would have been entitled to it since March 2020. The federation therefore recommends that commercial tenants be allowed to receive the CERS for all months in which they would have been eligible for it since the beginning of the crisis and for which they did not receive the CECRA.
As we all know, government programs are rarely retroactive, and that's fine. However, we are in a more than exceptional situation. Let's be clear: thousands of entrepreneurs were eligible for the CECRA, but they were not able to benefit from the program for reasons that were totally beyond their control. In this case, for us, making the program retroactive would correct an injustice that has been experienced by far too many medium-sized business owners in Quebec and the rest of Canada.
On another note, the FCCQ also looks favourably on the assistance that was announced in the economic statement for the events and arts sector. I know that my colleagues the other witnesses will talk about this at length, so I won't go into detail. However, it should be remembered that the major Quebec and Canadian hotels have seen their clientele of international travellers and conventioneers virtually disappear since last March.
For us, this tourist accommodation sector is important and is still too often left out of the current crisis. For now, unfortunately, the assistance promised by Ottawa is limited to loans, when it is clear to us that hoteliers and tourism businesses still need direct and most concrete assistance, as does the cultural sector, for that matter.
I'll close by quickly talking to you about the pharmaceutical industry, because Bill C-14 is preventing and alleviating shortages of therapeutic products, including drugs and medical equipment, in Canada. This is a great opportunity to remind ourselves of the importance of the health and life sciences sector in Canada. Prior to the pandemic, the FCCQ had recommended a massive investment in this sector, and I believe that the federal government has a role to play, among other things, in the local production of manufacturers and, above all, in the rapid review of the proposed reform of the Patented Medicine Prices Review Board, the PMPRB. The crisis has revealed the importance of having a strong pharmaceutical industry in Canada, and I think you have an opportunity as parliamentarians to improve the situation at this time.
In conclusion, the federation recommends the passage of Bill C-14, while reiterating the importance of making the Canada emergency rent subsidy retroactive for contractors who were unable to obtain emergency assistance.
Thank you. I would be happy to answer any questions you may have.
Marcel Groleau
View Marcel Groleau Profile
Marcel Groleau
2021-03-09 15:37
Thank you, Mr. Chair.
Good afternoon, members of the committee.
My name is Marcel Groleau, and I am the general president of the Union des producteurs agricoles, or UPA. With me is Marc St-Roch, a specialist in agricultural taxation. He has the expertise to answer more technical questions.
The agriculture and agri-food sector is responsible for one in eight jobs, generating more than $112 billion in annual revenues and exporting more than $60 billion worth of products every year. The backbone of many rural areas, the sector is also vital to the food security of Canadians.
Some 98% of the country's farms are family owned and operated. That business model is a source of pride for Canadians. Family farming promotes sustainable growth, environmental stewardship and reinvestment in local economies.
The legal structure of farm operations has changed in recent years. According to the 2016 Census of Agriculture, the percentage of incorporated farms more than doubled in 20 years, going from 12% to 25%. As the number of farms dropped by approximately 83,000, the number of incorporated farm operations continued to grow in Canada, increasing from 32,700 to 48,600.
As has been pointed out, farmers are getting older: the average age of farm operators is now 55, seven and a half years older than the average age in 1991.
With rising asset values and, by extension, debt, farm operators have turned to incorporation to help finance investments, since corporate tax rates allow operators to pay back borrowed capital more quickly.
According to a 2017 study by the Business Development Bank of Canada, nearly 40% of small businesses will be transferred or sold by the end of 2022 as owners near retirement. More than $50 billion in agricultural assets is expected to change hands in the next decade.
Unfortunately, Canada's tax system treats the transfer of family businesses unfairly. Under the current rules, it is usually much more expensive for a farm owner to sell their business to a family member than to an unrelated buyer. By penalizing retiring farmers and young farmers hoping to take over the business, the tax rules put the country's family farms in financial jeopardy.
Pursuant to section 84.1 of the Income Tax Act, if, in order to finance the sale of a business, a person sells the shares of their corporation to a related party, the capital gain triggered by the sale is deemed a taxable dividend. That means the seller cannot claim the capital gains deduction in relation to a qualified farm property. Conversely, if the owner sells the corporation to a corporation controlled by an unrelated third party, the capital gain realized can be tax-exempt. That is unfair. Consequently, on a $500,000 gain, the taxable portion can vary by $225,000 when it should be tax-free in both cases.
In order to facilitate financing in relation to the sale of a family corporation between related persons and to allow sellers to take advantage of the capital gains deduction, the Quebec government amended its Taxation Act to include an exception to the application of the provincial provision corresponding to section 84.1 of the federal legislation. The Canadian government should follow Quebec's lead.
Canada's Income Tax Act is out of step with the realities and demographic pressures facing family farms. The UPA believes that Bill C-208 would help level the playing field by eliminating the significant costs that put farm and small business owners at a disadvantage when they wish to sell the business to a family member.
In addition, disputes arise from time to time, and as a result, owners of multi-family farms prefer to operate their businesses separately. Section 55 of the Income Tax Act sets out a mechanism whereby the assets of an incorporated business can be shared among the shareholders tax-free as long as the assets are distributed in a proportional manner.
However, the proportional distribution of assets may not be possible. Assets like farmland cannot be separated. In order for the value of the assets to be distributed equally, a shareholder exiting the business may receive more money instead of a corporation asset. In that case, if the assets of the corporation are not distributed equally, they may become taxable in the form of a non-tax-exempt capital gain.
When the business is transferred between related parties, the requirement for proportional distribution does not apply and the cash payment may not be taxable. However, under section 55 of the Income Tax Act, siblings are deemed to be unrelated for the purposes of the section. As everyone knows, these types of businesses are usually divided among siblings, meaning that section 55 penalizes parties when assets cannot be split proportionally, because it triggers taxes. As a result, the viability of each owner's business is undermined.
The UPA is of the view that the amendment in Bill C-208 to exclude transactions between siblings from the application of section 55 would also be appropriate in cases where the cash and other assets transferred to a shareholder exiting the business are invested in another farm operation. That way, the assets would still be invested in farming despite being split among separate businesses.
In conclusion, farm operations could continue to grow. They often support more than one household and are increasingly being incorporated for tax reasons and estate planning. In this new landscape, good tax planning is crucial for family farmers if family farms are to remain viable for future generations.
Thank you.
View Pat Kelly Profile
CPC (AB)
There's one other point I also want to make or get into the record through witnesses.
There have been criticisms of the whole idea of a corporate entity. We know what's been said in the past and the accusations of tax cheating and that kind of thing. I'll leave this for whichever witness might be best able to answer this, but is it not correct that often the decision for a business to operate through a corporation is driven by pressures that are not really their choice? It could be their bank, for example. In any kind of commercial lending scenario, a bank will normally insist that the land or the building be held in a corporate entity, and often maybe even one separate from the operating entity, but they want both to be corporate structures.
This whole idea of small businesses, family businesses, forming corporations is often not the choice of the business owners themselves.
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