Thank you, Mr. Chair, members of the committee, for your invitation to appear today following the Department of Finance Canada's June 30 news release respecting Private Member's Bill C‑208, and the clarification issued by the government yesterday which replaced that June 30 news release.

As the Law Clerk and Parliamentary Counsel for the House of Commons, I am pleased to be here today to address any questions that the committee may have on this matter. My office provides comprehensive legal and legislative services to the Speaker, the Board of Internal Economy, the House and its committees, members of Parliament and the House Administration.

As counsel to the House, its committees and members, we serve the interests of the legislative branch of government, and provide similar types of legal and legislative services to the House as the Department of Justice provides to the government.

I am accompanied by Michel Bédard, Deputy Law Clerk and Parliamentary Counsel, Legal Services, and I hope that our answers will assist the committee.

Before turning to Bill C-208, I want to take a few moments to highlight the rules applicable to the coming into force of legislation. These same rules apply equally to legislation implementing tax measures.

Enacting new laws and amending existing ones is a process that culminates in a legislative text receiving royal assent. However, a distinction must be made between the date on which a legislative measure is enacted by Parliament and the date on which it comes into force. A bill becomes law after it has been passed by both Houses in the same form and has received royal assent, but its provisions will produce their effect and become enforceable only when they are brought into force.

The Interpretation Act, which applies to all federal legislation, contains the provisions governing the coming into force of statutes, including the timing of that coming into force. Generally, a statute will come into force either on the day of assent or on another date as provided by the legislation itself. The other date could be a specific day set out in the act, or the act could leave it to the government to determine the date of the coming into force by an order in council.

If no coming-into-force provision is included in an act, the default rule found in subsection 5(2) of the Interpretation Act applies, and the entire act comes into force on the day on which it receives royal assent.

I will now say a few specific words about the implementation of tax measures.

Governments will, from time to time, implement proposed legislative changes respecting taxation, for example for new capital gain inclusion rates or new GST rates, before their formal legislative enactment. The actions of taxpayers will then be influenced by the proposed measures—that are oftentimes already implemented administratively by the Canada Revenue Agency—in anticipation to the subsequent legislative enactment that would have retroactive effect to the date the proposed legislative changes were announced.

House of Commons Procedure and Practice summarizes this practice as follows:

It is the long‑standing practice of Canadian governments to put tax measures into effect as soon as the notices of the ways and means motions on which they are based are tabled in the House of Commons, with the result that taxes are collected as of the date of this notice, even though it may be months, if not years, before the implementing legislation is actually passed by Parliament.

Implementation of the tax measures often starts when their announcement is made, including by the tabling of a ways and means motion, but is always contingent on the tax measures being ultimately enacted by Parliament.

Bill C-208, an act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation), received royal assent on June 29, 2021.

The bill does not contain a coming-into-force or a commencement provision, so, in accordance with subsection 5(2) of the Interpretation Act, the date of coming into force is the date of royal assent. This means that the new provisions apply as of that date, in this case, June 29, 2021.

There is nothing unusual about this. On June 30 the government proposed legislation to clarify that the Bill C-208 amendments to the Income Tax Act would apply at the beginning of the next taxation year, starting on January 1, 2022.

Yesterday, the government issued a new statement replacing the June 30 news release and affirming that as Bill C-208 has been passed by Parliament and has received royal assent, it has become a part of the Income Tax Act and that the changes contained in Bill C-208 now apply in law.

The government also clarified that it intends to bring forward amendments to the Income Tax Act that honour the spirit of Bill C-208 while safeguarding against any unintended tax-avoidance loopholes that may have been created by the bill.

Because the bill is now law, making any changes to it would require new legislation. Such new legislation could provide for any amendments to the Income Tax Act to apply retroactively, including applying to events that take place before the day on which the new legislation comes into force.

I would now be pleased to answer any questions you may have.

Thank you.

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