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Results: 1 - 60 of 150000
View Wayne Easter Profile
Lib. (PE)
View Wayne Easter Profile
2021-07-20 14:00
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We'll call the meeting to order. Welcome to meeting number 60 of the House of Commons Standing Committee on Finance. Pursuant to Standing Order 108(2), the committee is meeting to study the coming into force of Bill C-208, an act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation).
We went through the rules for this room this morning, on the pandemic and social distancing and so on, so we don't need to go through those again.
We'll start with the witnesses.
I see, Ms. Aitken, you've been working steadily. We've had you on screen here and you've been getting a lot of work done while you've been waiting for us to come on.
We welcome Ms. Aitken, executive director and senior general counsel, finance legal services, law branch. Then we have Mr. Jovanovic, associate assistant deputy minister, tax policy branch; and Trevor McGowan, director general, tax legislation division, tax policy branch.
Trevor is no stranger to this committee. I think he has spent pretty near as many hours as some of us have. Am I right, Ed?
I don't believe there's an opening statement. If there is, raise your hand or yell. Otherwise we'll start with questions, six-minute rounds, with Mr. Fast, Ms. Dzerowicz, Mr. Ste-Marie and Ms. Mathyssen.
Mr. Fast, you're first on deck. Welcome. Go ahead.
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View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2021-07-20 14:02
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Well, thank you, Mr. Chair. My questions will be for Mr. McGowan.
Trevor, you've been at parliamentary committees many times before, as the chair has suggested, so you know the drill. When private members' legislation comes before a committee, we generally have a robust discussion about the legislation. The government, through its MPs, has the ability to bring forward amendments that would fix loopholes or deficiencies in those bills.
Mr. McGowan, you were present at committee as a witness, as Bill C-208 was being discussed. Is that correct?
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Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-07-20 14:03
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That is correct.
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View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2021-07-20 14:03
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All right. Your recent press release, the finance department's press release dated July 19, highlights four specific loopholes that it feels should be fixed in Bill C-208. My question to you is, when you appeared before committee as a witness to discuss this bill, did you or any of your officials recommend amendments that would have addressed the shortcomings Bill C-208 had, and specific wording for those amendments?
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Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-07-20 14:03
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As was stated, my colleague Shawn Porter and I appeared before the House finance committee and the Senate committee on agriculture to discuss Bill C-208 and provide comments on the technical aspects of the bill. During that time, we provided technical commentary and analysis in respect of the bill, but our involvement was limited to that. We weren't suggesting amendments, but certainly we did raise some of the concerns that are alluded to or mentioned in the July 19 press release.
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View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2021-07-20 14:04
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What was the purpose of your appearing before committee if there was no process by which Finance could inform the committee and provide it with the assistance and the wording for amendments that could have fixed the so-called loopholes that you've identified after the fact?
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Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-07-20 14:04
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As I understood it, the purpose of my appearance before the House finance committee was to provide information and analysis on the technical aspects of the bill so that members of the committee had the appropriate information to make decisions.
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View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2021-07-20 14:05
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Okay, so after royal assent, somebody in government, maybe in Finance or maybe in the Prime Minister's Office, made the decision to announce that Bill C-208 would not be applied. In other words, it wouldn't be implemented right away. Is that correct?
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Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-07-20 14:05
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Just to be technical in the terminology, when Bill C-208 received royal assent, it became effective. It became part of law. It amended the Income Tax Act. On June 29, the date of royal assent, Bill C-208 amended the Income Tax Act. As of that date, the provisions it had amended were part of Canadian law. That's the date on which it came into law. That's just a fact and not something that could be changed.
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View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2021-07-20 14:06
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Well, let me say this: I'm so glad that you're now acknowledging that Bill C-208 became the law on June 29. It's something that was not reflected in your June 30 press release.
I want to know who it was in your department, or who it was in government, who made the decision not to respect Bill C-208 and issue the press release that led to the confusion, and quite frankly the bewilderment, of the small business community in Canada.
