44th Parl. 1st Sess.
March 22, 2022 10:00AM
Mr. Speaker, this bill is about tax rules for charities, specifically certain dispositions of real estate or private corporation shares.
I would like to know if my colleague thinks it would be appropriate at some point to expand the scope of the bill to other types of assets such as those that can be liquidated by estates and that might have appreciated over time.
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Mr. Speaker, I thank my colleague for introducing this very interesting bill. I am perhaps one of the few people in the House who really enjoy studying taxation.
I want to take a moment during my speech to acknowledge the people of the Sainte-Scholastique sector of Mirabel, who continue to fight to have the Minister of Transport approve the Synergie Mirabel project. This project, which the Liberals are blocking, would provide housing for 40 seniors who are losing their independence. Again, the Liberals are blocking the project.
I am talking about this because today we are debating the taxation of charities, the taxation of philanthropy. I want to show how important our organizations are to our families and to our community and social fabric, not only in my riding of Mirabel, but also elsewhere in Quebec.
I was in Blainville last week and I visited Moisson Laurentides, an extraordinary organization that collects food to feed thousands of families and thousands of children, people who do not have an easy life, people who live in extraordinarily difficult situations. This organization helps our food drives, and that shows how important charitable organizations are.
Sometimes, in people's minds, charitable donations are not truly generous because they are simply used for tax credits. However, to a person, a business or an estate and its beneficiaries, that money is a real donation, even if it provides a small tax benefit in return, because those who make the donation are giving up their material goods and financial advantages that could have been used for their own benefit. We must therefore commend people who donate, people who participate. We need these organizations and I say thank you.
There are currently tax measures for charitable organizations. We know the principle of charitable giving. Most people give a cheque or cash to an organization. In return, they receive an official receipt that will give them a small deduction on their tax return.
There are also other ways to make donations, including by donating shares of publicly traded companies. Few people do that, but these are often very valuable donations to endowment funds for our universities, our hospitals or very large organizations. These donations are a huge help.
Donating shares has two tax implications. First, at the time of transfer of the value of the shares, the donor receives an exemption from paying the capital gains tax because they will not personally benefit from the donation. Second, they will receive an official tax receipt.
Not all businesses are incorporated, and neither are all sources of capital. There are different types of businesses. If someone owns their own business, if an individual is a partner in a small business or if an individual owns a building and decides to donate the value of the building, one of the two tax benefits is lost, the capital gains tax exemption. However, an official tax receipt is issued.
There are other types of donations that provide tax benefits, including donations of ecologically sensitive land, which we discussed.
I will now invite my colleagues opposite to listen. The bill seeks to achieve tax fairness in response to the following question: Why does capital in a given legal form provide a tax benefit when donated that is greater than the benefit that would be provided by the same capital, in the same amount, but in another legal form?
I think that this bill is worthwhile. I think it is worth studying it in committee because this is about revenue neutrality. The same amount of money, donated in two different ways, must be treated exactly the same way by the tax authorities.
I understand that we are talking about significant amounts of money. I think it is still worthy of study, but I remind those who are studying the cost of this new tax measure that the federal government already provides very significant tax exemptions to a great many organizations. I would even tell my colleagues across the way that their political donors received tax credits. We therefore really need to study this matter in committee.
We must consider costs and the issue will be studied in committee. The Parliamentary Budget Officer says that the measure will cost $777 million over five years. Members on the other side of the House sometimes forget that they need to divide by five, and I know that it is not easy.
These are tax expenditures, revenue the government is foregoing. This $777 million in tax expenditures will generate $981 million, which is close to an additional $1 billion in donations to our charities. At first glance, the cost to the government is lower than what would be donated.
True, that is not a very big gap. True, the Parliamentary Budget Officer told us there was some uncertainty and that the numbers are not 100% clear. However, when it comes to statistics and estimates, nothing is certain. For example, as recently as yesterday, the Bloc Québécois thought there was just one party in government, and now look at what happened.
Things can change very fast, especially seeing as, in this market, most of these donations will be made in the form of property, and capital gains on property change very fast. We have been seeing higher capital gains and higher property values. That gap could widen.
My suggestion would be to have the Parliamentary Budget Officer appear in committee. We have to study the measure, look at the numbers and analyze the impact of this measure. We are all reasonable people who can talk about these things.
It needs to be socially acceptable, because the rationale behind these tax credits for charitable donations is that perhaps governments have less need to collect taxes on the money that organizations give to serve the community, our hospitals and our universities. That can also cause distortions.
This money goes to some good causes, but it also goes to religious organizations and all kinds of other organizations that do not always correspond to the values espoused by our democratically elected governments. Social acceptability criteria are needed, and they do exist. We will examine them, but at first glance, I think that, on the simple principle of tax neutrality and fairness, if anyone in the House thinks that it is normal for existing charities to be entitled to the current tax treatment, it would be entirely reasonable to consider expanding it. We could also consider making amendments.
People from the Department of Finance will have to be invited to appear before the committee, because the bill was introduced under the Harper government. I would remind members that the Liberals decided not to implement it in 2015. The bill was reintroduced in the previous Parliament, so this idea has been around for a while. As we know, Mr. Johnson promoted this idea, so it has been around for a while.
We will have to ensure that the terms and conditions create true revenue neutrality. I cited the example of buildings for the member for Charleswood—St. James—Assiniboia—Headingley, who was kind enough to discuss his bill with me beforehand. As we know, when someone owns a building, over time there are profits, revenues and expenditures associated with it. A profit is made. Every year, the owner is entitled to a CCA, or capital cost allowance. Every year, this is artificially applied. When the value of the building increases, that decreases profit and taxes. When the amount associated with the liquidation of the building is donated to a charitable organization, the taxes are paid back. However, in the meantime, the owner will have indirectly benefited from an interest-free loan from the government for 5, 10, 15 or 20 years, which will have yielded income and a return that at certain times may have exceeded the value of the capital gain on the building expressed as a percentage.
Thus, there may be other tax benefits associated with these types of assets. We will have to study this, because when shares in a publicly traded corporation are donated, all the profits associated with said company's entire basket of investments are included in the donation, for example. We will have to look at all these aspects.
Taxation is complex. There are a lot of ins and outs. What is more, there are terms to discuss.
Again, I think this is a good initiative, that it is supported by our organizations, and that it will increase donations. I think it would be premature to turn our backs on Bill C‑240 and simply say no to it without studying it in committee.
It was a great pleasure to discuss this with the member for Charleswood—St. James—Assiniboia—Headingley. I know that he is reasonable and open. He knows his bill and taxation. I know that we will be able to discuss various ways of improving the bill. We could talk about other types of assets that may be on the table one day. I know that we will be able to do so calmly and intelligently in a spirit of tax fairness and neutrality.
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