[Recorded by Electronic Apparatus]
Tuesday, June 11, 1996
.1530 
[English]
The Chairman: Order.
The finance committee is looking into Bill C-36, an act to amend the Income Tax Act, the Excise Act, the Excise Tax Act, the Office of the Superintendent of Financial Institutions Act, the Old Age Security Act, the Canada Shipping Act, the act controlling the appointment of the Auditor General of Canada, and all other matters referred to our committee.
Our parliamentary secretary will take us through the bill.
Mr. Barry Campbell (Parliamentary Secretary to the Minister of Finance): Thank you, Mr. Chairman.
What I wanted to bring to the attention of members are some amendments that the government is proposing to make at this stage in committee. I wonder if it's the wish of the committee for me to outline those amendments so that as we proceed to clause-by-clause consideration people will know what they are.
The Chairman: Please.
Mr. Campbell: There are six amendments in total. They have now been handed out to all of you, and I'll deal very quickly with each of them.
The Chairman: I understand that all but one are technical amendments.
Mr. Campbell: They are for the most part technical, but as they are beyond mere translation discrepancies or number changes, I might want to refer to them very quickly, Mr. Chairman, lest somebody later says that I described something that was different as being merely technical.
There are two motions to amend clause 17. Subclause 17(3) enacts changes to subsection 96(1.6) of the Income Tax Act, which deems former members of a partnership who hold a residual income interest in a partnership to be carrying on business for certain purposes, including the ten-year transitional period. By adding a reference to section 150 of the act, such partners will also be considered to be carrying on a business for the purpose of the extended June 15 filing date that applies to individuals reporting business income on their tax returns.
I might add, Mr. Chairman, as I neglected to do so, that I have asked officials from the department to be here. If members have particular questions about these clauses, officials, led byMr. Len Farber, are here to respond.
The second change is to subclause 17(6), which is the coming into force provision that applies to certain amendments to section 96. By having subclause 17(3) apply after 1993 rather than 1994, former members of a partnership who hold a residual income interest in the partnership at the end of 1994 can access the 10-year transitional reserve period for the recognition of December 31, 1995 income in respect of the business.
The third amendment addresses and amends clause 28. This is a quite important change that the government is making in response to representations made to us by the film industry. Subclause 28(2) is the coming into force provision that applies to the Canadian film or video production tax credit regime, one of the very well received changes in the 1995 budget. By replacing the words ``are primarily'' by ``include'' in the definition of ``qualified corporation'' for film and video productions the principal photography of which began before July 1996, a smoother transition period is provided to corporations for the purpose of applying the requirement that their activities be primarily the carrying on of a Canadian film or video production business. I'm pleased that we are making this amendment in response to representations made to us since the 1995 budget was brought down.
The Chairman: If I could interrupt, Mr. Campbell, Mr. Loubier called me on Friday about that particular amendment and was concerned about it as well.
[Translation]
Mr. Loubier (Saint-Hyacinthe-Bagot): Mr. Chairman, we support the amendment to clause 28 without reservation.
[English]
Mr. Campbell: I thank Mr. Loubier for that support. This is something we were all approached about only in the last few days, and we're pleased to be offering that amendment.
.1535
Mr. Chairman, I might go on quickly to the other three changes. About amendments to clause 38, subclause 38.(1) enacts changes that extend the filing date for a deceased taxpayer's income tax return where the taxpayer earns income from a business in a taxation year to the later of six months after the taxpayer dies or the filing due date following the tax year in which the taxpayer dies. By the changes being made here an otherwise unintended result is corrected, one that would have denied the benefit of the filing date extension to taxpayers who die on their filing due date rather than before that day. I'm sure members would want to make that change.
The Chairman: Do you care to elaborate on that?
Mr. Campbell: That's the extent of my knowledge on that one. That's why I've invited officials here to respond if you want to discuss that one, Mr. Chairman.
Second to last, the amendment to clause 51. Second reading amendments to clause 51 ensure none of variables in any of the formulae in that clause are represented by the same letter of the alphabet or any letter already used in section 204.2. This is one of the very technical changes,Mr. Chairman. I'll dispense with reading the description. It was to avoid confusion arising from the use of alphabetic identification of specific provisions.
The last amendment is to clause 74. In this case clause 74 amends paragraph 33(2)(a) of the Old Age Security Act to allow for the provision of information to the Department of National Revenue where such information is necessary for the administration of the Income Tax Act. The amendment is consequential on the amendments on the bill dealing with the recovery of Old Age Security benefits. The motion does not change the substance of the amendment but moves it from paragraph 33(2)(a) of the Old Age Security Act into a separate paragraph. This change is being made because currently there are other bills before Parliament containing amendments with the same paragraph. This motion, by moving this amendment to proposed new paragraph 33.(2)(a.1), avoids the necessity of complex provisions to ensure there is no inadvertent conflict between the amendments and these various bills.