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Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-07-20 14:06
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I suppose there are two things to discuss there. The first relates to the decision-making process in terms of the press release. In that, the department follows the regular approval process that we use for all of our public communications projects, in alignment with the requirements of the federal communications policy.
In terms of the substantive portion of the question, as I said, on June 29 Bill C-208 produced its effect and amended the Income Tax Act. The government's announcement on June 30 was that the government proposes to introduce legislation providing that the amendments would apply only as of January 1, 2022. It's perhaps a technical point that the June 30 amendment would amend the Income Tax Act, which had been amended by Bill C-30 ahead of time, but the government was announcing its intention to table legislation to provide a January 1, 2022, application date.
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View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2021-07-20 14:08
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Trevor, really, that is a re-characterization of what has happened. The June 30 press release made it very clear that the government was going to withhold implementation of Bill C-208 until it had a chance to amend it. In that, it was moving in a way that effectively defied the will of Parliament. My question, which you didn't answer, is who in Finance or who in government actually made the decision that was then reflected in the press release that was issued on June 30?
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Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-07-20 14:08
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Well, as I said, getting back to the—
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View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2021-07-20 14:08
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Answer the question.
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Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-07-20 14:08
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—approval process for the press release, it followed the normal federal communications policy, which involved a number of groups or branches within the Department of Finance working on the press release, so—
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View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2021-07-20 14:09
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I'm not asking about process. I'm asking who made the final decision—
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View Wayne Easter Profile
Lib. (PE)
View Wayne Easter Profile
2021-07-20 14:09
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Mr. Fast, give Mr. McGowan the opportunity and the courtesy of time to answer the question—
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View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2021-07-20 14:09
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With respect, Mr. Chair, you know what he's doing. He's not answering the question. I asked who, and he will not provide me with that answer.
All we want to know is this: Who's the decision-maker who made the decision to issue the press release that reflected the government's decision not to respect the will of Parliament?
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View Wayne Easter Profile
Lib. (PE)
View Wayne Easter Profile
2021-07-20 14:09
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You've been in government, and in these matters it isn't usually a single individual.
Mr. McGowan, answer as specifically as you can, please.
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Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-07-20 14:09
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Thank you.
I just want it to be clear that in terms of the press release, we're being clear on specifically what it did. In terms of who made the decision, the press release stated that the “government” proposes to introduce legislation. That is a reference to the elected Government of Canada and its intention to table a bill. That is a proposal of the Government of Canada and not—
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View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2021-07-20 14:10
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That's right. Let me stop you right there.
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View Wayne Easter Profile
Lib. (PE)
View Wayne Easter Profile
2021-07-20 14:10
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You're out of time, but I will give you and others time as well. That will be the last question.
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View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2021-07-20 14:10
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Thank you, Mr. Chair.
Who in the elected government made the decision to issue this release, or to instruct your department to issue this release, which has led to all of this confusion?
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View Wayne Easter Profile
Lib. (PE)
View Wayne Easter Profile
2021-07-20 14:10
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Mr. McGowan, I believe you answered that question, but go ahead. We'll give you another snap at it.
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View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2021-07-20 14:10
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No, he hasn't answered the question.
Who in the elected government made that decision?
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View Wayne Easter Profile
Lib. (PE)
View Wayne Easter Profile
2021-07-20 14:10
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That's the last question, Mr. Fast.
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View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2021-07-20 14:11
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You guys are awful.
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View Wayne Easter Profile
Lib. (PE)
View Wayne Easter Profile
2021-07-20 14:11
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I have a point of order from Mr. Gerretsen. I'm sorry, Mr. McGowan.
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View Mark Gerretsen Profile
Lib. (ON)
With all due respect, Mr. Chair, Mr. Fast just said, off the cuff, “You guys are awful.” Can he explain who he is referring to? Is it the departmental officials who are before us? If so, he owes an apology for that comment.
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View Wayne Easter Profile
Lib. (PE)
View Wayne Easter Profile
2021-07-20 14:11
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I'm going to leave it at that. You've made your point.
