Canada’s Finance Minister did not attend a committee meeting to address why the government tried to delay new tax legislation even after she was asked to do so by members.
Chrystia Freeland was invited to answer questions about Bill C-208 within two weeks from the finance committee’s last meeting on July 20. But on Wednesday afternoon, members received an e-mail from the committee clerk: “I have been informed this morning that the minister is unable to accept the committee’s invitation.”
This comes after weeks of confusion surrounding the bill, which gives more generous tax treatment to small businesses.
On June 29, Bill C-208 received royal assent, which is when legislation usually comes into effect. The next day, however, the Finance Department issued a news release saying that the changes wouldn’t take effect until Jan. 1.
On July 19, the Finance Department issued another news release that confirmed the legislation had in fact gone into effect in June, saying the statement “replaces” the earlier news release on the issue.
At the July 20 committee meeting, members heard from Finance Department officials that the Liberal cabinet decided the bill wouldn’t be implemented until January, not the Finance Department. Conservative MP Pat Kelly, who is a vice-chair of the committee, then introduced the motion asking Ms. Freeland to attend to take questions on the situation, and the motion passed.
Mr. Kelly said in an interview that committee members have not had an adequate explanation for the changes and confusion, nor an explanation for why “this government would think that it could just pick and choose not to implement a law passed by Parliament.”
“It’s not a small matter in a democratic society,” he added.
Bill C-208 allows owners of small and medium-sized businesses to sell shares to adult children or grandchildren and claim the proceeds as capital gains instead of dividend payments. This benefits business owners because capital gains are taxed at a lower rate.
There were 19 Liberal MPs who voted for the bill, including the chair of the finance committee, but most voted against it.
Katherine Cuplinskas, a spokesperson for Ms. Freeland, said in an e-mail statement that the law stands. “Our government fully supports a level playing field for intergenerational transfers,” the statement read.
Ms. Freeland took questions about the bill from reporters at an event on July 20 where she confirmed that the bill is law. She also said the department plans to introduce amendments to the legislation that are aimed at closing loopholes that could allow for tax avoidance.
“Our government absolutely supports the core objective of C-208, which is to create fairness when it comes to intergenerational transfers of businesses,” she said at the event.
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