Members, that is a very brief summary of six mostly technical changes. If members want to ask questions, they may do so.
The Chairman: That was an excellent presentation, Mr. Campbell.
[Translation]
Are there any questions? Mr. Loubier.
Mr. Loubier: I don't have a comment, but I do have a question.
What does the change to clause 17 imply, as opposed to the current provisions? Why is it made?
[English]
Mr. Campbell: There are two changes to clause 17. I don't know if the officials want to reference both of them.
Mr. Gerard Lalond (Chief, Business and Property Income, Department of Finance): Sorry, there are two amendments to clause 17. Which one? The first one?
Both of them deal with section 96 of the act. Subsection 96(1.6) deems certain essentially retired partners to be carrying on a partnership business for the purposes of various provisions of the act. The first amendment adds a reference to section 150. Section 150 of the act is the provision that deals with the rules indicating when you have to file your income tax return for a year. As a result of the changes made to the fiscal period rules, if you're carrying on a business you have until June 15 of the year to file your income tax return for a year.
This provision originally didn't pick up people who were carrying on business only by reason of this extended definition, which is essentially for retired partners. The first amendment picks up the extended definition of retired partners. So if you as a retired partner are reporting income from the partnership you have until June 15 to file your income tax return - June 15 after the end of a taxation year to file your income tax return for that year.
The Chairman: Could I just piggyback on that? That was a terrible error that was made in the original drafting, I assume.
Mr. Lalond: I suppose.
The second provision also deals with retired partners and ensures if you are a retired partner and you're in a position where you are getting two years of income being reported as a result of the fiscal period changes, you are considered to be carrying on a business at the end of 1994 for the purposes of being able to claim the ten-year transitional reserve. If it weren't for this provision, you wouldn't necessarily be considered to have been carrying on the business at the end of 1994 and therefore wouldn't be eligible for the ten-year transitional reserve.
.1540
Mr. Loubier: Okay.
The Chairman: Mr. Grubel, would you wish to...?
Mr. Grubel: No, but you're in good shape today.
The Chairman: Thank you very much, everyone, for all your cooperation.
Clauses 2 to 16 inclusive agreed to
Clause 17 as amended agreed to
Clauses 18 and 19 agreed to on division
Clauses 20 to 27 inclusive agreed to
Clause 28 as amended agreed to
Clauses 29 to 37 inclusive agreed to
Clause 38 as amended agreed to
Clauses 39 to 50 inclusive agreed to
Clause 51 as amended agreed to
Clauses 52 to 54 inclusive agreed to
Clause 55 agreed to on division
Clauses 56 to 71 inclusive agreed to
Clause 72 agreed to on division
Clause 73 agreed to
Clause 74 as amended agreed to
Clause 75 agreed to
Clause 1 agreed to
The Chairman: Shall the title carry?
Some hon. members: Agreed.
The Chairman: Shall the bill carry?
Some hon. members: Agreed.
An hon. member: On division.
The Chairman: Shall I report the bill to the House?
Some hon. members: Agreed.
[Translation]
The Chairman: Mr. Loubier.
Mr. Loubier: Mr. Chairman, I just want to make sure that our opposition to clause 72 is duly noted.
The Chairman: Consider it's done.
Mr. Loubier: And we agree with the bill as a whole on division.
The Chairman: Fine.
[English]
The Chairman: Mr. Campbell.
Mr. Campbell: Are we through the clause-by-clause consideration?
The Chairman: Yes, we are.
Mr. Campbell: I just wanted, on behalf of the government, to express my thanks to members on all sides of the House for dealing expeditiously with this bill. It was a long time in getting before the committee, and I want to express my thanks to everyone for dealing with it as quickly as they have - and to the officials for their help.
[Translation]
Mr. Loubier: The leaders are meeting this afternoon. Can we be assured that the bill will be adopted in the House before the summer adjournment?
[English]
The Chairman: Mr. Campbell.
Mr. Campbell: Mr. Loubier, thank you. That's a desire that I have expressed to our leadership in the House, and I certainly hope that it could be the case. You know the competition for House time as we head towards the summer adjournment. That is one of the reasons why I very much appreciate the cooperation here, because by dealing with it today there is a prospect, at least, that it could be dealt with before the adjournment.
The Chairman: Maybe we could adopt it on consent without a vote, which would save us a lot of time.
[Translation]
Maybe you could talk to your House leader about that.
Mr. Loubier: I have already done it.
The Chairman: We will do the same.
[English]
The Chairman: Mr. Grubel, maybe you could talk to your House leader and we could get this through. Which year does this deal with in the Income Tax Act, which budget amendments?
Mr. Campbell: 1995. There are some time-sensitive changes that people are anxious to have in place, particularly in the film industry.
The Chairman: Could I reiterate what Mr. Campbell said? Thank you for the cooperation from members of all sides, and thank you to our officials. I appreciate it.
We stand adjourned until tomorrow at 3:30 p.m.