Mr. McGowan, do you want to say a couple of last words in this round? Then we'll move on to Ms. Dzerowicz.
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Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-07-20 14:11
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As I said, it was an announcement of the government's proposal. As we start with the approval process, of course the Department of Finance officials provide advice to the minister, and then we implement the government's decisions. I was simply trying to highlight the fact that this was a government proposal to table a bill in Parliament that would affect the application date of the amendments included in Bill C-208.
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View Wayne Easter Profile
Lib. (PE)
View Wayne Easter Profile
2021-07-20 14:12
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Thank you.
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View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2021-07-20 14:12
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On a point of order, Mr. Chair, my comment that “you guys are awful” was not addressed to our civil servants, and it certainly wasn't addressed to Mr. McGowan. It was addressed to my Liberal friends across the table from us, who were heckling and guffawing about our asking very significant questions of Mr. McGowan related to Bill C-208.
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View Wayne Easter Profile
Lib. (PE)
View Wayne Easter Profile
2021-07-20 14:12
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We'll leave it at that on the across the table. We're more than two sword lengths apart here, so we're okay at the moment. We will go to Ms Dzerowicz.
Because we don't have the witnesses here at the table, Mr. McGowan, if some of your other colleagues want to come in and assist on an answer or give an answer, they'll have to yell, I guess. It's the only way I can bring them in, or you can direct us that way.
Ms. Dzerowicz, go ahead for six minutes, if you could, or a little better.
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View Julie Dzerowicz Profile
Lib. (ON)
View Julie Dzerowicz Profile
2021-07-20 14:13
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Thank you so much, Mr. Chair.
I want to thank the three officials from our Department of Finance for being here today. I really appreciate their being here to answer our questions.
I want to start off by clarifying a couple of things, because I think it's important to have this on the record. Could you please explain the difference between coming into force and application, or coming into effect?
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Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-07-20 14:13
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It is a somewhat arcane thing that doesn't come up much, but it is critically important in the preparation of tax amendments.
As I said initially, for example, the amendments in Bill C-208 came into force on the date they received royal assent; that is to say that the bill amended the Income Tax Act on that date.
That doesn't necessarily mean their application to any particular transaction is going to be clear. In particular, when we're putting together income tax amendments, we typically set out specific application dates. For example, one reading of a coming-into-force date in the middle of a taxation year is that it applies to transactions that occur on or after the date of royal assent. Another reading of the measure is that because a taxpayer's liability for tax crystalizes at the end of the taxation year when it is computed, it's the law at the end of the taxation year that is relevant for the purposes of computing tax.
A coming-into-force date that simply appears in the act on, let's say, June 29, is ambiguous in that it's not clear if it applies to transactions that occur on or after that particular date or for the 2021 taxation year. That's the reason we typically, in drafting income tax amendments, set out specifically when an amendment applies. It could apply, for example, in respect to transactions that occur on or after a particular date. It could apply as of a particular taxation year. There are a number of different formulations. We do that to address that and provide clarity—
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View Julie Dzerowicz Profile
Lib. (ON)
View Julie Dzerowicz Profile
2021-07-20 14:15
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Thank you. I'm sorry, but it's past two minutes now, and I have to get to a few more questions. I appreciate your response.
I'll get to it very quickly. What was the intention behind the June 30 news release? Was it to change the coming-into-force date, the date on which Bill C-208 came into law?
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Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-07-20 14:16
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I apologize. I'll try to be more brief.
As I said, the coming into force of Bill C-208 was a factual matter. It amended the Income Tax Act on June 29. That's just when it produced its effect.
The proposed amendment would.... Of course, it would have to be included in a bill, as stated. The government would have to propose it to introduce legislation, and that bill would need to receive royal assent. If passed, it would have the effect of providing that the amendments that had been made as a result of Bill C-208 would apply as of January 1, 2022.
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View Julie Dzerowicz Profile
Lib. (ON)
View Julie Dzerowicz Profile
2021-07-20 14:16
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It would go into effect, but the amendments would be applied after January 1, 2022, according to the news release.
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Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-07-20 14:17
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Yes. It's quite common that when income tax amendments are made, they apply as of a future date. A bill like Bill C-30, the recent budget bill, might have a number of amendments that, even though it also received royal assent on June 29, might not start to apply until a later taxation year or a later date in the future, in order to give the taxpayers and the tax administration time to respond.
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View Julie Dzerowicz Profile
Lib. (ON)
View Julie Dzerowicz Profile
2021-07-20 14:17
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If I own a family farm right now and I decide I'm going to sell it to my daughter, and that transaction happens over the next month, what actually happens? Does Bill C-208 apply, or is whatever is passed or introduced as of November 1 retroactive to sales after June 29?
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Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-07-20 14:18
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The July 19 announcement provided that Bill C-208 amendments currently apply and that any new amendments put forward by the government, which as we discussed would need to be included in a bill and passed through Parliament, would not apply before November 1, 2021.
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View Julie Dzerowicz Profile
Lib. (ON)
View Julie Dzerowicz Profile
2021-07-20 14:18
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If I sold a farm to my daughter right now, would Bill C-208 apply, including whatever amendments we actually make for the income tax provisions that we introduce after November 1?
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Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-07-20 14:18
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The relevant provisions of the Income Tax Act as amended by Bill C-208 would apply to a transaction undertaken today. That's based on yesterday's press release. The government announced that any new amendments would not apply before November 2021. For any transaction undertaken between now and the end of October, the government announced that whatever new conditions it might include in the bill, which, again, would need to be passed by Parliament, would not apply.
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View Julie Dzerowicz Profile
Lib. (ON)
View Julie Dzerowicz Profile
2021-07-20 14:19
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I'm actually clear on that, thank you.
I have another question. As you know, Mr. McGowan, the bill that finally passed.... It's actually after the third time of being introduced into the House of Commons that it has passed. It's been discussed for probably around 10 years within the finance department. We know that the U.S. and Quebec already have a model that works. Why is it taking so long to address the loopholes we've identified?
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Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-07-20 14:20
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It's a complex issue with a number of competing factors. As I said in my earlier committee appearance, a lot of people have an intuitive sense of what it means to transfer a business to the next generation, but it is a difficult thing to legislate with precision so that all of the genuine intergenerational transfers are accommodated under the rules but more contrived or artificial transactions are not. It is a complex thing.
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View Julie Dzerowicz Profile
Lib. (ON)
View Julie Dzerowicz Profile
2021-07-20 14:20
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Thank you.
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View Wayne Easter Profile
Lib. (PE)
View Wayne Easter Profile
2021-07-20 14:20
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Did you want to add more there, Trevor?
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Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-07-20 14:20
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No, thank you.
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View Wayne Easter Profile
Lib. (PE)
View Wayne Easter Profile
2021-07-20 14:20
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All right. We'll go to Mr. Ste-Marie, followed by Ms. Mathyssen.
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View Gabriel Ste-Marie Profile
BQ (QC)
View Gabriel Ste-Marie Profile
2021-07-20 14:21
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Thank you, Mr. Chair.
I'd like to welcome the witnesses and thank them for being with us today.
Before I get to my questions, I want to recognize the important work that senior officials and all employees at the Department of Finance have done during the pandemic. This committee met often, and we regularly heard from department officials. They have done incredible work to save the economy. I want to commend them and thank them again for all their hard work.
My questions are for Mr. McGowan.
After yesterday's news release and Ms. Bendayan's earlier comments, everything was clear in my mind, but the answers, details and clarifications you gave Ms. Dzerowicz confused me. Therefore, I'm going to ask you the same question.
Since Bill C‑208 received royal assent in June, the provisions in Bill C‑208 have applied in the case of parents who sell their farm or family business to their son or daughter. Is that correct?
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Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-07-20 14:22
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Right now that is absolutely correct. What I was saying with respect to the government's July 19 announcement was that while the government has announced its intention to provide additional conditions that may need to be met at the end of a consultation process, those new conditions would not apply before November 2021. Right now the rules in the Income Tax Act that were amended by Bill C-208 are the law and can be relied upon.
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View Gabriel Ste-Marie Profile
BQ (QC)
View Gabriel Ste-Marie Profile
2021-07-20 14:23
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Thank you.
Julie Bissonnette of the Fédération de la relève agricole du Québec wanted us to ask you that question. Both my fellow member Ms. Dzerowicz and I have asked it now. You gave a clear answer, which I appreciate.
Nevertheless, something you said in response to my fellow member's question worried me, and you said it again when you answered my question. You said that it has been that way since yesterday's news release. This morning, however, the law clerk for the House of Commons and former members of the House told the committee that it has actually been that way since the bill received royal assent, regardless of what the news release said. Yesterday's news release reiterated that fact. However, since Bill C‑208 received royal assent, it has been possible to sell a business for the purposes of an intergenerational transfer of a family farm with the usual rights and benefits. Is that correct?
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Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-07-20 14:24
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If I understand the question correctly, right now the rules as enacted by Bill C-208 apply and can be relied upon. It is the law of the land.
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View Gabriel Ste-Marie Profile
BQ (QC)
View Gabriel Ste-Marie Profile
2021-07-20 14:24
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Very good. Thank you.
Now I'm going to move on to another topic; it has to do with the amendments. As you said, in yesterday's news release, the government announced its intentions to make changes to the amendments set out in Bill C‑208. It is our understanding that a new bill will be introduced to amend the changes contained in Bill C‑208, without altering the bill's intent.
Something about this whole process surprises me. As we heard this morning, the first reading of the bill took place on February 19, 2020. That means the period between when the bill was given first reading and when it received royal assent was 527 days. As Mr. Dufresne, the law clerk, pointed out this morning, at almost every stage of the legislative process, the government could have brought forward the amendments it is now saying it will introduce in a future bill.
I gather from the answers you gave Mr. Fast that, when Bill C‑208 was at committee stage, the government had not asked the Department of Finance to draft amendments to the bill that would close the potential tax loopholes. Is that correct?
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Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-07-20 14:26
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As part of our committee appearance this spring to discuss Bill C-208, the departmental officials were present to help explain the technical aspects of the bill, and I would need to defer to the honourable chair of the committee in terms of the rules. I'm not even aware of whether departmental officials could table amendments to a bill at a committee hearing, or whether that would have to be done by another—
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View Gabriel Ste-Marie Profile
BQ (QC)
View Gabriel Ste-Marie Profile
2021-07-20 14:26
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Pardon me, Mr. McGowan. I don't think I made myself clear. I meant that it was up to members of the government, not public servants or senior officials, to bring forward amendments that would have addressed the concerns you raised with the government regarding this bill.
My question is this. Did the government ask you to draft amendments to rectify the potential problems resulting from Bill C‑208, amendments that could have been proposed when the bill was being studied by the committee? Did the government ask you to draft such amendments?
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Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-07-20 14:27
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In connection with my last statement, I want to answer the questions as fully as possible, but that starts to get pretty close to describing our advice and internal instructions from the government. I would defer to my colleague Jenifer as to whether that's something that can be appropriately answered.
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View Wayne Easter Profile
Lib. (PE)
View Wayne Easter Profile
2021-07-20 14:28
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Ms. Aitken, would you like to come in? I think it's pretty clear that the officials would advise government on what amendments should be made, and those would have to come forward at that stage as either government amendments or those by a member of the committee. I think that's the procedure.
Ms. Aitken, do you want to come in?
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Jenifer Aitken
View Jenifer Aitken Profile
Jenifer Aitken
2021-07-20 14:28
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Mr. Chair, I think you've expressed it very well in terms of what we are or are not at liberty to say. I agree with Mr. McGowan that we want to say everything we possibly can to be helpful—that's what we're here for—but we're not at liberty to talk specifically about questions of advice. I think, Mr. Chair, you explained the process.
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